Post-Brexit migration
What should the Government’s objectives be in drawing up a post Brexit immigration system?
1. The key objectives should be to end free movement so as to control and substantially reduce net migration from the EU, to retain the ability to recruit highly-skilled migrants from the EU and to maintain and develop the personal, historical and cultural links that we have with Europeans. This could be done by extending the system of Tier 2 highly-skilled work permits to cover EU migrants. Some transition arrangements may be needed for construction workers as well as a scheme for Seasonal Agricultural Workers. There should be a minimum of formalities for EU citizens visiting the UK for business, tourism, study and family purposes.
2. Other objectives can be summarised as follows:
a) To avoid entangling these matters with the trade aspects of the Brexit negotiations.
b) To avoid a ‘hard border’ between the UK and Ireland.
c) To ensure the availability of sufficient resources for the successful implementation of immigration policies.
What are the implications of the net migration target?
3. The target was put in place in 2010 because net migration of 250,000 per year was driving the fastest population growth that we had seen in decades. After peaking at 336,000 in both 2015 and 2016, net migration remained (in the year to September 2017) only just below the historically very high level of 250,000 a year so there is every reason for the target to be kept in place. The UK population is projected to increase by nearly ten million by 2041 with over 80% of this growth being the result of migration. The government should redouble its efforts to meet the target as part of the need to reign in rapid population growth. A recent poll conducted for Channel 4 News found 73% saying they felt the target was the right policy, although a portion felt it needed to be applied with flexibility. The target should help coordinate policy across government and keep government action accountable to the public. The opportunity of Brexit should be maximised in order to help the government achieve it.
How should the UK address skills shortages which are currently met by EU migration?
4. This is a something of a chicken and egg situation, with employers reluctant to invest in developing skills because they can import trained workers from abroad [Migration Advisory Committee (MAC) report, ‘Migrants in low-skilled work’, 2014].[1] Since the late 1990s, the amount spent per head on training has declined quite significantly. The number of employees attending training outside the workplace fell from 140,000 in 2000 to 20,000 in 2014. There has also been declining investment by employers in vocational training since 2005 [in contrast to increased investment in France and Germany] according to the Chartered Institute for Personnel and Development (CIPD). Policy decisions by government have also had an impact, for example insufficient numbers of training places being provided for nurses and doctors, and too little being done to address high staff turnover.
5. Underemployment remains well above pre-recession levels, and our recent analysis of the Labour Force Survey suggests that the situation of those four million wanting to work more is unlikely to be helped by further immigration [see our report].[2] With such a large reserve of underutilised labour, employers should look to raise wages and improve working conditions in order to attract these potential workers into employment. As the MAC noted in its interim report on EEA migration, published in March 2018, ‘individual employers would almost always be able to recruit resident workers if they paid wages sufficiently above the going rate’. Employers should almost always be able to find people capable of being trained in the skills required.
6. That said, there may be scope for some transitional arrangements where the skills gap is long-standing and large such as for construction workers, as well as a scheme for Seasonal Agricultural Workers for roles that might not provide sustainable employment for residents. As our November 2017 paper notes, the current New Zealand seasonal worker scheme has been cited as an example of ‘best practice’ by the World Bank and includes safeguards against undercutting and overstaying which the UK would do well to incorporate also.[3]
Should a post-Brexit immigration policy seek to reflect regional variations?
7. There is already a tailored Shortage Occupation List for Scotland. There may be some further adjustments that the MAC could advise on. However, attempts to implement a regional immigration system with respect to different locations across the UK would cause a great deal of confusion and would not bring benefits. Indeed, researchers from Bath and Coventry Universities have written that such a scheme would be ‘hugely complicated and risky’.[4] The Migration Observatory has noted that it is not clear that regional variations would lead to a better match between economic needs and policy design.[5] The few existing regional immigration systems in the world appear to have uneven records of success. Meanwhile, in part because they would act to distort competition, such schemes would not be popular with business. The results of a survey published by the CIPD in February found that only 5% of employers would be in favour of ‘a regional immigration policy that gives preferential arrangements to some areas over others’.[6]
To what extent will trade and immigration arrangements be linked in the negotiations and in the legal text on the UK’s future relationship with the EU?
