Migration Policy and the Economy

Joanna Cherry Excerpts

Wednesday 29th November 2017 Westminster Hall

[Mr Harper]

My hon. Friend makes a good point. The literature shows that many factors contribute to productivity. To digress for the moment on the regional aspect, which is not too far from the main topic, the strongest action the Government should take is to continue to invest in infrastructure across the United Kingdom, particularly transport infrastructure. One of the reasons for the focus of our former colleague George Osborne, when he was Chancellor of the Exchequer, on the northern powerhouse was that if we improved the transport infrastructure to join up the northern cities of England so that people could commute much more quickly between them, we would effectively create a group of cities that together would be globally competitive and would make a real difference to the productivity not just of their region, but of the United Kingdom. Ensuring that we invest in all parts of the United Kingdom and not just in London and the south-east is a valuable point.

[Joanna Cherry (Edinburgh South West) (SNP)]

To go back to the right hon. Gentleman’s earlier point, is he aware that he has mis-stated the results of the research on the effect of immigration on wages? In fact, the research to which he refers shows a fall of only 1% in the wages of low-skilled workers as a result of immigration, according to the immigration expert Jonathan Portes. Does the right hon. Gentleman accept that that is the true result of the research that he misquoted?

[Mr Harper]

No, and I take slight exception to being misquoted by the hon. and learned Lady. Some people have misquoted the research, but I have been careful to have a copy of the document in front of me and quote exactly from its conclusion without overstating it. I am familiar with Jonathan Portes’ research, but that is different research.

[Joanna Cherry]

Jonathan Portes is an expert in economic immigration. His commentary on the document states that the actual results suggest a fall of only 1% in the wages of low-skilled workers due to immigration. That is Jonathan Portes’ expert conclusion.

[Mr Harper]

I am pleased that the hon. and learned Lady has just confirmed that that is Jonathan Portes’ opinion about the research.

[Joanna Cherry]

His expert opinion.

[Mr Harper]

I was quoting from the document itself; I carefully explained what it was and read out its precise words. What the hon. and learned Lady has done is read out someone’s opinion on it. Jonathan Portes is indeed an economist—in fact, I was debating and disagreeing with him on this very subject on the “Today” programme this morning. Someone may call himself an expert and be an economist, but I suspect everyone here knows that when a number of economists get together, the room ends up with more opinions than economists in it.

[Joanna Cherry]

rose—

[Mr Harper]

No, I will not give way again yet. I will make some progress.

Much of this debate is about the assumptions behind economic models. Changing the assumptions can often lead to different conclusions. We often hold different views about these things, so we have to make our case with arguments and let our ultimate bosses—the voters —take a view on who they believe. I am content to let them reach that conclusion.

My second point is about migrants’ contribution to the public finances. When we came into office, there was a budget deficit of approximately 10% of GDP, which was completely unsustainable. We have reduced that budget deficit by three quarters, but despite the considerable progress we have made, we still have a fiscal challenge to solve. It is important that we look at the contribution made by those coming here.

The Migration Advisory Committee is an independent, expert committee, so I hope the hon. and learned Lady will listen carefully to what it has to say. It did a very detailed piece of work for the Government in 2011, looking at the minimum income requirement for sponsorship under the family migration route. One of its conclusions from the 2011-12 figures was that a household had to earn £25,700 to make a neutral contribution to the public finances—in other words, for the tax it paid to be sufficient to offset its share of public services such as education, health and defence.

That suggests that the migrant workers in Britain who do not earn significant salaries but have access to benefits such as our welfare system are not making a net contribution to public finances. I am not suggesting that they are not working; they are, but they are earning a lower salary and are therefore entitled to things like in-work tax credits and—as the system changes—universal credit. Lower-paid migrant workers are coming to Britain, working, earning money and paying taxes, but the taxes they pay are not sufficient to contribute properly to public finances. In effect, British citizens and those already working here are subsidising some of those migrant workers.

