Immigration: who needs a deal?

The status of EU nationals in the UK and UK nationals in the EU is likely to be the first item on the agenda for the Article 50 negotiations, as I explain here. What is far less clear is whether, and when, there will be any substantive discussion about the UK’s post-Brexit immigration policy.  There are two possible approaches that the government – and other EU member states – could take.

The first is that advocated before the referendum by Vote Leave – that, after leaving the EU, the UK should adopt a “non-discriminatory” system, under which non-UK nationals seeking to migrate to the UK would be treated the same, regardless of their country of origin (with a few relatively minor exceptions, non-EEA/Swiss nationals all currently face the same rules).   On the face of it, there is a strong logic to this approach:

  • The government has stated clearly that “we will design our immigration system to ensure that we are able to control the numbers of people who come here from the EU. In future, therefore, the Free Movement Directive will no longer apply and the migration of EU nationals will be subject to UK law.”
  • This in turn means, by definition, that we will no longer be part of the Single Market, since free movement is one of the “four freedoms”. The broader economic and political rationale for very different immigration arrangements  for EU and non-EU migrants  to the UK (and UK migrants to the rest of the EU) will therefore largely disappear;
  • Given this, the logic of the original Vote Leave position – that we should have a system which selects migrants according to criteria that relates to the individual  characteristics  we want to prioritise (skills, qualifications, family ties, etc) – seems compelling
  • Moreover, from the point of view of the EU-27, it is not clear that they will wish to negotiate over immigration. While free movement within the Single Market is a clear EU principle, governed by EU law and Directives, immigration policy between Member States and third countries (other than EEA/Switzerland) is largely a national competence.
  • Nor is it necessarily in the interests of other Member States for us, once outside the EU, to give preferential access to skilled European workers, even if the arrangements were reciprocal. We would be saying that we’d be happy to take their bankers and academics, but not farmworkers or cleaners. It’s not obvious that this is a particularly enticing offer.

So one approach would be simply to say that the negotiations will be complicated enough already; why introduce another legally complex and politically toxic issue?  In due course, the UK will formulate its own immigration policy – and individual EU member states will formulate theirs with respect to UK nationals.

However, it may not be as simple as that. The government has said that it wants “a new strategic partnership with the EU, including an ambitious and comprehensive Free Trade Agreement…it should give UK companies the maximum freedom to trade with and operate within European markets and let European businesses do the same in the UK.”

That doesn’t require special immigration rules for EU nationals. But such rules – particularly with respect to intra-company transfers, extended business visits and so on – would certainly help.

But perhaps more important is that there appears to be an increasing realisation in the UK government that moving to a “non-discriminatory” system would have significant economic costs – and impose a huge administrative burden on both the Home Office and employers.

Looking at the raw immigration statistics would suggest that EU migration and non-EU migration are roughly equal in magnitude – annual gross inflows of about 260,000. So it might appear that extending the current system would double the volumes- itself quite a challenge for a Home Office already struggling with budget cuts.

But this is misleading – it omits short-term flows, and covers all (long-term) immigrants.  If we look instead at National Insurance Number registrations – a better measure of people moving here to work – then the number of EU nationals registering is more than 600,000, more than three times the number of non-EU nationals.

Not surprising then that sector after sector, from agriculture to health, from finance to construction, has been queuing up to put the government on notice of the impact of cutting off the supply of EU migrant workers; and that senior Whitehall officials do not think the Home Office is remotely ready to cope with the potential additional burden

Moreover, two key facts – long obvious but largely ignored until now – are gradually sinking in. First, that ending free movement is not primarily about border controls or about entry to the UK– it is about controlling who employers can legally hire, and that means that moving to a “non-discriminatory” approach means applying the bureaucratic, expensive and inflexible (at best) system that currently applies to non-UK nationals to the much larger number of EU nationals.

Since many employers, especially smaller ones, have little or no experience with this system, the additional burdens will be severe. Second, that the likely result will not just be reductions in “low-skilled” immigration, but also in the number of medium and high-skilled workers moving to the UK (even before Brexit, we are already seeing signs of this).

The government appears to be taking notice. The Immigration Minister’s recent testimony to the Lords Economic Affairs Committee strongly hinted that the UK would like to see immigration being part of any deal:

“The negotiations will need to take into account people who may wish to travel and work here and British people who may want to work there….I hope that the negotiations will result in a bespoke system between ourselves and the European Union. I think that that is unlikely to be identical to any of the other systems that we have with countries around the world.”

What would such a system look like?  At present, we don’t know.  British Future have put forward some – broadly sensible – proposals here, for “reciprocal free movement” for skilled EU nationals and “preferential sector-based quotas” for lower-skilled jobs.

This would by no means avoid the risks described above – in particular, any sector-based schemes are likely to raise difficult administrative issues, as well as being vulnerable to gaming and political lobbying. But it would mean that the system retained a considerable degree of “European preference” – as well as “British preference” for those of us wishing to live or work elsewhere in Europe.

But perhaps the broader point is this. Some on the UK side have been labouring under the delusion that other EU member states want access for their citizens to the UK labour market, and that we can somehow trade such access for concessions on other issues, especially tariffs and regulation.

This may be a profound misreading. It is true that, if we wanted to stay in the Single Market, the EU-27 would insist on free movement. But, having left not just the EU but the Single Market, we may well find that we need to attract EU migrants to the UK far more than the rest of the EU needs us to let them in.

By Jonathan Portes, senior fellow at The UK in a Changing Europe

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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