8. It would be much better in the context of the Brexit negotiations to keep immigration and trade separate. It has been made clear that the UK will not be in the Single Market so the question of ‘indivisible four freedoms’ simply does not arise. The government should pursue its agenda for frictionless trade with the EU as a third country, noting that the EU does not seek to include any provisions for free movement of people even in its most ambitious and extensive negotiations, whether towards the agreements concluded with Canada, South Korea or Japan, or the lengthy and ultimately abortive TTIP with the USA, or the DCFTAs with its neighbours in Ukraine, Georgia and Moldova.
What are the likely trade-offs?
9. One might expect a trade agreement to include arrangements for labour mobility required for delivery of services, business visitors and investors, as appear in the agreements above. But trade agreements are about trade and the means of accomplishing that trade to the mutual benefit of both parties. The granting of rights to individuals to move and settle for their own personal reasons are not necessary for this and are thus essentially irrelevant.
Could the UK seek to continue to participate fully in the Single Market while satisfying public demand for control of immigration?
10. No. This is impossible because as a matter of definition the Single Market (internal market) is an area within which there must be free movement of people. Pollster Professor Sir John Curtice has cited polling which shows that an average of 52% of the public expect less immigration as a result of Brexit. More recent polling has found that 70% say they would like to see a reduction in EU immigration.[7] So it seems unlikely that anything less than an ending of free movement as it stands (as was indeed promised by both the Conservative and Labour manifestos in the 2017 General Election) would satisfy public expectations for a reduction in immigration. But the answer to the question “Could the UK seek to trade freely with the EU while satisfying public demand for control of immigration” is clearly ‘Yes’, on the basis of the agreements concluded by the EU with other third countries as above.
What controls to EU migration or employment, additional to those currently used, are presently available to the UK Government within the single market and what might be the impact were they to be adopted by the Government?
11. Under free movement rules [which are a condition of being in the Single Market], EU citizens are granted leave to enter the UK unless the government is satisfied that the particular individual poses a genuine and serious threat to one of the fundamental interests of society. Within the Single Market, the UK has no effective means of controlling migration from other EU countries. David Cameron’s 2016 attempt to secure an emergency brake illustrates the limited degree to which free movement could be adapted by those remaining within the Single Market.
What measures are used in other EU countries?
12. There are examples of the Belgian authorities deporting people who do not work and support themselves. The UK does this too. In the most recent year, the UK enforced the removal of about 1,000 EU nationals for reasons other than their being Foreign National Offenders. There is also the example of the Spanish government requiring those accessing healthcare to register with the social security authorities and show residence and identity documents. However, the ability to remove people who are not working by definition provides no control over free movement of workers, and so, nothing can be done about the hundreds of thousands of people in low-paid work in the UK that EU law has required the UK to admit freely, many of whom are not actually supporting themselves. For example, nearly 20% of in-work housing benefit is paid to EEA-national led claims.
Would there be benefit in any future deal between the UK and the EU containing an ‘emergency brake’ or similar safeguarding clause? If so, what might such a provision look like and how might it be activated?
13. It is unlikely that any future deal between the UK and EU would contain an ‘emergency brake’ clause unless it entailed Single Market membership which would, in turn, imply the UK continuing to participate in freedom of movement. This would be unacceptable to the majority of the public who want immigration controlled and reduced. Switzerland is neither a member of the EU nor the EEA. However, it has signed a series of bilateral agreements with the EU including on the free movement of persons. Despite this, following a referendum in 2014, which saw the Swiss public vote to introduce quotas on free movement, Switzerland has introduced targeted restrictions obliging employers to give preference to local residents. This does not amount to an ‘emergency brake’ however. Moreover, as even one advocate of the ‘Swiss model’ has acknowledged, such measures would not be likely to reduce EU immigration. Thus they would not adequately address public concerns about the current scale of immigration.
What kind of emergency brake might be available within an EEA type framework?
14.Within the European Economic Area agreement there are ‘safeguard mechanisms’ contained in Articles 112 and 113. According to this Treaty, there must be consultations on these emergency brake mechanisms ‘every three months from the date of their adoption with a view to their abolition’. Moreover, the Norwegians have reportedly never used their ’emergency brake’ on immigration because they believed it would trigger a retaliatory response from the EU. Leaving aside concerns that such a ‘brake’ would not be practicable to operate, this mechanism would not give the UK control of immigration in a way mandated by the referendum result or the government’s negotiating red lines (see our paper).[8]
What UK/EU immigration controls would be possible in a free trade agreement, what relevant precedents exist and what would be the likely trade-offs if the UK pursued an FTA?
