Demand, not supply

The new-centre-ground

Labour can again contest the centre-ground if it untangles the web of immigration, jobs and wages, suggests Matt Cavanagh

In the February edition of Progress Liam Byrne urged Labour to ‘keep the insight that elections are won in the centre-ground’. He did not mention immigration, though as a former holder of the ministerial brief I am sure he would agree the insight applies here. Labour has understandably been quiet on immigration since the election. But there are strong principled as well as pragmatic reasons why it should actively engage in the immigration debate and contest the centre-ground as it now stands, rather than hoping it will drift back towards it.

The pragmatic reason is clear: immigration is central to our politics and likely to remain so. For a decade it has never dropped out of the top five issues. It is currently third, below only the economy and unemployment. The Conservatives will be trying to keep it there, and unemployment and sluggish growth will heighten concerns about migrants competing for jobs and holding down wages, while spending cuts will sharpen resentment over migrants claiming benefits or adding to pressure on stretched public services. Labour might have won handsomely in 1997 and 2001 with a policy that was far more pro-immigration than most voters’ views, but returning to such a stance now would be reckless. Rejecting the centre-ground is even riskier on immigration than, say, the economy, since moving left on immigration would not even unite Labour’s core vote, let alone the coalition of voters it needs to win a majority.

The principled reason is that on such a divisive issue all national political parties have a responsibility to try to set out a position which can unify the country. They must avoid any suggestion that immigration policy will be handed over to judges, or ‘experts’, and insist that it be decided through democratic debate. Some on the left are uncomfortable with this, given the hostility of much of the media and the extent to which voters’ views are influenced by false beliefs: for example, on average British voters think the proportion of foreign-born residents is three times as high as it actually is. But this kind of challenge is not unique to immigration, and political parties need to refute, not reinforce, the sense that immigration policy is being decided by an elite.

The immigration debate continued to run along old left-right dividing lines up to and including the 2005 election, with Labour broadly happy to be seen as pro-immigration, the Conservatives happy to be seen as against. This was at best a mixed blessing for Labour, though it only became seriously damaging towards the end of its time in office, as the public moved further right on the issue at the same time as it rose up their list of concerns. But since 2005 both parties have tried to shed their old polar positions, and have been competing for a new, more centrist position: roughly, ‘pro-immigration, but less of it’.

The Conservatives made the first move when David Cameron became leader and distanced the party from its previous approach as part of his efforts to decontaminate their brand. With a few inevitable lapses, they have stayed more or less on the centre-ground ever since, a task made easier as the ground itself continued to drift right.

Labour’s pitch for the centre-ground came later, in its last two years of power. The party tried to reassure people that it would use the new points-based system to ensure that, when growth returned, it would benefit those already here, through more jobs and rising wages, rather than rising immigration. It also tried to address the sense of unfairness around some aspects of immigration, encouraging councils to give priority for social housing to people with an established local connection, and making it harder for migrants to qualify for a range of benefits in the early years after arrival.

Despite this late move from Labour, the battle for the centre-ground was won comprehensively by the Conservatives. Their flagship policy of placing a ‘cap’ on immigration had the virtue of simplicity – even if what looked simple in opposition is starting to look simplistic in government, as people realise that less than five per cent of immigration is actually ‘capped’. More important than the Conservatives’ strength on the issue, however, was Labour’s weakness: by the time it made its move, people had stopped listening. And in terms of the challenge Labour now faces, it remains the case that reclaiming the centre-ground depends on first regaining the permission to be heard.

Part of this is being seen to admit that Labour ‘got it wrong’ in government, which the current frontbench team has shown itself willing to do. Another part is re-establishing a reputation for competence, and holding ministers to account. Labour was badly damaged during its time in government by the perception, fed and exploited by the rightwing media, that immigration was simply ‘out of control’. This was only partly fair: critics relied on an unrealistic view of visas and border security which turns every lapse into a national scandal, as was brought home to the Conservatives in their first scandal in November. One of the strategic questions facing Labour is whether to take its turn at exploiting these stories to the full, or whether to offer to work with the government on building a more realistic narrative on border security, one which compels voters to confront the real trade-offs that exist between control, convenience, and cost.

