The uphill struggle to stop Reform

 

Making political predictions is foolish, but I can only see two political parties that can stop a Reform government in the UK: Labour and Reform themselves. The mistake I made writing a similar post five years ago was to neglect the possibility of populist parties and leaders imploding, as Johnson’s Conservatives did. But we cannot assume that will happen to Reform.

One reason is that Reform and Farage are treated with kid gloves by the mainstream broadcast media. Corruption that might sink other politicians is often ignored for Reform politicians because too many think that is how a populist opposition would be expected to behave, so is it really news? But probably more important is that the broadcast media often takes its lead from the far right press, which is largely pro-Reform.

Could a revival in Conservative party fortunes damage Reform? Undoubtedly yes, but that looks increasingly unlikely to happen. Their policy of trying to ape Reform on Immigration, the ECHR or climate change just loses them votes to other more socially liberal parties, in particular the LibDems. Unless Reform implodes, few Reform voters are likely to be attracted back to the Conservatives because everyone remembers what a mess the Tories made while in power.

One way the Conservatives may become increasingly irrelevant is if more Conservative MPs defect to Reform. There is a danger here, in that Reform begins to look like the old Conservative government under a new name. But Farage is such a prominent figure that risk may be small, compared to the gains to Reform in capturing yet more Conservative voters.

Could an insurgent left stop Reform? While we could get to a French situation where centre parties are squeezed and the main battle is between the left and far right, in the UK it is much more difficult seeing that as any more than one route to Reform taking power. For the left to defeat Reform the Labour vote would have to completely collapse (far more than it has at present), and the remaining parties (LibDems, Greens, Welsh and Scottish Nationalists and maybe a new left party) would have to divide up the winnable seats between them, withdrawing from the others. Both conditions seem pretty unlikely on their own, and together even more unlikely, although not completely impossible.

For those who think a period of Reform in power would not be too bad, and might lay the groundwork for something much better afterwards, I ask you to just look at what is happening in the US. While Farage himself may try to distance himself from Trump before an election, it is pretty clear listening to someone like Tice that Reform are just copying the Republican party. [1]

It is the combination of a hard right populist media and Trump in the US that makes the threat of a Reform government so real, and that makes that prospect so terrifying. As we are currently seeing in the US, the transition to a fascism in which the leader is a virtual dictator, independent media is steadily eliminated, elections are rigged, minorities and any people that resist can be terrorised by a police force that goes around wearing masks and which has almost no accountability, and in which a judicial system is routinely overruled by a captured supreme court, can be frighteningly quick. While Reform may never capture more than 30+% of the vote in the UK, they can still capture power because of our bizarre first past the post system.

This is why it is worth looking at what happened at the Labour party conference, and see where that puts us in terms of Labour either helping or stopping Reform. For political journalists there have been two ways of spinning that conference: signs of hope or evidence of deep weakness. Both are true, because Labour are starting from such a poor position in electoral terms.

The first positive sign was to attack Reform on immigration on grounds other than the nebulous charges of impracticality or seriousness. If you wanted to put a really positive spin on what happened you could argue that because Labour had moved towards Reform’s rhetoric on immigration and asylum, this helped encourage Reform to go further by scrapping Indefinite Leave to Remain (ILR). The idea of ILR is popular, so Farage’s policy does allow Labour to draw a clear dividing line between the two parties on this issue without worrying that it is giving them votes. But that spin is far too generous to Labour.

While it’s good that Labour have at last found something to make their immigration and asylum policy distinct from Reform and the Conservatives, overall their stance remains much too illiberal for many. Even with ILR, Labour’s position still leaves a lot to be desired. Every time they bring in some tweak on immigration or asylum that introduces another cruelty that migrants must face, they give credibility to the illusion the populist right has created that these issues are of utmost national importance. [2] To quote Chris Grey

“Yet Labour politicians still don’t seem to grasp that by constantly accepting that there are ‘legitimate concerns’ about “uncontrolled immigration” and “open borders” (when the reality is that immigration is not, and has never been, ‘uncontrolled’ any more than borders have been ‘open’) in general, or, in this case, about existing ILR rules (which, as the polls linked to earlier show, are supported by the overwhelming majority), they cede ground to Farage and invite his inevitable denunciation of their reforms as inadequate.”

In addition the new Home Secretary seems happy to take ever more authoritarian positions on other matters like policing. It is hard to imagine that any liberal voter will take the combination of Labour’s position on ILR and their attempt to ban repeat marches and think that makes them more likely to vote Labour.

Chris Grey also welcomes that Starmer is finally linking the problem of small boats to Brexit, and Brexit to Farage, calling them Farage boats. But for that to work it needs every Labour politician to use the phrase at every opportunity, and take those opportunities to explain why Brexit is a major probable cause of the increase in small boats. I see no signs of that happening yet.

