The authoritative source for independent research on UK-EU relations

05 Jun 2017

Policies

Politics and Society

Immigration in general – and free movement within the European Union in particular, were central issues during the referendum campaign. Concerns about the level of immigration was one of the principal reasons why the UK voted to Leave. However, Brexit does not automatically imply an end to free movement. Norway and Switzerland are both outside the EU but within its free movement area. Meanwhile, the status of EU nationals living in the UK and UK nationals elsewhere in the EU is yet to be decided. Nor does Brexit imply anything about immigration policy towards non-EEA (European Economic Area) nationals.

Immigration was a central issue in previous elections but policy offerings were constrained by EU membership. By contrast, in 2017 the next government will have some important choices to make. The Conservatives have made it clear that Brexit means that free movement will end.

The manifesto states “Leaving the European Union means, for the first time in decades, that we will be able to control immigration from the European Union too. We will therefore establish an immigration policy that allows us to reduce and control the number of people who come to Britain from the European Union, while still allowing us to attract the skilled workers our economy needs.”

Perhaps the most important point here is what isn’t said. The lack of a date by which free movement will definitely end leaves open the possibility that it might continue in some form, for a lengthy “transitional period” after Brexit. It also suggests that a preferential status for EU citizens in the UK immigration system is likely to continue after Brexit. Labour is, if anything, more definitive, stating simply that “free movement will end when we leave the EU”, although the substance of Labour’s manifesto is effectively identical.

By contrast, the Liberal Democrats offer a clear and explicit commitment to remaining in the single market and retaining free movement as now: “We support the principle of freedom of movement – to abandon it would threaten Britain’s prosperity and reputation as an open, tolerant society. Any deal negotiated for the UK outside the EU must protect the right to work, travel, study and retire across the EU.”

This presumably implies a Norway or Swiss style arrangement. For EU nationals, both Labour and the Liberal Democrats would immediately guarantee all existing rights and seek to negotiate the same rights for UK nationals elsewhere in the EU, which is broadly what the EU-27 have already proposed.

This would obviously make the negotiations easier, although numerous detailed technical issues would still need to be resolved, such as how to determine which EU citizens in fact have the right to reside in the UK absent any reliable mechanism such as worker registration documents to prove their entitlement.

The Conservatives are even vaguer, merely saying that they will “secure the entitlements” of both groups; it remains unclear whether they accept the EU-27’s proposals in principle. Differences are much sharper on non-EU migration. Both Labour and the Liberal Democrats decry the “scapegoating” of immigrants, describe foreign students and skilled workers as essential to the economy, and suggest that the UK should be more open to refugees.

Although there are few specifics, the implication is very much a return to the broadly liberal approach to economic migration of the BlairBrown years. Both would reinstate and expand the Migration Impact Fund, intended to help those areas which have struggled due to a large influx of migrants.

By contrast, the Conservatives state explicitly that migration is too high, and propose a number of measures designed to reduce non-EU migration of students (further tightening of visa rules), skilled workers (a doubling of the skills charge) and family members (a rise in the earnings threshold, which Labour would abolish).

Considerable emphasis is placed on the responsibility of employers to train British workers to fill skilled jobs currently done by migrants. However, when it comes to occupations where the government itself could act directly – for example nursing – there are few if any firm commitments.

But of course the most important single commitment in the eyes of the public is the Conservative manifesto pledge to reduce migration to the tens of thousands – explicitly rejected by Labour, and not mentioned by the Liberal Democrats. The Conservative policy raises, but does not answer, two important questions – is the pledge credible, and what would the impact be? The pledge does include concrete proposals that will reduce non-EU immigration.

Moreover, after free movement does eventually end, if the UK extends the current arrangements for non-EU nationals to Europeans, it would exclude at least three quarters of them, and even before that there are likely to be economic and psychological factors that will reduce EU migration.

The Office of National Statistics (ONS) has just reported a drop of 84,000 in net migration to the UK, in large part accounted for by EU citizens leaving the UK. So while actually hitting the target will depend to a large extent on factors outside the government’s control, considerable reductions in migration are likely. May’s immigration figures, showing a fall in net migration, largely as a result of EU nationals leaving the UK, indicate this may already be happening.

The economic impact of reducing the migration figure to the tens of thousands is likely to be severe. The proposals to reduce skilled workers and students from outside the EU will be particularly damaging at a time when migration from the EU is likely to fall. And, while the manifesto implies that the UK will remain open to skilled workers from the EU, this is not consistent with the scale of reductions required to meet the target. Moreover, ending free movement – which will be enforced not by “taking back control” of our borders, but rather by new obligations on employers – is also likely to reduce the flexibility of the UK labour market.

The Conservative manifesto does not attempt to quantify the impact of these policies. However, the independent Office for Budget Responsibility has done so. Back in November, it estimated that the fiscal impact of a forecast reduction of net migration from 265,000 to 185,000 at about £6bn a year by 2021; it follows a further reduction to 100,000 would have a similar cost. While their calculations are – as they admit – crude, they matter since, by law, they enter into the official Budget arithmetic.

So if the OBR believes the government means it this time, then the government will have to “find” an extra £6bn, from taxes, spending or borrowing. But the narrow fiscal cost is less important (although easier to calculate) than the wider economic implications; recent research suggests that large Brexit-induced reductions in immigration would have a significant impact on UK growth, adding to any negative impacts resulting from the reductions in trade, discussed in the trade section.

By Professors Catherine Barnard and Jonathan Portes, senior fellows at The UK in a Changing Europe.

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