Immigration and Social Security Co-ordination (EU Withdrawal) Bill (First sitting)

(Limited Text - Ministerial Extracts only)

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 9th June 2020 Public Bill Committees

[The Chair]

Before we begin, I have a few preliminary points. Members should switch off any electronic devices or switch them to silent. As in all Bill Committees, tea and coffee are not allowed during sittings. Obviously, I must stress the importance of social distancing in the Committee Room. I will suspend proceedings if at any point I am not satisfied that advice on public health is being observed.

The Hansard reporters would be most grateful if Members could email any electronic copies of their speaking notes to [e-mail].

We will first consider the programme motion. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions before the evidence session. If there are any questions about our unusual procedure because of social distancing during that session, we can deal with them then. In view of the limited time available, I hope we can take these matters without too much debate. At 11 o’clock, there will be a minute’s silence in memory of the death of George Floyd.

I call the Minister to move the programme motion, which was agreed at the Programming Sub-Committee yesterday.

[The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)]

I beg to move,

That—

(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 9 June meet—

(a) at 2.00pm on Tuesday 9 June;

(b) at 11.30am and 2.00pm on Thursday 11 June;

(c) at 9.25am and 2.00pm on Tuesday 16 June;

(d) at 11.30am and 2.00pm on Thursday 18 June;

(e) at 9.25am and 2.00pm on Tuesday 23 June;

(2) the Committee shall hear oral evidence in accordance with the following Table:

[The Chair]

Copies of written evidence that the Committee receives will be made available in the Committee Room.

Resolved,

That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Kevin Foster.)

--- Later in debate ---

[The Chair]

Thank you. Richard Burge, please introduce yourself.

Richard Burge: Thank you very much. My name is Richard Burge. I am the chief executive—fairly recent—of the London Chamber of Commerce and Industry.

Martin McTague: I am Martin McTague. I am the chair of policy and advocacy for the FSB in the UK.

[Kevin Foster]

Q I will start with a slightly more open question to the two witnesses. How do you see small businesses adapting to the new system that we have proposed?

Richard Burge: With difficulty. The obvious difficulty they have is that they are surrounded by chaos at the moment. Many small businesses have furloughed a large number of members of staff, or they are operating on their own. They have only so much bandwidth, so this will be hard work for them, particularly as they do not know what the rules will be. If they employ EU citizens, their concern is that they will now be introduced to the world of having to register themselves and get themselves licensed, which, like customs documentation, is a completely new world for them, and they have six months to do it.

Martin McTague: Sorry, I could not hear that question very well. Could you repeat it? You are very echoey and quite distant.

[The Chair]

Just before you do, Minister, it would be helpful if when asking questions, Members said who they were directing the question to.

[Kevin Foster]

Q Certainly, Mr Stringer. The question was an open one, directed at both witnesses, and it was basically about how they see small businesses adapting to the proposed new immigration system.

Martin McTague: I just about got that; I think it was a question about small businesses’ experience of immigration. The reality is that 95% of small businesses have absolutely no experience of dealing with any kind of visa system, and the system has been largely designed for larger businesses with reasonably sophisticated HR resources. We have found that the biggest concentration of issues is to do with mid-skilled occupations; in other words, the debate tends to be very binary. It either refers to high-skilled and very sophisticated employment requirements or completely low-skilled ones, but there are a lot of mid-skilled positions that fall within the £20,000 to £30,000 bracket, and those are the ones that cause the most problems for small businesses in the UK.

[Kevin Foster]

Q I would like to ask two follow-up questions, one to each witness, if that is acceptable. My first question is to Mr McTague, given what he has just said about mid-skilled workers being a particular issue. Does he see the skill level of skilled workers’ being changed to RQF3—that is, A-levels—as helping to address that issue?

Martin McTague: I assume that was to me, was it?

[Kevin Foster]

My question to Mr Burgh is about the fact that he talked about the process of sponsorship and becoming licensed. He may be aware that the Home Office is looking to streamline that system. Is there a particular change, or changes, he thinks we could make to the sponsorship licensing system that would help address some of the concerns he outlined?

Martin McTague: [Inaudible] it is welcome. It is a change that we were keen to see, and there has been a welcome change in the Government’s approach.

Richard Burge: To add to that, first of all, I have great admiration for the Home Office team working on this. I have worked for Matthew Rycroft before, in the Foreign Office, and he is one of the most talented managers in the public service. I think umbrella licensing is a good idea: it has good precedents, and it would create a huge relief for small businesses if they felt they could go to an organisation that had the ability to provide umbrella licensing. It would provide reassurance to the Home Office and a workable solution for small businesses, and we would be happy to be part of that process.

