Should the UK embrace higher net migration or rethink the economy?

Tough choices. We must be willing to make tough choices. It is a soundbite heard frequently from politicians, often accompanied by another chestnut: there’s no such thing as a free lunch.

Both statements are true. Free lunches are few and far between. There are tough choices that need to be made. But, like most other developed countries in similar circumstances, Britain is reluctant to make them.

Tough choices implies a willingness to make sacrifices and that doesn’t fit well with the west’s “I want it all now” culture. Politicians pander to this. They talk about the need to make tough choices but in fact look for the soft option, because that’s what keeps the punters happy.

The debate over immigration is a case in point. Migration is a hot topic here, as it is in Germany, France, the Netherlands and the US. What’s more, it is certain to remain a salient political issue.

Last week, the Office for National Statistics published its latest projections for the size of the UK’s population. These showed the number of people living in the UK rising to 70 million by 2026 – a decade earlier than previously envisaged – and continuing to increase over the following decade to 73.7 million. Net migration – the number of people entering the UK minus the number leaving – is expected to account for more than 90% of the 6.6 million increase in the population between 2021 and 2036.

Just to be clear, these are not ONS forecasts but rather projections based on net migration of 315,000 from 2028 onwards. This would be much lower than the record 672,000 in the year to June 2023 but significantly higher than in any previous period. When Tony Blair became prime minister in 1997, for example, net migration was 48,000. When David Cameron entered Downing Street in 2010 the figure stood at 256,000.

One response to these projections is to say: what’s the problem? If people from other parts of the world want to come here then they are welcome to come. Migration is globalisation in action: workers from poor countries seeking out job opportunities in countries where they can earn higher wages and enjoy better living standards.

Migrants can make the economy grow faster and they do the jobs home-born workers are reluctant to do. Without migrant workers the care system would collapse and NHS waiting lists would be even longer than they are already. Without foreign students, the higher education system would be in deep financial trouble. Given the UK’s ageing population, it makes no economic sense to put an arbitrary limit on net migration.

Let’s assume all the above is correct. Put to one side the fact that much higher levels of net migration have coincided with only weak growth in per capita incomes. Whether or not migration is good for growth, if the UK’s population is to increase on the scale envisaged over the next decade or so, then this country will have to be prepared to build (and pay for) the infrastructure to service a much-expanded citizenry.

That means more schools, more hospitals, more capacity on the transport network and – most importantly – more houses. The current level of homes built in the UK is about half that of its postwar peak of 425,000 recorded in 1968, a time when the population was 12 million smaller than it is today and 19 million smaller than it is expected to be by the mid-2030s.

The supply of homes is already insufficient to meet existing demands and those pressures are only going to increase if the ONS projections are right. And that means, you guessed it, tough choices.

If housing supply is to keep up with demand it will mean liberalising the planning rules. It might even involve building on the green belt. It will certainly lead to a struggle between whoever is in government and those who think demand can be met simply by developing brownfield sites.

The consequences of a 10% increase in the population without a significant increase in the supply of new homes are obvious: rampant house-price inflation; more overcrowding; ever-higher numbers of children living with their parents into their 30s; more people squeezed into private-rented accommodation, and a growing divide between the housing haves and the housing have nots.

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So how about some serious immigration controls instead? Wouldn’t they be an alternative to concreting over the green belt? In theory, yes. It was not so long ago that annual net migration hovered around zero. In 1990 and 1991, for example, it averaged 40,000 a year; in the following two years it fell by 6,000 a year on average.

In practice, of course, returning to those levels of net migration would also have consequences. Care homes would need to charge more to attract UK-born workers. Universities would no longer be able to use the fees from foreign students to subsidise those from the UK. Businesses that have come to rely on migrant workers would become unviable.

Again, one response would be: so what? If the business model of care homes relies on cheap foreign labour and that of universities relies on expensive foreign students then there is something wrong with those business models.

But while the long-term solution might well be a different economic model – higher wage, higher productivity, more highly automated – getting to that better world will not be easy or cost-free. It means either higher taxes to pay for higher levels of public spending or higher prices for consumers, and quite possibly both.

So there’s a choice that has to be made: embrace high levels of net migration and fundamentally rethink housing; or reduce net migration to late 20th-century levels and fundamentally rethink the economy. It can’t be ducked.

The Guardian