Brexit and the Labour Market (Economic Affairs Committee Report) - Motion to Take Note

Part of the debate – in the House of Lords at 12:01 pm on 8th February 2018.

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Photo of Lord Sharkey Lord Sharkey Liberal Democrat 12:01 pm, 8th February 2018

My Lords, I have the privilege of being a member of the committee that produced this report under the chairmanships of the redoubtable noble Lords, Lord Hollick and Lord Forsyth. There were three areas of conclusions and recommendations in the report: the first was about net migration statistics; the second was about adapting the UK labour market; and the third was about the net migration target.

In the area of migration statistics, our report emphasised the very poor quality of the data available to inform decision-making, as the noble Lords, Lord Forsyth and Lord Livermore, have graphically illustrated. The obvious and real defects in our current measurement system do not provide a sound basis for any assessment of the success of government policy. Both the Government and the ONS acknowledge these defects. In the Government’s case, this acknowledgment was rather in passing in response to our report. The ONS has done better and deserves some credit. It has published a timetable for the improvement of immigration statistics overall, so that by 2020 we may at last have reliable overall net migration figures, and it very helpfully published on 24 August last year new data on the number of non-EU students who actually stay on after finishing their courses.

We observed in our report:

“The objective of having migration at sustainable levels is unlikely to be best achieved by the strict use of an annual numerical target for net migration”.

Having such strict targets is a political error and a policy millstone, and is probably unworkable or economically disastrous or both: much better, as we recommended, to set an objective for migration that can be flexibly implemented and is able to take account of varying and variable labour market needs. This is an urgent requirement. Business and the public sector need clarity about their ability and need to recruit foreign workers once a transition period ends and need time to begin to adjust their businesses before the end of that transition period.

For example, we need to decide whether there should be caps by sector, how these caps should be arrived at and what their consequences might be. We also need to give early warning of thinking on these areas to allow time for employers to adapt to changes in the availability of both labour and skills, and we need to have a clear assessment of the differential regional impact of any new immigration control regime. We should think carefully about the capital needs of SMEs, especially in the agricultural sector, when they are faced with reductions in the supply of labour.

We will need better data than we currently have to do any of this. For example, last Tuesday the ONS published a report on labour in the agricultural industry, which explicitly recognised our inability to measure the number of seasonal workers, 99% of whom, according to the NFU, are in fact from the EU. If we are to have an immigration policy linked to industry needs, we must have this kind of sectoral data to drive it.

I believe that the Government accept that a new immigration regime will accelerate the need for upskilling in the UK workforce. In their response to our report, the Government pointed to T-levels, apprenticeships and lifelong learning as means of achieving this upskilling. Perhaps I could ask the Minister a couple of questions about this. The T-levels require three months of employment experience as a key part of the course. What evidence is there that a sufficient number of employers will be able to provide a meaningful three-month experience? As for apprenticeships, do not recent events suggest that the scheme needs a thorough overhaul? The actual take-up of apprenticeships dropped by an astonishing 61% from quarter 4 of 2016 to quarter 4 of 2017, and there is a huge delay in approving the standards needed before apprenticeship courses can even begin. As of last week, there were 305 sets of standards in the queue for approval, and Ofsted reports that around half of all registered apprenticeship providers inspected were inadequate or required improvement. If the Ofsted sample was representative, that means that we currently have 37,000 students being taught by inadequate providers. Ofsted also said that it did not have the resources to widen its inspection base. This is a pretty awful mess. Can the Minister say what is being done about all this?

In their response to our report, the Government said:

“We are working to understand the potential impacts of any proposed changes”— to future immigration arrangements—

“on the economy and labour market. We will build a comprehensive picture of the needs and interests of all parts of the UK and look to develop a system which works for all”.

There is an obvious “as opposed to what?” response to that. But what the Government have actually done is to commission the Migration Advisory Committee to do this work. The brief was comprehensive and detailed, except in one vital respect. It contains no policy variants to test. This seems to me to be a fundamental mistake. It is surely obvious that policy choices should be influenced by their likely outcomes. The MAC has not been asked to consider this.

In July last year, the Home Secretary asked the MAC to report by September this year and for interim reports to be delivered. Can the Minister say whether there have been any interim reports? Can she tell the House whether these reports, interim and final, will be published as the Home Secretary receives them? Can she also say whether she is confident that the full report is in fact on schedule for September?

Timing is an absolutely critical consideration. On Monday, the chair of the EU Parliament’s Committee on Constitutional Affairs, Danuta Hübner, said that the EU Parliament would require to see a firm and reasonably fleshed out framework proposal for our future relationship by the end of October. It is hard to see how the Government can meet this timetable when it comes to immigration controls if the MAC report arrives at the end of September. It will be harder still if the report is delayed—and everything seems to be delayed, including the immigration White Paper.

The Minister also asked the MAC, on the same deadline, to report on international students. Our report dealt with this issue. We concluded that the Government should expedite measures to assess accurately the number of students who leave the UK at the end of their courses and to monitor the impact on local housing by asking universities to provide information on the accommodation provided to international students so we could assess the effect on local housing markets. We said:

“Once this information is available students should not be included in any short-term net migration figures for public policy purposes”.

We now have the first measure. We now know that the number of students who stay on after completing their courses is much lower than previously thought. In fact, in its August report the ONS concluded that,

“there is no evidence of a major issue of non-EU students overstaying their entitlement to stay”.

Have the Government asked the universities for the accommodation data, as we recommended?

Our universities are among the most successful in the world. They form a vital part of our economy now and will play an even more important role in the future. They are a source of influence around the world and a source of a huge amount of world-class research. To make international students and researchers unwelcome or to make them feel unwelcome has been, and will continue to be, a very big mistake. I hope that the fact that the Prime Minister recently pointed to the success in closing down bogus colleges with bogus students and the fact that the number overstaying is so low may herald an imminent change in policy.

In a post-Brexit world, we will need a flexible immigration policy that allows our businesses and public services to operate without damaging constraints and our world-class universities to continue to attract the very best students and researchers. For that to be possible, we need to know the shape of that immigration policy very soon.