End the UK’s dependence on low-skilled migration and move to a highly selective immigration system by investing in automation, capping visas and seeking out the best talent from across the world.

A new report from the Adam Smith Institute (ASI) argues that we need to bring migration figures down to the tens of thousands, but that in order to do so we must make sure that the economy, which has been propped up by mass migration, can adapt.

In an accompanying foreword, Lord Frost praises the report’s calls to fundamentally change the UK’s economic model by transitioning away from a dependency on low-skilled migration and focusing on attracting the best and brightest to the UK.

The Adam Smith Institute highlights the recent changes in immigration trends:

-The era of mass migration began in 1997. In the 25 years leading up to the 1997 election, the UK’s average annual net migration was 68,000. In the 25 years that followed, it tripled to an average of 236,000;

-Recent changes to the immigration system have intensified this trend. In just two years, 2022 and 2023, around a net 1.3 million people came to the UK legally.

Authors David Cowan and Tom Jones looked at the economic impacts of mass migration, and found that high levels of low-skilled immigration has been helping to prop up a low-wage, low-productivity and low-growth economy:

- Gross GDP has been artificially boosted by increasing the size of the population, creating a larger economy by default. But GDP per capita, which is a better measure of a country’s prosperity, has stagnated since 2008. The economy might be getting larger, but we are not getting individually richer;

- The economic impact of migration has been shown to be quite small- between only +1% and -1% of GDP;

- High levels of low-skilled migration disincentives the investment in machinery and automation the UK needs to boost its productivity;

- Mass migration is not necessarily the cause of the UK’s poor economic performance- there are a number of factors at play, including our planning system, high energy costs, and over-regulation;

- But it is propping up our current economic model by subsidising certain sectors, especially the UK’s universities and healthcare system.

The paper also highlights that mass migration is not the solution to Britain’s ageing demographic problem:

- Low fertility is a global problem. By 2050, 75% of nations will not have above-replacement fertility levels, rising to 97% by 2100;

- Mass migration is also unlikely to increase the UK’s fertility rate. Evidence shows that when women move to a different country with a different fertility rate, they adapt their behaviour accordingly. This is known as ‘fertility convergence.’

This report puts forward recommendations which would create a highly selective immigration system which actively seeks out the best talent from across the world, and which would accelerate the UK’s transition to a high-skill, high wage, high productivity and highly innovative economy. These include:

Reducing low-skilled immigration, whilst promoting global talent:

-Support annual caps on visa routes informed by annual Migration Budgets approved by Parliament and informed by a Migration Book, as proposed by the Centre for Policy Studies;

Return migration levels to pre-1997 levels by setting an overall skilled worker cap at a higher number of around of around 50,000 to 60,000 , which is informed by the Migration Budgets;

-Abolish the graduate visa route. The best and brightest who study in the UK will be able to enter the country via other routes; we do not need an open-ended graduate visa system. This should be mitigated through an unfreezing of student fees for UK students, alongside wider reforms to student loan repayments to prevent UK students being overburdened;

Retire the Shortage Occupation List, and cap the number of health and social care visas, thus ending two of the most straightforward open-ended routes for mass migration to the UK;

-Auction out work visas for foreign hires to employers every three months, raising much needed revenue;

-Allow anyone employed in the same company for the whole five years to apply for indefinite leave to remain, with further steps in the citizenship process contingent upon bespoke assessment;

-Issue extremely limited rounds of work visas for highly desirable immigration streams, including a relocation bonus and pathway to citizenship;

Create a new guest worker programme for seasonal work that has no pathway to residency and citizenship, and no access to the welfare state whatsoever.

Ending low-wage dependency:

-Scrap the British Medical Association’s cap on the number of medical training places available, enabling more top domestic students to qualify in the UK and reducing the need for doctors who have qualified abroad;

-Re-establish the Resident Labour Market Test for medical practitioners;

-Abolish all state-sponsored immigration schemes for low-wage occupations, including £10,000 ‘international relocation payments’ and Qualified Teacher scheme;

Incentivise domestic workers to work in the public sector, for example by offering part-time courses and grants;

-Remove the social care visa route gradually to give time for the market to adjust;

-Raise the salary threshold to £40,000 per annum and thereafter tie it to inflation and/or immigration data on net contributions to the UK economy.

Supporting automation to boost productivity:

-Introduce tax credits to incentivise private investment in robotics and automation, with expanded eligibility criteria expanded to include long-life plant machinery and buildings;

-Grant National Insurance holidays for companies that automate more jobs;

-Provide tax relief for pension funds that invest in infrastructure and technological capital investment;

-Expand technical and vocational training for fields related to robotics and automation.

Maxwell Marlow, Director of Research at the Adam Smith Institute said:

“Over the years, politicians have used high immigration figures to artificially increase the size of the UK’s economy.

But this is unsustainable. We haven’t been getting individually richer, and the UK’s productivity has been flatlining. Mass migration may not be the cause of our woeful economic performance, but it is propping up a model which simply isn’t working for Britain.

Nor will it offset our ageing demographic problem. Fertility will increasingly be a global problem, so we cannot rely on migration to boost our population.

We need to reduce our reliance on mass migration. But it will not be enough to simply cap numbers. The economy will need to be able to adapt.

This report does not recommend that we pull up the drawbridge. Instead, it puts forward a progressive vision for Britain, where wages and productivity are rising, our working practices are innovative, and which actively seeks out the world’s most ambitious and skilled people. In short, our immigration system would be fit for the future.”

For further comment, or to arrange an interview, please contact press@adamsmith.org | +44 7584778207.

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.

David Cowan is a Substack writer and PhD candidate in history at the University of Cambridge. He has worked as a staffer and researcher in the House of Commons, and has been previously published at American Affairs, The American Conservative, Engelsberg Ideas, Fusion, and National Review.

Tom Jones is the Councillor for Scotton and Lower Wensleydale at North Yorkshire Council, where he also serves as Whip. He is also a lobbyist and the author of the Potemkin Village Idiot substack.

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