To come back to our friend Jonathan Portes, on the radio this morning he made the point that if we take all EU migrants together, they do make a positive contribution. I have not checked the figures since I debated him, but I think he is right about that. However, he is mushing together all EU migrants of all skill levels. My argument is that we should absolutely continue to have people coming here who are sufficiently highly skilled, are earning income and are making a positive contribution to the public finances, but we should not allow everyone to come here.

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[Mr Harper]

Yes, I will come to that.

It is worth saying that Britain’s unemployment rate of 4.3% is relatively low, compared with 7.5% in the EU as a whole and 8.9% in the euro area. Some countries in Europe have unemployment rates of more than 20%. Our record is very positive, and businesses have created 3 million new jobs since this Government have been in power. I am always careful to say that businesses have created the jobs, because it does not happen automatically. Although we can help to create the conditions, it is businessmen and businesswomen who actually take the risks and start the businesses. In this country there are still 1.4 million unemployed people, as well as a number of people not in the labour market, to whom we should give opportunities. I think that addresses my hon. Friend’s point.

When we leave the EU in March 2019, we will leave the single market and the customs union, and freedom of movement will end. The Government were absolutely right to make a generous offer to EU nationals already in Britain who came here before we triggered article 50. We were not able to make that offer unilaterally, because we had to ensure that we protected the 1 million British citizens elsewhere in the EU, since the British Government’s first responsibility is to defend the interests of British citizens, wherever they may be in the world. In the Chamber today, we will debate an Opposition day motion from the Scottish National party that we should unilaterally make an offer to EU nationals, casting aside the essential interests of British citizens elsewhere in the world.

[Joanna Cherry]

rose—

[Mr Harper]

I see that that point has engaged SNP Members, but we will have plenty of time to debate it later. I mention it now because the Government have published a very clear document for EU nationals called “Rights of EU Citizens in the UK”. Every hon. Member who speaks to EU nationals already in Britain should ensure that they see that document, so they know that the Government have made it very clear that they are not just welcome, but positively encouraged to stay here after we have left the EU. If they have been here for five years, they can get settled status; if not, they can stay for that period and then get it. We want them to stay. My point is about what we do after we have left the EU when new EU nationals want to come and work in Britain. It is worth distinguishing those categories so that there is no opportunity for mischief-making or for anyone to pretend that we do not want existing EU nationals to stay under the Government’s very generous offer.

There has been some debate in the media today about our negotiations, but from the document produced by Michel Barnier’s team, which sets out the British Government’s offer on EU citizens and the demands of the EU27, we can see that we are not a million miles away. There are some issues left that still have to be negotiated on, but on the vast majority there is complete agreement, including residence, exportable benefits and access to the health service. We are within touching distance of reaching a deal on that basis, which will set the mind of many people—EU nationals and British citizens—at rest.

I am also very keen that students keep coming to the United Kingdom to attend our fantastic universities. It is worth mentioning that over the last year the number of international students coming to Britain has increased. Students make very little net impact on the immigration figures because usually they complete their course and then leave; those who want to stay are welcome to do so if they get a graduate-level job, but then they are counted as a worker and not as a student. We have a fantastic offer for international students and I am very pleased that the Home Secretary has asked the Migration Advisory Committee to examine the contribution that international students make to our economy. I look forward to seeing the results of that research.

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[Mr Harper]

Well, the figures I looked at suggest that is not true. There has been a small reduction in the number of students coming from the European Union, but that has been more than offset by the number of students coming from outside the European Union. Also, the whole issue of whether students are counted in the migration figures or not is a complete red herring. There is no limit on the number of international students who come to Britain. The only things that students have to be able to do is speak English to an appropriate level, be properly qualified for the course they are taking and be able to pay for that course. There is no limit on the number of students coming here.