More generally, Starmer’s speech illustrates another problem Labour have, and that is a hopeless communications strategy. For example, calling Reform’s policy racist may be accurate, but is it good politics? The Daily Mail took no time to distort what Starmer had said. This distortion might not matter if Labour had a good communications team that could fight back against this kind of misinformation, but at present they don’t.

Labour should take a leaf out of the right wing playbook, which is to find the most extreme examples on the right and demand that Farage and Jenrich disassociate themselves from them. To quote from Ian Dunt in a very good discussion

“Right now, for instance, several mainstream right-wing commentators are claiming that black people cannot be English. Matthew Goodwin has said it. Isabel Oakshott has said it. This is absolute poison, obviously, but it is also contrary to public opinion. It is unpopular. I would like to see a Labour communication strategy which punches that bruise. Make it the chief issue, focus remorselessly on it. Force everyone on the right to either disassociate themselves from it or be branded a racist for holding it.”

This suggests to me that Labour still have two basic impediments to improving their electoral position that have yet to be removed. The first is to develop a far better communications strategy. It is hard to combat the power of the right wing press and right wing social media, particularly when the BBC shows every sign of being captured by that media. However the one institution that could present a counterweight to that power is a Labour government. Yet the government seems remarkably reluctant to take any steps to combat this media. It still just uses X rather than alternative social media, for example.

The second is to stop thinking Labour has to fight Reform by stealing its clothes, and instead start thinking about preserving its core vote, which is not some bygone working class but is the socially liberal middle class. Pursuing a Blue Labour strategy might work against a fatally unpopular Conservative government, but it does not work when in government. The last year proves that. The longer that party factionalism and ideology blind those running Labour to this basic truth the bigger the crash will be when electoral disaster forces change upon them, and the greater the possibility becomes of a Trump like government in the UK.

[1] Tice even talked about the link between Tylenol and autism on UK TV, even though Tylenol is called Paracetamol in the UK.

{2] Voters might think immigration is very important nationally, but few think it is important in their own area. Which means its perceived importance depends on what voters hear in the media, and we know the media is full of myths that are miles from the truth. In the UK immigration is the ultimate vibe issue.

Misunderstandings on the left (and elsewhere) about the OBR, independence and the bond market

 

I often see pieces from those on the left criticising the OBR. Here is Louise Haigh, for example, talking about the “rigid orthodoxy of the OBR”. Such criticisms are typically based on a misunderstanding about what the OBR does, or deflect more valid criticisms of other aspects of fiscal policy onto the OBR’s shoulders where they do not belong. This is generally linked to more general criticisms of the OBR and Bank of England, suggesting that both institutions create a ‘democratic deficit’. While some independent central banks do create democratic deficits, ironically this is much less the case for the Bank of England and is certainly not the case for the OBR.

With both institutions, what the government has done is delegate to experts a task that requires a high degree of technical skill, in an area where that skill could easily be overridden by short term, party political or personal advantage. The example I generally quote, which I was told about on good authority, is a Chancellor before the Bank became independent who said that they knew interest rates had to increase, but there was no way he was going to do that until after the party conference. In this case a politician was exploiting the fact that advice was secret to enhance party or personal popularity. That is hardly democratic.

The Bank of England is tasked with meeting an inflation target set by the Chancellor, over a period that is roughly set by the Chancellor/Treasury. The interest rate required to achieve this target is largely a technical macroeconomic question, and as such does not create any significant democratic deficit. [1]

The macroeconomic consensus is overwhelming that independent central banks produce better outcomes, and I agree with that consensus. Just look at the United States right now. Trump says the economy is booming, and therefore interest rates should be lower. If he could set interest rates, they would be far lower right now, and that would probably increase inflation further above target, requiring interest rates to rise again later. From any objective point of view an independent central bank produces a better outcome than with Trump setting rates.

Now thankfully not all governments are like the current US administration. But a lot of commentary on the left implicitly assumes a government that is benevolent, by which I mean one that always takes decisions to maximise social welfare. (The politics comes in how you define social welfare.) Even if we were to assume that governments on the left were like this, the whole point of democracy is that such governments can lose power, often to administrations that are not benevolent.

Independent institutions can protect society from the consequences of non-benevolant behaviour by politicians. We have a justice system where juries decide on guilt or innocence, and judges make decisions about prison sentences, because to give politicians that power would be dangerous, yet neither juries nor judges are democratically elected. A pluralistic democracy is all about giving other institutions besides parliament or the executive a limited degree of authority to make decisions. The populist right hates this, which is why they tend to try and end this independence. It is a shame that some on the left sometimes seem to side with the populists on this. [2]

The OBR does not take any decisions. All they do is forecast. Forecasts involve an assessment of how society will behave in macroeconomic terms over the next few years. When I was a lot younger I did a good deal of macro forecasting, and at no point can I recall politics coming into it. A parallel I often draw is with assessments by NICE about the effectiveness of new drugs. Sure, politicians often prefer some forecasts to others, just as they might prefer some NICE assessments to others, but if you think about why that is, it only strengthens rather than weakens the case for keeping politicians out of the process. I don’t think I have read much talk about how NICE creates a democratic deficit in health policy.

