If there is to be an immigration cap, the Government should sell that limited number of work permits and visas

Unsurprisingly, the government has been struggling somewhat with how to implement its policy of imposing an immigration cap on non-EU immigrants. Fortunately, in The Challenge of Immigration, a new paper published by the IEA today, Nobel prize winning economist Professor Gary Becker comes up with a radical, but simple solution. Once you’ve decided how many “visas” or “permits” you’re going to issue, sell them.

There are all sorts of arguments about whether imposing a cap is the right idea and how problematic (or beneficial) it is that the EU has internally open labour markets. But, for now, cast those arguments aside. If you’ve settled on a policy of imposing a ceiling on immigration, ask yourself how you’re going to decide who gets the green light and who gets blocked.

You have two basic choices. You either go down the bureaucratic route or down the market-orientated route. Sadly, Theresa May has headed down the former path. Government officials will continue to wade through millions of pieces of paper attempting to judge who has the skills and expertise to meet the nation’s overall needs. They will have certain rules to guide them, of course. So, because of special exemptions, if your abilities lie in playing football, you will effectively be treated as more desirable than someone who’s a wizard at engineering.

Read the rest of the article on the ConservativeHome website.

Director General, IEA

Mark Littlewood is Director General of the Institute of Economic Affairs and the IEA’s Ralph Harris Fellow. Mark has overseen significant growth in the IEA’s size, influence and media profile during his tenure, since 2009. Mark also sits on the Board of Big Brother Watch, a non-profit organisation fighting for the protection of privacy and civil liberties in the UK. Mark is recognised as a powerful, engaging and articulate spokesman for free markets. He is a much sought-after speaker at a range of events including university debates, industry conferences and public policy events. He also features as a regular guest on flagship political programmes such as BBC Question Time, Newsnight, Sky News and the Today Programme. He writes a regular column for The Times and features in many other print and broadcast media such as The Telegraph, City AM and Any Questions.

2 thoughts on “If there is to be an immigration cap, the Government should sell that limited number of work permits and visas”

  1. Posted 16/04/2011 at 19:36 | Permalink

    What should be the ultimate aim of allowing migrant labour to enter the UK? To supplement the existing work force of the UK with world-class talent? Or to act as a source of cheap labour so that the UK competes on price rather than innovation and quality?

    If we want to have the strongest and richest economy in the world then the answer should be the former. So why then would those immigrant workers, that we say we are in desperately need of, be prepared to pay £30k or more to work in the UK, when they could get visas or work permits for similar jobs elsewhere in the EU and the USA for free? In any free market the best workers will always migrate to countries with the highest incomes and the lowest cost of entry. If a country wishes to avail itself of the best talented labour from abroad, large immigration fees applied to those migrant workers would be self-defeating. That is the first problem with this proposal.

    The second problem is that it will not reduce or eliminate illegal immigration as is claimed here. The reality is that there is already a monetised market in immigration to the UK. It exists in the form of illegal immigration with potential immigrants paying large sums to people traffickers, smugglers and organised crime gangs. This policy will not change that. Instead of paying people traffickers for safe passage to the UK, those same potential immigrants will be driven into the arms of the same criminal gangs in order to obtain loans to finance their visa fees. The consequence will be even more loan-sharking and bonded labour than exists at the moment.

    Therefore it should be clear that monetising the visa process from the point of view of the external applicant (i.e. the migrant worker) will not work. It will merely act to drive the best applicants elsewhere in the world, leaving the cheapest and lowest quality to enter the UK. A much better policy would be to monetise the process for the internal beneficiary of the process – namely the employer.

    This policy should be about internalising externalities. In this case the externalities are the adverse social costs that are currently passed on to the taxpayer and the State as a result of immigration. These can include higher unemployment, additional costs on public services (such as education and health), the lowering of domestic wage rates, and a reduction in workplace training.

    The impact on workplace training is of particular importance. In this regard the UK’s record is lamentable, and immigration makes it even worse. It allows bad employers to undercut good employers by utilising low cost foreign labour instead of improving the skills of their existing employees. This lack of workplace training is not a new phenomenon in the UK. As Will Hutton pointed out in his book “The State We’re In” back in 1994 (see p187), British employers in 1988 only invested about 0.15% of their turnover in training. Companies in Japan, France and Germany invested about ten times that amount. That was the main source of the UK skills shortage then, and it probably still is now.

    The solution, therefore, should be to make employers pay more for immigrant labour than they would have to for retraining their existing UK workers. It is employers who should bid for these work permits in monthly auctions not the migrant workers. Perhaps then employers would be incentivised more to invest in their workforce instead of continually carping to government ministers about the supposed skills shortage in this country. To put it in simple terms, if migrant workers are really that essential to the well-being of the UK economy, then employers should be prepared to pay a premium for their services.

  2. Posted 05/05/2011 at 16:13 | Permalink


    British system of higher education is the best in the world. It does not seem so good at in supplying the needs of high-skill labour market. British economy and society rely on soaking up talent educated elsewhere.

    We live in a shrunken world and millions of people are on the move; one of our biggest challenges is how we learn to live in proximity to difference – different skin colours, different beliefs and different way of life. According to a study by COMPAS, Muslims born and educated were given the impression of outsiders. The perception among Muslims is that they are unwelcome in Britain is undermining efforts to help them integrate into wider society. Most of them say that they have experienced race discrimination and religious prejudice. Muslims and Islam is promoted a fundamentalist and separatist by the western elite, which have negative impact on community and social cohesion. The number of racist incidents occurring in London Borough of Redbridge’s schools have reached their highest levels since record begin.

    An employer would rather hire a hard working immigrant because the Brits would rather stay on their sofas pigging out on crisps and claiming benefits.

    USA has over 12 million illegal immigrants and the government won’t do anything about it because their economy would be ruined without CHEAP illegal labor that is fueling American businesses across the nation. Without that many illegals in the USA, alot of businesses would move over to China. USA never abolished slavery, they just changed the skin color of the slaves and maybe Reinfelt and Wetterstrand is considering it taking it up.

    Immigrant is an immigrant,he is neither legal or illegal.Crazy to hear this, when Europeans invaded Africa, Asia and the Middle Eastern countries and took over every thing, they were not illegal, when those people came here they are illegal, shame on you, go back to history.

    Migration is good for economy and business. Migrants pay more taxes than they use in public services. They are just economic slaves of the British society.They have never been treated as human beings. They have been victim of racism,discrimination,bullying,physical and verbal abuse. Unskilled migrants are not welcomed because they are not economically beneficial for Britain.

    Without foreign workers, British economy will bleed to death. British society must be greatful to the foreign workers who kept them alive.

    Now migrant communities need doctors, nurses, teachers and social workers with their cultural backgrounds and who can speak their languages. They are in a better position to serve and satisfy their needs and demands.

    When Europeans invaded other countries and took over every thing, they were not illegal, when those people came here they are illegal, shame on you, go back to history.

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