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20 Jun 2020

Policies

immigration

LONG READ

“The old is dying and the new cannot be born; in this interregnum, a great deal of morbid symptoms arise…” [Antonio Gramsci, Prison Notebooks]

Immigration was a central factor in the Brexit referendum of 2016. The British public’s concern about the issue was one of the major reasons why David Cameron was forced to call the landmark vote in June of that year, and it went on to be a subject of crucial importance throughout the campaign.

However, four years have passed since the referendum took place and it would be fair to say that the immigration debate in British politics has become somewhat confused and complicated.

The hard reality is that the British government’s immigration policy is still unchanged. As long as the post-Brexit standstill transition continues, the UK will be governed by all the provisions of EU law relating to free movement. Real change will only come once the transition is over and the UK introduces new policies to contain free movement of EU nationals.

And yet, even as we wait for those policies to be finalised, the contours of the immigration debate in Britain have been changing before our eyes. Over the last four years, there has been a sharp fall in the migration of EU citizens to the UK. Opinion polls suggest there has been a major shift in UK public opinion on the matter, with voters simultaneously becoming both much less concerned about immigration and much more positive about its impacts. And now, the crisis over Covid-19 has triggered intense debate about whether Britain can afford to restrict the movement of Europeans working in the critical health and social care sectors – as well as broader questions about the role and status of immigrants in contemporary Britain.

Finally, just in the last few weeks, the government has signalled one other major policy shift – albeit one driven by external geopolitical events, not immigration policy. The commitment to offer extended visas and, eventually, a path to residence and citizenship for British National (Overseas) passport holders from Hong Kong, in the event that the Chinese government implements its proposed security bill, is carefully hedged, and, in the short term at least, is unlikely to result in large migration flows – but nonetheless is extremely significant, particularly in a historical context. In the late 1960s and early 1970s, the arrival of the East African Asians, another group with British passports and a historical connection with the UK, was intensely controversial, opposed by many on explicitly racial (and racist) grounds. Boris Johnson’s decision to associate himself with the legacy of Ted Heath – who did allow entry to Ugandan Asians in 1972 – rather than that of Enoch Powell, Norman Tebbit, and Margaret Thatcher, is more than just symbolic.

So where is the immigration debate heading? What impact could the recent changes in migration numbers and in public opinion have on post-Brexit policy? And what impact is the Covid-19 crisis having? This essay examines those questions.

Politics and the Brexit negotiations since 2016

First, let’s briefly recap where several years of Brexit negotiations between Britain and the EU have left on immigration. At the time of the referendum, there was an ambiguity over what Brexiters actually wanted to happen on freedom of movement. Daniel Hannan, a leading figure in the Vote Leave campaign, said that “no-one is talking about leaving the single market” and expressed support for a Swiss-style trading relationship, which would have included preserving free movement. So, too, did Nigel Farage, leader of the rival Leave.EU campaign.

However, Vote Leave, led by Boris Johnson, promised a new immigration system – an ‘Australian-style points system’ – which would treat EU and non-EU migrants similarly, something which was clearly incompatible with any version of free movement.

This left Theresa May facing a choice after she succeeded David Cameron in July 2016. Many policymakers believed it would be clearly in the UK’s economic interests after Brexit to retain most or all of the benefits of membership of the single market – either by maintaining membership of the European Economic Area (like Norway) or via a series of bilateral agreements (like Switzerland).

But Theresa May rejected such an approach, making clear “we are not leaving the European Union only to give up control of immigration.” This position meant that the EU never seriously considered what, if any, compromises it could make on free movement. Instead, the ‘Barnier Staircase’ was deployed by the EU to underline the fact that free movement was an integral part of single market membership.

As a result, although the negotiations between the UK and the EU on the future economic, trading and security relationship will continue throughout 2020 and perhaps beyond, immigration (beyond a few relatively minor measures to facilitate business visits and so on) will not be a major topic – as the Political Declaration that accompanied the UK’s Withdrawal Agreement made clear.