Haigh gives some examples of why the OBR represents a case where “opaque watchdogs outrank democratic choice”: underestimating the impact of public investment, or the macro benefits of public spending like ‘Sure Start’. But independent institutions tend to be far more open about their assessments than government departments, and governments and the public alike are free to challenge those assessments. The OBR attempts to provide analysis that represents a consensus view among experts. I would much rather that than wishful thinking by politicians who generally think their policies will have a greater impact than they actually do. Calling this consensus ‘orthodoxy’ is just name calling.

It is not the case, as NEF suggest here, that the government is obliged to make fiscal decisions based on the OBR’s judgements. Legally any government could say that it is not meeting its fiscal rule in the OBR’s forecast because it believes the OBR is wrong. It could claim, for example, the OBR is underestimating the impact of public investment. That this never happens is generally because the OBR’s judgements are following the consensus, and as a result politicians are not prepared to take a public bet on their own optimism.

Some wonder why fiscal decisions should be based on forecasts at all, because judgements made in those forecasts can have a big influence on policy. But when Chris Giles says that “this is no way to conduct public finances in a mature democracy” he is completely wrong. The only alternative to basing fiscal policy on forecasts is to base it on current data, and that would make fiscal decisions far more erratic. The Bank bases interest rate setting on forecasts, and the reasons to look ahead when making fiscal decisions are stronger still.

It would be perfectly possible for the Treasury rather than the OBR to do the forecasts on which policy is based, and as NEF suggests let the OBR provide an alternative forecast that focuses on areas of disagreement. That is transforming the OBR into more of a fiscal watchdog, which is making it closer to independent fiscal institutions in some other countries. My own view is that this would make policy worse rather than better, particularly when you remember that a right wing populist government could well be in power. Macro forecasting is difficult, and rarely gets things right, but I would much rather policy was based on experts making those forecasts than politicians engaged in wishful thinking.

An example of misdirected criticism comes from the cuts in welfare spending last Spring. It wasn’t the OBR that chose to forecast twice a year, it was parliament that mandated the OBR to do so. It wasn’t the OBR that required a fiscal correction following that forecast rather than wait until the autumn, but the government. Equally the Bank’s sales of its government debt is something that the government should take a greater interest in, and the Bank should and would adjust its policy to accommodate government wishes.

What about Andy Burnham’s statement that the government should not be in hock to the bond markets? That statement doesn’t make much sense [3], but equally neither does much mainstream comment on the bond market, which talks as if this market had a veto on fiscal policy. The problem the UK government faces now is not an inability to borrow, but rather hat it is expensive to borrow. It is relatively expensive for the UK government to borrow not because of the size of the deficit or the amount of UK government debt, but because UK short term interest rates are relatively high because UK inflation is relatively high.

There is quite understandable frustration at the moment on the left and elsewhere about the continuing fiscal squeeze on many if not all parts of government spending. I share that frustration. But for once the source of the problem is pretty clear. It is not the fault of the OBR, who are just trying to forecast as best they can the likely level of tax receipts and government spending over the next few years. It is not the fault of the fiscal rule that currently binds, which requires current government spending to match taxation in a few years time. No one to my knowledge has suggested why that rule is not appropriate in the current macroeconomic conjuncture. Nor is it the fault of the bond markets.

The current problem with fiscal policy in the UK is quite simple. The government is not raising enough in tax. Most people, understandably, want a level of public services comparable to our neighbours in Western Europe. The amount of taxes we collectively pay, however, is significantly below most countries in Western Europe. This was not the case in 2010, but is a consequence of 14 years of Conservative government. As the last Labour government showed, if you want better public services than a Conservative government typically provides you need to raise taxes.

[1] The set of interest rates necessary to achieve the goals set by the Chancellor is not unique, however, and any choice may involve issues which different politicians might have different views about. That is why the Bank’s job is not completely technocratic. This problem is well understood, and is dealt with by many central banks by defining secondary objectives like employment. In the UK it is easy for the government to provide the Bank with additional direction in general terms about how it views such trade-offs.

[2] Adam Tooze asks here whether MAGA attacks on central banks might spur those on the left “to define what a democratic politics of central banking might look like”. In this post I’m kind of asking the same question, but with rather different motivations. If you are prepared to condemn independent central banks as undemocratic and technocratic, then are Trump and MAGA in this instance doing what you have always wanted?

[3] We don’t say we have a cost of living crisis because UK consumers are in hock to the goods market.

Farage and the BBC

 

On Monday 22nd September I watched a party political broadcast on behalf of Nigel Farage’s Reform Party. It was on the BBC, and it was entitled ‘News at Ten’. Unfortunately that news bulletin is no longer available on the BBC's website, so all I can do is give you a flavour of what it was like.

