Hugo Dixon: How to respond to UKIP’s surge

By Hugo Dixon
May 6, 2013

By Hugo Dixon

(Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.)

The UK Independence Party will not come close to winning Britain’s next general election. The populist anti-Europe, anti-immigration party may not even win a single seat, despite last week’s surge in English local elections where it won nearly a quarter of the vote – running a close third to Labour and the Conservatives. That’s how the maths of Britain’s first-past-the-post voting system works.

Nevertheless, the rise of UKIP could have profound consequences for British politics and business – in particular, for the UK’s relationship with the European Union. This is because UKIP is mainly taking votes away from David Cameron’s Conservatives. A calculation by Sky News suggested that, if the local election results were translated into a general election, Labour would win an overall majority. Even though UKIP might win no seats itself, its popularity would damage Cameron’s prospects for reelection in 2015.

A key question will be how the Conservatives respond to this challenge. The party’s right-wing is already advocating a shift to the right to prevent more defections to UKIP. David Davis, who lost out to Cameron in the battle to lead to Conservatives in 2005, advocated an early referendum on whether Britain should quit the EU. Cameron has promised such a plebiscite but only after the next election – and implicitly only if he wins that election.

Other Conservatives will be arguing that it will be folly to tack to the right and leave the centre completely open to Labour. Holding a referendum on Europe before the election is not even practical politics, as the Conservatives are in coalition with the pro-European LibDems who oppose such a vote.

British business, which has a vital interest in how this debate progresses, should make clear that it wants the government to stick to the centre. It will not help the economy if there is a hard shift to the right on either immigration or Europe.

Look first at immigration. The economy benefits from having a moderately open approach to foreign workers – both in high-skilled and low-skilled sectors. Finance, information technology and, yes, plumbing are among the industries where Britain gains from imported skills. Immigration helps industry thrive and keeps costs down.

Within the EU, there is freedom of movement of labour – with the exception of Romania and Bulgaria, where the last controls will be lifted at the end of the year. This is a benefit too to British, who are free to work anywhere across the 27-member union. Immigration from the rest of the world is much more controlled.

There are worries, fanned by UKIP, about foreigners coming to Britain to enjoy free education, health care and benefits. But these are exaggerated. Immigrants tend to be younger, better educated and more economically active than natives. For example, a typical immigrant from Eastern Europe is 59 percent less likely to be on benefits than a British citizen, according to a study by the Institute of Fiscal Studies.

Immigration is therefore in most cases a good deal for Britain. And where this is not so, the answer is to make it harder for recently-arrived immigrants to get access to benefits rather than to stop immigrants who genuinely want to work.

Now look at Britain’s relationship with the EU. The economy benefits hugely from being part of the single market, which accounts for nearly half its trade. The City of London also gains from having a hinterland for its financial services. None of this is to suggest that Britain doesn’t also need to trade with the rest of the world. But Europe is a large, rich market on its doorstep.

That said, the EU is far from perfect. The economic model has been based too much on protecting people and companies from competition and not enough on boosting enterprise – as parts of the euro zone, in particular, have discovered with a vengeance in recent years. This isn’t just bad for the euro zone; it’s bad for Britain too.

The UK, therefore, needs to put its weight behind a campaign to make Europe more competitive. Although most of the work needs to be done at a national level, there are three supranational priorities.

First, the single market needs to be completed, especially in services, where Britain has a comparative advantage. Second, there needs to be a big push to cut free trade deals between the EU and other blocs, especially the United States. Third, there should be a drive to create vibrant capital markets, based in London, to take the strain off Europe’s dysfunctional banking system.

To be fair, Cameron started preaching some of this agenda in his European speech in January. But he also gave the impression that he wants to opt out of some European policies – a strategy that would reduce his chances of negotiating reform with other national leaders, even if it appealed to his right wing. He also implied that not much would happen before the general election. But the sooner reform starts, the better.

