Today
Sun 5 December 2021

Jonathan Portes explores how the Government’s offer of a home to those being politically repressed in the former British colony could mark a shift in the UK’s economy and immigration debate

“It is our duty. There can be no equivocation. These are British subjects with British passports. They are being expelled from their country which, in many cases, is the land of their birth. They are entitled to come here and they will be welcome here.’’

This was a noble sentiment from a Conservative Prime Minister, honouring the debts of Empire to people who had never set foot on British soil. All the more so for not being technically correct in a legal sense. As Enoch Powell put it, “their so-called British passports do not entitle them to enter Britain”, thanks to the overtly racist Commonwealth Immigrants Act of 1968. 

The 200,000 or so East African Asians who came to the UK in the late 1960s and 1970s, before and after Edward Heath’s grand gesture, generally prospered. But that was far from obvious at the time. Powell was not alone in his opposition and much of the media reaction was openly racist.  

History does not repeat itself but it rhymes. The decision of the current Conservative Government to offer entry – and ultimately a path to citizenship – to the almost three million British National Overseas passport holders from Hong Kong, and their dependents, is at least as important and dramatic as that of Heath. 

And it marks a sharp break with the legacy of Margaret Thatcher, whose well-documented prejudice against non-white immigrants meant that she was only prepared to grant entry rights to a small and select group of Hong Kongers when the British agreed to hand back the territory – even after the Tiananmen Square Massacre.  

Almost more surprising than the Government’s decision has been the lack of a political backlash – in sharp contrast to the previous episodes described above. As has frequently been noted, the Leave campaign during the 2016 EU Referendum was a successful coalition between two very different political tendencies: the more liberal (in both economic and social terms) advocates of ‘Global Britain’; and the more nationalist, protectionist, and, when it comes to immigration, restrictionist, ‘little Englanders’.  

For the latter, Brexit represented not just a rejection of freedom of movement within the EU but of immigration more broadly. This was manifested both in the openly xenophobic ‘Breaking Point’ poster by Nigel Farage’s Leave.EU campaign, and in the only marginally more subtle Vote Leave ones – which claimed that EU membership would mean a flood of migrants from Turkey, and perhaps, Syria and Iraq. 

Under Theresa May – who of course voted to remain in the EU – it was this faction that was in the ascendancy. The plan was for immigration policy after Brexit to result in a ‘levelling-down’, with both Europeans and non-Europeans subject to the same restrictive system.

But Boris Johnson’s Government has changed course significantly. The new system introduced on 1 January is a compromise: while it will indeed be much harder for Europeans to move here in the future, it will be somewhat easier for non-Europeans.


The Changing Immigration Debate

The Hong Kong decision builds on and extends – perhaps hugely – this tentative move towards a more liberal approach.

And yet, apart from the usual suspects – nativist conservatives who think that we have got far too much ethnic diversity already, the xenophobes of Migration Watch, and so on – there has been almost no opposition. 

Ironically, while it is easy to find die-hard Remainers on Twitter who claim that racist Brexiters will be very upset by an influx of ethnically Chinese people from Hong Kong, it is very hard to find any evidence that such reactions are, in fact, widespread. 

That doesn’t mean that we should take at face value claims that racist attitudes aren’t both widespread and intimately bound up with attitudes towards immigration – just that the picture is very different, and a lot more complex, than it was in the 1970s.

There has been a clear shift from overt racism based on skin colour – no longer respectable among politicians and mainstream commentators – to prejudice against Muslims, which has sadly become normalised through much of the media, The Times and Spectator magazine, as much as by the tabloids.  Through that lens, ethnically Chinese people and Indians, have – like Jews before them – graduated to the ranks of ‘good immigrants’. 

That changes the nature of the immigration debate. But, while I have much sympathy with the argument that we should not accept narratives that seek to draw an artificial distinction between ‘good’ and ‘bad’ immigrants, particularly on racial or religious lines, it does not mean that we should not argue for immigration – in particular refugee immigration, as here – as a potential force for good.

But, politics and historical precedent aside, what will it mean for the UK’s economy and society? 

The simple answer is that we don’t know and it isn’t under our control. The Home Office has made a brave – some might say foolhardy – attempt to forecast how many Hong Kongers might come here as a result, with a central estimate of about 300,000 people. But, with low and high estimates of 10,000 and 1,000,000 respectively, they are very much hedging their bets. 

