169. How To Wean The UK Off Immigration

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1:19hello and welcome to the rest is money with me Robert Perston and me Steph McGovern um so we've been doing a lot of analysis over the last few days about what's been going on with all these trade deals. But we've got another guest to chat to today. It's Rachel Wolfe, the founder and CEO of a policy consultancy called Public First. Really interesting career that Rachel's had. She actually co-authored the Conservative Party's election manifesto in 2019, supporter of Brexit as well. So it'll be really interesting to get her thoughts on, I guess, the kind of economic credibility that our political parties need and whether voters care about it when it comes to you know making decisions about governments but um robert i know someone who's really smart isn't she and we'll have loads to talk to about yeah look rachel is one of the more thoughtful people on the center right of politics we're recording this not long after reform's unbelievable surge which were not unbelievable, very believable, so many would say, in the local mayoral elections and the absolute implosion of the Tory party.

2:30And so if we're going to try and understand what the Tory party has to do to become a credible party and arguably a credible party of government again, particularly when it comes to the economy, I cannot think of anybody more interesting to talk to than Rachel Wolfe. Rachel thank you very much for joining us I'm really interested by what you think in terms of why people are voting for reform and I know you did a piece for political where you say that there's no new magic reform voter there's no new problem politicians need to figure out they're the same people who surprised us in Brexit and you know surprising us now, surprised us in 2019 and I think I agree with you because I know a lot of those people who are the people making those votes who were strong Labour voters but had had enough and went for the Tories and then voted for Brexit and then you know decided the Tories hadn't done what they wanted either and gone back to Labour and are now really annoyed again and and I think this is really simple this is about people not being given what they're told they're going to get by politicians isn't it?

3:45I agree with you People are largely voting for the same reasons as they've been voting since Brexit. And consistently in every single one of those votes, whether it's through the referendum or in general election campaigns, they've been promised things very substantially on immigration, but also in other areas that haven't been delivered. And so they're still trying to find someone who might actually keep those promises. I do think two other things have happened. The first is there's no core political loyalty in the way that perhaps there once was. Once you break this idea that you're a lifetime Labour voter or a lifetime Conservative voter, it's very easy to break it again.

4:31And so people are like, well, they didn't give me what I wanted. I'm going to move on to someone else. maybe three things actually the second is Farage is I think the only frontline politician in Britain now who has any claim to ideological consistency you might not agree with him but he's consistently been saying the same things and arguing for the same things for at least a decade you could argue two decades and therefore he feels like he's one of the few authentic politicians left in Britain And the third is that it was never very high, but the basic view that it's not like the standard political parties can get anything done.

5:08It's not like they're competent. It's not like they've got well thought through policy positions. So this attack that reform is somehow substanceless doesn't really hold because they think everyone is substanceless. So I agree with you. None of this is surprising. It's exactly the same reason that people have been changing their votes for years. It's what you would have predicted, and it is going to keep happening. And so if the only thing you can do, either as a party leader to become more popular, would be to deliver rising living standards for the vast majority of people, which is, I think what you're saying, and not just those rising living standards, but people feeling that their quality of life is improving.

5:51And if doing that is also the only way to sort of get us out of a world, maybe we want to be in a world of many different parties and all this political, I should make a value judgment about whether political fragmentation is good or bad. But let's just look at it from the point of view of whether you're Starmer, Farage, or Kemi Baden-Ark. I mean, I think what you are basically saying is certainly improving living standards is absolutely fundamental. But actually, answer me another question. When you talk about people's obsession with immigration, and there's absolutely no doubt that they are, is that, in a sense, also a reflection of people just feeling that they've got worse off?

6:38and they want to blame a particular phenomenon? Or is there something else going on in your view? On immigration, what is driving it? So I think some of it is economic. And there's no question people believe that immigrants have suppressed wages. And you also get arguments in focus groups that by having high immigration, it makes it easier for people to be on benefits and not have to take jobs. You know, there are all sorts of economic arguments that people come up with. Some of it is fairness. There's absolute fury in large parts of the country about asylum seekers being put up in hotels that would otherwise be a massive deal to pay for your wedding.