Instead, the government’s commitment to maintaining regulatory flexibility after Brexit, and the accelerated timetable for negotiating a trade deal with the EU, means there is little prospect of seeing any significant provisions on labour mobility between the UK and the EU in any post-Brexit deal. The UK will, in short, be free to design its own post-Brexit immigration system.

EU citizens in the UK 

As we recap where negotiations have got to, we also need to take account of the one area where there has been a lot of negotiation: the status of the approximately 3.5m EU citizens who are resident in the UK (and that of their British counterparts elsewhere in the EU). Here, agreement on the legal position has proved relatively straightforward, at least when compared to other issues, in particular the status of Northern Ireland.

The EU has accepted that the jurisdiction of the European Court of Justice over the rights of EU citizens in the UK cannot continue indefinitely, while the UK has accepted that provisions guaranteeing those rights, not just now but in the future, should be embedded in UK law.

More importantly, the UK government has implemented a relatively light-touch scheme to give resident EU nationals the right to settled or ‘pre-settled’ status. This recognises the sheer administrative challenge of registering such large numbers of people in a short time. The scheme is largely online, relying heavily (as some of us originally proposed) on administrative data already held by government. While there have inevitably – given the numbers involved – been egregious errors, the process has gone as well as could be expected, with over three million grants of settled or ‘pre-settled’ status by March 2020.

The deadline for applications is June 2021; and inevitably, with any scheme of such magnitude, a proportion of the 3.5m people who are eligible will fall through the cracks and fail to apply or to supply the necessary evidence, particularly given the Covid-19 crisis. Such cases are disproportionally likely to be among relatively disadvantaged groups. These problems already arise under the current immigration system for non-EEA nationals, as Windrush and other less-reported scandals have shown. But the number of such cases for EU citizens could dwarf these and might easily be in the tens, if not hundreds of thousands. In principle, such people will be subject to enforcement action, up to and including deportation.

It seems highly unlikely the government would want to create a ‘Windrush Mark 2’ particularly when it would involve such large numbers of people. So, some form of moratorium or amnesty is likely, even if the government is reluctant to state this publicly at present.

Migration trends

So, as we said above, the UK must now design its own post-Brexit immigration system. But while it does so, it also knows that two major factors are changing in the immigration debate.

First, there is the trend in net migration numbers. In June 2016, when the referendum took place, net migration to the UK reached an all-time record of 333,000.

This included net migration of more than 200,000 from elsewhere in the EU, also a record. After the Brexit vote, I argued that a significant fall was likely for a number of reasons. This was because:

  • even before the referendum, employment growth in the UK had slowed, while unemployment was falling elsewhere in the EU, in particular in some major source countries, such as Poland, where labour shortages were emerging;
  • the referendum result was likely to make this fall much sharper, partly through the overall economic impact of Brexit on growth, output, and employment, and partly because migration from some EU countries appears to respond to exchange rate changes, with a fall in the pound making the UK less attractive as a destination country;
  • legal and psychological factors were bound to have an impact. These related to the uncertainty about the future rights that EU citizens currently resident might enjoy, and the more general political and social climate, with the UK no longer seen as a hospitable destination for EU migrants.

As the chart below shows, net EU migration has indeed fallen by slightly more than 150,000. This is despite the fact that the Brexit process has been slower than anticipated, and despite the resilience of the UK labour market between the referendum and the onset of the Covid-19 crisis. These numbers suggest that while economic conditions remained relatively favourable, the psychological impact of Brexit on past and prospective migrants from elsewhere in the EU has been larger than we anticipated.

immigrationChart source: ONS

At the same time, since mid-2018, there has been a significant rise in non-EU migration. This is likely to reflect labour market pressures, with the fall in EU work-related migration leading to shortages in some sectors and occupations, which have in part been filled by non-EU migrants. This substitution was facilitated by government policy, with the cap on Tier 2 visas for non-EU migrants (that is, relatively skilled or highly paid workers) being relaxed, particularly for those coming to work in the NHS, in late 2018, when it became apparent that enforcing the existing cap would further aggravate existing recruitment issues.

While this represented a relatively minor policy change, it marked the end of the Theresa May era in immigration policy, during which the overriding objective of immigration policy had been to reduce numbers.