It starts 16 minutes into the bulletin, with Chris Mason, Political Editor of BBC News, interviewing the leader of the Liberal Democrat party, Ed Davey. The Liberal Democrats are having their party conference, so this is a chance for its leader to make a relatively rare appearance (see below) on the news, and perhaps explain what the Liberal Democrat’s policies are, or what their political aims are. But Chris Mason had other ideas.

“Do you feel a moral duty to keep Nigel Farage out of power” is his second question. His third is “You say that Nigel Farage gets too much attention, but ...” He holds up a little figurine of Farage that he bought at the conference.”... You are obsessed with him, aren’t you? Frightened even.” And so it continues, with pretty well every question from Mason being about Reform. Finally he takes on Davey’s claim that the BBC is giving too much uncritical airtime to Farage, and accuses Davey of behaving like Donald Trump! Mason’s summing up at the end is about Nigel Farage. 

This segment was then followed by the man himself, with Farage announcing a new policy to remove settled status from immigrants who have been in the UK for a number of years. Despite apparently discussing the Farage policy, the BBC failed to say clearly that there was no basis to his claim that this would save public money.

Did I catch this BBC News Bulletin on a bad night. We do have data, thanks to a study from Cardiff University led by Professor Stephen Cushion and Dr Matt Walsh. This found that on both the BBC’s and ITV’s News at Ten, Reform featured far more often than the Liberal Democrats, despite the latter having far more MPs. It is clear that impartiality is being defined by broadcasters as reflecting the position of the two parties in recent polls, rather than in their relative number of MPs. There is nothing wrong about using this as a criteria, as long as it is applied consistently, and the study does not find any clear fault with this coverage. However Stephen Cushion did say

“While there are no rules on reporting party leaders, our study did find Nigel Farage was more prominently covered than the Liberal Democrats’ leader, Ed Davey – and often leading the news agenda. Broadcasters might want to consider the level of airtime granted to party leaders and the degree of scrutiny they receive.”

As the example above illustrates, interviewing Ed Davey and just asking him questions about Nigel Farage hardly corrects an imbalance in favour of Farage!

 

More worrying I believe is that the BBC is actively trying to alter story selection to regain the trust of Reform voters. It is certainly true that right wing voters, including those voting Reform, tend to say they have little trust in the BBC, in part because their politicians and their press are constantly telling them the BBC has a left wing bias. The BBC’s typical response to that criticism is to become defensive, and that response can often amount to appeasement. In contrast, as the Mason interview discussed above shows, when a party from the center or left makes similar criticisms the BBC’s response is much more aggressive. The BBC applies its impartiality rules in a biased way.

There are two simple reasons for the asymmetry. The first is that BBC News coverage is far too influenced by the UK press, and the UK press is heavily biased towards the populist right. The second is that the BBC is run by people who support the Conservative party. Its Director General, Tim Davie, is a former Conservative party county councillor. Robbie Gibb, former director of communications for Theresa May, is on the BBC Board and takes a keen interest in ensuring BBC impartiality. Is this why BBC coverage of the genocide in Gaza seems to be heavily influenced by a fear of being perceived as critical of the Israeli government?

The BBC Board is in part appointed by the government, and the Board appoints the Director General. So if Labour remains in power over a long period, if it wishes it can correct this right wing bias in the BBC’s management. But that looks at the moment like a very big if. Far better, in my view, would be a more immediate attempt to reorganise BBC governance so that the political party in power cannot so easily influence what the BBC broadcasts.

The particular BBC News at Ten that I watched illustrated two other problems that I think are more general. The first is the poor quality of much political journalism. Comparing Ed Davey’s complaints about BBC coverage to what Trump has been doing is just ridiculous. In one case we have a political party in opposition with no influence whatsoever, and in the other we have a fascist dictator with considerable power to influence what the media does. If a political journalist cannot see the difference then that is really worrying.

The second is that both the media and politicians have not really come to terms with how to deal with right wing populists like Farage or Trump. They keep treating them as normal politicians when they work by quite different rules. For example right wing populists lie far more often than other politicians, and if this isn’t called out then this favours those populists. When populists say reducing immigration or stopping immigrants becoming citizens will save the taxpayer money, they are lying in the same way that they lied about Brexit and the NHS. If the BBC fails to treat these claims in the same way as they treat Trump’s claims about health (as in the news bulletin above), then they are doing the populist’s job for them. Part of the problem is that when Trump tells lies about health, the BBC will typically get their health correspondent to comment, who knows their subject and talks to experts. If Farage did the same, this would typically be covered by a political correspondent without that knowledge or focus. 

As with Trump, we know that Farage habitually lies. There was a revealing question in that Davey interview. Mason asked wasn’t there a danger that established parties were making the same mistake with Reform as with Brexit, and millions of voters would again respond that established parties just don’t get it. (It is a question Farage would hav loved, because he wants to paint himself as the insurgent against the establishment.) Davey didn’t give the obvious answer, which is that we now know that Brexit has been a disaster, and the person leading Reform is the same person who lied to us about Brexit.

