Brexit: UK-EU Movement of People (EUC Report)

Baroness Prashar Excerpts

Monday 17th July 2017 Lords Chamber

Moved by

[Baroness Prashar]

To move that this House takes note of the Report from the European Union Committee Brexit: UK-EU movement of people (14th Report, Session 2016-17, HL Paper 121).

[Baroness Prashar (CB)]

My Lords, this report was published in March of this year when I was the chair of the European Union Sub-Committee on Home Affairs. I begin by thanking the members of the sub-committee and the former clerk, Julia Labeta, for their assistance in the preparation of this report. I am also pleased to see that a number of noble Lords have signed up to speak in the debate and I look forward to their contributions. However, I regret that we have yet to receive a response from the Government.

Much was said during the EU referendum campaign about immigration. In her Lancaster House speech in January, the Prime Minister underlined the fact that Brexit must mean control over the number of people coming into Britain from Europe. The Conservative manifesto for last month’s election repeated the commitment to reduce net migration to the tens of thousands, and the Queen’s Speech stated that the immigration Bill will end the free movement of EU nationals to the UK. However, the Government have yet to declare the restrictions that they will put in place. We are told that the Bill will allow the Government to control the number of people coming to the UK from Europe while still allowing the UK to attract the best and the brightest.

The Government’s primary objective in putting an end to freedom of movement is to restore sovereignty and control immigration; that is, to ensure that immigration rules for EU nationals are devised and adopted in the UK. However, controlling EU migration may or may not mean reducing immigration. The outcome will depend on the effect that any new controls may have on the number of EU nationals coming to the UK. For instance, until 2016 net migration to the UK from outside the EU was consistently higher than EU migration, despite the fact that relevant policy levers are already under national control.

In our report we examined what the Government’s pledge to deliver control might mean in practice and the policy options open to them. As the House is aware, the free movement of people—which has two dimensions: the right to entry and residence, and right to equal treatment—has its legal basis in single market provisions, not in immigration policy. It is set to end automatically when the UK ceases to be a member of the EU.

If negotiations under Article 50 were to conclude without an agreement, the default outcome is that UK nationals would become third-country nationals for the purposes of EU law and the domestic immigration rules of EU member states. For its part, the UK could place EU migrants on the same footing as non-EU immigrants. At the other end of the spectrum of possible outcomes, negotiations could lead to new and preferential arrangements for UK-EU migration, falling short of free movement as it exists today.

The committee’s report attempts to highlight issues that it felt deserve careful consideration as the UK looks to develop a new immigration policy. In considering various models for regulating future UK-EU migration, we did not seek to capture the full range of options that may be available, nor to endorse any specific approach. Indeed, there may be trade-offs between the level of access to the single market that the UK can secure in a future free trade agreement and the precise arrangements for future migration between the UK and the EU.

It is therefore important to emphasise that it is vital that the Government should not close off options ahead of the negotiations. However, the committee recommends that there are, of course, benefits to the UK in offering preferential treatment to EU nationals compared to non-EU in the UK’s future immigration regime. This could increase the likelihood of securing preferential treatment for UK nationals in the EU and improve the UK’s objectives on access to the single market. The options examined by the sub-committee were free movement with an emergency brake and free movement with a work permit or a job offer.

A time-limited emergency brake has been one of the options under consideration in European capitals and within government, not least because the temporary nature of an emergency brake would in principle be compatible with a high degree of access to the single market. While we heard that a time-limited emergency brake on free movement would be compatible with a high degree of access to the single market, there were concerns about what this would mean in practice: how many immigrants would trigger the brake? How long would it last? How much notice would employers get once a brake was applied? Crucially, would the EU 27 even agree to an emergency brake?

We also heard evidence regarding free movement with work permits and free movement with a job offer. We were told that if the UK were to extend the work permit system it uses for non-EU nationals to EU nationals, this would disproportionately affect employers’ ability to sponsor EU workers and could result in labour shortages. To avoid this, if the Government are tempted to consider a work permit system hedged with exemptions for particular sectors and schemes, this could produce the worst of all worlds: failing to deliver a meaningful reduction in immigration while also proving more onerous and costly for employers, prospective applicants and those charged with enforcement.