So, immigration and emigration have undoubtedly fallen sharply, and, as the Covid-19 crisis plays out, it would be no surprise if net migration were to become negative, with long-term residents in the UK returning for family or health reasons to their countries of origin. (It is ironic that, not long after the government formally abandoned David Cameron’s ill-fated 2010 target to reduce migration to the “tens of thousands”, the target has almost certainly now been hit, albeit only as the by-product of a global pandemic.)

A key question ahead is what happens when restrictions relating to the pandemic are eased and international travel – even if restricted – returns. What will change? In the United States, President Trump may well use the pretext of the “Chinese virus” to extend the immigration restrictions he has long advocated. However, similar restrictions seem unlikely here.

True, when the spread of the virus has been definitively suppressed in Britain, it will become necessary to worry about the arrival of infectious people from abroad. But the UK is exceptionally dependent on international travel and connectivity in a way that the US is not. More British people fly internationally every year than citizens of any other country, including, despite the disparity in population size, the US. This means that the imperative for policymakers will be to find a way to allow people to move across our borders in very large numbers again, albeit with the deployment of screening and testing.

Such measures – not to mention social distancing on planes, if required – will make international travel more difficult, time-consuming, and costly. However, proportionately, that will hit tourism more than immigration. Immigrants already pay multiple thousands of pounds in visa fees and other charges, and are unlikely to be deterred by extra bureaucracy and higher plane fares.

Public opinion

The second big change since the referendum has been in public opinion. In 2016, immigration was the most important single issue for British voters. But even before the Covid-19 crisis, it had dropped to ninth and has now disappeared from the top ten altogether.

This fall in the salience of immigration has been accompanied by a parallel change in attitudes towards immigration, with an increasing proportion of the population regarding immigration as positive, both from an economic and cultural perspective.

immigration

Chart source: Ipsos Mori

Why has this change in public attitudes occurred? We can begin by ruling out the fact that the public are less worried about immigration simply because net migration has fallen. After all, net migration remains at historically high levels. It is plausible, however, that while immigration has not fallen by that much, many perceive that it has fallen, or believe that Brexit means that it will fall considerably in future.

It may also be that the prospect of the end of free movement, and hence the increase in the UK’s ability to control migration flows (and move towards a more skill-focused system), may be generating more positive attitudes, even if overall numbers do not reduce significantly; in other words it is the perception of ‘control’, rather than numbers per se, that matters.

There has been a marked shift in both the volume and tone of media coverage since the referendum, with considerably fewer negative or ‘scare’ stories, and more stories which paint immigration in a relatively positive light. In particular, the media has shifted from narratives which show immigration as a cost (e.g. benefit tourism, putting pressure on the health service) to those that show reductions in immigration as potentially damaging (e.g. fewer nurses, skill shortages, etc.).

The Covid-19 crisis has further accentuated this trend. Immigrants are overrepresented in a number of ‘key worker’ categories, most obviously NHS staff and care workers, but also in, for example, public transport, agriculture and food production. The disproportionate number of ethnic minority staff in the NHS who have died during the outbreak has further highlighted the positive contribution of immigration to the UK’s economy and society.

It is too early to judge how the aftermath of the Covid-19 crisis, particularly if it leads to a prolonged recession and sustained high unemployment, will affect attitudes to immigration. Nevertheless, the sustained positive changes over the past few years appear to be well embedded; and it is against this background that the government will have to work out its post-Brexit policy.

Designing a new system

So, as we have seen, major changes in net migration and in the public perceptions of immigration are clearly apparent. Against that background, what decisions are minsters starting to take on what the new system should look like?

The government has already set out its proposals for a new, points-based system after the end of the Brexit transition period. Free movement will end on December 31 and the new system will apply to all those moving to the UK to work, with the exception of Irish citizens. EU (and EEA/Swiss) nationals already resident in the UK are able to apply to remain indefinitely under the “settled status” scheme. As described above, most have already done so.