A great danger that faces both mainstream politicians and the media is to create double standards that favour right wing populists. When a mainstream politician is caught misleading the public, or makes some political gaffe, or there is a hint of financial misconduct, the media or opposing politicians will make a big deal of this. However because right wing populists like Trump or Farage do this all the time, it is considered normal and so goes unremarked. We suffered the disaster of Brexit because the constant lying of Leavers was not sufficiently exposed and called out. It would be tragic if this happened so soon again, because politicians and journalists were not prepared to ask Farage one simple question. You lied to us once before, and we are all suffering as a result, so why should we believe you again?

Parallels between what to do about Trump and what to do about Farage

 

Much as Starmer’s government has attempted to deal with Farage and domestic right wing populism by bending towards it (some might say falling over towards it), Starmer has tried to deal with Trump in a similar manner. One obvious example is inviting him for a state visit. Another was probably the appointment of Peter Mandleson as US Ambassador.

The reasons for trying to keep on the good side of Donald Trump are obvious. He is effectively the all powerful monarch of one of the two most powerful countries in the world, and getting on the wrong side of him is likely to have significant costs for any smaller nation that does so. Trump’s main weapon for imposing these costs is tariffs. For example, he has imposed 50% tariffs on Brazil because they have dared prosecute a former right wing President who attempted to overturn by force an election he lost.

One problem that is common with both strategies, either appealing to voters attracted to Reform and appealing to or flattering Donald Trump, is that this alienates the majority of your voters who dislike right wing populism. Mandelson’s close friendship with Jeffrey Epstein, and his support for him even after he had been convicted, was unacceptable to UK public opinion, but it meant he had a lot in common with Donald Trump, who also was a close friend of Epstein. This fact also probably meant that Mandelson and Trump had personality traits in common, which again would make the task of flattering and persuading Trump easier. It was almost certainly one of the reasons Mandelson was appointed in the first place. It is probably no coincidence that McSweeney, who is one of the architects of Labour’s attempts to copy Farage on immigration and asylum policy, is said to have been keen in appointing Mandelson.

Mandelson’s support for Epstein was not acceptable to the UK public, anymore than Prince Andrew’s friendship was. I personally have had little time for Mandelson ever since I briefly met him when I was a student. I can also see why much of the media would like to treat Mandelson’s departure in isolation, rather than as anything to do with Donald Trump. But this seems quite wrong, and potentially hypocritical, to me. Mandelson was appointed in good part because Donald Trump had been elected as POTUS. If Kamala Harris had become POTUS, it seems unlikely Mandelson would have got that job.

If you think Starmer’s judgement was bad in appointing Mandelson, then surely you need to address the fact that his appointment was part of a strategy to deal with Donald Trump. You might need to explain why you think Mandelson’s appointment was a mistake, but yet giving Trump a state visit is OK. After all, Trump has not only had a close relationship with Epstein but, unlike Mandelson, seems to have had similar sexual predilections. There is also the small matter of Trump encouraging a coup to overturn the election of the previous POTUS, and generally turning the US into a fascist state.

Are there risks beyond alienating domestic public opinion in the strategy of trying to flatter and appease Donald Trump? I can think of two major additional problems, which again link to problems with following right wing populists on immigration and asylum. The first is that the more the UK government treats Trump as just another POTUS, rather than the dangerous fascist that he is, the more difficult it is to criticise Reform when they copy Trump’s policies. One of Reform’s major weaknesses is that its members, who are getting elected in increasing numbers, actually like and often try to copy what Trump is doing. Most UK voters, by contrast, do not. Explicitly branding Reform as Trump surrogates is a powerful weapon to use against them, but one the UK government has not used because I suspect they worry about Trump’s reaction. The parallel here is how the government, by constantly talking up the issue of asylum or immigration, plays into Farage’s hands.

The second reason is that it normalises Trump in the minds of decision makers and the media as well as voters. An event of far greater importance to the UK than Mandelson’s departure happened this week, and that was Russia firing a large number of drones at Poland. Most were unarmed, so it is highly unlikely that they all wandered into Poland by mistake when their intended target was Ukraine. Poland certainly doesn’t think it was an accident. Instead this looks like a deliberate act by Putin to test the water. The muted reaction from Poland’s NATO allies (as Phillips O’Brien notes NATO could not even call it an attack) together with the remark that it could be a mistake from Trump himself, might suggest to Putin that the water is rather inviting from his point of view.

If Putin did in the next few years try and invade one of the Baltic states, for example, it seems likely that the United States would do what it could to stop NATO responding. The more other NATO country leaders have a mindset that involves trying to placate Trump, the more vulnerable they become to Trump acting as Putin’s inside man. The parallel here is that the more government ministers say that dealing with asylum seekers is one of the most important issues facing this country, the more they as well as voters will believe it. It leads ministers to take actions that do harm to individuals and also to the other goals of government, like increasing living standards.

