Hamish McRae: Reality defeats Le Pen's pals

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The Independent Online

"I want people who can sit on my board, not people who will wash my Rolls."

That was the way one of this country's hugely successful immigrants, the head of a large company, put his perspective on the issue of immigration to me on Friday.

Migration was at the front of all our minds last week because of the shock waves that followed Jean-Marie Le Pen's success in France. But it ought to be in our minds for the much less publicised comments, also last week, by Gordon Brown, that one of the reasons why the Treasury had raised its estimate of the UK's potential growth rate was inward migration.

Over the last 20 years the UK has grown at about 2.3 per cent a year. But now the Treasury reckons that the potential growth rate is 2.75 per cent, which if right, would enormously increase the wealth of the country over the next 20 years. It helps in the short-term, too. The faster the economy grows, the more tax the system generates. Had it not been for this higher estimate of potential growth, Mr Brown's tax increases would have been nearer £10bn instead of "only" £8bn.

The detail of the new estimate for our underlying growth rate is not yet clear but it seems that the net migration into the country and the implications that has for population change is one of the key factors. Whereas during the 1970s and early 1980s there was net migration out of the country, the net flow since then has been the other way – snapshots of the inward and outward flows in 1971, 1981, 1991 and 2000 are shown in the left-hand graph.

Just what these flows, plus the natural increase or decrease in the population, will do for the size of the UK population is not at all clear. We do have some UN projections for 2050 in the middle table. If these turn out to be right, the population will be down a touch by then – though not nearly as sharply down as that of Italy, Russia or Japan. Aside from the rather special case of Ireland, the main EU population winner would be France, which is expected to grow slightly. Elsewhere, population is expected to shrink.

But of course the greatest winner is the US, thanks to its slightly higher birth rates but much more to its expected immigration. The intriguing question is whether the UK might be heading down the US path. We have a relatively small stock of foreign-born nationals by European standards, but the strength of the UK economy clearly makes the UK an attractive destination. It has the lowest unemployment of any large European nation.

This raises the central question, "What sort of immigrants?" EU nationals have free access to this job market, which is immensely attractive at both the bottom and top ends of the scale. At the bottom end, entry jobs in the UK tend to require fewer formal qualifications than the rest of the EU, with the result that young Europeans are able to finance spending some time here.

At the top end, the London job market is the only one in this time zone where there are several thousand jobs offering a post-tax income of more than $1m a year. Maybe there are a fewer such jobs now than there were a couple of years ago, for many are in the financial services industry where bonuses have been slashed. But these jobs do not exist at all, even in a good year, elsewhere in Europe. Numerically, the number of migrants who get these jobs may be quite small but the magnet effect is tremendous. And insofar as such migrants pay UK tax, Mr Brown's coffers benefit. Last year the top 1 per cent of earners paid 23 per cent of total income tax receipts, against only 11 per cent in 1978.

So the economy benefits; growth benefits; taxpayers benefit. What can be wrong with this?

The rational arguments against, as opposed to the racist and disgraceful ones, seem to me to fall into two groups. The first group concern the effects of such growth. Growth creates pressure: pressure on housing, pressure on schools and healthcare; pressure on transport, pressure on the environment. If this is not handled with care, the quality of life deteriorates for the existing population as well as for the new migrants.

A survey of European cities last week showed that London had the longest commuting times, but also that it was the place to which most people wanted to come. The task is to manage the pressure without damaging the vitality, something at which we have been at best OK, and at the other end, totally incompetent.

But while there is no magic wand – coping with the pressure of a rising population requires great attention to detail – at least this is an area where there are solutions. Spending rather more money on communications, removing road-blocks in the planning process to build more homes, improving policing – these are all remedies that lie in our own hands. We simply need to learn to cope with growth, and if we worry about that, maybe pay a visit to Argentina to see what coping with the reverse looks like.

The other set of arguments are much tougher to counter, because it is hard in the real world to pick and choose who should come in.

Few people would argue that there should be more people hanging on to the side of the trains though the Chunnel. Few people would object to the Swiss investment banker moving to London to make his millions. But in the great grey area in between there is no clear policy, little honesty, and not yet even an agreement that we should seek to encourage the migrants who are likely to help us and discourage those who are likely to harm us.

The principle of that industrialist I quoted at the top is a good common-sense start – though I would hope that just a few of the chaps who are washing his Roller will also end up, like him, as successful entrepreneurs.

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