Either way, admitting past mistakes and regaining a reputation for competence will not be enough: in the end Labour will require fresh ideas to convince voters it has learned from the experience of the last decade. The best place to start is the argument over immigration, jobs and wages. Here too the main parties are already less far apart than many suppose. Leaving aside employment minister Chris Grayling’s attempts to blame immigrants for being welfare scroungers, or for pushing British people out of jobs (he has yet to argue both on the same day, though it is probably only a matter of time), most senior politicians in both main parties talk about immigration as the symptom of Britain’s problems rather than the cause. The difference is what they believe those underlying problems are – and so what they think the solution should be.

The Conservatives believe that the real problem is welfare dependency, and so the solution is welfare reform, which they argue will incentivise the unemployed to compete harder with immigrants for low-paid jobs. Labour’s view is that the real problem is our model of capitalism, which is not generating enough ‘good’ jobs at the lower end of the income distribution, instead generating the kind of jobs which attract migrant workers rather than the unemployed: demanding but low-paid and low-skilled, often temporary, and lacking career progression or development. At least, we are to assume this is Labour’s view: so far the link between immigration and policy ideas like increasing the minimum wage and enforcing it more rigorously, or using public procurement to require employers to train their workforce, has been left much more implicit than in the Conservative version.

If this is the key difference between the parties on immigration, then a more useful and honest political debate would be one that focused not so much on how we can control the supply of immigration – where the Tory ‘cap’ squares up against Labour’s points-based system – as on how we can influence the demand for immigration. This would be more honest not least because neither party’s policy on controlling the supply of immigration covers migrants from eastern Europe, who are the most obvious competitors for low-skilled jobs.

If the debate did shift onto this new ground, how would the two parties fare? The Labour view has vulnerabilities, mirroring the bigger narrative of which it is a part. Critics will argue that raising the minimum wage will depress job creation more than it stops migrant workers undercutting residents; they will say it is vague, unrealistic or dangerous for governments to talk about intervening to promote ‘good’ jobs over ‘bad’ ones, just as it is to talk about intervening to promote ‘good’ companies over ‘bad’ ones. But these are arguments Labour needs to win anyway.

At the same time, the vulnerabilities of the Conservative argument look even more serious. Even if welfare reform is successful – which is a big ‘if’ – the scale and pace of the reforms mean they will not have a big effect on the demand for immigration during this parliament. Moreover, the reforms are not geographically well-targeted as far as immigration is concerned: the places where chronic welfare dependency is concentrated are not typically the places where local jobseekers have to compete for jobs with large numbers of migrants – indeed, they are often places where there are not any jobs, and therefore no migrants either.

So neither party’s view will convince voters easily, especially given the depth of distrust on the issue. And winning this argument is only one part of what Labour needs to do: equally important will be rethinking how it deals with the sense of unfairness around the allocation of social housing and benefits to newcomers, and engaging properly – as the blue Labour project started to do, before Maurice Glasman drove it off the rails – with the debate around the impact of immigration on our culture and way of life. But the debate over immigration, jobs and wages is the right place to start: it fits with Labour’s wider political and economic narrative, and though it is harder work than jumping on the next border scandal, the potential pay-off could be far greater.

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Matt Cavanagh is associate director for UK migration policy at IPPR

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  • Jill Rutter

    Matt Cavanagh is right – influencing the demand for migrant labour needs to be part of progressive policies on immigration. I am convinced that absence of affordable and flexible childcare has a greater role to play in increasing the demand for migrant labour than Government acknowledges. The majority of migrant workers are young and childless. But for a UK-born parent Daycare Trust research suggests that the average nursery now costs about £4.90 per hour and much more in London. Moreover, 40 per cent of jobs involve working outside normal office hours, when formal childcare is rarely available. So it isn’t really surprising we need migrant workers, particularly in the retail, catering, health and social care sectors, which involve the most atypical hours working and which often have the highest concentrations of migrant workers.

