It’s time to salvage rational thought when we look at immigration plans for refugees

Priti Patel’s proposals to send illegal immigrants to Rwanda has sent the usual suspects into a veritable lather. Not since the peak days of the pandemic, have we seen such a number of people indulge in virtue-signalling.

Even the Archbishop of Canterbury has joined in, cornering the headlines on Easter Sunday. He seems to have rather forgotten that a key belief of Protestants such as himself is that everyone can speak directly to God. There is no need to go through the Church as an intermediary. Clearly, not everyone is getting the same message back as him.

On a more secular note, the question is raised once again of the role of immigration in an advanced economy such as the UK. Normally when immigration comes up, all rational thought goes out the window and our prejudices either way get the better of us.

It is often claimed that immigration, and hence an increase in the supply of labour, raises the growth rate of the economy – and everyone benefits.

On one level, this is true. In the mainstream model of economic theory, growth depends upon the growth in the labour force, increases in the amount of capital used to produce goods and services, and the speed with which new technology is taken up. According to this, immigration does raise the growth rate by expanding the labour force.  

But it is the growth per capita which matters to people, not the rate of growth itself. And an increase in immigration means there are more people to share in the growth.

If the skill levels of immigrants are higher than those of the current labour force and they are more able to embrace new technology, growth per person will indeed rise.

Indeed, this is what the government is trying to promote with its policy of visas for skilled workers. But this is completely different to the consequences of a policy of embracing mass immigration.

A further argument often invoked in favour of immigration is that migrants tend to be young.  Given our ageing population, this helps to provide the resources needed to support the elderly. The trouble with “replacement migration” as a solution is that immigrants themselves grow old. They have to be supported by the next generation of workers. In other words, if we follow this model, we need a continuing flow of new immigrants.

Overall, then, opposition to large scale immigration does have a basis in rational economic argument, especially for the less skilled and lower paid.

The Rwanda proposals are based on a fundamental proposition in economics. Namely, when the set of incentives which people face is changed, behaviour is changed. People react to changes in incentives.

Asylum seekers already face what many would regard as serious disincentives to try to enter the UK illegally. After a long and fraught journey overland to the French Channel ports, they risk a perilous sea crossing.

Even so, the lure of the flexible British labour market, in which it is easy to integrate compared to EU ones, outweighs the potential costs.

The Rwanda proposals are essentially a practical application of economic rationality. They represent a sharp increase in the costs of attempting illegal entry into the UK.  

The mere possibility of being processed in Rwanda represents a marked shift in incentives. In practice, very few need to actually be sent there in order to generate the desired response.

As published in City AM Wednesday 20th April 2022
Paul Ormerod
Image: Wikimedia

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ALEX O’BYRNE

Associate

e: aobyrne@volterra.co.uk
t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.

ELLIE EVANS

Senior Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.