In the last week before Christmas, the United Kingdom Government published its long-delayed plans for the immigration system after the UK leaves the European Union. I will provide Parliament with an assessment of the impact that those retrograde proposals will have on Scotland, to build on the reaction that the First Minister outlined in Downing Street.
It is sometimes difficult for politicians to make the positive case in support of immigration. It is undoubtedly true that concerns about immigration were an important driver of the vote to leave the EU in some parts of the UK, and immigration remains a contentious issue for many.
People who have concerns deserve to have them listened to and treated seriously. It is true that such concerns are often based on misconceptions that are not supported by evidence. Political leaders have a responsibility to listen but also to respond in a way that builds understanding and raises awareness. It is greatly to this Parliament’s credit that its members have risen to that challenge. We all agree that migration to Scotland supports economic growth, helps to address the serious issue of long-term demographic change and enhances and sustains our communities.
When the Migration Advisory Committee reviewed the impact of migration on the UK labour market last year, it found no evidence that migration reduces employment or training opportunities or UK workers’ wages. Furthermore, there is clear evidence that migrants contribute more through taxes than they receive in benefits or public services. The committee found that migration increases productivity, innovation and gross domestic product per capita, which helps to raise living standards for all of us.
It is therefore extremely disappointing that the policy measures that the UK Government has proposed fail to lead the debate or respond to the evidence. The proposals in the UK white paper would economically damage the whole UK and especially Scotland. I will briefly remind members of the white paper’s key measures before I describe why Scotland would fare worse than other parts of the UK.
The UK Government plans to end freedom of movement of people from the European Economic Area after the implementation period and to manage all economic migration to the UK through a single system. In effect, that will be the current tier 2 employer-sponsored route for most workers, with some adjustments. Tier 2 is widely held by business to be complex and costly; in the main, it is limited to highly paid graduate-level roles.
Once European migration comes into tier 2, the UK Government proposes to lower the skill requirement, so that skilled roles that are below graduate level are eligible for it. However, it intends to maintain a salary threshold, which is expected to be set at £30,000. That will price out many roles, even if the skill barrier is reduced, and it does nothing to address the fact that the administrative and financial cost of tier 2 means that many small and medium-sized enterprises cannot use it. The Federation of Small Businesses estimates that, because of those barriers, 95 per cent of small businesses in the UK have never used tier 2. Cutting off access to international talent by ending free movement would be a disaster for those firms.
No route is proposed for what the UK Government terms lower-skilled roles, although such roles and the important skills for them—such as those in social care, tourism, hospitality and construction—make a vital contribution to our economy and society. The 12-month visa for such workers that has been announced as a transitional measure will be inadequate for business. Without a route to settlement, that will prevent people with the valued and valuable skills that we need from living, working and—importantly—raising their families here and helping to tackle demographic challenges.
We must remember that all our projected population growth is meant to come from migration in the next 25 years. The proposals will have a negative impact on the economy of the whole UK—the figures in the white paper show that clearly—and it is important that members understand that the changes will have a greater impact on Scotland than on the UK as a whole.
UK Government figures published in the white paper show that 80 per cent of projected long-term EEA worker inflows to the UK would be affected by these changes, rising to 85 per cent for Scotland.
That accords with Scottish Government economic modelling published earlier last year in our discussion paper, “Scotland’s Population Needs and Migration Policy”. Using official population projections from the Office for National Statistics and from the National Records of Scotland, the paper showed that the slow-down in migration as a result of the Brexit vote would result in reduced GDP growth in the UK of 3.7 per cent by 2040, but 4.5 per cent in Scotland.
An alternative scenario, using the 50 per cent less EU migration projection, estimated a 6.2 per cent reduction in GDP growth for Scotland, relative to growth in the economy under pre-Brexit population projections. That scenario also estimates that the UK economy could be 5.9 per cent smaller as a result of lower population growth.
Separate modelling has also highlighted the importance of migration and productivity. Under a hard Brexit, trade and tariff barriers are estimated to have the most immediate economic impact, but in the medium to long term, the impact of reduced migration, and the decline in productivity will overtake that, accounting for up to 85 per cent of lost economic growth compared to remaining in the EU.
Migration is particularly important to supporting growth in our working age population. In the 50 per cent reduction scenario, Scotland’s working age population will decrease over the 25 years to 2041. However, the UK Government says that migration to Scotland will fall not by 50 per cent—it is 85 per cent of future workers who would not be eligible under these plans. It has never been clearer that keeping free movement of people would be in both Scotland’s and the UK’s best interests. Free movement is also a set of reciprocal rights that British people, as EU citizens themselves, can enjoy, allowing them to live, work and study across the continent.