7:16And that this is deeply unfair and the sense that there always seems to be money for someone else and support for someone else, but there never is for them. And part of it is cultural. Part of it is a sense that the places they're in have changed and changed in ways that they don't feel comfortable with. So I don't think you can make it one single reason. I also don't think you can underestimate how important it is. There's a kind of theory in Westminster that sometimes goes around, but actually, immigration is just a function of other things. And if you made people feel better off, they would stop caring.

7:47I'm not convinced by that, although we can argue it. On your first question, is the only thing the governments can do if they don't want deep fragmentation politics to massively improve living standards? I'm not sure I do agree for a few reasons. First of all is I think we have to stop massively amping up promises that we have no intention of and no idea of how to deliver in election campaigns. So that's number one. The second, and I argued for this in the levelling up era, is I think you have to put in place some small policies that you might deride as relatively unimportant. The sorts of things like potholes or low level crime that you put up with or people stealing things that they don't seem to be any consequences for.

8:36Or you go to supermarkets and meat is locked up. making small changes that you can do relatively rapidly, not because they're the things that most matter to people, although they do, but because they're a way of showing that you're on a path of change relatively fast. And because they're tangible, so you could actually physically see it rather than talking about GDP and all these kind of esoteric things. Exactly. And what I worry about a lot with the kind of living signs and growth agenda, which I'll come back to, is you're kind of saying, guys, stick with us. We're on a 20-year journey, but just trust us and we'll get there.

9:07when they have absolutely no reason to have that trust, like zero. So you have to pick some small things. The third, which we shouldn't underestimate and the toys always try and avoid talking about, is public services. A lot of this is not just living standards. It's I want a GP appointment. Although, hang on, I would argue that living standards, I don't just mean, you know, some narrow financial calculation. I mean, quality of life is what I mean. I mean, being able to get a GP appointment is absolutely fundamental to quality of life. Yeah, I totally agree with that. And in that case, I think crime does too.

9:44And I think one of the challenges is that many people feel that they are, you know, we are in a country that is much richer than it was a few decades ago, no question. But there's certain things they expected then they can no longer expect now. Yeah, I mean, one of the most fundamental ones, I mean, you talked about low level crime, you know 20 or 30 years ago we expected police to investigate robberies and burglaries and shoplifters and frankly far too often they just don't now and that's a massive most of us would say undermining of quality of life it's terrible and it breeds um it breeds terrible uncertainty of life too that you don't know if the crime's going to get investigated you don't know if you're going to be able to get the ambulance.

10:32You have no sense of the reliability of the basic services around you. And that makes you understandably very angry and very worried. So can I ask you then, Rachel, kind of what you do if you are a political party? Because as you say, you know, there is this kind of anti-establishment vote happening, people who are saying, well, none of the ones who've been in however long have done what they said they would. what does a party need to do to get in but also be economically credible? Because reform might get in the next election, but then the policy, the economic policies not stand and therefore they'll just fall at that first hurdle and then the vote will move to someone else.

11:15How do you actually make this sustainable? I mean, reform, certainly in vote share terms, did pretty well at the 2024 election on a manifesto that made enormous and, frankly, completely unbelievable promises. Now, I suspect that their success had very little to do with those enormous and undeliverable promises. But I think that the thing that both Steph and I are absolutely fascinated by, and I know this is something you think about a lot, is this tension between what you have to do in today's sort of media campaigning world to attract attention and win votes versus the kind of policies that are actually deliverable.

12:06Because many of the policies that are deliverable and are sensible are unbelievably dull. What's your example of an incredibly important and dull and sensible policy? Well, I suppose what I'm saying is a lot of what needs to happen to fix the UK is sort of sensible. And some of it is also just straightforwardly unpopular. You know, obviously, the most obvious example of this is maybe you disagree, but I do think we've got to build more infrastructure, build more houses, build more factories. and most of that stuff is pretty unpopular, particularly in the local community where it's happening. Although I think that is a really interesting example because I would say that for the Labour Party, there's not that much political damage if they went very, very heavy on house building in large parts of the country.

