Rt Hon Lord Lilley

    Article for the Evening Standard ? 21 March 2005

    Should We Now Set Limits?

    Immigration has become a central issue in the election campaign since Michael Howard and Tony Blair locked horns over their plans to restrict it ? and I have now doubt we will hear more from both sides about it. But it has particular implications for London and the South East which have not yet been discussed honestly.

    A year ago I started some research into the government?s house building targets for southern England. As a result, I find myself embroiled in the immigration issue.

    I say this knowing full well that this is an issue of which moderate politicians are normally advised to steer clear. But one link that I discovered in taking apart the costs and benefits of immigration is that John Prescott?s controversial housing policy is linked to – indeed driven by ? his Government?s immigration policy.

    The connection between the two is well hidden. Mr Prescott has made 17 statements to Parliament about housing policy – raising house building targets to 3.8 million. The only reason he has ever given for needing these extra houses, apart from the trend to smaller households, has been North/South migration within the UK ? never international migration.

    Yet I discovered that the net inflow to the south from the rest of Britain is the smallest component ? less than 10% of population growth. International migration is the largest and, on government forecasts, will account for a third of all the extra households across the UK.

    In the south the figure is more like 40per cent – a significant number since it is equal to the proportion of new houses that the government believes will have to be built on green field sites. Net immigration into this country has trebled since 1997 to over 150,000 in 2003. That is equivalent to two whole constituencies to house every year – mostly in South-East England whose population density is already very high.

    Like most people, I had assumed this inflow was occurring despite the government?s attempts to control immigration. I discovered that in fact it was the result of government?s deliberate efforts to encourage legal immigration. The evidence for this is clear. First, a Home Office document admits, “the Government wants to encourage lawful immigration?sustaining and perhaps increasing current levels?. Second, the government has written to businesses encouraging them to fill “high, medium and low skilled vacancies from overseas?. Third, the government has relaxed the rules in over a dozen ways. As a result, the number entering on work permits now dwarfs the number of asylum seekers granted refuge.

    When immigration emerged as a major election issue, Tony Blair had to give the impression he was going to rein it back. Hence his pledge to introduce an “Australian-style points system? which deliberately sounded as if it matched Michael Howard?s plan. But the Australian system ? like the Conservative plan – sets an annual limit on the total number allowed into the country.

    The points system is used to select applicants, not to restrict numbers. Labour refuses to set any limit. We know how Mr Blair would operate a points system without an annual quota since he has already introduced just such a system for those coming here to seek work. Far from using points to limit the number of entrants the Government deliberately reduced the number of points required to boost the number of applicants.

    If, as we are often told, immigration is essential to our economic well-being, the pressure it imposes on housing in London and the Home Counties would be something we would have to cope with. The only criticism that could be made of the Government?s policy would be that it is pursuing it by stealth.

    But rational debate about how much and what sort of immigration is necessary has been stifled by fears of being labelled racist. As a result the choice appears to be polarised between the extremes of ?all immigration good? and ?all immigrants bad?.

    The latter view is based on a populist caricature of immigrants as scroungers, layabouts and criminals. That caricature is the reverse of the truth. Most immigrants are decent, hard-working, law-abiding people who want to make a positive contribution just as British ethnic minorities already do. They tend to epitomise the enterprise and family values that Conservatives particularly admire.

    Conservatives, therefore need to explain why, given that immigrants are desirable, do we need to limit immigration. Can you have too much of a good thing?

    There is a case for some, but limited, immigration. Immigration is to the economy what oil is to your car: it is a lubricant not a fuel. Lack of oil damages your car. Stopping all immigration would severely damage the economy. But, beyond a certain point, increasing the amount does not make it go better.

    Although immigration enriches us economically and culturally, the benefits do not increase in proportion to numbers, whereas the costs do ? notably the pressure on housing and land. That is why a limit is necessary.

    The Government?s arguments in favour of immigration imply that the more we have the better it will be for the resident population. Tony Blair claims that immigrants boost economic growth; fill vacancies; make a positive contribution to the exchequer; and will solve our pension crisis. Those arguments are rarely challenged but crumble on analysis.

    Immigration does make the economy grow bigger but that does not make average incomes grow faster. It makes the better off richer by giving them cheaper nannies and builders. But it makes the less well off poorer by holding down the pay of resident nurses, teachers, catering workers etc.

    If there were a labour shortage the symptom would be rising pay. Yet pay inflation is unusually subdued. Immigration does not reduce the level of job vacancies because migrants not only produce goods and services they consume goods and services ? which require yet more workers to produce.

    The claim that immigrants pay in more taxes than the cost of public services they use ignores pension liabilities. Today?s immigrants will become pensioners when the demographic problem is most acute.

    I believe a limit on immigration would be compatible with both our economic needs and our humanitarian obligations. The limit should be set to balance the inflow and outflow of non-EU citizens as soon as feasible. In addition to workers coming from the new EU member states, this would still allow 200,000 non-EU citizens to come to live here every year, matched by a similar number returning home.

    Above all a clear limit would bring the openness that is essential if we are to rebuild public confidence across all communities about our immigration policy – after many years of doing one thing while saying another.