Friday 21 December 2018 8:26 am

The immigration white paper is a case study in self-sabotage

Philip Salter is founder of The Entrepreneurs Network.

Philip Salter is founder of The Entrepreneurs Network.

If the many-worlds interpretation of quantum mechanics is true, there are alternate worlds in which Ed Miliband beat David Cameron in 2015 and the Brexit referendum didn’t happen.

In these worlds, the core of Wednesday’s immigration white paper would be a laudable liberalisation of non-EU migration to the UK.

Instead, it’s a massive blow to our economic competitiveness.

It’s not all bad, and non-EU migrants will welcome the proposed reforms. The abolition of the cap on high-skilled workers is long overdue. Although there are strong economic and moral reasons to be unashamedly supportive of all immigration, British citizens benefit to a greater extent from the best and brightest.

Scrapping the resident labour market test also makes sense. The need for employers to first prove that a candidate cannot be found within the resident UK market is bureaucratic and ultimately unenforceable. All it does is slow businesses down in employing who they want.

And the modest extension of post-study leave for graduates from four months to six months is at least a step in the right direction – but it falls well short of what is needed.

We are still out of step with our competitors in higher education – notably the US, Canada, and Australia – which all allow graduates to stay at least a year after graduating and have no minimum salary thresholds.

While the rest of the world rightly believes that they will reap the rewards of international graduates staying in their countries, our government lacks the confidence to trust British universities, despite us having many of the best in the world.

Any positives, however, pale into insignificance compared to the dramatic restrictions on EU migration that will come into force after Brexit.

The suggested £30,000 salary threshold to hire workers will hit cash-strapped startups hard, which currently incentivise many employees with less than this in the hope and promise of the realisation of a vision. Often this is done with equity to make up for comparatively low salaries.

In survey after survey, British business owners rank access to talent as the number one obstacle to growth. We all knew free movement was ending – that’s one thing that the Prime Minister has been clear about – but few expected such a damaging post-Brexit arrangement.

Let’s be clear: EU migrants are more likely to be entrepreneurial than native Brits, have a positive impact on productivity, and don’t have a negative impact on jobs or average wages.

Even though anyone can conceivably move here, in practice EU migrants are on average better educated and more skilled than natives. They are 45 per cent less likely to receive benefits and pay £1.34 in taxes for every £1 that they receive in state assistance.

The government admits as much in the depths of the white paper. It estimates that fewer EU immigrants will cost us £2-4bn over five years. But the damage will cut much deeper if it undermines the status of Britain as the uncontested hub for European entrepreneurship.

Even if entrepreneurs aren’t priced out of the market, requiring a job in advance will also put off prospective European founders who up until now have been able to experiment by working in UK startups before building their own business.

Ultimately, cutting off this flow will decrease Britain’s resident human capital, which will downgrade the country in the eyes of international investors.

Britain is still the best place in Europe to start and grow a company – just this week it was ranked the best country for business in a Forbes survey.

That’s unlikely to change, but politicians seem to be on a rampage of self-sabotage. The “botch-job Brexit” that we’re all suffering through and the growing potential of a Labour Prime Minister who makes Miliband look like a Thatcherite suggest that we might not be living in the best of all possible worlds.


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