Of course, what the Government have done over the last seven years is make sure that students are indeed genuine students, and are compliant with our immigration regime. When we came to power, there were tens of thousands of students who were not really students; they were pretending to be students, but they were actually here working. We have removed sponsor licences from, I think, 916 educational institutions, which were bringing in students but were not complying with our immigration rules. That did no one any favours.

We now have an almost entirely compliant system, in which everybody coming here as a student is a genuine student, does their course and, at the end of it, either goes back to their country of origin or, if they have a graduate-level job opportunity, stays and contributes to our country. They are very welcome to do so. If smart, talented students want to come to Britain and study, I welcome them; if they want to stay here afterwards and take a graduate-level job, I welcome them; and if they want to stay here and start up a business, creating wealth and job opportunities for others, I welcome them. We have seen more people doing those things, not fewer, and I hope that trend continues.

We should base our offer to EU nationals post-Brexit on skills. One reason for that is that there are 1.4 million unemployed people in our country, but there are also some people who do not get the opportunities that they ought to get from employers, because employers are sometimes a little too ready to ask people to come from elsewhere in the European Union to work here.

I am thinking about some of the people who need employers to think about them a little more. There are around a million people in the UK on out-of-work benefits who have some kind of mental health problem but are perfectly capable of working, and who would like to work; some, but certainly not all, of them are included in the 1.4 million people who are unemployed. They may need employers to make reasonable adjustments for them, or they may need some support from the excellent Access to Work system that the Department for Work and Pensions has, but they deserve an opportunity to get into the labour market. We should say to employers, “Before you bring someone in from outside the United Kingdom, you should think a little harder about the people we already have here, and ask yourself if you are doing enough to engage them in the labour market.”

I declare an interest as the chair of the all-party group on learning disability, but there are also around 600,000 people with learning disabilities in the UK who Mencap estimates are perfectly capable of working, and who would love nothing more than to enter the workforce. Again, they should be given the opportunity to do so, and we should just challenge employers a little to look at some of the people we have here. I accept they may not be completely job-ready, but I will come back to the point that my hon. Friend the Member for Dover (Charlie Elphicke) made about encouraging employers to invest in the skills of employees, so that they get the opportunities to participate. Such encouragement would help enormously.

It is also important that we have an immigration system that commands public support. I was looking at some very interesting work that an organisation called British Future has done. It looked at some of the options that will be in front of us in its report, “Time to get it right: Finding consensus on Britain’s future immigration policy”, which was published in September. The report considered whether we should effectively continue to have free movement, whether we should do what I suggest and have a system like the one we have for migration outside the EU, or whether we should have some other system.

Interestingly, British Future did some polling. I always think that we should not make our policies fit polling, but when we have come to the conclusion that we think is right for other reasons, it is quite helpful and heartening, when one looks at what the public’s views are, to find that actually the public are broadly supportive. When I look at the tables about that polling, I see, first of all, that there is a very considerable consensus, and that people think we should not prioritise business and the economy over immigration, or prioritise immigration over the economy, but that we should have a compromise that balances immigration and the economy. That position commanded very significant support from people, whether they were Conservative or Labour supporters, leave or remain, and men or women, which is encouraging.

The report also considers two options for the Government. One is controlling low-skilled immigration through a cap while allowing skilled migrants to come to the UK, as before. Again, that approach has overwhelming support from a whole range of people, whether they were leave or remain, Labour or Conservative, or whatever. The other option is to consider whether we should have different targets for different types of immigration, and that also commands overwhelming support.

Interestingly, particularly for Scottish National party colleagues who are here, the report also put those questions to voters in Scotland and in London. In Scotland, 62% of voters agreed that we should control low-skilled immigration through a cap while allowing skilled migrants to come to the UK as before, which was far more than the proportion of people who wanted to keep free movement or—at the other extreme—wanted to stop EU migration all together. In London, there was broadly the same figure, with 59% of people wanting to control low-skilled immigration but being very relaxed about higher-skilled migrants, and both those numbers were broadly consistent with those for the UK as a whole.

