ANALYSIS: UKIP 2015 General Election manifesto
By Michael Ben-Gad, Professor of Economics
The main policy on immigration
in the UKIP manifesto is a reduction of the number of immigrants each year to
50,000, with most admitted on the basis of an Australian-style point system.
Having a policy on the number of immigrants allowed in is far more sensible than the current policy of trying to control net migration. And the Australian system is generally well-regarded for the way it ensures that those who arrive are most likely to contribute to the country’s economy.
The number of 50,000 is extremely low and, given the current flow of emigration, means a rate of net migration of negative just over one quarter of a million people per annum. Given the rate of natural increase, the population would be shrinking and also ageing very rapidly.
Interestingly, though UKIP does make some reference to the issue of labour market competition, the bulk of the argument seems to have shifted to the issue of how the immigrants overburden public resources. The evidence for this is not presented and belies the work done by Dustmann and Frattini (2014) on immigrants – particularly from the EU – and their net contributions to the Exchequer or my own work on immigration and debt. Numerous studies on the effects of immigration on the labour market also fail to find significant effects.
One other aspect of the manifesto is that immigrants would no longer be automatically entitled to treatment on the NHS – or most other benefits – but would have to purchase insurance, all the while paying the full amount of tax. This is effectively a heavy tax on immigration.
Of course, all this is premised on what UKIP calls `Brexit`, the UK exit from the EU – without this, there is indeed no possibility of reaching their targets. The manifesto makes a strong argument that the EU is a far more extensive project than it was in 1974 when the UK joined and that EU integration has gone much farther than most British people anticipated or perhaps want.
If the UK were to leave, the EU would seek to punish it by making the break as uncomfortable as possible.
There is much less devoted to explaining the costs of leaving. There is an implicit assumption that were the UK to leave, the EU would happily allow the UK to retain many of the benefits of membership and relinquish all the costs. This is a rather heroic assumption, certainly not the experience of Switzerland or Norway who pay heavily for access to the common market and have no more freedom than the UK to regulate migration. More likely that if the UK were to leave, the EU would seek to punish it by making the break as uncomfortable as possible, even if this means accepting some pain itself, in order to prevent others from defecting.
It should be stressed that in any free trade zone, it is usually the small country, in this case the UK, that benefits most from the reduction of barriers. Though the continental EU runs a trade surplus with the UK, the effects of cutting off the UK on the larger EU economy would not be very large. The effect on the UK economy would be far more substantial and disruptive.