The Government's negotiating objectives: the rights of UK and EU citizens Contents

5A new immigration system

EU migration to the UK

100.On 23 February 2017, the most recent migration figures were published by the Office for National Statistics, Home Office and DWP, covering the year ending September 2016—the first set of figures for any time since the referendum. Net migration to the UK was 273,000, down 49,000 from the previous year, and the first time net migration to the UK had gone below 300,000 in two years.135 Net migration from the EU was +165,000, running level with net migration from non-EU countries also at +164,000.136 There has been a small decrease in immigration from nationals from the A8 countries—Poland, Hungary, Latvia, Lithuania, Czech Republic, Slovakia, Slovenia and Estonia—but an increase in immigration from Romania and Bulgaria.137

The Lancaster House speech and the White Paper on Immigration

101.In her Lancaster House speech of 17 January, the Prime Minister included controlling immigration as one of her 12 priorities for negotiations.

Because while controlled immigration can bring great benefits—filling skills shortages delivering public services, making British businesses the world beaters they often are—when the numbers get too high, public support for the system falters.

On free trade with European markets, the Prime Minister said:

What I am proposing cannot mean membership of the single market. European leaders have said many times that membership means accepting the ‘4 freedoms’ of goods, capital, services and people. And being out of the EU but a member of the single market would mean complying with the EU’s rules and regulations that implement those freedoms, without having a vote on what those rules and regulations are. It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country.138

102.This was followed by the White Paper in February which reiterated that it was important “to ensure we can control the number of people coming to the UK from the EU” and stated that the sheer volume of long-term migration had given rise to public concern about pressure on public services, like schools and housing, and placed downward pressure on wages for people on the lowest incomes. It added that “The public must have confidence in our ability to control immigration” and as a result, in future, “the Free Movement Directive will no longer apply and the migration of EU nationals will be subject to UK law.” It continued:

5.10 Implementing any new immigration arrangements for EU nationals and the support they receive will be complex and Parliament will have an important role in considering these matters further. There may be a phased process of implementation to prepare for the new arrangements. This would give businesses and individuals enough time to plan and prepare for those new arrangements.139

The objectives of a new system

103.The Government has decided to prioritise control over immigration in its negotiations on leaving the EU and the UK’s future relationship with the EU. We asked our witnesses what the aims of a new immigration system might be. Sunder Katwala said:

There is clearly a conflict or tradeoff. [ … ] Before we had the referendum, the question was, “Do you want to adopt these club rules? There is a club you can be part of, and if so you will constrain your immigration policy,” and the answer to that has been “no”.140

104.He said there were two questions to ask, firstly, what business might want from immigration and secondly, what there is public and political consent for. In the trade-off between those two questions, there were different degrees of acceptance for the different types of immigration: supportive of skilled immigration, but not for the “current level and pace” of unskilled immigration. There were also “very different public views about different types of low-skilled and semi-skilled immigration.” He gave the example of broad support for migrant labour in care homes but less support for the use of such labour in the hospitality sector.141 David Goodhart, Head of the Demography, Immigration, and Integration Unit, at Policy Exchange, said:

There is pretty broad consensus that for highly-skilled employees there should continue to be an assumption that it should be pretty easy for people from the European Union to come here—some sort of fasttrack, light-touch system.142

105.There are different ways for the Government to try to accommodate these differences. Free movement requires the minimum of bureaucracy. Creating a system more responsive to the needs of both business and the public will introduce administrative complexity. Professor Portes argued that different sectors would respond differently to changes that restricted immigration, and this would negatively affect the economy, depending on how strict the restrictions were and what the reduction was.143

106.Part of the debate around immigration has examined why British people have not taken the job opportunities that have been taken up by migrant workers. David Goodhart commented on the reduction in training over the last 20 years:

I think there is plenty of evidence [ … ] about the dramatic fall-off in training levels in Britain, over the last 20 years. There is plenty of evidence that employers have been exploiting this reserve army of labour in the European Union, and it is time that they stepped up to the plate.144