    A vision of free universal and flexible childcare would have many benefits!

  • Ryszard

    We miss the whole point here – much of the opposition to immigration is aimed at people with a 100% entitlement to work here – A10 nationals. Unless and until we address this issue, we will only ever tinker on the margins of this issue.

    In actual fact, personally I am all in favour of A10 immigration, it’s only fair if beetroot faced English pensioner migrants can retire to the Costas in Spain ‘because there’s too many immigrants in Britain’ – oh, the sweet irony – then this is the logical corollary. And our migrants at least pay taxes, NI, rarely claim benefits and actually perform a useful purpose within the country.

    Our mission is a mission to explain, the right of the party and Blue Labour in particular run scared of white working class prejudice and would rather shift the party to the right on this issue than to challenge and inform.

  • Ryszard

    We miss the whole point here – much of the opposition to immigration is aimed at people with a 100% entitlement to work here – A10 nationals. Unless and until we address this issue, we will only ever tinker on the margins of this issue.

    In actual fact, personally I am all in favour of A10 immigration, it’s only fair if beetroot faced English pensioner migrants can retire to the Costas in Spain ‘because there’s too many immigrants in Britain’ – oh, the sweet irony – then this is the logical corollary. And our migrants at least pay taxes, NI, rarely claim benefits and actually perform a useful purpose within the country.

    Our mission is a mission to explain, the right of the party and Blue Labour in particular run scared of white working class prejudice and would rather shift the party to the right on this issue than to challenge and inform.

  • Rob

    Matt, you have argued here, in The Guardian and elsewhere that immigration is a “good thing”. You deny that mass immigration has driven down wages – surely the first time in economic history when a massive increase in supply (of labour) is claimed to have had no effect on price – wages.

    Until the left understands that supporting mass immigration is not at all progressive, as i argued here http://labourlist.org/2010/10/labours-immigration-pains/
    – the Labour party will have no credibility with the electorate and we will be not regain our lost voters.

    It wasn’t a “perception that we lost control of our borders; it was true. You cannot untangle the web of immigration, jobs and wages, they are interlinked. The problem is that too many on the Left, like you, still fail to understand this.

    • Ryszard

      I don’t think Labour or indeed the left of Labour support ‘mass immigration’ – no matter what the redtops or the Daily Heil/Express say. It is one of those myths that constantly goes unchallenged that New Labour planned all along for 1,000,000 plus A10 nationals would come to the UK, when the original estimated figure was around 50,000 (and the same newspapers would still be screaming like bats even with this figure – remember the fuss about the numerically less Ugandan Asians?).

      We haven’t – and never did – ‘lose control of our borders’. Most A10 nationals give far more to the UK state than they ever receive (or will ever receive back).

      One of the main problems in the UK is the fact that with a (cough) ‘unofficial’ economy the size it is and that is so easy to access and so badly policed, illegal immigrants have a clear incentive. And the very fact they are illegal immigrants means they are difficult to police.

      That is why we have so many Afghanis/Eritreans/etc wanting to come over, safe in the knowledge they can probably find cash in hand work somewhere. Until the country cracks down effectively on this area – not very sexy, and requiring a lot of work and resources, the real problems will not be addressed. Meanwhile people will whinge they no longer can buy cheap Indian food/have their car washed cheaply/have their offices cleaned cheaply – when the very fact they do is due to dodgy firms using and exploiting illegals.

  • end of term report

    well said Ed !

  • Anthony Sperryn

    This comment posted by Anthony Sperryn

    There are a lot of valid points made in previous comments on the article.

    It is saddening how often governments follow economic policies that are, in essence, out of date and which are subsequently discredited.

    New Labour was no exception to this, with its policies being driven by one dominant personality.

    In it heyday, New Labour continued with the shock therapy given by the previous government to the British economy and relied on the theory of free markets and light-touch regulation to see it through. This treatment was aggravated, with detriment to New Labour’s popularity, by its giving free rein to globalisation (rather than alleviating its impact) and neglecting its own constituency in the UK (despite the handouts it provided).

