Thursday, 27 November 2014

When fiscal credibility and xenophobia collide ...

Andrew Fisher on the contradictions at the heart of the Conservative-led government

Research published earlier this month showed that migrants made a net contribution of £25 billion to the UK in the last 10 years (see UCL press release).

With George Osborne having spectacularly failed to clear the deficit by next year - and the deficit rising again this year (during a recovery!!) - the Tories should welcome the news that net migration has increased by 260,000 in the last year.

The recent past, as the best guide we have, shows these migrants are likely to contribute more in taxes than they take out - and therefore help to narrow the deficit.

This government has staked its reputation on fiscal credibility - yet five years of austerity are now set to become ten, as their 'long-term economic plan' has failed, and so become the rather less catchy 'much-longer-term-than-we-expected economic plan'.

But alongside this, the government also pledged to bring net migration down "to the tens of thousands".

Net migration 2010-present (ONS data)

What the chart shows is that government immigration policy has probably had little or no impact on migration flows. As Osborne's intense austerity sent the economy into stagnation and increased unemployment, net migration flows declined, but since he relaxed and extended austerity causing the economy to pick up and unemployment to fall net migration has increased.

These two pledges expose the crisis at the heart of the Conservative Party - the neoliberal wing in conflict with the nationalist wing (with the latter increasingly flying off in the direction of UKIP).

In some respects, the fact that net migration to the UK has risen should be a cause for Conservative jubilation. They could credibly spin as a narrative that "the UK economic recovery - in contrast with the Eurozone - means that our shores are an attractive destination for migrant workers to come here and contribute".

However the contradictions inherent in the Conservative creed, exacerbated by the rising UKIP threat, mean they cannot do that.

What does this mean for the Conservatives? It means they made two very stupid promises that they were unable to keep on the deficit and migration - and that may ultimately be as or more damaging than their coalition partners' broken promises.

It also means the space is there for Labour to offer an alternative to the flawed policies of the Conservatives. Yet just as the Conservatives become increasingly discredited on two of their historically strongest issues (the economy and immigration), Labour has decided that imitating them on both is the sensible course - promising to stick to Tory austerity (Balls) and pandering to anti-migrant sentiment (Cooper / Reeves).

And that is why there is a real need for political debate in this country in place of the consensus of the stupid in Westminster.

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