[Joanna Cherry]

That is, of course, an opinion poll. Is the right hon. Gentleman aware that the majority of voters in Scotland have voted for political parties that want to keep free movement, and indeed that the Scottish Parliament has recently voted, on a cross-party basis, to support keeping free movement for Scotland and a differential immigration policy for Scotland?

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[Joanna Cherry (Edinburgh South West) (SNP)]

It is a great pleasure to welcome you to the chair and to serve under your chairmanship, Mr Hosie. It is also a pleasure to welcome the Minister to her place. We may disagree about politics, but I have always found her unerringly professional and courteous in her approach.

We have had a very interesting debate today, but these debates should be evidence-based. I want to start by taking the opportunity to correct for the record what was said by the right hon. Member for Forest of Dean (Mr Harper) on Sir Stephen Nickell’s research. I quote from an article published in The Independent on 25 January 2017 following an interview with Sir Stephen Nickell, where he said that his work had been misrepresented by those who wished to slash immigration:

“The author of an influential piece of economic research frequently heralded by leading Brexiteers as evidence that immigration from the European Union undermines native British wages has stressed that the negative impact is ‘infinitesimally small’ and that his findings had been widely misrepresented.”

Sir Stephen’s research, originally published in December 2015, is frequently cited by those who are

“asked to provide evidence that immigration has had a negative effect on...living standards”

in the United Kingdom, yet

“the 10 per cent claim was based on a significant misunderstanding of the research’s findings. As...Jonathan Portes has pointed out, the actual results suggested only a 1 per cent fall in the wages of low-skilled workers due to immigration—and this impact was spread over a period of eight years.”

That is 1% spread over eight years.

Sir Stephen said that his research had been “grossly misrepresented”, that the wage impact is “very small” and that low-skilled workers

“lose out by an infinitesimally small amount.”

He said that he was cross that he had not been able to get cross in public about the

“public bowdlerisation of his research findings”

because he was a senior official at the Office for Budget Responsibility until recently, and added that

“his co-author, Ms Saleheen, who works at the Bank of England, has also been unable to speak out publicly to correct misleading statements.”

I am pleased to quote from the horse’s mouth—the author of the research—that the research has been misquoted, and from Jonathan Portes, who is not a self-appointed expert, but a professor of economics and a widely recognised expert on immigration.

[Mr Harper]

I was very clear in what I said. I agree with the hon. and learned Lady—I do understand that some people have misrepresented what Professor Nickell said. I read from the conclusion of the report, which said that the 10% increase in the proportion of labour led to a 2% reduction in wages. I did not overstate it. I do understand that some people have exaggerated that, and I was very careful not to do so, because I take what economists say seriously.

[Joanna Cherry]

I hear what the right hon. Gentleman says and I am happy to have had the opportunity to clarify the matter.

What I really want to speak about is the evidence of the impact of immigration on the Scottish economy. It is increasingly clear that UK immigration policy does not and cannot address the demographic and social needs of Scotland. If that continues to be the case, the Scottish economy will be adversely affected. The contribution of citizens from the European Economic Area to Scotland has recently been addressed in detail, with substantial evidential analysis, by the Scottish Government, in their response to the Migration Advisory Committee’s call for evidence on the role of EEA workers in the UK labour market. I commend that to the Minister. It shows that EU migration in Scotland is essential to ensure sustainable population growth, which is the single biggest driver of our economic growth.

All the projected increases in Scotland’s population over the next 10 years are projected to come from migration, in contrast with the UK as a whole, where only 54% of population increase is expected to come from overseas migration. That is why Scotland needs a different immigration policy and why the Scottish Parliament has voted to support the Scottish Government’s policy of a differential immigration policy, although it is a matter of regret that the Conservatives and the Liberal Democrats did not support that. I am very pleased to say that the Labour party and the Greens did.

