Migration and growth. There are of course many non-economic arguments about migration and many arguments for increased migration other than for promoting economic growth. However, as fiscal debates about blackholes and doom loops rumble on, migration has found itself at the heart of the growth conversation. Last week, the Confederation of British Industry (CBI) held its annual conference, with both the Prime Minister and Leader of the Opposition using keynote speeches to present their vision for business and growth. A week on from the Chancellor’s Autumn Statement, anxiety still appeared to run high among business leaders, with the CBI’s chief UK Policy Director, Matthew Fell, warning of the impact of labour shortages on growth. Fell suggested that as the country was “running out of firepower on both fiscal and monetary policy”, the easing of migration rules may be the key to plugging the labour gap, meeting demand and spurring on growth. The number of job vacancies now stands at 1,225,000 according to the ONS which is 54 percent higher than before the pandemic. The CBI has called for the Shortage Occupations List (SOL) to be extended which would mean that visa restrictions would be eased for a wider range of positions. 

  • GDP per capita. In many ways, it makes logical sense that more immigration to the UK during a labour shortage should lead to growth, therefore a much-needed boost to living standards. However, while there is little doubt that plugging these labour gaps with migration would increase the size of the economy, it is not guaranteed to provide a better standard of living, argues the LSE’s Alan Manning.  Too often, Manning argues, the calculation of whether immigration boosts growth relies too heavily on GDP rather than GDP per capita. 
  • Migration and productivity. Several studies have actually found immigration to have a positive effect on GDP per capita as well as GDP. Many of these studies attribute the benefits of immigration to its effect on productivity, with some studies finding that the marginal migrant is around 2.5 times as productive as a UK-born worker. Another suggests that one percentage point increase in the migrant share results in a 1.6 per cent increase in total factor productivity (the total outputs relative to the total inputs used in production of the output).
  • Low-skilled vs. high-skilled migration. It is not necessarily just “high-skilled” migration that has a positive effect on migration, suggests former Cabinet Office chief economist Jonathan Portes who argues that “a more liberal immigration system overall, even one that is not solely focused on high-skilled workers, may boost productivity”. The TUC has argued against a points based system which preferences high-skilled workers, suggesting that “restricting the number of visas available for low skill jobs will increase shortages in key public sector roles”.
  • Training. When it comes to tackling labour and skills shortages, migration is often framed as the antithesis of training, in which migrants fill the gap left by a skills shortage among UK-born workers. In his speech to the CBI last week, Keir Starmer advocated for “a clear plan for higher skills and more training”, in place of the UK’s current “immigration dependency”. (it is worth noting that Starmer stopped short of saying that he thought overall migration should fall, saying that Labour would be “pragmatic on the basic lack of people”). However, a study by Francesco Campo (King’s College London), Giuseppe Forte (University of Oxford) and Jonathan Portes (King’s College London) found no evidence of migration having a negative impact on the training of the UK-born workforce. It found that, at local authority level, a one percentage point increase in the migrant share is associated with a 10.1 percentage point increase in native workers’ training. 
  • But, there must be investment. The CBI frames looser immigration policy as an antidote to a dearth of fiscal and monetary policy options. However, migration can only be successful if coupled with stimulus and investment, according to the TUC. “The way to tackle concerns about immigration isn’t by further restrictions and exploitative new schemes, but by addressing the root cause of low pay, insecure contracts, undercutting and discrimination workers are suffering, along with cuts to public services and lack of skills training”, it argues. 

Net migration. Net migration has hit a record of 504,000 in the year up until June 2022, an increase of 331,000 on the previous year. The net migration of non-EU nationals was 509,000, which is three times as high as the previous year while the net migration of EU nationals was -51,000. In large part this increase is due to an increase in arrivals from countries where the UK had established specific schemes in order to provide refuge for those fleeing conflict zones or political repression, specifically Ukraine, Afghanistan and Hong Kong.  From June 2021 to June 2022, 89,000 Ukrainians, 76,000 Hong Kongers and 21,000 Afghans arrived in the UK. And while asylum applications are at their highest for 32 years, nearly 100,000 people are waiting more than six months to have their initial claims processed. 