He questioned how ready the UK would be to fill the gaps with trained staff if the number of EU employees falls:

However, for European Union employment more generally—and do not forget that more than two-thirds of it tended to be in the lower-skilled areas—the question is, with those numbers coming down, what capacity do we have in this country to take up the slack?145

Importance of EEA migrants in the UK workforce

Proportion of employees in each sector that were born in the EEA

Accommodation and food services

14%

Manufacturing

10%

Agriculture, forestry and mining

10%

Admin and support services

9%

Transport and storage

9%

Information and communication

6%

Wholesale, retail, repair of vehicles

6%

Financial and insurance and real estate

6%

Prof, scientific, technical active

6%

Construction

5%

Health and social work

5%

Arts, entertainment and other services

5%

Education

5%

Public admin and defence

3%

Electricity, Gas and Water

1%

Source: Social Market Foundation, Working together: European workers in the UK economy, May 2016

107.For some sectors, these represent considerable numbers. The British Hospitality Association estimated that 700,000 staff in the hospitality sector are from the EU.146 There are an estimated 33,735 academic staff, and 12,490 non-academic staff, from the EU employed in higher education in the UK.147 The NHS is believed to employ 58,000 EU nationals in England, 21,000 of which are nurses.148

108.The Committee has heard concerns that ending free movement will have an impact on sectors of the economy which rely upon EU migrant workers. Both David Goodhart and Jonathan Portes commented on what the future immigration system might involve. David Goodhart said it was not in the UK’s interests to experience a rapid decline in EU workers, and that:

In the course of a negotiation we might well want to concede more favourable terms to EU citizens wanting to come and work, giving skilled EU workers some preference over non-EU skilled workers or allowing them quicker access to the social state.149

He admitted that the demand for EU labour would not change much in the medium-term. So if we operated a work permit system, and all permits requested were granted, then the flow of EU citizens into low-skilled jobs in construction, food processing and agriculture—might remain at similar levels to today.

109.Jonathan Portes said it would be difficult to restrict migration from the EU which would only reduce the migration of unskilled or low paid workers, without having an impact on skilled migration. He suggested that EU migration is likely to fall over the next two years, and that

I am reasonably confident, as I have said, that a substantial reduction in migration to the UK will reduce our GDP per capita.150

He also suggested that ending free movement would result in an increase in the regulatory burden on business, and that it will create a “significant increase in illegal working”.151

110.In the absence of free movement, the Government has tried to provide reassurances for business. In December 2016, Rt Hon David Davis MP, Secretary of State for Exiting the EU, told CBI Wales that “No one wants to see labour shortages in key sectors.”152 In her letter of 6 February 2017, the Home Secretary said “I’ve always been clear that after we leave the European Union we will have an immigration system that supports our economy and protects our public services.”153 And on a recent visit to Tallinn, Estonia, the Secretary of State was reported in The Times as saying that the UK would not suddenly restrict low-skilled migration after Brexit:

In the hospitality sector, hotels and restaurants, in the social care sector, working in agriculture, it will take time. It will be years and years before we get British citizens to do those jobs [ … ] Don’t expect just because we’re changing who makes the decision on the policy, the door will suddenly shut. It won’t.154

Any new immigration system will inevitably add to the regulatory burden. That burden will hit some parts of the economy more than others.

111.An abrupt reduction in the number of EU workers in the UK would cause disruption in a number of sectors. This cannot be the Government’s intention. The Government has made it clear that its priority is to control migration from the EU. We do not believe that necessarily means it will reduce net migration in the short-term.

112.As part of a long-term strategy to reduce the UK economy’s dependence on EU migrant workers, the Government needs to take steps to train, or further incentivise training, to ensure that skilled workers are available to fill jobs in sectors currently featuring a large number of EU nationals.

