Fantasy island?

For senior civil servants in Whitehall, Brexit is already almost all-consuming, and not just in the obvious Departments; I was told recently that there were 740 separate Brexit-related workstreams in progress, a number which is undoubtedly out of date by now.

For most readers involved in delivering public services in local authorities or the NHS, Brexit won’t have had much if any direct impact as yet.  But that will change. The impact of Brexit, and associated changes to immigration policy, is beginning to be felt already, even before Article 50 notification begins the official process of Brexit.

First, some basic statistics. The public sector is, on average, slightly less dependent on EEA nationals than the private sector: for example, about 5% of NHS England staff come from other EEA states, while they make up about 6-7% of the workforce; the proportion in the education sector (both schools and HE) appears to be similar, while in the broader public administration category it is somewhat lower.

But these relatively small “stock” numbers – the numbers employed now – conceal the fact that some public sector workers have become increasingly dependent on EU workers for the “flow” of new recruits. For example, in social care, only about 5% of the current workforce is from the EEA – but a much higher proportion of new recruits are. So the impact of Brexit on employers looking to recruit is likely to be considerably greater than the raw workforce numbers might suggest.

The first impact will be that the Brexit vote – even before any actual policy change – has made the UK less attractive to EU citizens planning to move here to work. That is not because their rights have changed – they haven’t – but because moving here has become less attractive both economically and psychologically.

The fall in sterling post-Brexit had reduced the value of the pound relative to the euro (and other European currencies) by about 10%. But more important are the non-economic impacts; not just the occasional outbreaks of xenophobia, but a more general sense that EU citizens are less welcome here.

And this is not just about how people feel; previously, EU citizens could come here knowing not just that they were entitled to work, but also to live here indefinitely, use the NHS and education system, and bring their spouses and children; that sense of security about future prospects is no longer there.

And that obviously matters more to relatively skilled workers planning to move here long-term – such as nurses, teachers or academics – than it does to those who are only coming for a short time or seasonal work. So this is likely to lead to some reduction even in the short-term – as we are already seeing for nurses.

For some public sector employers, therefore, the impact of Brexit will be felt immediately, as it becomes more difficult to recruit skilled workers, particularly in regions and sectors where we have become reliant on EEA migrants to fill gaps.

But what about EEA citizens already working here? For them, the prospect is of a prolonged period of uncertainty. This is not so much because of lack of political will to find a solution that will enable the vast majority of settled EEA citizens to remain here, if they so wish – politicians across the spectrum, both here and in other EU Member States, have generally made their intentions here clear – but because of the formidable administrative challenges involved in identifying and processing people.

The Home Office is already struggling to cope with the increased volume of applications for permanent residence (which requires the completion of a lengthy form, the surrender of the applicants’ passport, and so on).  Meanwhile, in the absence of a firm policy, officials have made little progress so far on devising a new, much lighter touch system.

The most likely outcome is that they will eventually introduce such a system – but this may take years not months, and in the meantime EEA citizens will be uncertain as to the ultimate outcome.

This is an area where public sector employers can take concrete actions now to help their employees – by, for example, proactively offering to compile detailed records of exactly how long their employees have been working for them, so that they can prove residence, or by offering help and perhaps financial support to those applying for permanent residence.

Beyond these transitional issues, what do we know about the new migration system post-Brexit? The government has rejected the idea of an “Australian-style points sytem”; it has also made clear that it wants immigration policy to be fully under the control of the UK government post-Brexit, meaning that even a modified version of free movement is unlikely to be on offer.

Instead, we seem to be heading for some sort of work permit system – as for non-EU nationals now – where government issues permissions to work to some foreign national workers. But this still leaves a host of questions unanswered, in particular:

  • Will the new system incorporate some form of “European preference”, under which EU citizens get preferential access to the UK labour market compared to non-EU nationals, or will the new system, as Vote Leave argued, be “non-discriminatory”?
  • How restrictive or liberal will the new system be overall, looking at both EU and non-EU nationals? Will the government be designing it so as to meet its “tens of thousands” target – implying sharp cuts in immigration overall – or will it take the opportunity to move towards an approach that recognises the economic reality that the UK benefits significantly from being open to economic migration?
  • Will any new system be based – as the current one for non-EU migrants largely is – on prioritising a relatively limited number of migrants who can meet a high threshold for skills, qualifications or earnings, or will it be based on sectors with particular shortages, so that it can recognise the very high demands in sectors like health and social care?

As yet we don’t know the answers to any of these questions, because the government doesn’t know either; some are dependent on the course of negotiations with the EU, others will depend on the strength of business and sectoral lobbying. However, some points are worth highlighting now.

First, and very importantly for employers, immigration control (of EEA nationals) does not (mostly) mean border control; it does not seem likely that we would restrict EEA nationals’ right to enter the UK without a visa (as, say Australians do now).

This means that control over how many and which EEA nationals are allowed to work in the UK will not, in practice, be applied at the border in the vast majority of cases. As with other non-visa nationals, like Americans or Australians, it will be applied in the workplace; employers will have to verify that EEA nationals are entitled to work in the UK, just as they currently do for non-EEA nationals.

So talking about ‘border controls’ for EEA nationals or reintroducing ‘controls’ over ‘who enters the country’ misses the point almost entirely. ‘Taking back control’ over immigration will in practice mean a significant increase in burdens on employers, who will be obliged to verify the right to work of EU nationals – some of whom will have it and some won’t, as they will fall into a confusing variety of categories, depending on when they arrived here and their current status.

Second, it is often claimed that the impact of ending free movement for EEA nationals will be to reduce migration for unskilled and/or low paid work, while having no impact on skilled migration; possibly even allowing an increase. This ignores the nature both of migration systems and outcomes.

No system can select perfectly, or even close to it. The view that we can devise an immigration system that allows in those, and only those ‘immigrants that have the skills we need’ is fantasy. Moreover, as explained above, it also ignores the fact that migration is not just a matter of the UK choosing migrants; migrants have to choose us. Even if we wish to remain open to skilled migrants from elsewhere in the EU post-Brexit, they may not choose to come here, or remain here.

So, while Brexit hasn’t happened yet, its impacts on the public sector workforce are already beginning to manifest themselves. Public sector employers face a series of challenges, both in the short term – coping with recruitment issues and reassuring their existing EEA citizen employees – and in the longer term, of adapting to a new system that will almost certainly be more restrictive, more bureaucratic and will make it harder and more expensive to find workers at all skill levels.

By Professor Jonathan Portes, senior fellow at The UK in a Changing Europe. This piece originally featured in Public Finance Perspectives.

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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