The government has broadly accepted the recommendations of the independent Migration Advisory Committee (MAC). These are that:

  • New migrants should be coming to work in a job paying more than £25,600 or the lower quartile of the average salary, whichever is higher, and in an occupation requiring skills equivalent to at least A-levels;
  • There will be a lower initial threshold for new entrants and for those in shortage occupations, meaning that for some occupations the salary threshold may be as low as about £20,000;
  • There will also be a lower threshold for those with PhDs, especially in STEM subjects;
  • For the National Health Service and education sectors, there will in effect be no salary threshold. If the job is at an appropriate skill level (again, roughly the equivalent of A-levels, and including not just nurses and doctors but radiographers and technicians), then paying the appropriate salary according to existing national pay scales will be sufficient;
  • There will be an expanded Seasonal Agricultural Workers Scheme, but no other sectoral schemes for workers who do not meet the skill threshold, and in particular not for the social care sector.

The new system will represent a very significant tightening of controls on EU migration compared to free movement. Migrants coming to work in lower-skilled and paid occupations will in principle no longer be able to gain entry. Even those who do qualify will need their prospective employers to apply on their behalf, will have to pay significant fees, and will, as is the case for non-EU migrants at present, have significantly fewer rights, for example in respect of access to the benefit system.

By contrast, compared to the current system, the new proposals represent a considerable liberalisation for non-EU migrants, with lower salary and skill thresholds, and no overall cap on numbers.

So what will the impact of these changes be on numbers? In reality, the implications for overall levels of immigration may not be that great. As set out above, previous estimates suggested that ending free movement might reduce net migration from the EU by 90,000 to 150,000, compared to pre-referendum levels; but the vast bulk of this reduction has already happened. Further large falls would therefore require a significant exodus of EU workers who are currently resident.

Given the liberalisation for non-EU workers, the overall impact on numbers may also be relatively small, even if the government remains committed in principle to reducing net migration. In any case, in the short to medium term, the Covid-19 crisis and its aftermath are likely to be far more important in driving migration flows than changes to the system.

What about the overall economic impacts of the new system? They are likely to be neutral to slightly positive, with any further negative impact of falling numbers being offset by an improvement in the skills mix, since the new system will reduce migration to lower-skilled jobs while increasing it to medium and higher skilled jobs. Retrospective analysis by the MAC suggests that – had the new regime been in place over the past 15 years – UK GDP and population would both be lower, but GDP per capita would be (marginally) higher.

What about the impact sector by sector? This will vary. All sectors employing large numbers of EU migrants will face substantial increases in costs and bureaucracy. Sectors like the NHS, finance, business services, and higher education, which are dominated by larger employers, most of which are already accustomed to dealing with the current system for non-EU migrants, are likely to be able to cope. To the extent that the new system is less restrictive for non-EU migrants – and to the extent that the government delivers on its promise to make it more efficient and less bureaucratic – they may even benefit.

However, some sectors are more at risk. Social care, where wages are well below the salary thresholds and most jobs currently filled by migrants do not meet the skills threshold, is a particular pressure point. The pressures here will only be alleviated if the sector gets a significant infusion of government funding that will allow it to increase wages and training budgets, since it has become heavily reliant on EU migrants to fill vacancies in recent years.

Other sectors that have come to rely on EU migrants to provide a flexible (and often motivated and trained) workforce, from food processing to construction, will also be concerned, with construction particularly threatened by its reliance on self-employed contractors, who will generally not be eligible under the new system.

A further major issue is the government’s capacity to deliver the new system on what has always looked like a very demanding timescale, and now with the Covid-19 crisis, looks close to impossible. Many employers will be beginning to recruit employees to start work in 2021 from mid-2020. The Home Office, and in particular those parts responsible for immigration policy and delivery, already have several ongoing major projects, including the implementation of the settled status scheme.

Moreover, there will inevitably be a complex set of interactions between this scheme — applying to EU nationals resident before 31 December– and the new rules applying to some (but not all) of those moving to work after that date. This will be complex both in legal and administrative terms. On top of that, there will inevitably have to be changes to rules governing international travel and visa issuance in the aftermath of the Covid-19 crisis.

