Linking immigration and welfare reform has been a clear political strategy for the Conservatives throughout 2011. They know voters tend to link the two issues – and so does the Tory right. But Conservative ministers don’t seem to have worked out which way round the argument is meant to run: back in April David Cameron argued that welfare reform was the key to cutting immigration; today, Iain Duncan Smith argued that cutting immigration is the key to welfare reform.

The coverage of IDS’ speech in the Mail, Sun, Telegraph and elsewhere committed the common fallacy of saying that “most new jobs go to foreigners”. This is simply wrong: it confuses gross changes with net changes.

What is true is that most of the net increase in employment over the last year, or the last decade, is accounted for by the net increase in foreign workers – but this disguises the fact that of the roughly three-quarters of a million jobs created each year, between 80 and 90 per cent are filled not by foreigners but by people already here. (IPPR produced a briefing on how to interpret employment and immigration statistics last year, but the “most jobs go to foreigners” fallacy is very resilient.)

IDS’s argument is essentially that unless we stop migrants coming here and taking our jobs, a new generation of Britons will be condemned to a life on benefits, regardless of anything he can achieve on welfare reform. David Cameron’s version is more honest, and more economically literate. He admitted that:

“This is not a case of ‘immigrants coming over here and taking our jobs’. The fact is – except perhaps in the very short term – there are not a fixed number of jobs in our economy.”

It might have been helpful for someone in Downing Street to point IDS’s speechwriter towards this earlier revelation. But there are deeper problems with the link between immigration and welfare reform which apply to Cameron’s version too.

Even if welfare reform is successful, its scale, and pace, means it won’t have a big effect on reducing immigration in the coming years. More fundamentally, it isn’t focused on the right areas of the country: welfare dependency is a real problem in some places, but these aren’t generally places where local people have to compete with lots of migrant workers for jobs. Too often, those are places where there aren’t any jobs. If IDS’ reforms work, and large numbers of people re-enter the labour market, most of them would have to ‘get on their bikes’ to another part of the country before they had to start worrying about large numbers of foreigners.

Youth unemployment, unlike worklessness, is distributed more evenly over the country – but a recent report from the LSE’s Centre for Economic performance concluded that there is no evidence that caps on immigrant flows would have a major impact here either.

Both IDS’ and Cameron’s arguments also both depend on ignoring the inconvenient truth that the government can’t control a lot of low-skill immigration anyway, in particular from Eastern Europe, which was up significantly in the most recent figures. Together with the decline in emigration, this is pushing the government’s chosen target, of reducing overall net migration to the tens of thousands, further away. The risk is that the government will feel compelled to clamp down even harder on those categories of immigration which are easiest to control, simply because they are easy to control, despite the fact that they are the most economically valuable. This applies to the ‘cap’ or quota on skilled workers, to recent proposals to stop skilled workers from staying longer than five years, and to restrictions on student visas – which according to the government’s own estimate will take billions of pounds out of the economy.

For those who care only about reducing net migration, these policies make sense. But they won’t help the cause of welfare reform, or help tackle youth unemployment; and for anyone who cares about Britain’s ability to continue to attract the ‘brightest and best,’ and about the impact on the economy as we try to grow our way out of recession, they raise real concerns.

This is the most serious charge against the government – that by linking welfare reform and the labour market to the emotive issue of immigration, which they know is almost guaranteed to be reported in a distorted way, they are creating a smokescreen to cover the inadequacy of their policy on growth, jobs, youth unemployment, and regional policy.

Our people

Matt Cavanagh, Associate Fellow