At the end of the day this is an issue of getting the balance right at any moment of time rather than a binary flip to a policy that does the complete opposite. Europe cannot afford to completely antagonise Trump right now if only because Ukraine needs the modest support the US still provides. Similarly Labour needs a distinctive policy on asylum and immigration rather than one that is completely laissez faire. But as with domestic policy, UK foreign policy towards Trump does seem to have got that balance a bit wrong. The appointment of Mandelson and Trump’s state visit suggest current UK foreign policy is too unbalanced in favour of appeasing Trump.

We desperately need Starmer and other ministers to say that while we need to work with Trump, his values are not the values of the great majority of the British people. This is the same as the need for Starmer and other ministers to fight back against the rising tide of domestic racism and intolerance. If Starmer has advisers who counsel against such a fight back because it might offend Trump or lose a few votes those advisers need to go, because in our current situation they are dangerous. If Starmer and any ministers themselves believe it is best to stay quiet for risk of offending Trump or some voters then I’m afraid they are in the wrong place at a critical time, and should go. And for god sake do something about overseas funding, X and Musk.

Key myths on asylum, immigration and how to take on the far right

 

There are few subjects where the national debate is so contaminated by disinformation as immigration and asylum. Alan Beattie in the Financial Times described this as a millefeuille of falsehood. This list below is not comprehensive (for example it says nothing about one of our leading export industries, teaching students from overseas), but I’ve tried to focus on areas where the public are clearly and grossly misinformed. (More myths here)

Asylum and Refugees

Myth 1. “There is an ‘invasion’ of people arriving in small boats.”

Around 37,000 people arrived in small boats to claim asylum in 2024, which is just under 4% of the total number of immigrants that came to the UK in that year, That is 0.05% of the UK population. Yet from a YouGov poll only 20% of people correctly thought that there were many more immigrants staying legally than illegally, with almost half believing there were more illegal than legal migrants.

Myth 2. “The number of asylum seekers coming to the UK is out of control”

Someone who successfully claims asylum in the UK is at serious risk if they are returned to the country they came from. So the number of potential asylum seekers is completely out of the UK government’s control. All the UK government can do is either persuade asylum seekers to choose another country (see below), or if it was led by Nigel Farage send them back to their possible death. The UK’s actual record in the 1930s is far from good, but no doubt if Nigel Farage had been in power he would have eagerly sent every Jewish refugee fleeing from the Nazis back to Germany.

Myth 3. “Asylum seekers are particularly attracted to UK because we make it easy for them”

In 2023 the UK processed far less asylum claims than Germany, France or Spain. As a proportion of its population, it processes far fewer asylum claims than the Netherlands, Belgium, Denmark or Finland.

Myth 4. “But those coming on small boats are coming here illegally”

If this was the case, everyone arriving by small boat would be arrested and charged with some crime. They are not, because it is legal for anyone to apply for asylum in the UK. They come by small boat because they cannot get to the UK by any other means, and cannot claim asylum outside the UK.

Myth 5. “But most of those claiming asylum in the UK are economic migrants”

Typically many more asylum claims are successful than are refused.

Myth 6. “It costs the government a huge amount to deal with asylum seekers

In one poll, when asked what the three things the government spent most money on, dealing with asylum seekers and migrants appeared as number two in the list. The reality is completely different. The public vastly overestimates the costs of dealing with asylum seekers.

Myth 7. “Asylum seekers live a life of luxury in hotels”

They don’t. It is illegal for asylum seekers to work in the UK while their claims are processed. If their claim is successful, refugees have to find their own accommodation quickly, which can be difficult if they have no savings. There is no law or Government policy that puts refugees ahead of British Nationals in securing social or council housing because of their identity.

There is a reason why we should be concerned about the number of small boat crossings. It is that these journeys are dangerous to those who make them. The only realistic way to significantly reduce this number of crossings is to increase the number of safe routes for asylum applicants.

That these myths persist is partly because the coverage of this issue in the broadcast media is highly biased to the illiberal right, and highly dishonest. People have a right to claim asylum in the UK, and if the UK makes it impossible for most to claim asylum except if they are physically in the UK, then they will try to get here. By treating small boats as a problem caused by asylum seekers or criminal gangs rather than a consequence of the government's policy to deny safe routes (presumably so we don’t have to take our fair share of refugees), the media is dehumanising refugees.

Immigration

Myth 1. “Net migration is rising and is out of control.”

Net immigration fell from around 800,000 in 2023 to around 400,000 in 2024. Yet when people were asked about this, only 8% thought that migration had decreased.

Myth 2. “Immigration makes it more difficult to see a doctor, get places in schools etc”

Immigrants typically improve the public finances. Crucially, reductions in immigration are likely to be assessed by the OBR as worsening the public finances, so any government that cut back on immigration would have to raise taxes or cut spending on things like health or education.