12:56If the Labour Party concreted over the entirety of Cambridgeshire and Oxfordshire with not a single blade of grass left, I'm not convinced that would lose them any elections. So I agree there is a tension and we can come back to that. But I do also think that we have got ourselves into a funk and we have convinced ourselves that it is impossible to try and make an argument to the public over time. So we shouldn't even try. That we can't bear any political losses under any circumstances anywhere. And therefore we have to be careful. And that therefore we are completely stuck. And I actually don't buy that.

13:31There are costs and there are trade-offs, but there are costs and trade-offs as we're seeing to inaction too. And we are, I think, underdoing the cost of inaction and overdoing the cost of action right now. So I buy it in some ways, we're unquestionably fiscally very constrained. I do think it would actually be very hard for the government to borrow lots more for infrastructure. But in other ways, I actually think they could go a lot further and a lot faster. I think you're completely right that reform has not tried to be and not had to be even a tiny bit serious about policy. And that is not at all why people are voting for them.

14:04They're voting for them because they hate everybody else and they want there to be a wake up call and they think these guys can't be any worse. I always think if you started to think reform was a genuinely plausible governing party, you would get some more scrutiny on them. And if they want to be a serious political party, they're going to have to spend a lot more time on what their platform is over the next few years. I sort of do agree with you that the real problem seems to me that we simultaneously worry too much about the political pain of doing anything and worry too little about the political pain of doing nothing.

14:44So give us some examples of how you, if you were invited. I just did, right? I think housing is a great example of that. I think that welfare reform is a great example of that. I think you're going to ask me about the Conservative Party at some point. And even if it is electorally very hard in the short term, I don't see how in the long term the Conservative Party kind of regains its position of something in any way differentiated if it doesn't start to consistently make the argument that we can't afford what we're doing right now. And it avoids that. So it too makes the kind of benefits and pension benefits on the immediate term and moves things around at the edges and sort of complains about a smaller state but then doesn't give you any actual examples of where you would like the state to be smaller.

15:31And so they come across as unserious. So I do think that there has to be that serious argument and we have to give it a try. I mean, I would argue that in two quite fundamental ways, somebody in the person of Kimi Babenock, who says that she's serious and thoughtful and long term, and I think she would certainly pay lip service to what you've just said. But I have been struck that they have been critical of the government's welfare reforms, and they were very unwelcoming of the India trade deal. And it seemed to me in both those cases, they didn't look like serious, didn't look like a serious party.

16:20If you're on the centre-right, it's all very well, you know, you can sort of say, well, we're going to make this a better deal by arguing about the detail, as it were. But for them to sort of imply that they were against free trade in the shape of the India deal and significant welfare reform when it came to changes to the rules on disability, There are all sorts of reasons why you might criticise the way the government is going about the disability reforms. Of course there are. But that was not really the message that one heard from the Tory party. And my view is, and this is a completely non-partisan view, but I do think they are finished as a party if people don't think they're serious.

17:06because the one thing that the Tory party has had going for it for more or less its entire history is that there have been periods of sort of what you might these days describe as populism and there have been periods of flamboyance, but mostly they've tried to, their sort of reputation has been that they don't take excessive risks and they do understand basic economics. I've obviously been thinking about this a lot over the last few weeks And I don't want to underestimate how difficult it is to be the leader of the Conservative Party right now and how much most almost all of the Conservative Party's problems right now have got nothing to do with its leader.

17:46It's all a legacy of people's utter fury over what happened under the last Conservative administrations. And the public move on much more slowly than Westminster does. So they haven't forgotten and they haven't forgiven. And that's got nothing to do with her. I do, though, think that you are right, that if you are between reform on the one hand and the Lib Dems on the other, what are you for? And I think that what you are for, in essence, is being the grown-ups. I think if you're not that, then you can't be a successful concepto party. So I do agree with that. I think you can be the grown-ups who are tough on crime and want immigration to come down and want a serious plan to have immigration come down.

