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

Alison McGovern Excerpts

Committee Debate: 1st sitting: House of Commons
Tuesday 12th February 2019 Public Bill Committees

[Paul Blomfield]

Q Do you not find it extraordinary that such a historic measure, which affects so many people in this country, does not have that provision?

Professor Ryan: Yes, indeed. That is why I started with that observation—to try to ask for the Bill to be seen in those terms. Understandably, because of the politics around leaving the European Union, everyone is concerned with the moment, as it were, but I urge the Government to take a longer view of what the Bill really means and think about other things that could go in the Bill because of the long life that it may have.

[Alison McGovern (Wirral South) (Lab)]

Q Professor Manning, on behalf of the Migration Advisory Committee, in relation to EEA nationals working in this country, you were careful to say just now that the root cause of low wages in the care sector is not immigration, but rather the funding of the system. In relation to other sectors, you seem to be saying that you believe that constraint in the labour market could have a positive effect on wages. Could you just say a little bit more about what you think the channel to that is? Is it excess profits in manufacturing that management will decide to divert to wages? Is it efficiencies that the manufacturing industry has not invested in, and now will? What do you think the channel will be? It is one thing to say that immigration has been neutral to negative—your words—but another to say that constraint in the immigration system affecting the labour market will push up wages. This is not simple supply and demand, is it?

Professor Manning: It is not just simple supply and demand, but supply and demand is relevant. It is important not to exaggerate the role that immigration plays in everything that is happening in the labour market as a whole. We have a very tight labour market at the moment, and demand for labour is running ahead of supply in many sectors. There are complaints about shortages and vacancies in a lot of places. Solving that through immigration, it is said, means increasing the supply of labour to bring demand and supply into line, but in our view that will not work because when immigrants come, they increase supply. They earn money, spend money, and add to labour demand more or less in balance. That is why the overall effect is neutral.

We think the way in which you should respond to imbalance in the labour market is through raising wages. Where do those rising wages come from? Partly, employers are put under pressure to use labour more efficiently when labour is scarce, so that is part of the efficiencies that you talked about. There might be some sectors that have been quite profitable in recent years, so there is some scope to squeeze profits, although there are many sectors where margins are tight. If you talk to employers, they would say they really have not got that much choice.

It is also the case that workers will vote with their feet and go to work for employers that they think offer them the best deal. In that process, there are good employers and bad employers. When labour markets are tight, good employers do well and bad employers find it harder. That is a natural process by which we have rising living standards in the economy.

[Alison McGovern]

Q I just want to be clear about what you are saying. Obviously, there are second order effects, so there is the simple function of supply and demand, which might put pressure on employers to raise wages, but the second order effects will depend on their business circumstances. For example, take a manufacturing firm in the north of England where they have already heavily invested in machinery and robotics, where the nature of what they do has not been profitable. The car industry has not been massively profitable over the past few years. They will find it quite difficult to put wages up and maintain viability for their business.

Professor Manning: There are British employers at the cutting edge of new technology, so it is very hard to find productivity gains. But we also know that productivity in British industry across the piece lags behind our competitors, notably in Germany, quite substantially. Within all sectors there is a huge range of productivity. There are very efficient employers, but a lot of research suggests there is quite a long tail of not-so-productive employers where there are potential productivity gains to be had by moving to current best practice.

[Alison McGovern]

Q Has MAC disaggregated that data? Productivity gains and where they could be made affect different regional economies in quite a diverse manner. Areas dominated by manufacturing, where there has been investment, would be different from areas that have many more firms that are less productive. Does MAC have any evidence on the regional impact of the Bill?

Professor Manning: In the interim report that we published last spring, we did a broad sectoral analysis in which we looked at trends in productivity. We also did a regional analysis, but we have not done a full mix of regions by industry. I don’t know if you can say a particular industry in a particular region, but I have a particular view on that.

[Alison McGovern]

Q Okay. Professor Manning, you are saying that we do not fully understand how the Bill will affect the different locations in our country, even though, economically speaking, we know we have a pretty unequal country. We do not really know, do we?