[Holly Lynch (Halifax) (Lab)]

Q As free movement comes to an end with this Bill and we transition to the minimum income requirement of £25,600, how have your members responded to that minimum income threshold?

Richard Burge: In two ways. One is relief that the threshold was lowered; it is now a much more realistic threshold. I have to say, though, that it is going to be a lot more workable within London than it is for my colleagues who run chambers in other parts of the country. A threshold of £25,600 is quite high in different parts of the UK, given the wage levels there, so while I think it is workable in London—not ideal, but workable—I also think we concentrate on income too much as an indicator of value, rather than skills, and that in parts of the country, the threshold is still probably too high.

--- Later in debate ---

[The Chair]

Good morning, Mr Fell. The Bill Committee will now hear your oral evidence. I am sorry about the technical hitches; you will be on your own, not with Make UK.

Thank you very much for agreeing to give evidence today. If you would like to briefly introduce yourself, we can move straight to questions. We have about 10 minutes.

Matthew Fell: I am Matthew Fell, chief policy director at the CBI.

[Kevin Foster]

Q I will ask one question, because of constraints of time. How do you see your members working with the proposed new migration system?

Matthew Fell: I think our members completely understand that free movement of people is ending. Business gets that, and it is ready to phase into a new immigration system. I think, with the proposed approach of a points-based system, it is entirely possible to design a system that works for business. There are many positives in it so far—the headline salary threshold changes that have been announced and the commitment to streamline and improve the system are all positives—but I would say that there are perhaps three areas of concern for our members at the moment.

One concern is the absence of any route at all below level 3, which will prove challenging for the care, hospitality and logistics sectors and so on. The second, from the Government’s perspective, is introducing this with a phased approach; I can perfectly see where they are coming from, but it means that business will be left with a reasonably cumbersome system from the off, with a promise of improvements to come. The third is that we are getting very close to the deadline for the system being introduced, and business is still looking for further clarity, time to prepare and assurances that the system will be ready in time. Those are the concerns, against a backdrop of an effort to really make this work and lean into it.

[Holly Lynch (Halifax) (Lab)]

Q Bearing in mind what you have just said, what are the things that you would really like changed about the Bill? Alternatively, what would the Government need to do to support you to manage the impact that it will have on your businesses?

Matthew Fell: There are a few things that we would like to see in the proposed new immigration system. We believe that a temporary route for people to come and work in this country would be a helpful addition to the system as it is currently set up.

Secondly, I would say to accelerate efforts to streamline the proposed approach. The vast majority of businesses have never previously had to engage with the visa system; something like only 30,000 businesses in the country have grappled with it so far, because we have lived and worked with free movement of people for so long. It will be a big change, so I would say to accelerate the changes to streamline and improve the system, reduce red tape and so on.

The final piece, just to reiterate, is to accelerate efforts to get clarity and detail out there and known to businesses as soon as possible, so they can begin to familiarise themselves, prepare and get ready.

--- Later in debate ---

[The Chair]

Welcome to the Committee. I apologise for the difficulties we had before. You will be on your own. First, can you introduce yourself to the Committee for the record, and then I will ask the Minister to ask you a question?

Tim Thomas: My name is Tim Thomas. I work for Make UK, the manufacturers’ organisation. I am Make UK’s director of employment and skills policy, so I cover all work-related issues and a few political issues, including immigration policy.

[Kevin Foster]

Q Mr Thomas, how do you see the manufacturing sector working with the proposed new migration system?

Tim Thomas: Sorry, could you just repeat that? It was a bit echoey. Apologies for the line.

[Kevin Foster]

I will say it slowly; it will sound weird. How do you see the manufacturing sector working with the new system?

Tim Thomas: 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.

[Holly Lynch]

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?

Tim Thomas: 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.

--- Later in debate ---

[The Chair]

Mr Bell, thank you very much for coming today. I remind members of the Committee that at 11 o’clock the bell will ring and there will be a minute’s silence for George Floyd. We will stand for that minute. Would you like to introduce yourself, Mr Bell, for the benefit of the record?

Brian Bell: I am Professor Brian Bell. I am the interim chair of the Migration Advisory Committee and professor of economics at King’s College London.

[Kevin Foster]

Q I will start with perhaps a slightly more general question. The Migration Advisory Committee has recommended that in the context of the Bill ending free movement with the European Union there should not be a dedicated general route for employers to recruit at or near the minimum wage from outside the UK and the Republic of Ireland. Would you like to explain to the Committee the reasoning behind that recommendation?