And rightly so. When the new member states of central and eastern Europe, and the Baltic states, joined the EU in 2004, the UK chose to open its labour markets immediately to the citizens of those countries. Attempts to forecast migration flows proved highly inaccurate – partly because it was not anticipated that other existing EU member states would not follow our lead, and partly because it is just extremely difficult to forecast migration at the best of times. 

And predicting how many people would come from elsewhere in Europe – primarily for economic reasons, driven by relatively quantifiable factors such as relative unemployment and wage rates – was much easier than for Hong Kong, where the key driver will be developments in politics there, particularly whether political tensions escalate further and China intensifies its crackdown on pro-democracy activists. 

But if – and it is a big if – hundreds of thousands of Hong Kong residents do come to the UK, it has the potential to be transformative. 

Again, the Home Office has made a valiant attempt to model the impacts, projecting that the Treasury will benefit to the tune of about £2.6 billion over five years, with revenues increasing by nearly £7 billion, offset by more than £4 billion in extra spending on public services.

This is based on, and adds to, the existing evidence that immigration is likely to make it easier, not harder, to fund good quality public services for the rest of us. Similarly, although the Home Office doesn’t try to estimate the impact on overall economic output, wages or living standards, the very strong implication is that they are likely to be positive.  

These estimates are predicated on the fact that potential migrants from Hong Kong are likely to be relatively highly educated, with marketable skills, including speaking English. All of these are indeed advantages in the UK labour market. But they also miss the bigger picture. 


Making ‘Global Britain’ A Reality

Static calculations about additions to the population and the skilled labour force ignore the wider economic impacts on growth, productivity and trade.

A similar calculation, undertaken at the time of the arrival of the East African Asians, would probably have shown that they would have been expected to be broadly neutral – perhaps a slight negative. But that misses something about the dynamism immigration brings to the economy and labour market. 

There is plenty of evidence to show that immigration, and the diversity it brings, generates wider economic benefits: increased innovation, trade linkages and so on. 

And that may be more so for refugees, rather than less. As the experience of the East African Asians – who did better than most other immigrant groups, despite coming with little or nothing in most cases – shows, refugees are generally resilient and highly motivated to succeed in their new country. 

As I have observed previously: “All have necessarily left their home country under duress, all have self-evidently made it through to a place of safety, and all have experienced (at the least) very difficult transitions. We should clearly be cautious in predicting similar futures for current or future refugees, whether from Syria, Hong Kong, or elsewhere, but nevertheless, it may be that the commonalities are more important than the differences.”

And an influx of new, motivated people could be exactly what post-Brexit, post-COVID Britain needs. Brexit, and now the end of free movement, has meant a sharp drop in the immigration from Europe that has been such a driver of growth in the UK’s economy and labour market over the past two decades.  

Worse still, the impact of the Coronavirus pandemic – and the UK’s relatively poor performance, both in limiting the spread of the virus and in economic terms – has led to a large exodus of migrants, especially from London. Perhaps the UK’s success in rolling out vaccines mean that we will recover quicker than some of our competitors, and this will be reversed. 

But – particularly if, post-Brexit, Europeans feel reluctant to return or are barred by Home Office rules – there is a risk that our recovery, especially in the most economically dynamic and productive sectors and regions, will be held back by labour and skill shortages. 

Combined with the impact of new trade barriers with the EU, which are already beginning to take their toll, we could – after a brief, post-vaccine ‘sugar high’ of relief-driven consumer spending – face a long period of slow growth and economic stagnation. While the Government has talked a lot about ‘Global Britain’, the reality is that both Brexit and the pandemic have already make the UK considerably less open and outward-oriented, and threaten London’s status as one of the few genuinely global cities.  

So short of fantasy politics involving a near-term reversal of Brexit, it is hard to think of a policy that is better targeted at reversing that than the arrival of hundreds of thousands of new Britons, determined to create a new life here – but at the same time with very different backgrounds, personal histories and connections to most of the rest of us. Far more than a few economically insignificant trade deals, this could help make ‘Global Britain’ a reality.  

It is not only London that could benefit. Scotland, and to a lesser extent Wales, facing economic and especially demographic challenges, have waged a long and frustrating campaign to ensure that immigration policy is better tailored to their own needs. But here they can take matters into their own hands. 

Why not start now, in partnership with the existing communities in Glasgow, Cardiff and elsewhere, to invite Hong Kongers to relocate to those cities rather than to London or the south-east? 

None of these benefits are certain. But, at a time when we need all the cause for optimism we can get, this is a reason to be cheerful.

Jonathan Portes is Professor of Economics and Public Policy at the School of Politics & Economics at King’s College London

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