Why immigration is the key to Britain’s economic future

Under the banner of our “Vox Pop” series, IF supporter Tom Hannah takes on the most contentious issue of the EU referendum, and makes the intergenerational caseIF_Blog_Vox_Pop_Retro_Mic_logo_revised

For the past few years, immigration has been a fiercely debated topic in British politics. Immigration dominated the election campaigns of 2015 and has been central in the EU referendum debate. If there was one topic that embodied the buoyancy of British democracy it would be immigration. It seems everyone has an opinion, but are these opinions rooted in fact or dogma?

The political consequences of Britain’s ageing population

There is no escaping the fact that Britain has an ageing population; over 11.6 million people (17.8% of the population) are aged 65 and over, and 1.5 million (2.3% of the population) aged 85 and over. Birth rates in Britain are increasing; however, they are nowhere near the levels of the 1950s and 1960s. Britain is facing a fiscal crisis: by 2026 8.9 million more people will be of retirement age, whilst only 6.6 million will enter the jobs market. When you take into account that around 30% of these young people will choose to go to university, there will be a deficit of over 4 million working age people by 2026. This is a significant decrease and will inevitably have a huge effect on tax income, and national spending. Not only will spending on pensions increase, but also the NHS and benefits to the elderly.

Older populations have been ring-fenced from severe austerity cuts in recent years; this isn’t a party-political issue, it’s just plain political. Why would you dissuade the majority of the voting population from supporting your party by cutting pensions, or other benefits such as the winter fuel allowance? Based on recent political trends it is fair to say that the state pension rate will not change, if anything it will increase. Currently the government spends around £108 billion on pensions, which is a significant proportion of government spending; in the future we are going to see even more money spent on pensions, which has the potential to damage the interests of younger people in Britain.

Potential tax burden for the young

With a declining working population, we have to work out who is going to foot the bill for the increase in government spending. One method of paying for our pensions bill would be to increase tax revenues; we could raise capital gains tax, V.A.T, income tax or any number of other taxes. This would put a greater strain on an already disconsolate Generation Y (those born in the 1980s and 1990s), who already suffer from shrinking job opportunities and lower real wages, but it is a solution. Alternatively, we could cut spending on pensions, but, as discussed above, there is no political incentive to do this.

On the other hand, we could increase the numbers of working-age adults through immigration. With more people working, the pension burden would be spread across a greater number of people, which in my eyes is a fairer option. Over the past five years Britain’s net immigration rate has averaged around 240,800 per year – in order to plug this gap in the working population, it would need to increase to 418,900.

Opponents to immigration have often claimed that immigrants are a strain on public resources; they take up school places, hospital beds and housing. Nevertheless the economic contribution immigrants make to the coffers of the Treasury outweighs the perceived reliance on the state that is so often cited. With the increased tax revenues we can build more hospitals, more schools and more houses. It is improvident to blame government failures on working people. We should be blaming consecutive governments for allowing the housing stock to deplete to such astonishingly low levels and for underinvesting in our education and health systems, not immigrants who have simply moved to Britain to contribute and work.

The necessity of immigration

It is beneficial to both Generation Y and the baby-boomers to encourage immigration. The baby-boomers will have economic security (they can be safe in the knowledge that their pensions will not be cut), whilst young people will be able to save for the future and not be too burdened by tax in order to pay for the pensions of a much larger generation. Unfortunately however, there is a perennial shortsightedness in long-term economic planning within Britain. Parsimonious governments have neglected long-term investment in Britain’s future and have burdened hard-working people through austerity. Catchy headlines have distracted us from the economic realities of immigration.

We need immigrants and should be welcoming our international brethren with open arms. Instead of being aloof we should be amiable; instead of fostering hatred we should be encouraging hope, and most importantly we must not obfuscate the issue of immigration with disingenuous claims about the role of immigrants in society.