Brian Bell: If you move to a system in which you take control of immigration and are no longer subject to free movement under the European Union, you essentially have to have a selective immigration policy, and the question is where you think that selectivity should be. All the evidence that the committee reviewed in its 2018 report pointed to the benefits to the United Kingdom being highest when we focused on high-skill immigration—often high-wage immigration—and the gains, to the economy as a whole and also the resident population, which is our key metric, as it were, being highest with those kinds of workers. If you are going to have any kind of selectivity, that is where you want to tilt the balance, as it were.

That does not necessarily mean that you do not have any access to workers at low wages and with lower training or educational requirements. There are other routes that are already available within the system for immigration. For example, the family route allows you to recruit people who come through the family route for immigration, and there is the asylum route—once applicants are granted asylum they can be employed in the United Kingdom without regard to their skill level. There are alternative routes, and in fact that is extremely common. There are an awful lot of non-EEA workers employed in British firms across sectors who would not meet the requirements of the new immigration system but still have a job because they can come through different routes.

At the end of the day, there is a crucial distinction that we draw. With jobs where the training requirement and the education, both academic and vocational, to begin that job are reasonably low, firms can actually compete against each other, and we sort of want firms to compete against each other for workers, because that is good for workers; whereas for more technical, highly skilled jobs with very high training requirements there is often a practical difficulty in getting a new supply if you need it. You cannot just turn on the tap, so migration is a more obvious response for that.

[Kevin Foster]

In terms of that general route for recruitment, the MAC made some specific comments on the care sector, again in the context of the Bill ending freedom of movement. It was very specific against a sectoral scheme. Could you explain some of the rationale for that?

Brian Bell: The first point to bear in mind when thinking about the social care sector is that it is often described as being dependent on migrant workers. Nothing could be further from the truth. Something like 80% of those working in the social care sector are British, so actually it relies on British workers. The European Union is a relatively small fraction of the social care employment sector relative to the economy as a whole, accounting for about 5% of it, depending on which statistics are used.

We do not think there should be a particular route for social care because we think that immigration has historically been used as an excuse to not deal with the problems of the social care sector. The problems of the social care sector are fundamentally nothing to do with immigration. They are to do with the fact that, frankly, Governments of all stripes have failed to grasp the funding issue of social care. If people say that the response to the social care issue should be, “Well, employers should be allowed to bring in as many migrants as they want at the minimum wage,” first, that does not sound like the low-wage problem of the social care sector is being dealt with, and secondly it suggests that one of the groups that will really suffer from that is the social care workers. You are saying that you are going to keep on allowing their wages to be held down by allowing employers to bring in workers at the minimum wage, whereas we want to see wages rising in that sector. That will not happen if there is a continuous supply of free labour from abroad willing to work at the minimum wage.

[Kevin Foster]

Q Some of the earlier witnesses—particularly those from the London Chamber of Commerce and Industry and especially from the Federation of Small Businesses—talked about the need for flexibility when it comes to those sections of the Bill setting how we will empower Ministers to set the future migration system. Given that the Migration Advisory Committee’s role is to provide expert advice to the Government—to myself and the Home Secretary—how do you see it being able to respond to the demands of the new system in the context of the Bill?

Brian Bell: The Migration Advisory Committee has a key role in making sure that we keep a pretty constant view of what is happening across sectors, occupations and industries as the new system is rolled out, to see where problems are emerging. When you switch from a system that has been running for 40 years to a new one that incorporates all European Union countries as well, there will inevitably be teething problems. It would be surprising if that were not the case. We will be focussed on looking for the evidence: where is the system having problems? We will be highlighting those to the Government, and we can do that. We have an annual report that we will be publishing, and we will be highlighting to Ministers where the problems are, as well as potentially what solutions might be available.

[Kevin Foster]

Q The Migration Advisory Committee also advised specifically against having regional variations in the migration policy, specifying that there should not be any in the Bill. Is there any particular reasoning behind that recommendation?

Brian Bell: We were asked explicitly to think about whether there should be regional variation in the salary thresholds that are a key part of the system. The easiest way to answer that is to think about the fact that the median wage in Edinburgh for a full-time worker is higher than it is in Newcastle, Manchester, Leeds, Birmingham, Cardiff and Belfast. Compared to Dumfries and Galloway, it is 25% higher. In other words, regional wage variation—if by that you mean either the nations of Britain or the regions of England—demonstrates that variation within those areas is much greater than variation across them. If you really wanted to go down that route, you would need an immigration system that set thresholds in every local community around Britain. I do not quite know how that would be enforced. You would be explicitly saying that low-wage areas should stay low-wage areas and that high-wage areas should stay high-wage areas. I am not sure that it is a very sensible policy.