We want our fellow EU citizens already in Scotland to stay. They are part of the fabric of our country. In December we announced that the Scottish Government will deliver an advice service for EU citizens in Scotland in partnership with Citizens Advice Scotland and their network of citizens’ advice bureaux. There is an urgent need for clear and trusted information on citizens’ rights and the existing network of Citizens Advice Scotland, together with their trusted status, will allow the service to be delivered quickly across Scotland.
Of course, the Scottish Parliament voted on 19 December, calling on the UK to scrap the settled status fee, but if it goes ahead, the Scottish Government has made the commitment to pay the fees for EU citizens working in our devolved public services. They include doctors, nurses and other public sector workers on whom we all rely. We will shortly provide further details of that process.
As the disastrous approach of the UK Government unfolds, there is growing support for a new tailor-made solution for Scotland. In response to the white paper, the Scottish Trades Union Congress said:
“The First Minister is right to highlight both the negative effect of pandering to anti-migrant sentiment and the need for a separate Scottish approach. The STUC supports additional powers on migration for the Scottish Parliament.”
Business groups and employers have made similar statements. FSB Scotland said:
“We have argued that there should be a system in Scotland which responds to the particular needs of Scottish industry and demography.”
The Scottish Council for Development and Industry points out that:
“Other countries successfully operate regional migration schemes which target the specific needs of their economies … there are workable options for more differentiation in the UK’s system.”
I strongly encourage business to make its voice heard by responding to the white paper. It is important that the UK Government understands what business across the UK needs, and what opportunities employers in Scotland see in a tailored approach.
The minister, Ben Macpherson, last year commissioned an independent expert advisory group to review the policy options before the UK Government, and consider the impact of those choices on areas of devolved responsibility in Scotland. It will provide its initial report next month, and the minister will return to Parliament with its findings.
The white paper is described as
“the UK’s future skills-based immigration system” but, as the Immigration Law Practitioners’ Association points out, it has very little to do with skills or, even more importantly, little to do with social values. Instead, it envisages a narrow, selective system based on wealth and ability to pay, and focuses on cutting numbers at the expense of all else.
Scotland has a different experience and we want to forge a different society in which the contribution of the nurse, the carer, the restaurant worker and the technician are all seen and valued as being core to our society and economy. The UK immigration white paper is not only wrong-headed but wrong-hearted.
The cabinet secretary will now take questions on the issues raised in her statement. I intend to allow about 20 minutes for questions, after which we must, as members will know, move on to the next item of business. Members who wish to ask questions should press their request-to-speak buttons now, and I call Adam Tomkins.
I thank the cabinet secretary for early sight of her statement. There are some remarks in it with which I agree. For example, I agree that this Parliament, by and large, debates matters relating to migration in a way that is to its credit, and I hope that that continues this afternoon.
I also agree with her urging Scottish business and other important members of Scottish society to take part in this consultation exercise. It is important to underscore that the white paper published last month is a consultation document, and all of us should feel free to engage in that consultation process and to encourage others to do so. It is very important that the voice of Scottish business is fully heard in the process.
I want to ask the cabinet secretary two questions about her statement. In her Florence speech of September 2017, the Prime Minister said:
“I want to repeat to ... all EU citizens who have made their lives in our country ... we want you to stay; we value you; and we thank you for your contribution to our national life”.
The withdrawal agreement that has now been successfully negotiated by the Prime Minister and her team with the European Union provides exactly that. All EU citizens lawfully residing in the United Kingdom at the end of the implementation period will be able to stay here in the United Kingdom, and it also makes extensive, detailed and welcome provision for family members, children and dependants.
In her statement, the cabinet secretary referred to a “hard Brexit”. The way to avoid a hard Brexit is to vote for the Prime Minister’s deal, which delivers exactly what the Scottish National Party has been calling for. When, in December, I asked Ben Macpherson why his party colleagues at Westminster were preparing to vote against the deal instead of backing it, he could not answer the question. I therefore repeat it to the cabinet secretary today: why is the SNP not going to back this deal when it delivers exactly what it has been calling for?