Professor Manning: We did an analysis of how it would impact different regions. For example, when one talks about salary thresholds, we have tables on how this would affect different regions. But you are right to point out that there are very big regional inequalities in the UK that probably have been allowed to fester for too long. One of the reasons, for example, why we do not recommend regional variations in salary thresholds is because we do not want to institutionalise some parts of the country as low wage and other parts as high wage.

[Alison McGovern]

Q One final question, if I may. Professor Ryan, you have said to us on several occasions that there is a major gap in this Bill as regards EU nationals who will have settled status. You mentioned a parallel with the Windrush scandal. Is the message we should take from your evidence that unless the Bill is amended, it will open us up to another Windrush?

Professor Ryan: I would not want to be that dramatic.

[Alison McGovern]

Q Or it could.

Professor Ryan: It is more that Parliament needs to think about future-proofing the immigration arrangements that are put in place, to think about whether this will work over the long term and not leave people out. To take the Windrush parallel, it is the children from those times who, later in life, are having to prove their status. Exactly the same could happen with EU citizens; the children of those citizens may struggle later if things are not designed correctly to establish what is happening now. Whatever arrangements are put in place, that should be part of what is being addressed.

I believe that, somehow, through primary legislation, guarantees need to be put in place for current residents. I recognise that could be done in subsequent legislation—the withdrawal agreement Act would be another opportunity to consider this question—but, of course, if we do not have that legislation because there is no deal, this seems to be the opportunity. I realise that is a difficulty, but perhaps it should be addressed now.

[Alison McGovern]

Q The clock is ticking.

[Nic Dakin (Scunthorpe) (Lab)]

Q You are being very clear, Professor Ryan, that something should be written into the Bill that protects the rights of people who are here at the moment.

Professor Ryan: This is not the only opportunity to do it, but if there is no deal, this may be the best opportunity to do it. That is really what I am saying.

--- Later in debate ---

[The Chair]

We are more than halfway through this session, and we have not heard anything from Dr Greening.

[Alison McGovern]

Q If I may say so, I would hesitate to describe anybody who comes to work in this country as “shipped in”. I think that is unfortunate. I want to ask about our ageing population, to follow up on the question asked by my colleague Nick Thomas-Symonds. Do you think that the dependency ratio, under the situation that you envisage with reduced immigration, will get better or worse?

Lord Green: First of all, what was the word that you were worried about?

[Alison McGovern]

Q You described people coming to work in this country as being “shipped in”.

Lord Green: Oh yes—well, they were shipped in.

[Alison McGovern]

Q It is unfortunate language, with respect, Lord Green. It is dehumanising language.

Lord Green: I want you to understand how this system worked. It was actually employers who brought them in—can I say in bulk?—together, as a group, in order to work in the fields.

[Alison McGovern]

Q The point has been made. How do you see your proposal as improving—or otherwise—our dependency ratio in the labour market?

Lord Green: Of course it would increase the dependency ratio. There is no doubt about that. Equally, there is only one way to deal with that, which is to raise the retirement age. If you are going to try to use immigration to deal with the dependency ratio, it becomes a Ponzi scheme, because as the new migrants get older you have more older people, and therefore you need more migrants in order to restore the balance. That is the oldest story in the book.

[Alison McGovern]

Q What would you like the retirement age to be raised to—something like 70 or 75?

Lord Green: You can do various calculations on that. I do not have them in my head. I think that so long as we live longer and healthier, there is perfectly good reason to raise the retirement age.

[Gavin Newlands (Paisley and Renfrewshire North) (SNP)]

Q I want to follow on the back of Ms McGovern’s question. You did speak of humans as being shipped in and shipped out, as if they were canned goods rather than actual human beings. That leads me to a point you raised in the oral evidence session for the previous Immigration Bill, when you described asylum seekers, and victims of exploitation and traffickers, as “these people”. Would you agree that this sort of careless and dehumanising terminology has fuelled much of the anti-immigrant rhetoric in the UK, and has perhaps even led to Brexit itself?

Lord Green: No, I think that is completely irrelevant, frankly. I hope that this is a meeting in which I can speak to you clearly and simply. If I was making some public speech, I would use different words. This is not a public speech, I hope.