The Liberal Immigration Puzzle
Record numbers and the liberal response
Over the past three years, net migration into this country reached the highest levels ever recorded. This week, new revisions to the data revealed that those levels were even higher than we previously thought. From mid-2022 to mid-2023, the number of people moving to this country exceeded the number of people leaving by just over 0.9 million, with another 0.7 million following over the subsequent 12 months. For comparison, from the mid-2000s to 2020, net migration figures used to fluctuate from somewhat under 0.2 million to somewhat over 0.3 million per annum.
Recent numbers put those of us who defend a liberal immigration system in a difficult position. I have long argued that we should stop obsessing over headline figures, and pay more attention to who comes here, why they come here, and what they do once they are here. But, admittedly, when I argued that “the numbers” were irrelevant, it was typical numbers of the 2000s and the 2010s that I had in mind, not numbers that were four or five times greater than that.
Liberals often point out that most of the economic problems that people attribute to immigration would be more accurately described as problems caused by inadequate domestic policies. Technically, this remains true today. For example, from the mid-19th century to the 1960s, the British housing stock used to grow by between 1-2% per annum in most years. If we could repeat this today, it would be more than enough to accommodate even the exceptional migration figures of recent years. In the late Victorian and Edwardian periods, the length of the rail network also used to grow by around 1% per annum, whereas today, the only thing that still grows at such rates is the length of the consultation documents. Back when Britain used to build things, the country was quite able to cope with a growing population. It is a result of political choices that this is no longer true today.
But while it is worth pointing this out, I accept that it is not a helpful guide to present-day migration policy. Yes, in a hypothetical alternative Britain, which had kept the best bits of the Victorian/Edwardian age, high migration figures would not be a big deal. But we don't live in that Britain, and for the foreseeable future, we are not going to. Thus, liberals need to think about not just second-best, but also third-best, fourth-best and fifth-best solutions, tailored to the I-wouldn’t-start-from-here situation we’re in. It is certainly an issue we will keep an eye on.
By Editorial Director, Kristian Niemietz
More from the IEA on Immigration:
Somin, I. (2024) Immigration and the Economic Freedom of Natives
Niemietz, K. (2019) Immigration: Picking the low-hanging fruits
Legrain, P. (2016) Free to Move: The costs and consequences of restrictions on migration
Becker, G. (2011) The Challenge of Immigration: A Radical Solution
P.S. The best way to never miss out on IEA content and support our research and educational programmes is to become a paid IEA Insider. For a limited time, new paid subscribers will receive a copy of Steve Davies’ book Apocalypse Next: The Economics of Global Catastrophic Risks and a 15% discount.
The Political Realignment: Executive Director Tom Clougherty, Editorial Director Kristian Niemietz, and Senior Education Fellow Dr Stephen Davies discuss the political realignment and net zero on the IEA Podcast
NEW DISCUSSION PAPER: Reform university funding to incentivise education, not recruitment
In a new IEA discussion paper published this week, Peter Ainsworth sets out bold policy proposals to fix higher education to deliver a better deal for students, taxpayers, and universities - and position the UK as a global leader in higher education.
A New Funding Model
Ainsworth argues for a fundamental shift in how universities are funded. Currently, universities are paid for recruiting students, not for enhancing their prospects. He proposes a model where universities share in their graduates’ financial success, creating incentives for effective education: the cap on tuition fees should be abolished, with the government loan amount frozen. Universities would charge fees based on market demand, with any excess over the government loan financed through income-contingent agreements issued by the institution, not the state. Under this model, students would pay nothing upfront but repay a share of their income after graduation, tying universities’ financial success directly to their graduates’ career outcomes.
Unlike the current system, these loans would be funded by universities or their investors, not taxpayers. This would align university revenues with graduate employability and eliminate the current incentive to prioritise recruitment over quality education. Taxpayers would no longer bear the financial burden of underperforming courses and institutions.
Freeing Academics to Innovate
Ainsworth also calls for the abolition of course content regulations. With universities incentivised to deliver effective education, regulation becomes redundant. Academics, as experts in their fields, would have the freedom to design courses that best prepare students for career success, reducing red-tape and costs and fostering innovation.
Universities as Businesses
Following the government’s decision to charge VAT on private school fees, Ainsworth questions whether universities should continue to operate as charities. With the majority of their income derived from the sale of services, universities could transition to business status, freeing them from charity regulations and unlocking significant value.
Listing universities on the London Stock Exchange, itself in need of new business, could raise of the order of £100 billion for the Exchequer.
Peter Ainsworth said:
"The crisis in higher education is hurting everybody: 70% of universities are set to lose money next year, the value of a degree is collapsing, with the graduate premium down by £1,500 to a mere £6,500, while taxpayers are on the hook for billions in unpaid loans. The state-funded system, which pays universities for recruitment but not for a value-added education, has reached the end of the road.
"The only sustainable path forward is to recreate the success of the medieval apprenticeship system by allowing universities to set their own tuition fees but on condition that they grant income-linked loans so that their success is tied to that of their students. With interests thus aligned, we will promote the UK to No. 1 in higher education and become the university of the world."
The University System is Broken: Here’s How to Fix It - IEA YouTube
News, Views & Upcoming Events
Head of Lifestyle Economics Chris Snowdon criticises latest nanny-state push on unhealthy foods in The Sun
Is Labour working? Editorial and Research Fellow Len Shackleton delivers his verdict on the DWP white paper ‘Getting Britain Working’ in The Telegraph
Calories on menus haven’t worked - Head of Lifestyle Economics Chris Snowdon says “once again, a naive public health policy has disintegrated upon contact with reality” in The Times
What would von Mises make of Musk’s DOGE? Editorial Director Kristian Niemietz, IEA YouTube
Sadiq Khan’s new ‘rent controls’ aren’t really rent controls, but they still won’t work argues Editorial Director Kristian Niemietz in The Telegraph
Starmer should be negotiating a trade deal with Trump, argues Economics Fellow Julian Jessop in The Express
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Moving from one place to another gets easier every year so population movements will increase naturally. Illegalising movements creates a profit opportunity for traffickers and probably increases the flow rather than reduces it, If immigrants arrive freely we can stop helping them financially and they can get a job and pay tax, so we gain rather than loose. They create demand then so should increase the job market, not put downward pressure on wages as usually thought.