Secondly, immigration experts and business groups, including the director of the Confederation of British Industry Scotland, the Food and Drink Federation Scotland, Scottish Chambers of Commerce and NFU Scotland, have previously condemned the SNP’s insistence that powers over migration be devolved to this Parliament. Does the fact that the cabinet secretary did not repeat her party’s call for immigration powers to be devolved mean that the SNP has finally listened to the experts and dropped that unwanted and dangerous policy? If so, that would be welcome.
There are a number of issues to address in that question. First, I make it clear that the problem with Theresa May’s deal is that the proposal to end of freedom of movement makes it as bad as there being no deal. The majority of what I have laid out in my statement is an economic analysis of a reduction in freedom of movement, and under the white paper that is before us and which we are discussing, 85 per cent of the EU citizens who were previously able to come here would not be able to do so. That would affect our health service and so many businesses—it would be an economic disaster. Many other things are wrong with Theresa May’s deal, but that area alone, which we are addressing in the chamber, shows us in simple terms how bad the deal is. Freedom of movement is vital to this country.
As for our proposals for certain areas, I published in February last year a very comprehensive paper that set out proposals for ensuring that Scotland had a tailor-made system. Do we want more powers for the Parliament? Yes, but we also want the power to make policy, and even having the ability to make policy within the UK system would allow us to address some of the issues. For example, there are the differentials in salary levels: the median salary in London is £32,000, whereas in Scotland it is £23,833. Such absolutely material issues will make a difference to how the white paper is implemented, and that is why—as Mr Tomkins was right to point out—we need to ensure that people respond to it.
I would point out that CBI Scotland said:
“The proposals outlined in the White Paper don’t meet Scotland’s needs or the needs of the UK as a whole, and would be a sucker punch for many firms right across the country.”
It also said that the UK
“cannot indulge in selective hearing. It tunes in to business evidence on a disastrous Brexit no deal, but tunes out from the economic damage of draconian blocks on access to vital overseas workers.”
We in the Scottish Government have tried to compromise in many different ways over the past few months with regard to Brexit. Surely to goodness, on the practical measure of having a differential, tailored solution and policy within the UK system—which businesses across Scotland are starting to understand would help our economy—this Parliament, including the Conservatives, can forge some kind of process to ensure that we protect jobs, our health service and our economy.
I understand why it was that long, but that was a five-minute exchange. I have 12 people who want to ask questions, so I would ask for crisp questions and short answers, if appropriate. That does not apply to you, Ms Baker; you have a time slot that gives you one minute in which to ask your question.
If we are exiting the EU under the proposed deal or the disastrous no deal, we will see the end of freedom of movement. In that case, how can we retain the benefits that freedom of movement has given to Scotland? Our demographic challenges demand that we do.
The white paper fails to address Scotland’s needs. It will restrict population growth; the proposed £30,000 threshold is unworkable; the 12-month visa is derisory and undervalues people; and the commitment to immigration targets by the Prime Minster does not respond to the needs of key sectors in Scotland—that is perhaps not surprising, given her approach when she was Home Secretary.
We need flexibility within a UK framework. Other countries such as Canada and Australia have differentiation models that work. I fully appreciate how obdurate the UK Government is on this issue, but what work has the Scottish Government undertaken to consider other models, and will the cabinet secretary commit to working with all parties to propose workable solutions that we can unite around?
I thank Claire Baker for her question, and for its tone. She is correct to identify that both Theresa May’s deal and no deal would remove freedom of movement. That is a critical point.
She touched on the issue of what we can do to address the situation. The issue of population is as important as that of immigration. The white paper says that there might be a 12-month visa for people with certain skills. That does not encourage people to settle in Scotland and have families here. In some of our rural and remote areas, a third of local authorities will see their populations decrease. It is important to address the issue of depopulation.
On the issue of Parliament coming together, I would say that we have come together in many ways. I would also point out that the previous Administration’s fresh talent initiative is another example of a differentiated position within the UK system. Such a solution is perfectly possible within the system that we are in.
Claire Baker asks about the comparisons that we have made. In a paper that was produced in February last year, we set out what other countries have done in this regard. The proposal that we have put forward is doable and practical. Many things are wrong with the UK system as a whole—the hostile environment and all the rest of it—but, in terms of practical issues, there are steps that we can take together, and I sincerely hope that the Conservative party in Scotland will join us in working with business, the voluntary sector, local authorities and our health service to ensure that we can retain the workers that we have and also recruit new workers.