The UK already operates a points-based work system for non-EU nationals, so there might be a couple of options. We could either bring EU nationals under the same system or give preferential treatment to EU citizens as against non-EU nationals. Bringing EU nationals under the existing points-based system was not well received by employers’ organisations. They said the procedures for hiring non-EU staff were already time-consuming and burdensome, particularly for SMEs. They argued that to do so would affect employers’ ability to sponsor EU workers and could result in labour shortages in some areas, including publicly funded sectors such as the National Health Service and social care, and in horticulture, where the closure of the seasonal agricultural workers scheme at the end of 2013 was premised on growers having unrestricted access to workers from the EU.

We also heard concerns from employers about not being able to attract enough migrant workers. Less immigration from the EU could add significantly to existing pressures. Nursing, for example, was included in the shortage occupation list for non-EU nationals in 2016, meaning that it suffers from a shortage of nurses from outside the EU. Now, on top of this, the National Health Service has had to contend with a drop of 96% since last July in the number of nurses coming here from the EU. This is disturbing news for a profession that is already being severely tested.

The Government’s direction of travel seems to consist of three elements: high-skilled migrants remain welcome, low-skilled immigration is of concern, and there is a desire to reduce dependency on low-cost migrant labour. Closer scrutiny of these three elements showed that it is not self-evident that migration for high-skilled work should be treated preferentially relative to migration for low-skilled work, not least because the increase in the number of graduates in the UK has not been matched by an increase in high-skilled jobs.

The Government are making a link between the availability of migrant labour from the EU and the incentive to train or upgrade the skills of resident workers in the UK. The evidence we took suggests that there is not a sufficiently strong evidence base to judge whether that link is robust. Nor is it clear why any such link should exist for low-skilled work but not for high-skilled work.

Successive Governments have not led the way in investing in the skills of the resident workforce; doctors, nurses and teachers feature prominently among migrant workers recruited through the shortage occupation list. This reflects a failure to invest in training. In the public sector there may be a trade-off between spending levels and immigration; reducing immigration in the future may require more public investment. These are hard choices.

During the referendum campaign we heard a lot about how cutting EU immigration would benefit those on low wages. The evidence is less clear cut. The evidence we took suggests that the effect of migration on wages at the bottom of wage distribution has been modest. Witnesses told us that reducing EU immigration was unlikely to provide a quick fix. Other factors, such as the national minimum wage, the national living wage and inflation, are more significant in driving, or impeding, real-wage growth.

During the campaign we also heard how UK workers would be able to fill the jobs vacated by EU migrant workers. We found no evidence to prove or disprove that assumption. In fact, the situation may vary by sector, and hinge on factors such as labour mobility within the UK and the potential effects of incentives such as higher wages.

If the Government’s ultimate objective is to reduce dependency on low-cost migrant labour, the considerations in play would reach well beyond immigration policy. It would mean looking at a reassessment of industrial strategy, education and skills policy and public spending plans—issues well beyond the remit of the sub-committee. What is clear is that the crucial sectors of our economy are highly dependent on migrant labour, and therefore that it is essential that any changes do not endanger the vibrancy of the UK economy and that any transition is phased in gradually over time.

The evidence base to support or refute the Government’s assumptions that resident UK workers will fill the jobs is simply not there. There is a need to focus on improving the evidence base before further entrenching the skills-based immigration policy that the UK operates in respect of non-EU nationals. Furthermore, the evidence base available to policymakers is incomplete and in some cases insufficiently reliable. This is an unsatisfactory basis on which to start developing a policy, and it will complicate scrutiny of the policies that may result.

Different ways of measuring who counts as a migrant sow confusion in the public debate about immigration, facilitating both overstatement and understatement of particular trends in political rhetoric and contributing to a gap between perception and reality. The International Passenger Survey, the main source of data on migration flows, is limited in what it tells us about migrants coming to the UK. While it is an important tool in shedding light on immigration statistics at national level, it is not the right tool to answer all our questions on immigration. But then, using other tools can be problematic, too, because of differences in how definitions are used, meaning that comparing data can result in misleading findings.

Just as worrying is that these different measures and definitions can render migration statistics misleading when used in public debate. Who is counted in the Government’s net migration statistics is not always well understood by the public. For example, short-term migrants, defined as those staying in the UK for less than 12 months— that is, agricultural workers—are not included in net migration statistics. By contrast, both EU and non-EU students are counted in those statistics if they enrol for courses which last for more than 12 months.

The precise manner in which the Government will end free movement is a pivotal aspect of the UK’s approach to negotiations with the EU and could have far-reaching consequences for the UK’s future trading relationship with the EU and the UK economy. I therefore look forward to the Minister’s response, and some indication of the Government’s thinking and the progress they have made in deciding what our immigration policy will look like post Brexit. I beg to move.