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Seven days will decide if UK’s borders are open or closed
Bloomberg | May 14, 2025 2:20 PM CST

Synopsis

Keir Starmer unveiled a tough new immigration plan to counter Reform UK's rise, balancing border control with economic needs. He criticized past high migration for failing to boost growth, targeting care-worker visa reliance and proposing domestic labor solutions. While pushing EU youth mobility deals, Starmer must juggle growth, public services, and voter concerns over illegal immigration and economic strain.

On Monday, Keir Starmer unveiled a tough new approach to immigration, designed to stem the precipitous rise of foreign arrivals on UK shores in recent decades. His announcement should be seen through the prism of the threat posed by Reform UK, the populist outfit led by Nigel Farage which currently leads national opinion polls and won a tranche of recent local government elections largely by exploiting fears about the cultural threat from untrammeled immigration.

Exactly a week after his policy launch, the British prime minister will play host to European Union leaders at a summit aimed at achieving a post-Brexit “reset,” heralding a potentially warmer relationship following the departure from government of the Conservatives who oversaw Britain’s exit from the bloc.

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On the agenda, the possibility of a form of youth mobility pact, which proponents view as a welcome prospect allowing young Brits and their European counterparts to take part in the rite of passage of living and working abroad for a year or so. Critics, however, regard such a project as the return of free movement and therefore a betrayal of Brexit.

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At the time of writing, it’s unclear whether any such agreement will make it into whatever emerges from the reset discussions. While diplomats I have spoken to are optimistic, the EU’s moves to throw unrelated matters into the mix, such as fishing rites and the status of Gibraltar, coupled with UK paranoia about being seen to be canceling Brexit or loosening borders, means a deal may be some way off yet.

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The debate highlights an age-old battle between the Home Office and Treasury. At root is the question of whether Britain should be a free-trade nation embracing globalization or a citadel protecting borders to ensure jobs, services and housing are reserved for British workers.

For much of the last two decades, it’s an argument the Treasury has won. But by articulating a sense in the working-class communities Labour used to call its heartlands that Britain had lost control of its borders first to faceless Eurocrats and now to immigration, Farage put his thumb on the other side of the scales.

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The truth is that the government needs to boost its coffers to provide the wages and skills necessary to reduce the need for overseas workers. And that means growth, which in turn dictates that Starmer can’t allow electoral concerns about the threat from Reform to undermine what’s best for the economy.

It was the rhetoric that proved the most eye-catching aspect of his plan. Describing the largely unchecked nature of rising legal migration in recent decades as a “squalid chapter,” the PM warned that “we risk becoming an island of strangers,” drawing comparisons with an infamous 1968 anti-immigration address by the Conservative politician Enoch Powell, known as the “Rivers of Blood” speech.

But it was a declaration buried amid his proposals that may prove the most consequential, upending as it did decades of Treasury orthodoxy by rejecting the notion that high immigration automatically brings economic benefit. Pointing out the UK’s sluggish growth compared with fellow G-7 nations, it stated: “Despite the significant increases in long-term migration over recent years, economic growth and living standards have stagnated.”

It’s true that the influx of low-skilled workers and generous family-migration routes have done the UK economy few favors. To take one example: The white paper takes aim at the care-worker visa, an innovation of Boris Johnson’s Conservative government, for fueling an overreliance on ready supplies of cheap overseas labor in this sector.

But to fill these jobs with homegrown workers from 2028, as it has said it will do, this government will need to persuade Brits that it will be more lucrative for them than staying at home on benefits or taking a less strenuous minimum-wage job in a supermarket. That’s not straightforward when nearly 10 million people of working age are in receipt of welfare, and the minimum wage usually rises every year, often above the rate of inflation. (Home Secretary Yvette Cooper has said the government will soon introduce a “fair pay” regime for care staff but has yet to set out how much this will cost.)

Boosting care-home wages to rates high enough above the minimum wage of £12.21 ($16.23) an hour to persuade UK workers to take these jobs won’t come cheap. Training unskilled Brits so they can replace overseas employees in trades such as construction and engineering will also be expensive. Right now, it’s money the Treasury doesn’t have.

That explains why Chancellor of the Exchequer Rachel Reeves is said to be pushing for a youth mobility agreement with the EU, and similar programs such as the Indian trade deal, announced last week, which made it easier for Indian employees to work in the UK and is designed to fuel growth.

They are measures viewed with suspicion, though, by Labour MPs in the north of England and Midlands — a group that includes Cooper — where the Reform threat is most alive, who see mixed messaging and fret that they can’t sell the most contested options.

They shouldn’t underestimate the British public’s capacity to see immigration as something complex and sophisticated, and migrants as individuals rather than a monolithic block.

A poll published Monday by Ipsos found that while two out of three believe the numbers entering the UK are “too high,” voters are more open to the arrival of skilled workers (seen positively by 54% and negatively by only 11%), students (34% to 19%) and those from the EU (33% to 26%), with the remainder saying they viewed them neither positively or negatively.

That suggests giving a teenager from Italy the right to work for a year as a waiter in a restaurant that’s been struggling since Brexit to hire staff isn’t a problem for most Brits. Any hesitation could probably be assuaged by the thought of the wonderful opportunities open to their children and grandchildren who could in future live and work for a spell in Rome or Vienna or Madrid.

UK voters are primarily concerned about illegal arrivals crossing the Channel on small boats, about the huge cost of housing large families headed by adults with no means of support and few skills, and about the strain on chronically underfunded public services of a net immigration rate of 900,000 a year in a country of less than 70 million.

That means Starmer is right to address immigration by introducing a system that, in his words, is more “controlled, selective and fair.” But the best way for Labour to beat Reform is to materially improve voters’ lives. And the only way to do that is to deliver growth.


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