As my hon. Friend the Member for Glasgow East (David Linden) said, the Scottish Government also have the support of the Scottish Trades Union Congress. In particular, Unison has spoken out strongly about the need for a differential immigration policy for Scotland. I am also pleased to say that the Scottish Chambers of Commerce and the Scottish Institute of Directors have said that Scotland should look closely at a differential immigration policy.

To address the point about borders raised by the hon. Member for Angus (Kirstene Hair), Australia and Canada are two examples of countries that operate differential immigration systems. As the hon. Lady ought to know, because it is her Government’s policy, immigration is not controlled so much at borders these days but in the workplace, when people go to look for a job or a benefit, or go to rent a flat. In Scotland, we now have a separate national insurance code, so it would be easy for Scotland to have a differential immigration system from England without any need for a hard border. Indeed, we are repeatedly told by the UK Government that the Republic of Ireland can have a separate immigration policy from the north of Ireland without the need for a hard border.

I am constrained by time, but I want to look briefly at the macroeconomic modelling that has been done by the Scottish Government, because it shows the contribution of EU migrants to the Scottish economy: on average, each additional EU citizen working in Scotland contributes a further £34,400 per head in gross domestic product per year. As there are approximately 130,000 EU citizens working in Scotland, that means they are contributing approximately £4.42 billion per year to the Scottish economy. It is also estimated that, fiscally, they contribute £10,400 per head in Government revenue. So, the evidence shows that EU and EEA migrants are making a huge contribution to the Scottish economy.

With regard to migration from outside the EU, we do not think a one-size-fits-all approach applies either. We would like the UK Government to abolish their net migration target, which, let’s face it, they have missed for the past seven or eight years, so there is not really much point in it anyway. We would like them to abolish the immigration skills charge. We would like a more flexible and responsive approach to the existing mechanism of the shortage occupation list for Scotland, and most importantly—this has cross-party support from every single political party in Scotland—we want the post-study work visa introduced in Scotland. I would really like the Minister to tell us why the post-study work visa has not been reintroduced in Scotland, despite the support of her own party in Scotland for that to happen. We are often told how tremendously influential the Scottish Conservatives are now at Westminster. If that is so, let us see the post-study work visa come back, because the Scottish National party has been calling for that for a long time.

Immigration policy must be evidence-based. When we quote evidence, we have to look at it carefully to make sure that we understand it properly. If we are in any doubt about the conclusions, we are perhaps best to go back to the author of the research, as I have done with Sir Stephen Nickell.

As regards Scotland, the evidence shows that the Scottish economy benefits from immigration. Business in Scotland accepts that, the trade unions in Scotland accept it and most of the political parties accept it. It is time for immigration policy to be devolved to Scotland so that the Scottish Parliament can ensure that migration works to the benefit of the Scottish economy.

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[Victoria Atkins]

The hon. Gentleman has pre-empted me; I was going to deal with that at the end, but I will deal with it now. We have no plans to reintroduce the post-study work visa. The hon. and learned Member for Edinburgh South West (Joanna Cherry) was quite right to talk about evidence, and I thank her for her kind comments, but evidence from previous schemes showed that large numbers of people were undertaking low-skilled work. We now have the much more targeted tier 2 scheme, so that when graduates leave UK universities we know that they go into highly skilled jobs, using the skills that they have developed at university. Indeed, the evidence goes even further: we found that in October 2010, three in five users of the post-study work visa were in unskilled work. A 2014 analysis of migrants who had switched from the tier 1 post-study work category to the tier 1 entrepreneurial category found that the majority had no declared economic activity or were working in breach of their conditions of stay. That is why we are focusing on skills and productivity— precisely because we hope that students who come to our universities will deliver those skills and will be able to contribute.

I am conscious of time, so I thank all hon. Members who have contributed to this debate and I reassure them that the Government are clear that carefully controlled economic migration benefits our economy. It is vital for our country’s prosperity that we select and attract the right mix of skills to the UK, ensuring that we continue to support wealth creation, employment and productivity. We know that migration supports United Kingdom growth by allowing employers greater choice and enhancing the labour market’s ability to respond quickly to capacity constraints. I listened carefully to the comments of my hon. Friend the Member for South Suffolk (James Cartlidge) on the concerns of local employers. I hope that the independent Migration Advisory Committee report will draw on those views, so that in September 2018 we will have an evidenced-based report on what our migration system should look like.