Possible framework for future EU migration in the UK

113.Regarding the options for its future immigration system, the Government’s White Paper said:

5.9 We are considering very carefully the options that are open to us to gain control of the numbers of people coming to the UK from the EU. As part of that, it is important that we understand the impacts on the different sectors of the economy and the labour market. We will, therefore, ensure that businesses and communities have the opportunity to contribute their views. Equally, we will need to understand the potential impacts of any proposed changes in all the parts of the UK. So we will build a comprehensive picture of the needs and interests of all parts of the UK and look to develop a system that works for all.

114.What these options might be have been discussed by several commentators, including among others, the Migration Observatory, the IPPR, and Migration Watch.155

Adopting the same system for EEA and non-EEA citizens

115.The UK could adopt the same system for all people wishing to come to the UK for reasons of work, study or family without differentiating between EEA and non-EEA migrants. The Tier 2 visa is available for non-EEA skilled workers who wish to come to the UK and have a definite offer of a job. Tier 2 visas (General) are capped at 20,700 per year.156 Tier 3 is for low-skilled non-EEA workers and has never been in operation. The Government would have to decide on how it wanted to limit numbers if EU migrants were included within this structure. From our meetings in Westminster and across the UK, we have found little enthusiasm for applying this approach to those from the EU.157 Research suggests that if the current visa system were extended to EU migrants, then three quarters of the EU workforce in the UK would not meet these requirements. This would be of particular concern for some sectors, such as social care, agriculture and food processing which contain a high proportion of EU migrants and where the roles would not meet the salary and skills requirements under the existing visa system.158

Retaining an element of free movement

116.Another option would entail allowing EU citizens to enter, settle in the UK and work without a work permit. Some restrictions could apply, either they would need to have a definite job offer before coming to the UK, or there would be a numerical limit on the people allowed in for work purposes or only in particular sectors. The Government would have to decide what to do if limits were reached and how that was enforced. As with free movement now, enforcement would be difficult as EU citizens without a job would be able to visit the UK.159

Work permits

117.A system of work permits would require employers to apply for authorisation to hire a non-UK national for a specific job. The authorisation would come with conditions attached, e.g. type of work, time period it applies for, qualifications of the worker or the activities of the employer. Bureaucracy for acquiring the permit would fall on the employer. The Government would have to decide which jobs would be eligible for a work permit. Permits would either be granted for: all occupations, high-skilled occupations, or both high- and low-skilled jobs but with different eligibility criteria.160

118.Most work permit systems in high-income countries typically restrict eligibility by occupation, and are limited to high-skilled jobs. Low-skilled worker programmes are also common, although they tend to be more restrictive—often limited to specific types of work and often providing no or limited routes to permanent settlement or options for family unification.161 Migration Watch have proposed a system whereby EU nationals wishing to work in the UK should obtain a work permit restricted to skilled employment.162

119.If it wanted to give preference to high-skilled occupations, then the Government would have to decide how to define skilled work—commonly by salary or level of education—and how it would manage gaps in the labour market that did not qualify according to salary or level of education requirements but may have broader social or economic value, for example some creative jobs, scientific research or nursing and social care. The UK Government currently manages the demand for non-EEA skilled employees by maintaining a shortage occupation list, overseen by the Migration Advisory Committee.163

120.An important consideration in assessing labour demand is why vacancies do exist and why they are not filled from the domestic labour market. This is particularly important when considering EU migration, since EU workers are overrepresented in low-wage jobs. Low-skilled migration tends to occur where employers cannot attract sufficient workers from the domestic labour force to get the work done, such as in low-paid or undesirable work. Where there are no legal options to recruit migrant workers there is a risk that demand for illegal employment increases in these sectors.

121.Work permit schemes could require eligibility requirements to be met, such as language proficiency or qualifications. The Government would also have the choice of applying further criteria, such as a labour market test to show that the post cannot be filled domestically, charging the employer a fee, limiting which employers can hire someone using a work permit, or time limiting the work permit and the possibility of it being renewed.