In addition, civil service morale is low and there have been well-publicised disagreements between ministers and senior officials. All this has obvious parallels to previous government delivery failures. The most significant economic risk, therefore, is not the policy intention as such, but that there will be an extended period during which the system is in a period of turbulence (or worse), generating uncertainty for both employers and potential migrant employees and hence inhibiting recruitment (as well as potentially damaging the United Kingdom’s reputation after Brexit as ‘open for business’).

Where next?

There are major question marks about the alignment of this new system with the government’s wider economic strategy. From an economic perspective, there are clear advantages to the basic design proposed by the MAC and endorsed by the government. If the objective is to maximise the economic benefits of immigration, then a purely market solution would imply open borders. However, this is clearly not feasible for political, cultural and social reasons. At which point, a salary threshold is a clear second-best mechanism, because it puts the market, rather than bureaucrats or politicians, in charge of the selection process. This avoids having to pick winners, engage in central planning, or allow the loudest business voices to determine which occupations and sectors qualify and which do not. Not surprisingly, the MAC – dominated by labour market economists – went down this route.

The trouble with such a policy is that it sits rather oddly with the government’s wider economic strategy, which – despite caricature – is very far from a purist free-market approach. Rather, it combines two strands: first, a ‘levelling-up’ agenda, which prioritises the need to address regional and spatial inequalities. Second, a view that the UK’s economic future will be driven by its success in taking advantages of the commercial opportunities growing out of science and technology, including ‘big data’ and artificial intelligence.

But both of these strands require active policy, including an element of planning and picking winners – a ‘developmental state’ rather than a night-watchman state. Neither is necessarily compatible with an immigration system that, by definition, is likely to further advantage those sectors and regions where salaries are already highest and that therefore already benefit the most (notably, London and the financial sector).

On top of all this, Covid-19 will change the political dynamic. Most obviously, it has highlighted the fact that economic value, as measured by market wages, is not necessarily an accurate reflection of wider social value. Care workers, bus drivers and supermarket staff all fulfil essential functions, and it is far from obvious that there will be public support for an immigration system that excludes them all in favour of relatively junior bankers. As Sunder Katwala points out, this isn’t new – public opinion has always been nuanced about the appropriate definition of ‘skills’ for immigration purposes.

So to sum up, as Sophia Wolpers of London First puts it, are the government’s proposals “based on what is rapidly becoming old thinking”? Yes and no. The most serious problem the government faces is still its political commitment to deliver a new immigration system in time for the end of the Brexit transition period on 1 January 2021 – a goal which looked hopelessly optimistic even before the current crisis put everything else on hold.

The essential problem is that, with Covid-19, the broader policy environment has changed. While suffering from the disease has been widely spread, no-one disputes that immigrants and their children working in the NHS and care systems have borne a hugely disproportionate burden of death and illness. In contrast to the US, anti-immigration sentiment – which had already fallen sharply over the last few years – is likely to decrease even further.

So the government can, should it wish, take the opportunity to address the criticisms of its approach and ensure that the new system supports its wider economic strategy – as well as making it fairer and more humane.

What might that involve? Some steps would be relatively easy to take and do not require system change. Among these would be a reduction in exorbitant fees, particularly for visa extensions and renewals, settlement and citizenship.

The government could also, as the MAC recommends, loosen the current restrictive rules on settlement which discourage people who have contributed to the UK for years from making it their permanent home. All this would help ensure the UK doesn’t lose key workers and others who are essential to an economic revival after Covid-19.

As and when the new system is introduced, the government should step back and think again about what it really wants. Which sectors are the priority, from social care to science, and how do you adjust a salary-based scheme to take account of that? What regional or national flexibility would spread the benefits of migration outside London, and who decides? How do you adjust the system – which, inevitably, will be very far from perfect initially – quickly and flexibly without falling into the central planning trap?

To suggest that Covid-19 will mark a sea-change in either attitudes or policy towards immigration probably overstates the case. We were already heading in a more liberal direction anyway and Covid-19 should not, and hopefully will not, change that. The challenge for government is making sure its policy genuinely works for the UK in the uncertain age of Brexit and Covid-19.

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

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