Myth 3. “Immigration creates a housing shortage.”

Of course any increase in population potentially raises the demand for housing. That only becomes a problem if not enough new houses are built. England does have the second highest population density in the EU, but Wales, Scotland and Northern Ireland have far lower densities. The UK has a regional problem, rather than a population problem.

There is a trade-off between immigration and the retirement age. With an ageing population, the costs to the working population of providing pensions and the NHS is likely to become too great without immigration. If immigration was zero, one consequence would likely be a higher retirement age.

Myth 4. “Skilled immigration encourages firms to skimp on training”

There is little evidence of this. Firms that employ skilled migrants tend to do more training.

Myth 5. “Current immigration mostly involves unskilled workers”

The current UK immigration visa scheme is heavily orientated towards skilled workers

Myth 6. “Since we had high net immigration, the economy has tanked. That’s no coincidence.”

Except it is. Study after study tends to show that migration at worst leaves living standards unchanged, and may improve them. The US economy before Trump had high levels of immigration, and is one of the most successful economies in the world.

How to deal with a right wing focus on immigration and asylum

Myth 1. Get close to the right wing position

This idea comes straight from the simple political science spatial model of ‘triangulation’ or ‘accommodation’, and appears to be the approach the current UK government is following. But this model ignores voters’ perceptions of competence and trust. Quite simply, if two parties are similar but party A is in power and has failed to achieve voters’ objectives while party B has made this issue theirs, voters will tend to choose B. The simple spatial model also typically assumes that those voters that the triangulating party has moved away from will still vote for that party (as the lesser of two evils) rather than vote for another party or not vote at all.

Which is why empirical academic research, as well as experience in other countries suggests it is a bad idea for social democratic parties to try and ape the populist right. Current UK experience suggests exactly the same.(Paper here.)

Myth 2. Just get numbers down.

As I noted above, the government cannot control the numbers of people wanting to claim asylum in the UK, and since Brexit it has become more difficult to get other countries to take them instead. It is possible to limit immigration visas or overseas student numbers, but generally that involves a clear economic cost which will also influence government popularity, which is why successive governments haven't tried to do this. 

The pressure coming from the populist right, together with headline polls, may convince ministers that reducing immigration is worth almost any economic cost. But headline polls are highly misleading because they suggest numbers can be reduced costlessly. They are like polls about reducing taxation without mentioning public services. When voters are asked about whether immigration into particular jobs should be reduced, far more prefer current or higher levels of immigration.

In addition, if the disinformation evident in the current public debate tells us anything, it is that getting actual numbers down does not translate into a public perception that things are getting better. Whatever net migration numbers settle down to, the right wing chorus will be that this is too high, and the same is true for small boats.

The alternative to the two strategies above is to develop a distinctive position on both issues, that is not copying populists and which is not about getting numbers down. That distinctive position should be based on what voters say when they are asked questions beyond the simplistic up or down one. When asked, an overwhelming majority of people want to attract the best and the brightest people, even if that increases immigration. A majority also favours immigration if it improves the economy, or reduces skill shortages, or to staff the NHS. A distinctive position would centre on these trade-offs, to make clear that promises to reduce immigration made by other parties were either empty or would be highly damaging if implemented. 

A sensible immigration policy would focus on the causes of high immigration rather than simple numbers, and it would recognise that the UK has an moral obligation to take its fair share of refugees. One of the reasons the myths described above continue to be believed by so many people is that the facts are ignored by most politicians and most people in the media. Some have a motive to ignore reality, but others do not. 

The real fiscal concern should be a populist government

 

Scare stories about UK fiscal policy seem a regular occurrence nowadays. The latest is the idea that the UK might have to go to the IMF for money. It’s nonsense of course. The UK government cannot run out of money because it can create reserves, just as it did when the world’s bond markets dried up at the start of the pandemic. Current levels of debt to GDP rose a lot because of the Global Financial Crisis, austerity and the pandemic, but it is still below levels between 1917 and 1960.

But, as is often the case, there is a grain of truth in the recent concern. Inflation is coming down slower in the UK than in the US and Europe (although tariffs and deportations mean inflation is likely to rise again in the US.) That is one reason why interest rates on government debt remain pretty high in the UK.

While current (end August) rates on UK 10 year government bonds are 4.7%, for the US they are 4.2%, France 3.5% and Germany 2.7%.

This matters partly because it means the government has to pay these higher rates on the debt it issues, and higher debt interest payments mean either higher taxes or less money for public spending. (My own view is that it should be higher taxes, because most of those higher interest payments are going to UK individuals or institutions.) It also matters because other long term interest rates in the economy are influenced by bond rates, so higher bond rates mean higher mortgage rates, a higher cost of firm borrowing and so on.