Part of the problem with acting sooner is getting the LibDems on board. But there might be a way of doing that. Why not focus on competitiveness now – something the LibDems ought to be able to sign up to – and leave any discussions on opt-outs until after 2015? Such an approach should certainly appeal to most of business more than tacking to the right in an attempt to negate the challenge from UKIP.

 

One comment

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Hugo,

I have to REALLY object to some of your comments in this article. I find them ill-informed and utopian.

Please come to Ealing in West London and kindly educate yourself. Ealing is the number 1 hotspot for immigration in the UK (source : my local Tory MP).

1. Is 28/30 or 30/30 Eastern Europeans in local school classes really sustainable? Local children are in the minority and we even have a school further west from here where the teachers are all Polish, as are all the children. I gather that Poland has had its best ever school year as their class sizes are 20 per class. Well, guess what, my children’s education is slipping due to the impact of high numbers of children who cannot speak English.

2. English nationals are leaving the area in droves. They are chosing self-segregation rather than live like this or complain. Should they complain then it is deemed as racist. Every school term we lose more and more of our friends, as do our children lose thier school friends.

3. No interpol checks have been carried out on nationals arriving here from anywhere in Europe. The result is that we have members of serious organised crime syndicates here in Ealing as parents in local schools. We have enough of our own criminals, we do need those from Europe too? And with the ‘right to family life’ rulings we cannot even deport them.

4. Labour did a special deal with Poland whereby we cannot even deport Polish criminals for 5 years. Whose side are you on Labour?!

5. There is no multiplier in the local economy here. We have many Russian and Polish shops in Ealing where all goods are imported from native countries.

6. Local gardening businesses, for example, are either closing or sacking staff. Businesses that paid corporation tax, NICs and income tax no longer do so as they are being undercut by Eastern Europeans who work for cash. Benefits are paid to them AND to the locals now who cannot find work. HOw is this a benefit?

7. Ealing is in the top 10 shopping areas in London. You will not hear an English voice on the high street anymore. This is a fact that is very distressing to local people.

8. It seems that some recent arrivals have jumped the council housing queue by arriving here as single parents and pretending to be homeless. How is this fair to the locals who have waited patiently for years?

9. Given that we are GBP1.2Trn in debt and free services, schooling, meals, translation etc are provided to one and all (who by the way have paid no tax or NICs), how is this fair on our children? It is them after all who will have to pay this back.

10. EU contributions need to be rebalanced to reflect the migration. The UK must be one of the major locations for immigration from the EU, yet there is no EU budget rebalancing to reflect this. The UK should be getting a bigger budget rebate from the EU to reflect the movement of people to the UK.

11. Local services are at a breaking point, whether it be healthcare, social services or other service. Local people are being treated like second class citizens in their own country, yet have to pay for the pleasure and have no vote.

12. Our MP has had to write to schools in the area to remind them that local people come first. We have families that are being forced to move because 2 of their children go to a particular school and there is no space for their 3rd or 4th child. One headmaster moved the start of the January term date by over a week to protect her OFSTEAD attendance statistics. It appears that some Europeans go home for Christmas and don’t bother to come back until late January. This cost us and other local families about £400 in child care fees as we both have to work.

My point is that there is nothing wrong with immigration (and before you accuse me of being racist I was born here and am from an immigrant family), it is just the numbers are completely and utterly unsustainable both froma social and economic perspective.

Cameron promised to act should there be contagion from the Eurozone. Well, he hasn’t and it is families like ours that have to endure this unwarranted smashing of our communities.

We here in Ealing have no other way of changing things. I have protested to my MP many times, have signed the No.10 ePetition and been on marches etc etc etc but the three largest political parties in this country will not give us a vote.

UKIP have promised to do so and I, for one, will be voting for them as a way of getting my EU Referendum. As for who I would vote for post a Referendum, that is to be decided, but it is unlikely to be the main three parties. The democratic system in the UK has been broken.

Let’s hope that UKIP can help address the yawning democratic deficit.

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