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

Part of the debate – in the House of Lords at 1:11 pm on 8th February 2018.

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Photo of Lord Green of Deddington Lord Green of Deddington Crossbench 1:11 pm, 8th February 2018

My Lords, I declare an interest as chairman of Migration Watch, a post that I have occupied on a voluntary basis for nearly 17 years. Indeed, it was in that capacity that I give evidence to the committee when it was preparing its report.

The noble Lord, Lord Forsyth, in his magisterial survey, stressed the weakness of the immigration statistics, as did a number of noble Lords. He is right that the statistics now are simply not accurate enough to bear the kind of analysis needed for an economically driven system, and I accept that. At the broader level, it is worth bearing in mind that they tie in with the annual population survey and with the census, except for a period in the 2000s when they failed to count east Europeans. It says that it has now dealt with that. What that means is that the overall net migration figure, which has averaged 250,000 in the last 10 years, and is still at that level, is roughly right. That in turn leads to the increasing population and the consequences that the noble Lord, Lord Horam, so eloquently described, and which the public in general are very concerned about, whether noble Lords like it or not.

I shall start with a word about the economics of migration, then the future framework for EU migration and finally, the immigration target, which many noble Lords have mentioned. The House will recall that this committee’s landmark report of 2008 opened with the statement that,

“we have found no evidence for the argument, made by the Government, business and many others, that net immigration … generates significant economic benefits for the existing UK population”.

The immigration lobby has tried to ignore the central finding ever since. Yet surely it is at the heart of any policy on immigration and the labour market. Has new evidence emerged in the last nearly 10 years on this? What did the committee find? Apparently it did not find such evidence. The report includes, buried in paragraph 111, only a watered-down version of the earlier report. It says that,

“large-scale immigration, whilst increasing GDP, did not have the same effect on GDP per person”.

That sounds like an endorsement, and it is about right.

I suggest to noble Lords that it is absolutely wrong to say that immigration is good for the economy. It is not. It is not in dispute that highly skilled immigration is indeed good for our economy but there is certainly no evidence whatever for the UK—I stress the UK—that very high levels of migration into lower skilled or lower paid work over the past decade have enhanced either productivity or GDP. If anyone has that evidence, I would be most interested to see it. Meanwhile, in 2015, a report from the Bank of England concluded that large-scale inflows of cheap foreign labour may have put downward pressure on the pay of some low-paid UK workers. More recently, last month, Michael Saunders, a member of the Monetary Policy Committee made a very similar point.

The key to economic prosperity is not mass immigration but improved productivity. Indeed, UK productivity has barely grown since the recession, despite the overall number of immigrant workers increasing by more than 2 million and the migrant share of the workforce nearly doubling. That is not necessarily cause and effect, but I note that my noble friend Lord Burns touched on that point earlier. Better pay and the upskilling of UK workers are the keys to improving business models. Reducing immigration will add an important incentive for employers to take action in this regard. Certainly, their performance in the past decade has been frankly abysmal.

I turn now to the question of the future framework for EU migration. We can now expect an interim period of two years so that employers will have three years in which to make the necessary changes. Now that the status of EU citizens is almost settled, the Government should come forward soon with an outline of the immigration system that they propose for EU citizens so that business can make the necessary plans. The Home Secretary indicated, I think at the weekend, that unfortunately they do not plan to do this until the late autumn. That is bad news all round.

For our part, as Migration Watch, we have put forward proposals for such a system that would continue to allow businesses to recruit the best and the brightest from Europe, but which would also lead to a significant reduction in net migration from the EU. What we need is a work permit system that will sharply cut back the 80% of EU workers who are not in the highly skilled categories—that is, who would qualify if they were non-EU for a work permit. That is quite a high level, but if we cut those out, we could reduce net migration from Europe by something of the order of 100,000 a year from the record level. It may be necessary for a period to have work permits available for those with intermediate skills, such as construction workers. The noble Lord, Lord Shipley, was eloquent on that point, but they need to be time-limited. We believe that there should be an increasing annual charge on employers to encourage them to train local replacements. If there is not a financial spur, they will not do it. We have seen that for the last 10 years.

We should also encourage social and cultural links between young people. We should expand the youth mobility scheme to include young EU citizens, and allow them to stay for up to two years, but with no extensions and no access to public funds. Meanwhile, tourism has been touched on. Of course, ease of travel should be maintained for tourists, family visitors, business visitors and students who, in total, amount to 35 million passengers a year.

I will conclude with a word or two about the immigration target, which many noble Lords have mentioned. The committee’s report concludes that sustainable levels of immigration, as many have mentioned, are,

“unlikely to be best achieved by the strict use of an annual numerical target for net migration”.

Clearly those words were very carefully considered, and in some respects it is hard to challenge them. In fact, there has been no such strict use of a target, except possibly for tier 2 visas, but, in general, there has not been a strict target because the complexities involved in the different routes simply do not permit it. That is part of their own argument. But the benefit of an overall target is that it provides a focus for many strands of government policy that contribute to net migration, and provides a yardstick, of course, for the public to judge the Government’s performance. That, of course, is rather uncomfortable, if you are not meeting the target, but it is not a reason for abandoning it, particularly not when it is a major issue for a very considerable portion of the population, whether they vote for that side or this side.

If we drift into acceptance of the current level of immigration, we will, as the noble Lord, Lord Horam, said, grow by 10 million in the next 25 years, with serious consequences for our infrastructure and public services. For those who have ears to hear, public opinion is very clear—indeed, it was a major factor and arguably a decisive one in the outcome of the referendum that brought us to this point. Brexit now gives us the opportunity to put in place an immigration system that encourages the training of British workers, provides for the genuine needs of employers and, crucially, commands the support of the public.