122.In addition to applying limiting criteria, the Government could apply an upper cap to the total number of migrants that can come through either route, even if they fulfil the eligibility criteria. The Government would then need to design a mechanism for prioritising applications where the cap is oversubscribed—the current Tier 2 visa route for non-EEA skilled workers in the UK is subject to a minimum salary threshold and an upper cap.

Geographic flexibility

123.In designing a new immigration system for the UK, there have been proposals to consider whether it could include flexibility for the devolved nations and regions of the UK.164

Scotland

124.The Scottish Government publication, Scotland’s Place in Europe, said that “there is a strong and increasingly urgent case for greater flexibilities on immigration for different parts of the UK” and that it is clear that a “one-size-fits-all approach” is not in the best interests of Scotland.”165 It points out that Canada and Australia operate “differentiated immigration systems”. It proposes that, if a way could be found for Scotland to remain in the single market, then Scotland could retain the free movement of people while the rest of the UK did not. In which case:

People coming into Scotland from other countries—EU or non-EU—would continue to be subject to passport and other security checks as is the case now. Scotland remaining within the single market—and the rest of the UK not—would not change that. It would be open to the UK Government to apply additional visa requirements for citizens from other EU countries coming into airports or ports in England, Wales and Northern Ireland.166

125.UK citizens would be allowed to move freely between Scotland, England, Wales and Northern Ireland as they are now. People living in Scotland would have the right to free movement across the EU, while people in England, Wales and Northern Ireland would not, and “it is suggested that domicile would be the determinant of those rights.”167 In response to what it saw as the issue of EU nationals using free movement to Scotland as a route to living and working in the rest of the UK, it said immigration rules applied elsewhere in the UK would apply at the point of employment, or of accessing housing or services:

Anyone from outside the UK seeking to find work or housing or access social security or public services in the rest of the UK would be subject to whatever rules and standards of proof the UK Government decides upon.168

126.The Committee also heard from the Minister for UK Negotiations on Scotland’s Place in Europe, Mike Russell, on Scotland’s particular need for continued high levels of immigration and how a geographic immigration system would work.169

Wales

127.The joint Welsh Government and Plaid Cymru Brexit White Paper ‘Securing Wales’ Future’ deals extensively with the Welsh Government’s position on EU migration.170

London

128.The City of London Corporation commissioned PwC to look at the possibility of a regional visa for non-UK nationals.171 They put forward two models

129.The visas could be short-term (12 months) or long-term (three years with an option to extend). Long-term visa holders would be able to apply for permanent residency and citizenship subject to the relevant conditions. Flexibility could exist for the visa holder to change job or geographic area subject to the business case. Rules would apply in areas such as bringing in dependants and paying into the Immigration Health Surcharge. Controls would apply to where the regional visa holder could buy or rent property. The system would be enforced through checks to ensure the applicant is working in the geographic area and with the employer for whom their visa was issued. Similarly employers who have assigned Skills Deficit visas could be obliged to report any non-compliances to the Home Office within a prescribed period in line with current work permit reporting for non EU nationals. Employers would also face civil penalties and revocation of sponsor licences if found to be non-compliant.172

130.We heard mixed views on adopting a geographic area approach to immigration. David Goodhart thought it would be “politically unpopular, for now anyway” but that it should not be ruled out completely. He said it would be a way of “calming anxieties in those parts of the country, like London and Scotland, which voted quite heavily to remain that their special interests and anxieties are being listened to.”173 Jonathan Portes thought it was “perfectly feasible” for a new system to have geographical restrictions because

Ending free movement immigration control is not going to be enforced at the borders at all. It simply is not. We are still going to let people in, at Stansted and Heathrow, with French passports. They just will not have the right to work here, and that right to work will be enforced at the workplace.174

