Immigration and labour market inequalities 
Leader
Monday 14th August 2006 

          
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When the Home Secretary, John Reid, says he wants a "mature discussion" about immigration and suggests that we "get away from this daft, so-called politically correct, notion that anybody who wants to talk about immigration is somehow a racist", there are grounds for unease. 

In his previous job, after all, he called for a mature discussion about the British nuclear deterrent, at the same time that he and his cabinet colleagues made it clear they were stone deaf to the opinions of others. As for taking race out of the immigration debate, it can't be done, and Reid's remark raises the worrying possibility that he thinks it can. It may all be posturing, but there is a danger that the Home Secretary is looking for one of his quick fixes here. 

Yet he is right to point out that, for all that it seems an old chestnut, immigration is a new problem: for practical purposes, net immigration to Britain began only in 1994. This government is the first to have to deal with it in a sustained way and its record is, in many respects, good. If there is anxiety on the subject now it is related to two things: the large number of people who have arrived since the enlargement of the European Union in 2004, notably from Poland, and the need for the government to decide whether Bulgarians and Romanians will enjoy the same right to work here when their countries join the EU next year. 

Substantial problems have flowed from the sudden arrival of 250,000 or more people in this country from the recent accession countries. Some parts of the labour market have received a jolt and there are difficulties in housing, in the provision of welfare and elsewhere. In some places these problems have been acute, and they need to be addressed. 

It would be wrong, however, to imagine either that the consequences as a whole have been severely damaging, or that the problems must be long-term. A great many of these mainly young people intend to go home as soon as they can, and in the meantime they make a big contribution both to our economy and, through remittances, to the economies of their own countries. 

Those economies are developing and it will not be long before Poland is creating enough well-paid jobs to keep its people at home, which will be good for everybody. When it comes to a decision about Bulgaria and Romania, those factors should seal the argument. 

Where we have a long-term immigration problem it relates not to Europeans but to illegal workers, usually from further afield, who operate on the bottom rung of our economy. Some have been trafficked; more have arrived legally and stayed. In many cases they are paid a fraction of the minimum wage and enjoy none of the normal legal protections, so they are often cruelly exploited. By their nature they are uncountable, but estimates of their number range between 300,000 and 600,000, and there is reason to believe the number is growing. 

These people make a nonsense of the argument that we need an annual ceiling on immigration, a level that commands broad public consensus. First, as a recent House of Lords committee found, in crude terms, we can cope with them. They do not depress wage levels generally and they stimulate the economy. Second, they don't respect ceilings and once they are here there is little we can do about them. We can invest more in internal enforcement - we are relatively weak in this area - and in pursuing exploitative employers, but professionals believe it is like bailing a boat with a sieve. We cannot track down and deport half a million people. 

John Reid knows the fundamental truths by now, and they must form part of any mature debate. Net immigration is a symptom of the health of our economy and of the gulf that divides it from others in the world, especially those afflicted by war. People generally prefer to stay at home if they can, but driven by hardship, the world's labour force is globalising itself. Only when the great economic differentials of our time are reduced, therefore, should we expect immigration into Britain to fall. 



The rock star and the accountant 

What is the difference between tax evasion and tax avoidance? The former is illegal and done by mugs; the latter is legal and done by accountants. It was forever thus. But with income disparities rising around the world, the wealthy have never been more successful in cutting their liabilities. 

Our celebrity icons have proven particularly adept. Back in the 1970s the Rolling Stones moved their business dealings out of the UK to the Netherlands. Now, with shrewd management, using offshore trusts, Mick Jagger and his ageing band have managed to pay only 1.6 per cent tax on earnings last year of £81m. 

They're all at it. In the sports world, David Beckham and England's other failed footballers can offset their hairdressers and clothes against tax as a legitimate business expense if it enhances their public image. From Boris Becker to Franz Beckenbauer to Michael Schumacher, German stars have quit their country for tax-sunnier climes. 

Good luck to 'em if the loopholes are there, one might say. Except don't preach good works if you do. It is the poor who pay the highest marginal rates. The public is used to centre-left politicians displaying hypocrisy over their tax affairs. But perhaps the more impressionable will be disappointed by the news that U2 have also taken the Dutch financial route, thus sparing themselves higher Irish rates. Perhaps Bono should mount a new campaign: Make Taxation History. 
          This article first appeared in the New Statesman.
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