15.Negotiation of a free trade agreement with the EU need not entail any concession of the UK’s ability to control or reduce immigration. Allowing the movement of staff essential for the purpose of facilitating the flow of goods and services is normal in trade agreements. However, analysis of previous trade negotiations conducted by the EU reveals that it has never previously insisted upon liberalised border regimes or freedom of movement as a condition of a trade agreement. The only agreements that do provide for free movement of people were entered into many years ago when free movement was agreed among those countries that, at the time, saw themselves as in the ‘waiting room’ for EC membership. In contrast, for some decades now, free movement has not preceded full membership of the EU in any Accession Agreements.
What would be the advantages and disadvantages of having the same immigration arrangements for EEA and non-EEA citizens?
16. The advantage of extending the existing Tier-2 work permit system is that stakeholders are familiar with it and it works reasonably well in ensuring that work migration is driven by employers needs and benefits the UK. It could also lead to a significant reduction in the amount of migration into lower-skilled work, which has accounted for 80% of EU workers who arrived in the decade until 2016 [i.e. they would not have gained admission under the Tier 2 provisions for entry of skilled workers from outside the EEA. Indeed, since the ONS reconfigured its definitions for skill level of occupation in April 2017, we have made it clear that 80% refers to those who would not qualify for a Tier 2 work permit.] However, EU visitors, business visitors, tourists and students should be free to move to and from Britain with a passport but without any visa or permit.
Would it be practical to apply existing non-EEA rules to EEA citizens after Brexit?
17. Yes it would be practical for the reasons outlined above. Employers already have a duty to make sure that their employees have a legal right to work in the UK. Extending the Tier 2 system to cover EU nationals would simply be an extension of that. While this would impose additional costs on employers, directly through sponsorship fees etc and in time taken to recruit, we believe that this would have the positive effect of providing incentives to employers to take on and [where necessary train and develop] UK workers.
Is there evidence that free movement has had a negative impact on workers’ pay and conditions in the UK? If so, to what extent could such issues be addressed by reforms to labour market regulations?
18. The MAC has found that, looking at the UK as a whole, migrants were found to increase wages at the top of the UK wage distribution and reduce wages at the bottom. Other research (e.g. by the Resolution Foundation [2016][9], by the Bank of England [2015][10] and by Dustmann, Frattini and Preston [2008], has found negative impacts from migration on wages for workers in the skilled trade occupations and in the semi and unskilled services sector. In August 2016, the Trades Union Congress submitted proposals that would aim to guard against undercutting and worker displacement and also increase resources for labour market enforcement bodies.[11] We support these. However, they would not in themselves address the public’s continuing concerns about high levels of immigration from the EU.
What steps should the UK take to encourage UK businesses to employ workers already resident in the UK?
19. Unless it is in the financial interest of business to turn to UK workers then they will continue to rely on an unlimited supply of cheaper labour from Europe. This has negative implications for wages for the lowest paid and adds to unsustainable pressure on population growth, roads, schools, hospitals and other services. Extending the Tier 2 work permit system to cover EU nationals would therefore act as necessary counter-pressure on employers to raise wages, to improve working conditions and to invest a greater amount in training. Indeed, high levels of EU migration may well have had the effect of discouraging UK employers from investing in training.
Annex: The benefits of reducing net migration
20. A sharp and long-term reduction in migration into lower-skilled work would be beneficial to our society:
- Businesses would be given a strong incentive to invest in training. As is noted above, training in the UK has been abysmal over the past decade because employers have had access to an unlimited pool of migrant labour from abroad. For example, as UK Commission for Employment and Skills has noted, the UK is ranked 25th amongst OECD countries for intermediate skills. Stronger performance by other countries is expected to result in the UK’s decline to 28th place by 2020 [October 2015].[12] The question is: why would employers spend money on adequate training for UK workers when they can employ skilled workers from Europe on significantly lower salaries?
- Employers would be encouraged to do more to mobilise some of the four million underemployed in the UK.
- A rise in wages is likely to result. While some seek to dismiss the impact as small, the CBI’s evidence to the MAC suggests that the prospect of cheap labour supplies drying up is leading businesses to raise wages. And the most recent Bank of England Agents’ report noted not only the prospect of higher wages, but signs of businesses planning increasing automation. This is surely a good thing, especially in view of the UK’s very poor productivity growth over the past decade.