131.Sunder Katwala, British Future, disagreed. He felt that it was important for a new immigration system to secure public confidence, which was less likely without institutions set up to enforce it, and a geographical system would enable someone to move and get a job outside their designated geographic area. He also thought it unfair if a business one side of a boundary could secure a competitive advantage from migrant labour that someone the other side of the boundary could not.175 Others, such as IPPR, have pointed out the risks to social cohesion if geographic migration policies had the effect of increasing migration of workers to parts of the country where it might generate a reaction.176

132.Sunder Katwala was more positive on offering arguments for differentiation by sector. He said the UK could offer preferential European access to skilled migrants from Europe on a reciprocal basis, which would benefit UK employers and employees who wished to work in Europe.177 David Goodhart was supportive of some form of “fast track system” for high-skilled EU migrants, but he was clear it would not be free movement, the UK Government would have to be controlling who came in.178 He also suggested a system could be developed along the lines of the Youth mobility visa to enable young Europeans to be able to come and work for a limited time.179

133.The Government has options for a new immigration system for EU nationals that ranges from an approximation to continued free movement to applying the current system for non-EEA migrants to the UK to EEA migrants. Introducing restrictions on migration to and from the EU will introduce complexity to the system, and a balance will need to be struck as to who takes on the administrative burden—the applicant, their employer, or the Home Office.

134.There needs to be a reduction in uncertainty relating to possible changes to the immigration system as a result of the UK leaving the EU. The Government should set out how it will establish a new system for immigration to be in place within two years of triggering Article 50 and what the rules for EU migrants will be once free movement ends as the UK exits the EU. We urge the Government to publish its intended timetable for the next Immigration Bill as soon as possible.

135.We think that there could be benefit in the UK Government indicating in the negotiations that it is willing to consider preferential access for EU citizens in its new immigration policy.

136.The Government should respond to the proposals from the devolved governments and from London, and must set out as speedily and fully as possible whether it is considering a geographic element to future immigration policy, and if so, for which parts of the UK.

137.The Government must be prepared to set out its policy for the non-work aspects of immigration policy, including students, family reunion, and on EU spouses compared to non-EU spouses.

138.A major consideration in designing the new immigration system will be its ability to earn public confidence. We welcome the Government’s enthusiasm to make sure any changes to the system for immigration of EU nationals into the UK and UK nationals working across the EU enjoys the confidence of all interested parties, including employers, trade unions, and the wider public.

139.The Committee supports protecting the Common Travel Area and welcomes the Government’s commitment to it.


135 Net migration to UK falls by 49,000, bbc.co.uk, 23 February 2017

136 The net migration to the UK figure of 273,000 is reached by including the -56,000 UK citizens who left the UK within the time period.

140 Q760

141 Q760

142 Q760

143 Q758

144 Q808

145 Q760

146 British Hospitality Association IMM0158. The sector includes staff in hotels, serviced apartments, private rental schemes, private members’ clubs, self-catering accommodation, restaurants, food service management companies, attractions, sport stadiums, and other leisure outlets.

149 Q760

150 Q795, see also Q787

151 Professor Jonathan Portes written evidence to the Home Affairs Committee IMM0013

157 Q296 [CBI], Q220 [EEF], CBI, Business priorities for a new migration system, Policy Briefing, 2016. Also at meetings with representatives from the creative and tech sector in London.

159 Oral evidence to the House of Lords Select Committee on the European Union, Home Affairs Sub-Committee, Brexit: UK–EU Movement of people, Q7

162 Migration Watch written evidence to the Home Affairs Committee IMM0021

164 IPPR North, Regionalising Migration, January 2017

165 Scotland’s Place in Europe, para 160, see also paras 59–69

167 Scotland’s Place in Europe, para 166. Domicile is where someone considers to be their permanent home

169 Q873, see also Q816 [Prof McEwan] and the Scottish Affairs Committee have also published a report on The demography of Scotland and the implications for devolution, HC 82, paras 31 and 60

173 Q800

174 Q802

175 Q801

176 IPPR North, Regionalising Migration, January 2017

177 Q801

178 Q802

179 Q805




3 March 2017