Under the UK Government’s pay-to-stay policy, EU nationals must apply to remain here, facing charges of £65 per adult and £32.50 per child. If an organisation wishes to pay that fee on behalf of their employee, it faces a possible tax burden, as that will be deemed to be a taxable benefit. Does the cabinet secretary agree that, if organisations wish to pay the Tories’ shameful status fee for their employees, they should be able to do so in a straightforward manner without additional charges?
The UK Government is proposing that workers must pay to stay here with the rights that they had when they arrived here in the first place, and the member is right to identify one of the problems regarding the imposition of that fee. We have said that, if there is to be a fee, the Scottish Government will pay the fee on behalf of those workers who come within our administrative responsibilities, and I know that other employers wish to pay that fee as well.
We should scrap the fee—we should not have it in the first place. However, organisations such as Heathrow Airport, the University of Oxford, a number of national health service boards and the Carluccio’s restaurant chain have already said that, if it is to be brought in, they want to pay the fee on behalf of their employees. They have been told that that will be charged as a benefit in kind for their employees, and there is not even the option to bulk pay it.
The cabinet secretary mentioned the Migration Advisory Committee’s report and the benefits of migration that it included. However, it also said that a separate immigration system for Scotland is “not justified”. The MAC are not the only people who think that; many business organisations think the same. Why are they all wrong? Why should we not be working to get a system that works for every constituent part of the UK? Why will the cabinet secretary not work with us on that?
First, I suggest that Jamie Greene read the report properly. He should also listen to the comments from business, including from the Scottish Council for Development and Industry, to the effect that we can and should be looking at other options, and that other countries have differentiated systems.
I am not arguing for a completely separate Scottish immigration system. I am arguing, as I have consistently argued over a considerable time—including in the February paper that we published, as Jamie Greene would know, had he bothered to read it—for a proposal that would allow us to make policy decisions that would be tailor-made for Scotland. They would be policy decisions that would ensure that we address the needs of our country and that we take back control of our future in terms of the country’s population needs, the employment needs of our industries and the social and care needs of our vital health service.
I ask Conservative Party members to do two things: to read the material that is in front of them and to engage constructively, as our businesses in Scotland would wish them to do.
Is the cabinet secretary aware of the award-winning Real Food Cafe in Tyndrum in my constituency, which is a fantastic example of a successful tourism-related business? Around 70 per cent of its employees are from the EU. Many have stayed here long term and they contribute hugely to the local economy. One employee is a retained firefighter.
Yes, I do. As the tourism secretary in the Scottish Government, I am acutely aware of the concerns of the tourism sector. Bruce Crawford makes the important point that it is absolutely vital that families settle and stay.
It is also important to recall that the Migration Advisory Committee chair implied, when he came to Parliament, that there is something unproductive about tourism in Scotland. It is a vital part of the economy and it is essential that that be addressed. I was pleased that when I met the UK tourism minister he agreed to engage with the chair of the MAC in order to dispossess him of some of the views that he expressed about tourism to this Parliament’s Culture, Tourism, Europe and External Affairs Committee.
Does the cabinet secretary agree that there is a world of difference between devolving immigration and having a differentiated system of immigration, that the two should not be confused, and that the 1,700 EU nationals who demonstrate the need for Scotland to deal with its ageing population are a case in point?
I ask the cabinet secretary what contingency plans there are to ensure that social care services—
I missed the end of that question. However, Pauline McNeill is absolutely right that we are taking a pragmatic approach. We are compromising on so much in trying to ensure that we promote an approach on which we can all come together. This is a very immediate issue that must be addressed.
It would absolutely help our economy if we could ensure that there will be a tailor-made solution and policies that could include a Scottish visa option in respect of salaries and skill bases. We want to do that and have been arguing for it for some time. If only the Conservative Party could start listening and paying attention, as Pauline McNeill obviously has.
The UK’s hostile environment system is regularly exploited by human traffickers, disproportionate numbers of whose victims are women. Given that expanding that system to European nationals will result in an increased number of human trafficking victims across the UK and Scotland, what consideration has been given to the potential need to increase support services for victims of human trafficking?
That is a very important matter. There will be great ramifications. There will not be just the most obvious ones for our economy and society in ensuring that we have the right workforce; there will also be ramifications for how people arrive here. I will draw the question to the attention of the Cabinet Secretary for Justice and I will provide whatever updates from the justice department I can provide.