Migrants do not just bring the skills needed but enhance our society and contribute to British life. However, we must strike a balance. We need to attract migrant labour, which boosts our economy, while ensuring that migration does not reach unmanageable levels to the detriment of domestic labour, skills and local communities. Our commitment to reducing net migration to sustainable levels must be balanced by our determination to ensure that UK businesses have the labour force that they need. Our immigration system must strike that balance.

I was most interested to hear the speech of the hon. Member for Stretford and Urmston (Kate Green), particularly as she is the chair of the all-party parliamentary group on migration. She mentioned skills; in setting in our immigration policy we have followed the advice of the independent Migration Advisory Committee, particularly when it comes to drawing up the shortage occupation list. Again, we will look at the evidence of the committee’s report in September 2018.

The hon. Member for Glasgow East (David Linden) and the hon. and learned Member for Edinburgh South West both mentioned Scotland having its own immigration system. I make the simple point that the United Kingdom is united: there is free movement between England Wales and England and Scotland. The whole point of having a united immigration policy is to keep our kingdom united. I know that that does not play with the views of the—

[Joanna Cherry]

Will the Minister give way?

[Victoria Atkins]

Will the hon. and learned Lady forgive me if I do not, as I know that my right hon. Friend the Member for Forest of Dean wants to speak for two minutes at the end? I just wanted to make the point that we have freedom of movement in the United Kingdom.

I am grateful to my hon. Friend the Member for Angus (Kirstene Hair) for raising the issue of agricultural workers. That is being kept under review, and the Immigration Minister is visiting many members of the agricultural sector to discuss those concerns. We note in passing that the latest labour market statistics from the Office for National Statistics show that more EU nationals are coming to this country to work than ever before. That is why we have not implemented a seasonal agricultural workers scheme, but that is kept under review and we will listen carefully to the National Farmers Union and others.

The hon. Member for Ealing Central and Acton (Dr Huq) mentioned curry, students and fruit picking. We have already dealt with fruit picking, but I am delighted that she raised the subject of curry. Curry chefs are not subject to the freedom of movement rules that EU chefs enjoy. We do not want to discriminate between non-EU and EU migrants. There will be a system for all our international partners. I make no promises as to how that will impact curry chefs in particular, but the point is that we will be free of that current difference between EU and non-EU citizens because we are leaving the European Union.

The hon. and learned Member for Edinburgh South West spoke about the post-study work visa issue; I have already answered that point by way of an intervention. We continue to review our immigration arrangements regularly, and we are committed to ensuring that the system continues to serve the national interest.

Very quickly, on the point about the immigration Bill and rules, which was raised by a number of hon. Members, the MAC report is due to report in September 2018. The immigration Bill will be drafted before then; it will be about dealing with the European Union (Withdrawal) Bill repealing freedom of movement. The detail of EU migration policy that will apply to EU nationals will be set out in immigration rules. The report is a very important part of creating those rules. I hope that the Bill will come next year; it will set out the framework within which those rules will work.

Mr Hosie, I want to give my right hon. Friend the Member for Forest of Dean time to make his closing remarks. It has been a pleasure to listen to this debate and to the informative contributions; they have made for a very interesting morning. Allow me to finish with this thought: we all know that successful businesses are essential to the success of our economy. It is through successful businesses that we have employment, pay packets and prosperity, which is precisely why the Government established its immigration policy, and measures such as its modern industrial strategy and flexible working arrangements, through universal credit for example. I hope that that will have an impact on bringing people into the job market. All those policies draw together to try to ensure that the United Kingdom remains a great place to do business. We welcome the contribution that migrants have made historically, and will make in future.