Labour has stopped relying on the ‘magic money tree’ – now it has found a ‘magic people tree’

Keir Starmer says he is opposed to growth that relies on immigration, but this is another form of fantasy economics, writes John Rentoul

(Paul Campbell/PA Wire)

Keir Starmer is straddling the issue of immigration, opposing Rishi Sunak’s small boats policy for being ineffective rather than inhumane, and claiming that a Labour government would break Britain’s “dependence” on high net immigration to sustain economic growth.

It is ironic that, as Boris Johnson leaves the stage, it is the Labour Party that inherits his reputation for wanting to eat his cake and have it. Starmer has swivelled from defending the free movement of people throughout the EU at the last election to advocating lower net immigration than the government.

In November, the Labour leader told the CBI that he wanted to work with them “to help the British economy off its immigration dependency to start investing more in training workers who are already here”.

The message has been reinforced by Rachel Reeves, the shadow chancellor, who was asked in one of her post-Budget interviews this month about the assumption in the Office for Budget Responsibility’s forecast that net immigration would run at 245,000 a year: “I don’t think we should be using the immigration lever all the time to fix skills shortages here in the UK.” And Lisa Nandy, the shadow levelling-up secretary, was even blunter when asked by Andrew Neil a week ago: “Would Labour use high net migration as part of its plans for grow the economy?” She replied: “No.”

This is astute politics. Labour knows that its past support for free movement in the EU has been used by the Conservatives to portray it as advocating open borders. It is a tribute to Starmer’s handling of the issue that Labour is trusted on the subject of immigration by more voters than the Tories, according to most opinion polls.

But Labour’s presentational success ought to invite more scrutiny than it has so far. Like so much of Labour’s emerging manifesto for the next election, it rests on unconvincing assumptions. Starmer and Reeves have worked hard to wean Labour off its dependence on the “magic money tree” of higher public spending paid for by higher borrowing – an option now known as left-wing Trussonomics. But now they seem to be imagining a “magic people tree”, from which a highly trained workforce can be plucked to replace the need for imported labour.

The idea that a Labour government could in the short term reskill hundreds of thousands of the people who are currently economically inactive is pie in the sky. Especially as so many of them are inactive because they are suffering from long-term sickness or disability. So if Reeves were to instruct the Office for Budget Responsibility to cut its forecast for net immigration, it would have to cut its forecast for growth.

This is an argument that has already been fought in this government, when Suella Braverman, the home secretary, was overruled by Liz Truss as prime minister. Braverman wanted to stick to the manifesto promise to reduce immigration, whereas Truss accepted that this would act as a drag on growth, which she thought was more important. It is inconceivable that a Labour government would reach a different conclusion.

Nor does the Labour Party offer a genuine alternative on the asylum system and the Channel crossings. Yvette Cooper, the shadow home secretary, has a five-point plan to deal with the small boats that is essentially the same as the government’s policy with the exception of the Rwanda scheme.

Which means that Labour’s opinion-poll lead on immigration is likely to be essentially a side-effect of the government’s general unpopularity. If Labour’s lead in voting intention narrows as the election approaches, there is a danger that the party will find that its support is built on unsound foundations. I am not convinced that Starmer will be able to face both ways on immigration in the heat of an election campaign.

Having said goodbye to the magic money tree, Labour should have the courage to say goodbye to the magic people tree, and make the honest case for a moderate level of net immigration as the route to greater national prosperity.