- Our rapid population growth would be slowed down at a time when three-quarters of the public think Britain is already crowded [YouGov]. The UK is already one of the most densely populated countries in Europe. Pressure on oversubscribed housing, bursting hospitals, congested transport and overcrowded schools would be eased.
- It would respect the views of 70% of people who wish EU immigration to be reduced.
21. Suggestions that harm to the economy would result are unsupported by evidence:
- There is no evidence at all for the UK that the very large amount of immigration into lower-paid work over the past decade or so has been in any way enhancing of productivity or, consequently, of GDP per person – which is a better measure of economic prosperity than total GDP. The MAC noted in 2016 that low-skilled migrants have a neutral impact on GDP per head.
- Indeed, this type of migration may have helped cause the UK’s productivity growth to stagnate. From 1986 to 2006, productivity increased by 45%. Research has found that migration into high-skilled roles contributed to this. But it has flat-lined since then while the number of migrant workers has grown by over two million, with a much larger proportion than previously being in only lower-skilled work.
- The hidden cost to the taxpayer of employing migrant workers is often overlooked. The working age benefit bill for EU migrants in the UK in 2014/2015 was £4.4 billion. It may well have risen further since. In many cases, therefore, the taxpayer is subsidising low paid work for EU migrants.
- Low-paid immigration does not represent a fiscal benefit for the UK taxpayer and no one claims that it does. Our own research using established methodology found that migrants from the EU10 were a net cost of £1.5 billion in 2014/15
- Indeed, there is a strong economic case for the measures proposed. The Times’ economics editor recently wrote: “Get the immigration policy right, though, and a prize awaits. British companies have grown lazy on low-wage EU labour, allowing them to forgo investment to the detriment of productivity.”[13]Cutting the level of EU immigration that goes into lower-skilled work could help improve UK productivity. As the Chair of the OBR said in March 2018: “There is a possibility [that a more restrictive EU migration regime] could be a trigger to greater productivity.”[14]
[1] Migration Advisory Committee, ‘Migrants in low-skilled work’, July 2014, URL: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/333083/MAC-Migrants_in_low-skilled_work__Full_report_2014.pdf
[2] Migration Watch UK, ‘The likely scale of underemployment in the UK’, May 2018, URL: https://www.migrationwatchuk.org/briefing-paper/446
[3] Migration Watch UK, ‘New Zealand’s Recognised Seasonal Employer scheme as a possible model for the UK’, November 2017, URL: https://www.migrationwatchuk.org/briefing-paper/423
[4] Emma Carmel and Katharine Jones, January 2017, URL: https://theconversation.com/handing-regions-power-to-set-their-own-immigration-policy-will-not-fix-social-integration-70930
[5] Migration Observatory, October 2017, URL: http://www.migrationobservatory.ox.ac.uk/resources/reports/location-location-location-different-parts-uk-different-immigration-policies/
[6] CIPD Labour Market Outlook, 2016/17, February 2018, URL : https://www.cipd.co.uk/Images/labour-market-outlook_2018-winter-2017-18_tcm18-38214.pdf
[7] UK in a Changing Europe, February 2018, URL: http://u kandeu.ac.uk/what-the-public-think-about-immigration/
[8] Migration Watch UK, ‘An emergency brake on EU migration?’, August 2016, URL: https://www.migrationwatchuk.org/briefing-paper/389
[9] Resolution Foundation, August 2016, URL: https://www.resolutionfoundation.org/app/uploads/2016/08/A-brave-new-world.pdf
[10] Bank of England, December 2015, URL: https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2015/the-impact-of-immigration-on-occupational-wages-evidence-from-britain.pdf?la=en&hash=16F94BC8B55F06967E1F36249E90ECE9B597BA9C
[11] TUC, August 2016, URL: https://www.tuc.org.uk/sites/default/files/ManagingmigrationbetterforBritain.pdf
[12] UK Commission for Employment and Skills, https://www.gov.uk/government/news/ukces-bulletin-uk-skills-and-international-competitiveness
[13] The Times, June 2018, URL: https://www.thetimes.co.uk/article/immigration-targets-are-futile-when-visas-are-key-currency-in-trade-talks-xk2w95qbf
[14] Daily Telegraph, March 2018, URL: https://www.telegraph.co.uk/politics/2018/03/20/cutting-migration-could-boost-economic-growth-official-forecaster/