A cap on migrant workers will hurt London’s economy

Published in the London Evening Standard (November 2nd, 2010)

David Caldwell arrived in London two years ago from Australia armed with a burning desire for success. An engineer by training, he launched an innovative technology company and today his hard work is starting to pay off with subscribers signing up in their thousands for his text message-based marketplace for getting small jobs done quickly.

But if this fledgling company flies into the stratosphere, the benefits will not be felt in this country. The jobs created will not be British. The employees will not spend their earnings in British shops. The wealth created will not go on British services.

For this young entrepreneur is a victim of the Government’s ludicrous immigration cap, so he is preparing to relocate from Shoreditch to Silicon Valley in California. He has been told he is not wanted here. So whether his firm turns out to be the next Facebook or merely a modest success employing a handful of people, we will all be the losers.

Ironically, I met him at an event hosted by Google to launch a report revealing the importance of the internet to the British economy. Two Cabinet ministers were rolled out to proclaim how the sector was vital to the growth of the nation. So why are we turning away the next generation of entrepreneurs, especially when private-sector expansion is so crucial amid public spending cuts?

The reason is simple: because the Conservatives, spooked by loud voices in the media and on the Right, came up with the concept of an arbitrary cap on numbers coming into this country from outside the EU to make it appear they had a policy on immigration. It will bring the figure for net annual migration below 100,000, they said, while fudging precise details.

It was the sort of gesture politics that makes some sense in opposition but turns out to be nonsense in government. Ministers say they get endless complaints about the policy whenever they meet businesspeople. It is unfortunate that the Liberal Democrats failed to use their bargaining powers to get it abandoned; they should have insisted it was scrapped in return for their humiliation over the proposed rise in university tuition fees.

Instead we are stuck with this daft idea, which has been grafted on to Labour’s similarly foolish points-based system of entry. This insular new world was pioneered by Australia, where bureaucrats produced a five-kilo book that examined nearly 1,000 jobs before detailing the 399 occupations that qualified for a skilled migrant visa, the 61 jobs felt to be in short supply and four more separate lists for individual states.

This is the Kafkaesque situation we embraced as a consequence of the hysteria over immigration. The result is ambitious entrepreneurs are turned away but a rich person who has made millions gets in, even though start-ups are the motor of economic growth. And we have the contortions of a coalition that declared war on bureaucracy and accepts that government is, by nature, sclerotic, slow-moving and inefficient, employing an army of officials to dictate to businesses who they can employ.

So far we have only a temporary cap, although this is already causing enough disruption. Ten days before the end of October, the guillotine fell: 600 visas for highly-skilled migrants had been handed out so no more could be issued until yesterday. Tough luck if your business urgently needed that IT consultant from Bangalore to win a contract. Rules is rules.

Meanwhile, some unfortunate civil servants — who must almost wish they were victims of the Whitehall axe — are grappling with how to make the permanent cap work. The Prime Minister is hinting at softening restrictions, while the immigration minister is talking tough. But such is the cap’s ultimate inflexibility that any exceptions will only increase pressures elsewhere.

Already, millionaire footballers are deemed so essential to our well-being that they are exempt, so if Chelsea find a successor to Didier Drogba they can get him into the country. Engineers and scientists are seemingly less important, so even Sir Harry Kroto, a Nobel laureate in chemistry, suffered the indignity of having a researcher refused permission to study at Cambridge and ending up in the US.

The fact that two British-based winners of this year’s Nobel Prize for physics were born in Russia underlines the stupidity of this stance.

Then there is the looming chaos for universities. The definition of a migrant is someone who stays in the country for more than a year, so it includes most overseas students. But there are 214,000 students in Britain from outside the EU, and they bring in more than £8 billion in revenue. Restrict these numbers, especially when income has been slashed in the cuts, and there are real fears for the future of some universities. London would be especially badly hit.

The complexity is mind-boggling. It seems simple to shut down a few bogus language schools being misused by illegal migrants, for example. But as one Whitehall source said, how do we know which is bogus and which is being used to help brilliant Chinese mathematicians get up to speed in English before going to the LSE? And what about all those professors, since universities operate in a globalised world with one in 10 academics imported from abroad?

We should not forget the less glamorous sectors of care homes and hospitals. As the parent of a profoundly disabled child, the importance of overseas care staff cannot be overstated. They are the key to survival, since few Britons are interested in the long hours and tough work of caring for chronically sick people. Already agencies are reporting problems in filling posts, despite the economic downturn.

We live in a world in which we expect goods to move freely but not people. We live in a country in which we expect the right to live and work anywhere but don’t expect others to share the same dreams. We live in a society in which studies have shown immigration significantly boosts growth, prevents companies moving overseas and that migrants make the least use of public services. And we live in a city that has grown faster than the rest of the country for years, in part due to the immigrants who make it such a vibrant place to live.

Do we really want to impose a cap on this success?

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