18:33That's completely reasonable, but you have to be the grown-ups. It is very hard when you're in opposition, I think, not to resist coming out against any story that the government produces or any policy announcement that the government produces because it's so hard to get airtime. It's so hard to feel relevant and no one's listening to you anymore. So how do you get airtime if you're not in opposition? and that's a challenge for them because they are squeezed. But I agree that on things like winter fuel payment or disability reform or things that you kind of think are core conservative views, right, that you have to restrict the size of the state and you have to think about growing the economy, it's better not to.

19:10The India trade deal I think is more difficult because I also think there is no future for the Conservative Party that isn't pretty restrictive on immigration because there's no future for any party that isn't pretty restrictive on immigration. So much more we need to talk to you about, Rachel, but let's go for a quick break.

19:50So what do you think of something like the India trade deal then? Because Robert and I were saying, on balance, if you look at this, the estimates are that it's going to bring in more money than we'll lose, for example, from those lost national insurance contributions from the Indian nationals who come here to work and don't pay them for three years. And so it felt like that was totally exaggerated, the impact of that, because, you know, we know it's very specific criteria for immigration in those particular jobs and things. But it was made to be this headline of businesses are going to be, it's going to be cheaper for them to employ Indian nationals than people in the UK.

20:27But what did you make of it looking at this? So I haven't, I have not looked at the detail of the India trade deal, but I think the problem is that this is not a one-off event, right? This is a cumulative series of decisions that from the point of view of the public in every single moment chooses higher immigration over lower immigration and is after a kind of series of events that they remember around do people coming into the country get benefits that they can send back home? There's been this recent scandal, which I don't know the details about, about national insurance payments. So it's yet another nail in the coffin.

21:11And that's why it's completely irresistible from a political point of view, but also not surprising from a public point of view that it sparks anger. I think the core question, though, is, is that a reasonable trade off? What trade off would you make? Are you basically saying that one consequence of the very widespread view that we've got to limit numbers coming to this country is we've all got to be economic nationalists now? because I have immersed myself in the detail of this trade deal and the numbers of people who may be coming, in addition to those who are already here, the incremental number who will come and benefit from not paying national insurance in the UK is, in my view, going to be really pretty small relative to the benefits of bringing down trade barriers with what by any standards is one of the most important fast-growing economies in the entire world.

22:15And there are 20 ,000 here now who will benefit probably from not having to pay national insurance and maybe a few thousand more. I personally think if you're in government, you have to make the argument that that's not going to destroy people's quality of life or their communities. And it's a price worth paying for the very significant numbers of new jobs that will be created for Indigenous people? So my counter would be if I were in government, that if I knew I wanted to do an Indian trade deal, and that this was one of the core trade-offs I wanted to make, and that it mattered a huge amount to the prosperity of the UK and free trade, and I do believe in free trade, I would make damn sure that I'd made a number of other decisions in the previous six months that actually seriously reduced immigration and showed I was serious.

23:02So do you think the absolute crux of this thought is immigration? Because it feels like that's what you're saying so even if there are let's say you know the the more jobs created in an area where people are you know thinking about voting reform if there are suddenly more jobs there but yet there are some more some bit of relaxation on immigration that they're not going to go well actually things have improved a bit because we have got more jobs if i if i were to be really concrete in my prediction and who knows but let's give two different scenarios let's say uh gdp per capita increased. So wages increased faster than cost.

