Brexit – six months on: Immigration and free movement

What has happened?

The Quarterly Migration Statistics released on 1 December show that EU migration remained roughly flat, at historically high levels, in the year to June 2016. There is no evidence that migration slowed in the run-up to the referendum or that there was any ‘surge’ or ‘‘closing-down sale’ effect’ from EU nationals wishing to establish residence rights in the UK before Brexit.

There are only tentative data about post-referendum trends in migration flows:

  • In June-September, the number of EU nationals in employment rose by just under 50,000, considerably less than in most recent quarters. In a reversal of recent trends, the number of non-EU-born rose by considerably more than that of EU-born. However, these data are affected by seasonal fluctuations, making it too early to say if they mark a turning point.
  • In June-September, National Insurance registrations by EU nationals fell slightly.

There is some anecdotal evidence (for example, in the university and health sectors) that EU nationals may be less willing to move to, or remain in, the UK, as a consequence of what is perceived to be a less welcoming and secure climate.

Overall, information to date tends to support the view that net migration from the EU to the UK is likely to fall, perhaps quite significantly, but it is too early to be certain of the magnitude of this impact.

What have we learned about UK Government policy?

As Anand Menon suggests in his contribution, the balance of UK political opinion has swung clearly against free movement in anything like its current form. The UK Government has made a number of broad policy statements on the desired shape of a post-Brexit immigration system:

  • the Prime Minister stated that “we are not leaving the EU to give up control of immigration again”, and rejected a ‘points- based system’ as proposed by Vote Leave;
  • the Home Secretary reaffirmed the government’s commitment to reducing migration to the “tens of thousands”;
  • the government rejected the assurances by some Vote Leave campaigners (including some now in the Cabinet) that a new system would be more liberal for skilled non-EU migrants;
  • the Secretary of State for Exiting the EU said that policy would ensure that “key sectors” did not suffer from labour shortages, and the Chancellor said it would still enable labour mobility for highly skilled professionals in the financial sector;
  • the Government stated that while it fully expected that those EU nationals resident in the UK would be given residence rights, this would form part of the negotiations with the EU and would be subject to reciprocal assurances from other EU states.

Together, these statements indicate that the Government intends the new system:

  • to be fully under UK Government control (that is, there will not even be a modified version of free movement if it requires the UK to sign up ex ante to a set of obligations as part of a deal);
  • to be relatively restrictive, resulting in a large fall in EU migration as well as continued downward pressure on non-EU migration;
  • (probably) to retain some degree of preference for EU nationals compared to non-EU nationals; and
  • (possibly) to include at least some sector-specific schemes.

However, probably because policy development within government is still at an early stage, we know little about:

  • whether the Government seriously intends to set policy so as to achieve the “tens of thousands” target within a given timeframe, or whether – as in the last Parliament – this will remain an aspiration;
  • whether there will be hard numerical caps for EU migrants, either overall or for specific subgroups;
  • how any new controls would be administered, especially the nature of the administrative burden on employers, given that control will in practice take place primarily at the workplace, not the border;
  • if, as seems likely, the vast majority of EU nationals currently resident are granted permanent residence, what the qualifying conditions will be, how any such scheme will be administered and what will happen to those failing to qualify; and
  • the implications for border controls, both in general and specifically at the Northern Irish border.

What have we learned about other member states’ policy?

Other member states have maintained a united front. Their position remains that free movement – as one of the ‘four freedoms’ – is fundamental to both the EU and single market, and that if the UK is not prepared to accept free movement it cannot hope to replicate anything resembling current arrangements for trade in goods and services (including financial services). Member states’ motivations for this line differ: in France and some others, ruling parties do not want to give further ammunition to populist parties by making any concessions to the UK, while for newer member states the priority is the interests of their own citizens who have moved to the UK or might wish to do so.

Free movement does not mean the automatic right to live in another member state or immediately access the benefit system, and Germany and some other member states have made clear that further changes to the detailed practical operation of free movement remain on the agenda. If the UK maintains the stance set out so far by the Prime Minister, this may be of limited Brexit relevance. If, however, the UK shifted to prioritise single market membership, there would be more room for discussion and possible compromise.

Several member states have indicated that they share London’s view that the rights of UK residents in EU states should be generally protected, and vice versa. However, they have held to the line that there can be no negotiation on this or any other issues until Article 50 is triggered.

What happens next?

Over the next few months, the UK Government will continue to develop policy options. However, progress can be only limited until Ministers agree their negotiating objective and key priorities. Both currently appear a long way off, with some – such as the Chancellor and Business Secretary – regarding as important the single market and business’s ability to recruit the workers it needs, while the Prime Minister appears to see restoring full control over immigration policy and reducing migrant numbers as taking precedence.

Intermediate positions are possible (and likely) – but there is no assurance that the EU will accept them even as a basis for negotiation, and even this seems unlikely to become known until Article 50 is triggered. A considerable period of uncertainty is therefore likely, with the UK presenting a relatively general position (with possibly some more specific and conciliatory proposals on EU nationals currently resident in the UK) and then a prolonged negotiating standoff.

Jonathan Portes is a senior fellow at the UK in a Changing Europe, and a Research Fellow at the National Institute of Economic and Social Research.

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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