The political landscape. Despite the CBI’s calls for looser immigration policy, both Labour and the Conservatives have taken a much tougher stance with the Prime Minister arguing that immigration should fall and Keir Starmer warning of the UK’s “dependency” on migrant workers. 

  • Public opinion. Starmer and Sunak may be at odds with the public on this issue, however, with polls suggesting that the public’s concerns over immigration have waned since the 2016 Brexit referendum. A new paper published by the IPPR which analyses a range of attitudes data (such as the British Election Study and the Ipsos immigration tracker) suggests that “the public has become strikingly more positive about immigration across a range of indicators”. “While around 44 per cent of the public saw immigration as a top priority in 2015, the average for 2022 so far stands at only around 9 per cent”, the paper suggests.
  • Support for economic migration. This positive shift in favour of immigration appears, at least in part, to be linked to labour shortages, with public support varying for different types of immigration. The IPPR analysis found that the strongest support was for the migration of nurses and doctors but also that there had a been a strong increase in support for “relatively low skilled professions where substantial labour market pressures exist, such as restaurant and catering staff, construction workers, and fruit pickers”. 

The alternatives. Is the CBI’s suggestion of expanding the Shortage Occupations List the answer? This suggestion is backed by the IPPR, which has advocated for “opening up the list to allow for the potential inclusion of occupations of all skill levels” while also “redefining the shortage occupation list as a ‘priority occupation list’”. The IPPR also suggests that the immigration system could be used to boost workers’ rights more generally. For example, it could require employers to pay the real living wage to all their employees in order to gain a sponsorship licence and require sponsors to inform migrant workers of their employment rights.

  • No return to free movement. One idea which is not coming back is a return to free movement of labour. Despite arguing that the Brexit deal has to be ‘fixed’ and that forging a closer, less antagonistic, relationship with the EU would be Labour’s policy, the party have also made clear that free movement would be a ‘red line’.  
  • Safeguard against low pay. As well as ensuring that employers pay the living wage, immigration policy could also boost training and safeguard against low pay of migrants. Currently, employers can pay migrants less for roles on the Shortage Occupation List. However, businesses who use this scheme could be forced not only to demonstrate that they pay staff a living wage, but that they will invest in staff training and commit to increasing migrant wages over time, argues the IPPR’s Marley Morris. Morris has also set out how regional mayors can use their skills remit to promote regional growth and integration of migrants. 
  • Allowing asylum seekers to work. Another proposal that could help plug the skills shortage is to lift the ban on employment for asylum seekers who are waiting for their claims to be processed. Chief Executive of the Legatum Institute, Baroness Stroud, has argued that this would be a “common sense” change, with the ban currently costing the taxpayer an estimated £210m a year and leaving “businesses up and down the country without extra hands at a time of record job vacancies”. The idea has support across the political spectrum, including from prominent Conservatives such as Dominic Raab and Steve Baker.
Weekly Updates


Future Regulatory Framework. The Government has u-turned on its proposal for a controversial new “intervention power” to allow ministers to overrule financial regulators. Finance Innovation Lab’s (FIL) Jesse Griffiths warns that “the most controversial proposal” and “biggest threat to regulatory independence” remains: a goal for regulators to promote the ‘international competitiveness’ of the UK’s financial sector. (Read FIL’s explainer and our previous Digest on the Financial Services and Markets Bill for more.)

Financial instability and ‘collateralised fund obligations’. The FT’s Kaye Wiggins reports that ‘collateralised fund obligations’ (CFOs), “a private equity variant of “collateralised debt obligations” which contributed to the 2008 global financial crisis, are “one illustration of how post-crisis regulation, rather than ending the use of esoteric structures and risky leverage, has shifted it into a quieter, more lightly regulated corner of the financial world.” She explains how CFOs work and why they are a risk to financial stability.

Paradigm shift

Who’s advising who now? Guido has listed how think tank representation in the new round of Special Advisers drafted in has changed between Truss and Sunak’s premiership. Policy Exchange has six alumni advising cabinet members, followed by the Centre for Policy Studies (4) and Onward (4). The Institute for Economic Affairs still has 3 alumni, but the Taxpayers’ Alliance and the Adam Smith Institute are less represented than under the Truss administration.