    The free rein given to globalisation included, and still includes, a level of immigration such as to disturb the social ecosystem. The alleged need for immigration arises to a large extent from inappropriate, or inadequate, education in the UK and lack of training, but also the disincentive effect of the UK’s poverty traps and the effect of the City (a by-product of this being that the UK has become a tax haven for the rich, with the poor increasingly being excluded).

    The over-riding responsibility of a government has to be the actual well-being of its own people, not to abstract concepts, such as free markets or international capital.

    The reason for not giving too much weight to the latter is, metaphorically, that we live in a world where not everybody plays cricket and even quite a lot of those who do play cricket don’t play fair, but seek to manipulate the results. If we play fair and others don’t, it is us, in the UK, who suffer, as we already have.

    With regard to the specific matters of (1) the wrong form of capitalism and (2) the allegation of welfare dependency, I would like to comment briefly. I’ll add (3), where economics is going.

    (1) Yes, but the UK is trapped in or by a web of international agreements and institutions which hamstring its freedom of action. International agreement to change things would be desirable, but don’t hold your breath. Piecemeal alleviation (for the benefit of consumers, as is being promoted now by Labour) is one way of improving the situation. A major tightening of the laws on unfair contracts, fraud and misrepresentation would also be useful.

    However, business will only pay wages it can get away with (that includes, in the long term, bank bonuses) and, in a market system, there is no safe haven for the incompetent. [to sort that problem out needs much, much more specific care for the individual than has customarily been provided in the UK. This may cost a lot, at least in the short term.]

    (2) Means-testing has led to diabolical poverty traps.

    If only Labour would say that the only welfare reform it will support would be one such as fixed the highest marginal rate of benefit withdrawal and taxation and NI charged so that it was never, ever going to be higher than the top rate of income tax (ok, and NI), it might regain much more support (because it would be seen as being fair. It might also go a long way to defeat the myth of the benefit scrounger, because incentive to work would be created).

    It is ludicrous that the Conservatives should plead for lower top rates of tax for reasons of incentives, while ignoring the hugely disincentive effects of the various poverty traps that exist.

    Tax benefit payment, by all means (but compensate for the effect on recipients with unavoidable expenditures). Raise benefits if you must and you may well have to, but it could be a good social investment. The concept of social insurance is valid and needs to be re-examined. It could well be organised at arm’s length from government (perhaps with subsidy) and include a sovereign wealth fund as support.

    The idea that people can be priced into work needs to be re-examined. The George Osbornes of this world can take on a job in the Cabinet almost whatever the salary offered, because they can rely on private wealth to support them. Correspondingly, at the other end of the income scale, a citizen’s income for all, with scrapping of various tax concessions and so on, would enable poor-paying jobs to be filled, without importing immigrants, and a lower level of unemployment in the UK to be achieved. Poverty traps would largely be eliminated.

    But people don’t like being squeezed so as to pander to international investors who are pumping what are mostly monopoly or oligopoly profits into tax havens. That squeezing is now including not just increased fuel bills, but higher pasty prices, and more expensive food, generally.

    (3) In fact, the economic game has moved on from what most politicians learned in their universities. What matters now are environment, sustainability, probably protection for infant industries and controls on capital movements and financial innovation, for reasons of stability. These should be the primary objectives of economic policy, not a dumb search for “growth”. Markets can work, but they need continuous supervision to work humanely.

    Achievement of competition, by regulation, of utilities and infrastructure appears to be a mirage and such industries ought to be mutualised, with stringent efficiency audits and capacity criteria imposed.

    Introducing all of the above would make for a better Britain, but not necessarily growth in GDP. The key point is to reduce the growing alienation of all but the “one per cent”. The government needs to care for the “ninety-nine per cent”, whoever they are and wherever they come from. but not necessarily for the teeming billions who don’t live here, but who might like to come here.