23:41And the NHS got somewhat better, probably not as good as it was in the kind of Hay Day Blair period, but somewhat better. But migration was at, I'm making up numbers, 800 ,000 a year. And there was still lots of asylum seekers and hotels. And there's still many thousands of people coming over on boats every month. I still think people would vote before. That is my prediction. But you guys quite discreet it's a prediction no i mean i'm this is the thing i'm immersed in all you know especially up in the northeast talking to people about this all the time about what do they care about the most and it is it is that access to services and their own quality of life and the fact that they are blaming immigrants for that which is very hard to break through with any evidence or detail to explain it to them but there's an organization recently set up called the good growth foundation who've just done some some work on particularly on this particular issue and they say that actually you know when you talk to people there's some kinds of immigration that people will say they like so they like it when come people come and work in social care from overseas they say that they like it when they come and work in the health service but they hate it when foreigners come over to be bankers for example and it seems to me that maybe it is a more nuanced issue than we seem to have suggested so far in this conversation.

25:06And in particular, there is one thing that's massively on my mind at the moment. And I just wondered what you thought about it, which is, I am absolutely one of those people who thinks you've got to get the best brains into your economy if you want growth. Right. And there is this, I think, absolutely massive opportunity because there are so many super brainy American academics or people working in America at the moment who so hate what's going on in American universities and they so hate what Trump is doing that actually I personally take the view that we should try and organize you know the reverse of what used to be called the brain drain in the 60s and 70s ton of our best thinkers went to America this is an opportunity to get a ton of absolutely brilliant people to come to Britain.

25:53Would you, I mean, if I were in government, I would massively be trying to change the visa rules to get these people over here and throwing money at our universities to employ them and all the rest of it. But am I wrong? Is that a wrong thing? No, I agree with you. Like if I were magically in government and running everything, I would be throwing out, you know, every Georgian house I have at my disposal to bring in every amazing academic and sort of brilliant thinker in the US and throwing up a kind of huge blinking light saying, come here, and I would have no worries whatsoever about what that meant for public opinion.

26:29Zero. Like, we can have all the Nobel Prize winners. Everyone's going to be fine. First of all, these are not large numbers, and it's not a problem. So, no, I'm not saying that there is no distinction between different forms of immigration policy, nor am I saying that it's the only thing that matters. And in part pushing because people, I think, sometimes convince themselves that if they do other things, it doesn't matter at all. And I also don't agree with that. So I agree. Can I just say, I totally disagree with both of you on this. Because for me, putting academia and academic success above all the other skills.

27:01No, no, but these are people who come up with scientific and technological breakthroughs that make us rich. Yes, I know. But then what we bring them over here so that they put up our house prices. And, you know, they that why aren't we thinking about how we create our own really scientific breakthrough? I know, but I just think bringing up, I just think it's an insult. That's very interesting. Because to me, academia is not a level, a measure of intelligence. To me, it is about how you use your skills in whatever it is you do to make a living out of it. It's not about how bookish, clever you are.

27:38Yes, I know we need scientific breakthroughs, but what's to stop someone in a factory doing an apprenticeship who can come up with it? Where are our growth companies going to come from? Yeah, but it doesn't have to be academia that they come from. We should do more to encourage entrepreneurialism within workforces and businesses so that they leave the business and set up their own companies. It doesn't all have to come from, it should work in collaboration with universities, maybe. So like degree apprenticeships, I think are great now because they're both the vocational side and the academic side.

28:07But I just think we just have this siloed way of thinking where everything is either you're clever because you're academic or you're not because you're not. And it's just, I just think that's the wrong, we should be looking at these areas where there's high deprivation, where there's people who've got, you know, who are lacking ambition and inspiration and motivation and everything else should be taught about how their skills are actually really valuable and how they can be taught to create their own businesses and create, you know, we often see the most important problems that are solved in the world are often from very simple things, aren't they?

28:42And so why aren't we just helping people do it themselves rather than thinking of shipping in all these supposedly clever Americans to do it? Well, a lot of them aren't clever Americans. Quite a lot of them are clever Brits who went to America and were trying to get back. Or clever people from India or clever people from Israel. You know, there are, you know, I think we could do both those stuff is the point. I mean, you know, if you just look, if you just, you know, we talk all the time about how appalling it is that DeepMind starts here and goes and then relocates effectively to, you know, America.