The rates shown above are for 10 year government bonds. (If you buy them now, you get what you paid back in 10 year’s time.) One interesting feature of UK government debt at the moment is that interest rates rise the longer the maturity of the debt. The current interest rate on UK 30 year government debt is almost a full percentage point above the 10 year rate. Now that is not completely unexpected. Investors normally need something a bit extra to lock their money away for a long period, or risk having to sell in a volatile bond market.

However, the additional interest on a 30 year bond compared to a 10 or 3 year bond has been increasing recently. There are a number of possible reasons for this. One is global uncertainty, caused in particular by the antics of Donald Trump. In times of uncertainty people like to stay flexible, which in financial terms means staying liquid and avoiding long term commitments. The rise in 30 year bond rates relative to 10 (or less) year bond rates appears to be a global phenomenon.

Other specifically UK factors could involve supply and demand factors, plus some reason why arbitrage breaks down (such as the long time frame to make any profit.) One of these is the Bank of England selling off its stock of government debt built up under the Quantitative Easing programme. (Whether the Bank should be unwinding QE right now is another matter: see Carsten Jung of the IPPR here, for example.)

But there is yet another potential factor that should be raising bond rates in the UK beyond the short term, and that is the threat of a populist government. There are three reasons why the prospect of a populist government should lead to higher interest rates on longer term government debt. The first is central bank independence. Populists (by definition in the way I use the term) don’t like institutions that are independent from them yet that can take decisions that influence them. Populists also often (but not always) take stupid economic decisions, like cutting interest rates when inflation is likely to rise.

That matters a lot for anyone thinking about buying a government bond whose value is fixed in nominal terms (as most are). A period of inflation will reduce the real value of that bond, so anyone buying that bond will require a higher interest rate to compensate for that risk. Trump is a good example here. He has explicitly said that he thinks interest rates should be lower because the economy is booming (in his view), which is an idea that would help you fail a first year undergraduate economics exam. At the moment an independent central bank controls US interest rates, but Trump would like to replace the current decision makers with people who would do his bidding (effectively ending US central bank independence).

When Trump attempted to fire Lisa Cook, a central bank governor, under some fabricated pretext, this was seen as him stepping up his attempt to take control of the US central bank. The reaction of markets followed the analysis above. Rates on short term government debt fell, because Trump wants lower rates. However interest rates on longer term US government debt rose because of the prospects of higher inflation (coupled with the fact that someone at some point would raise interest rates to bring that inflation under control.)

The second reason bond markets should really worry about a populist government is default. A normal government in the UK or US would never choose to default, because the political costs of doing so far exceed the cost of servicing the debt. In addition, as noted above, a UK or US government cannot be forced to default. A populist government is, however, another matter. It is much more conceivable that a populist in power might choose to default on the government’s debt, although reducing real debt through higher inflation is still more probable. Even a very small chance of default would require significantly higher interest rates on government debt to compensate, as we saw in the Euro crisis.

The third reason why populist governments are likely to lead to higher interest rates on government debt is that they tend to make economic promises that can only be reconciled by higher budget deficits. Higher deficits will tend to raise interest rates not because they raise the chances of default (although see above) but because they add demand into the economy, which requires higher rates to offset its impact on inflation.

The example of Trump does raise an issue, however. Given his clear threats to central bank independence, the fact that he has flirted with the idea of partial default in the past, and that he has increased the deficit by giving tax breaks to the rich, why are interest rates on US government debt not even higher? One answer is to say the US is special, and there will always be an international demand for US government debt. Paul Krugman has a different answer, which is that markets typically discount the chances of a crisis until it is almost upon us.

In what is now the constant drip of scare stories about UK fiscal policy, there are two types. The first is pure wishful thinking by the (far) right. Here is Allister Heath of the Telegraph, thinking an impending debt crisis will force an early General Election. These are often the same people who thought Truss’s budget was wonderful.

The second and more interesting group involves more reputable and well intentioned economists, who sometimes raise legitimate issues. But there is always a danger for economists, which is that they focus on the economic details while ignoring the big political elephants in the room. If you are worried about levels of debt or debt interest in the UK and want to see debt to GDP falling, then focusing on fiscal rules or institutional fixes is not going to achieve very much as long as two big political hurdles remain in place.

The first elephant, as I have already mentioned, is the possibility, perhaps probability of a right wing populist government taking power in the next decade or so. Not only will this government probably ignore or cast aside any fiscal rules or institutions, they are also likely to greatly increase deficit finance simply for their own political gain. Under a right wing populist government, current worries about UK fiscal sustainability will look rather ridiculous.

The second, which is related to the first, is that in the UK any alternative to a populist government seems unable to raise taxes on income. Calling this cowardice by these governments misses the key point, which is that there is a general political belief that not pledging to keep current tax rates on income constant has a significant electoral cost. There are two possibilities. The first is that this belief is wrong. The second is that we have a political/media system that allows enough voters to believe that they can have both lower taxes and higher public spending. More needs to be done to show that if we want a level of public services similar to our Western European neighbours, we need to stop having a lower level of taxes than our Western European neighbours.