Public-Common Partnerships. NEF Associate Fellow Frances Northrop interviewed Bertie Russell, Kai Heron and Keir Milburn on the development of Public-Common Partnerships and “how they fit into the wider movement for the democratic economy” for Stir to Action magazine.


Speeding up the planning system. Britain Remade’s Sam Dumitriu explained why the planning system delays the delivery of major infrastructure projects such as nuclear power stations or offshore wind farms. He argues that delays in planning locks the UK into polluting technologies for longer and the risk of legal challenge deters investment and suggests creating “clean energy zones where green projects would get fast-track approval and wouldn’t be forced to carry out extensive environmental reporting”, which is currently being proposed in the EU.


Windfall tax on mining industry. The Global Alliance for Tax Justice is calling for excess profit taxes in the mining industry, as “the sector has long had a history of generating super-profits through colonial plunder, financial secrecy and aggressive financial reporting.” Recently the Serious Fraud Office fined the UK subsidiary of Glencore Energy ~£280m after it was convicted of multiple charges of bribery in an attempt to gain preferential access to oil supplies in Africa.

“Higher taxes are the new normal”. The IFS’s Paul Johnson predicts a permanently higher tax take (above 33% of national income) in future, which he argues “we can live with but only if we secure serious reforms…If tax is to stay high it is more important than ever that the tax system is both equitable and efficient.” 

Amazon paid no tax due to ‘super deduction’. The Make Amazon Pay campaign has been highlighting that Amazon offset its expenses against its profits in 2021, which resulted in the company paying no UK tax, whilst “employees’ real wages are dropping despite record revenues – and Amazon’s global carbon emissions are increasing.”

Welfare and public services

Welfare spending and declining public health. The OBR has released a supplementary forecast documenting the upward revisions in welfare spending outlined in the Autumn Statement. The OBR now forecast spending to rise by £19bn between 2023-24 and 2026-27, around half of which is due to uprating benefits with higher than expected inflation, and the remainder is driven by poorer health of the elderly and worse mental health of younger people. They predict that up to 14% of the working age population will be in receipt of disability benefits by 2027-28 due to declining public health.

Messaging for social security reform. On Road Media has developed a messaging guide on how to talk about social security more effectively, produced in collaboration with a commission led by people with lived experience of the current social security system.

The Transformation of British Welfare Policy event. IPPR will be launching Tom O’Grady’s book on welfare reform with an event today discussing “the roots of public opinion on the welfare system, the motives of politicians who have revolutionised it, and the ways in which the system and its users have been spoken about it.”

The struggles of unpaid carers. Research by Which? has found that nearly one third of single parents are skipping meals due to rising food costs. (The ONS reports 16.4% food price inflation in October - the highest level since 1977). Carers UK is calling for a National Carers Strategy for England: “it’s critical employers raise awareness of caring, identify carers in their workforce and provide flexibility, to support more carers to continue in employment where they wish to”.

New Winter of Discontent. Health and defense officials are drawing up plans to use armed forces personnel to staff roles in hospitals as they prepare for a winter beset by strikes. The Royal College of Nursing announced their strike last week over low pay - the Times’ Henry Zeffman and Chris Smyth report that HMT will not negotiate new pay agreements, arguing that it would fuel inflation. (A recent paper from the IMF concluded that the risks of a wage-price spiral taking hold have been exaggerated.)

Energy and inflation

Disability and the cost of living. Scope has published a report on the impact of rising cost of living on disabled people. They argue that disabled people faced an average extra cost of £583 per month before the crisis and make policy recommendations for government, energy and water regulators and energy and water companies.

Energy Price Cap Rise. Ofgem has confirmed the Winter Energy Price Cap will rise to £4,279, but the Energy Price Guarantee (EPG) is still £2,500 until April, meaning the state is paying the difference for most people costing ~£5bn a month. Cornwall Insight calculated that the energy support package could now cost £42bn over 18 months. The End Fuel Poverty Coalition argue that 7m homes are still in fuel poverty despite the EPG and “the injustices in the energy market remain with many paying much more for energy unit costs - and racking up debts due to high standing charges.”