In terms of how the manufacturing sector will work with the new system, it will be a considerable challenge to cope with the end of free movement. Around 95% of our members employ an EU worker and about 5% employ a non-EU worker, so the majority of Make UK members do not currently interface with the tier 2 non-EU migration system. There will be a considerable change for manufacturers’ recruitment practices with the implementation of the points system.
It is fair to say that the changes to the proposed points-based system for manufacturers will ease the route. The reduction in the qualification level from level 6 to level 3 and the reduction in the salary threshold will make things easier for manufacturers than they would be. However, manufacturing is a global business; about half of manufacturing exports go to the European Union, and they cannot export their British-manufactured goods to the EU without an exchange of people. People, and the cross-fertilisation of people between the UK and the EU, go hand in hand with trade in manufactured goods. There is a strong connection with the EU and global trade in the manufacturing sector, and the ability to recruit people from outside the UK is vital to that trade.
Q As free movement comes to an end, Mr Thomas, how satisfied are you that the Migration Advisory Committee and the shortage occupation list understand the requirements of the manufacturing sector and are able both to respond to potential shortages in skills and to understand the variety in salaries paid in your sector?
At Make UK, we have responded over several years to calls for evidence from the Migration Advisory Committee, and we are preparing our response to the current call for evidence. If I may make one point before I come to your question, the call for evidence from the MAC has a very short window for Make UK and other organisations to respond. That is because the points-based system is being implemented on a very truncated timeline. In gathering the evidence for the MAC, Make UK and other organisations face a stiff challenge in ensuring that our response is evidence-based and provides a realistic forward look at the manufacturing sector and the jobs we will need in the future.
As for how realistic the MAC can be in its work and how realistic we can be, covid-19, the changes to the manufacturing sector and the difficulties it is in have presented a challenge in showing the MAC the true state of what occupations are in shortage in our sector at the moment. The manufacturing sector systemically suffers from long-term skills shortages—we are no different from any other western European economy in that regard—and that is not because manufacturers do not train. About 75% of manufacturers have apprenticeship programmes, and Make UK is an apprenticeship provider. We are investing in training the next generation of talent, but the fact is that there are certain skills, including digital skills, that are not available in the UK, and we need them to make sure the manufacturing sector is internationally competitive and productive. In terms of the work of the MAC, it needs to take a realistic view of what the UK labour market can provide, given those skills shortages and how long it will take it to adjust at the end of free movement, given that those skills can be brought in through the points-based system.
There are some key elements of the manufacturing sector for which workers tend to come from the European Union. One is new green technology. We all support the move away from an economy in which electricity generation is carbon-based, towards clean energy. Clean energy is something that our members are investing large amounts of resource in. A lot of those skills, simply because the technology has been deployed for longer in the European Union, exist in, for example, Germany and Denmark to a greater extent than they exist in the UK. Accessing those green skills—those environmentally friendly skills—and that new technology is something that most people would support. We just need to make sure the MAC captures the fact that those skills are in shortage in the UK at the moment.
Apologies—what I said was that 95% of our members employ an EU worker. Across the whole of the sector, we employ between 2.7 million and 2.9 million workers, of whom about 330,000 are EU workers.
Q Given what you said, Mr Thomas, and everything that is going on, would it be helpful for the implementation of the new immigration system simply to be postponed?
I think that would simply lead to more uncertainty among manufacturers. We expect the UK Government to implement the new points-based system on the timeline that they guaranteed, and to provide businesses with the full suite of material—the statutory instruments and guidance—by the end of the summer at the latest so that we have a significant period to familiarise ourselves with it before January. If we delayed implementation, that would cause more uncertainty among businesses. Clearly, we need time to adjust and to see what the new system is. However, we naturally do not want a delay to the implementation date.
Q Many of the concerns about being able to get skilled workers such as engineers were expressed before the current covid crisis. Do you think that, in the new situation that we will be in, there will be lots of British workers with these skills looking for work? Therefore, if it is slightly more difficult to get in an EU worker, it might actually benefit British workers looking for jobs in your sector.
I understand the point that you are making, but our issue is with the type of skills that we need. I mentioned green skills, and we also need digital skills. We need a range of skills that are not available in the UK labour market. We are training domestic UK workers for them, but in the meantime there is a skills mismatch between what employers need and what is available in the UK labour market. There may be some mitigation, but I would say that we are still going to need non-UK workers for the foreseeable future, until we develop those skills in the domestic labour market.
We shall now hear oral evidence from the Migration Advisory Committee. May I take this opportunity, while the witness is coming in, to remind hon. Members about the scope of the Bill. It does not encompass a points system. I did not want to interrupt the previous witness, given the problems that we have had, but perhaps we can remember the scope of the Bill.