The strawberries left rotting in the fields of Fife due to the wider economic impacts that will come will be symbolic of the problems that will come from the UK Government immigration policy. Does the minister think that the UK Government should be straight with the British people about those economic impacts?
I do think that. The provisions that the UK Government has put in place for the whole UK would not be sufficient to satisfy the workforce needs for the berry fields and agricultural work in Angus, let alone in the rest of Scotland or the rest of the UK.
We have heard some politicians talking about cheese and onion crisps, which is a triviality. Some Conservative members who have important responsibilities need to face up to the serious issues that we face, including that which was mentioned by Willie Rennie.
Professor Alan Manning, the chair of the Migration Advisory Committee, who has been mentioned by the cabinet secretary, admitted to the Scottish Parliament Culture, Tourism, Europe and External Affairs Committee that he had done no modelling of the demographic or fiscal impacts on Scotland of his proposals, and that he had done no in-depth study of the differentiated migration systems in countries such as Canada. Does the cabinet secretary agree that that invalidates the conclusions of the MAC, which dismissed differentiated migration for Scotland?
I cited in my statement some important evidence about labour force and labour-market issues that had been raised by the Migration Advisory Committee. However, Joan McAlpine is right that the fundamental flaw in the Migration Advisory Committee’s approach was that it did not tackle demographics or the fiscal consequences of lack of productivity and lack of economic growth that are caused by of population issues. That is why we want to ensure that population is key in the analysis.
It is not just about short-term gain, which is why the 12-month visa is unsatisfactory. We need longer-term arrangements. We will again draw the issues to the attention of the
Migration Advisory Committee. As I just said, we have already done that with the UK tourism minister. The UK Government has to understand that focusing only on labour-force analysis will not tackle Scotland’s needs.
We are not the highest-taxed part of the UK; we have people who are paying less tax than they would pay elsewhere in the UK.
It is important that we address things in the round. Scotland has to be attractive, and we are encouraging people to live, work, study and invest in Scotland. We need families to relocate to Scotland and we need to make sure that we are not saying that people can come to Scotland only if they earn more than £30,000. That is no way to bring in the bright technicians and researchers, or all the people who could have the opportunity to build the entrepreneurial Scotland that we need.
It is a mindset issue. The problem is that we have a Conservative Government that is ideologically bound and is not considering the evidence—in particular, the economic evidence.
Annabelle Ewing has put her finger on it. Even the Migration Advisory Committee’s limited consideration of population—it is only looking at labour-market issues—shows that the UK as a whole will be worse off. That is why it is essential that we pursue our approach based on the evidence that is before us, which is what leads us to the conclusion that we have to change.
We are in the lucky position that people want to live and work in Scotland. We see movement of people from England to Scotland because people want to come to live and work in Scotland. We want to extend that and to ensure that it continues.
The number of EU citizens coming to Scotland has already declined significantly. We have not even left the EU, but we are already seeing the consequences of a flawed system. That was happening before the white paper.
Some of the key sectors that the cabinet secretary talked about are characterised by low pay and poor terms and conditions. Does she agree that, where Government can intervene—such as through the tier 2 work visa scheme—in relation to pay and terms and conditions in social care, we should do so, so that every job that people come to this country for is decently paid, with decent terms and conditions?
I agree. In the social care sector, the Government helped to ensure that the real living wage was extended across the sector for care workers. The member is right that we should drive up wages, because everybody benefits from that, but we have to do it in a responsible and sustainable way, and we have to work with employers. Currently, employers are under pressure because they will not necessarily have the labour force that they need under the scheme. They will have rising costs and there will be an economic impact because of the white paper and Brexit more generally. Also, a reduction in GDP of the level that I have talked about—of £10 billion by 2040—would mean less money in the public purse from taxation to pay for things such as nursing and social care. We have to look at the whole system.
What impact does the Scottish Government foresee the proposed extension of the £30,000 minimum-earnings rule to tier 2 visas having on public services in key economic sectors including agriculture, particularly in the south-west of Scotland, where we have 48 per cent of Scotland’s dairy farms, many of which are reliant on—
Clearly, no area of business is untouched. The impact on rural areas in particular will be absolutely catastrophic unless the issue is addressed. As I have pointed out previously, a limited agricultural workers pilot is taking place, involving 2,500 workers for the whole UK. That number would not even fill the vacancies in Angus. We have to ensure that the UK Government understands that. However, if the UK Government is thirled to thinking about the issue in ideological terms rather than on evidence-based economic terms, it will not address the issue.