The Government’s last-minute reaction to the prospect of Bulgarians and Romanians being able to work freely in the UK from 1 January has once again revealed its lack of strategic direction. After all, the date when the transitional arrangements for these countries comes to an end has been known for the past seven years.
Clearly all this talk of wanting to change the benefit system for new arrivals and reduce access to the UK labour market for EU citizens is a clear admission of what economists have been saying for some time. The Government’s pledge to reduce net immigration was bound to fail since, as things stand, one cannot control the movement of people from the rest of the EU.
What does not make sense economically is that Labour too is fanning the flames of anti-European prejudice by saying repeatedly it was a mistake not to impose transitional arrangements as other EU countries did on the first eight Eastern European countries to join the EU in 2004. It’s true that the number of Poles and others who entered the UK was vastly underestimated, but it was unquestionably good for the UK economy to have the increase in skilled and unskilled labour. Until the crash of 2008, the UK grew faster than its EU partners thanks to allowing a vigorous new labour force into Britain.
Yes, any major arrival of foreign incomers causes tensions, as I heard myself on a recent visit to Boston in Lincolnshire to take part in a Question Time debate. But EU workers have allowed sectors to flourish and companies to expand, thus generating more spending and employment in the communities they found themselves in.
It is also wrong to accuse EU workers of benefit-scrounging. A recent paper for the Centre for Research and Analysis of Migration argued that over the past decade, we have seen a net fiscal benefit from immigrants from European Economic Area countries. These workers are calculated to have paid more in taxes and contributions than they received in benefits and transfers.
Nor does it make sense to blame the foreigners for our current housing shortage. Britain long ago gave up state predictive planning. Even without EU workers, there would have been a major shortage of affordable housing for British citizens.
What about the NHS? Far from abusing the health service, many Eastern European men and women now work for the NHS (or in care homes), and the Conservative and Labour critics of EU workers need to ask what other sources there are to look after our ageing society. The independent Office for Budget Responsibility has calculated that migration contributes positively to the sustainability of public finances, and without net migration of at least 140,000 a year, long-term public debt levels would rocket under the pressure to finance long‑term social needs.
Ministers should beware of falling into a classic trap – the “lump of labour fallacy”, or the belief that there is only a limited number of jobs and that “foreigners take them away from us”. Extra people create extra demand, and by keeping firms going they create conditions for further investment and recruitment. Employment levels are at their highest ever, while unemployment continues to fall.
Let’s also not forget that 2.2 million British people live and work on the Continent, and we should be careful before we hang a notice on Britain’s front door saying “No more Europeans wanted”. Unlike 2004, all 26 EU member states in 2014 will open up labour-market access to Bulgarians and Romanians, and these new workers will spread themselves around, with Germany and Austria other likely destinations.
The UK has always been in favour of enlargement, which does it credit. But being seen as a “nasty” country deters investment and growth. The current fear of the foreigner is British politics at its worst. It contributes to a growing populism which obscures the real economic benefits to the UK of being part of the single European market.
Vicky Pryce’s updated book ‘Greekonomics: The Euro Crisis and Why Politicians Don’t Get It’ has just been published in paperback by Biteback Publishing