Immigration and Health Services

by George Hatjoullis

In my previous blog post I suggested the real case for Brexit was in relation to political union. The ultimate objective is European Political Union and if the British do not wish to be part of this then Brexit is a legitimate choice. One could defer the decision but ultimately the choice will need to be made. I also speculated that the hope of the Remain camp is that time will soften resistance to political union. One response to my post suggested I had casually, and unreasonably, dismissed the immigration debate as xenophobia. I do write my blogs with broad brush strokes to create images that all can see so it is easy to give the impression of being casual to someone that reads the blog with an embedded preconceived idea. The specific criticism is that I ignored the pressure that immigration has placed on the National Health Service. Let us look at this in more detail.

Pressure on health services is primarily driven by demographics. The more people there are, the greater the pressure, other things being equal. However, other things are rarely equal. An ageing population requires much more health service provision than a young population. The young are simply healthier and make less demands on the services (except antenatal services). It is also true that rapidly growing populations tend to be, on average, younger and slow growing populations, on average, older. There are thus  offsetting effects: a growth effect and an ageing effect. This covers the demand side.

If pressure is felt on health services it reflects inadequate supply. The growth effect is largely self financing subject to productivity growth and employment levels. If the growing population is employed (employment levels are high in the UK) and productivity is broadly in line with historic levels, then the economy can afford the provision. It is now a matter of whether the government of the day is allocating enough tax revenue towards maintaining services for a growing population, at the same standard, or whether it is deliberately eroding standards. You can draw your own conclusions here.

The ageing effect is much more serious. A smaller active population must now generate enough to fund maintaining services to a growing and demanding sector of the population. This is difficult unless productivity is actually growing (which apparently it is not). One way of offsetting this pressure is for more rapid population growth (ironically) which will reduce the average age of the population.

Net inward migration increases population growth. It also offsets the ageing population because migrants tend to be younger. Employment levels are high in the UK (which is why we have this migration) and productivity more or less in line with history. The net inflow of young migrants into work, far from increasing pressure on the NHS, is actively reducing pressure. It would be worse without the migration. This may sound counterintuitive but economics often does emerge this way. The young migrants are contributing more to funding the NHS than they use leaving more for our ageing population. The pressure we perceive arises because the government of the day is not using the tax revenue generated by the young migrants to maintain standards. This is an ideological decision and has nothing to do with migration.

So is the solution simply to allow unlimited migration? Obviously not. It is still valid to argue that this is a small island and population growth should be slow. One must however accept that slow population growth results in an ageing population and brings its own economic and social problems. Japan of today provides an excellent window into the future. One of these problems is pressure on health services, unless offset by greater allocation of resources. Moreover, membership of the EU does not imply permanent inward migration. It is cyclical.

The other problem involves the fact that migration brings in different people. They are ethnically different and culturally different and they will ‘dilute’ the native population (talking of ethnic ‘dilution’ takes us into racism so I am not going to go there). Resistance to cultural dilution is where xenophobia enters the equation. Resistance to cultural ‘dilution’ is universal and does create social problems. These problems should not be diminished. But let us be clear what are the issues. Immigration per se is not pressuring the NHS, it may even be helping. The problem is in ‘dilution’ of the British (mainly English) identity. This links back into my point on the real reason for Brexit. Political union implies submerging all national identities into a European identity. English becomes a regional rather than a national identity. It is legitimate to not want this ‘degrading’ of identity and beneath all the flannel this is what is driving the Brexit vote.

As a postscript, note I have placed ‘dilution’ and ‘degrading’ in quotation. This is because I want to convey how I believe the issue of immigration is perceived by some and not necessarily how it should be perceived. Multiculturalists would take issue on my use. I have no strong views on the multiculturalism either way. My purpose in all my blogs is to enlighten by looking at things slightly out of focus, even if the conclusion does not suit me personally. The point of my two blogs is that national identity is the underlying issue and xenophobia is present. The economic arguments (and immigration has an economic dimension) favour remaining but they are not the only consideration. National identity has an economic price but it is not an illegitimate objective. In some ways it would have been more honest if both sides had framed the debate in this way.

I hope I have not offended too many people in my attempt to reframe the debate.

For some data on the subject see June 10, 2016 4:43 pm Ageing population leaves NHS spending under the weather Gemma Tetlow, Economics Correspondent