Brexit and the Labour Market (Economic Affairs Committee Report)

Lord Reid of Cardowan Excerpts

Thursday 8th February 2018 Lords Chamber

[Lord Reid of Cardowan (Lab)]

My Lords, I wish to make three simple points. However, I have a feeling of déjà-vu as these issues were argued about, certainly internally, when the last Labour Government were in office. I confess that I lost on two of them.

First, I think it is right for the Government to take a view on immigration numbers and the level of immigration. I disagree with my noble friend Lord Darling: I do not see anything anti-New Labour in that. To find a middle way between the unfettered free market and central diktat is typically New Labour. Therefore, I welcome the Government’s intention in this regard, although I am not saying that I agree with any specific mechanisms. Incidentally, I have never understood why everyone accepts that it is correct to shape the flow of capital or investment through fixing interest rates but somehow it is terrible to try to do the same thing with the flow of labour. I recall that within a week of becoming Home Secretary, I suggested that and merited an editorial in the Guardian accusing me of trying to impose a Soviet-style system on Britain. Unfortunately, that kind of extreme cliché mars this whole debate.

My second point on the value of immigration is equally simple. I for one do not doubt the value of immigration as a whole, at a macro level, to the country’s GDP. The Treasury constantly argued this case throughout the tenures of different Governments. It found it too indelicate to mention publicly the fact that immigration also brought down wages hugely, but it always talked about the increase in GDP. The problem with that argument is twofold. First, you cannot estimate the value of immigration without weighing on the other side the social costs. Secondly, the value is always estimated at a macro level but the social costs apply at the micro level: they hit people and local communities. All other things being equal, an influx of large numbers of people reduces the services that local people get and their access to housing, a doctor, roads, flats and education. That cannot be wished away by branding people as somehow inherently racist. It is not a perception based on racism; it is based on people’s own self-interest and their standard of living, which they see being reduced. Therefore, I have always believed that if you are to have even managed migration, you also have to have a managed differential distribution of resources to those areas where the largest numbers of immigrants arrive and live. That brings me to my third point because, to do that, you need to be able to measure immigration.

One of the phrases that has, unfortunately, stuck with me for the last 15 years is “unfit for purpose” as regards the immigration department of the Home Office. I am glad that it has at least stood the test of time, as I think the noble Lord, Lord Forsyth, used it four times when he referred to the lack of empirical data due to the flawed nature of the statistics. It is an area where I won an argument, along with colleagues in the Labour Government. Unfortunately, that was not followed up by the then leader of the Lib Dems, who, on coming to power, immediately abolished the system of ID cards—I might add, without paying compensation to those who had voluntarily paid to have them. I predict that the Government will not be able to manage, measure or operate an immigration system in the absence of biometric ID cards and biometric visas. This is not a case of surveillance being carried out on the population. It is not merely a mechanism to counter terrorism and theft or to protect individuals’ identity, which is now the subject of increasing theft. It is an elementary mechanism for making sure that we have a managed and humane immigration policy that combines increasing the value to the country through immigrants and the skills they bring with maintaining services to individuals in their localities.

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[Lord Reid of Cardowan]

I am grateful to the Minister for giving way. I understand her awareness of the concerns of the public. But about a year and a half ago I asked her if the Government distinguished between the free movement of people and the free movement of labour. In other words, there are already existing provisions under the European Union regulations which allow the Government to take steps if people come here but do not work. Why have the Government never used those regulations?

[Baroness Williams of Trafford]

The noble Lord has a point—but nor did the previous Government use the regulations, and the concerns were growing at that time. But I take his point: perhaps we would be in a totally different place if successive Governments had looked at that.

On citizens’ rights, I begin by emphasising the significant contribution that EU citizens make to our national life and that we want them and their families to stay. The Government have been very clear since the start of negotiations with the EU that protecting the rights of EU citizens living here, together with the rights of UK nationals living in EU countries, was their first priority. We have now delivered on that commitment and have reached an agreement with our EU partners on citizens’ rights. The agreement will provide the millions of EU citizens living in the UK with certainty about their future rights and, most importantly, allows them and their families to stay. The noble Lord, Lord Livermore, said that the deal on citizens’ rights reached in December did not provide certainty. They will be able to continue to live their lives broadly as now. We greatly value their contribution to the UK and hope that they will choose to do so.

I turn now to what happens after the UK leaves the EU. Carefully controlled economic migration benefits our economy and has a hugely positive impact on the social and cultural fabric of the UK. With that in mind, we want to ensure that we strike a balance between attracting the right mix of skills to the UK and controlling immigration from the EU in the national interest. Let me be clear: the Government recognise the valuable economic, social and cultural contribution that migrants make, but we must ensure that we are able to control immigration in the national interest, as my noble friend Lord Suri said.

The noble Lords, Lord Lea, Lord Shipley and Lord Kennedy, and others talked about the consideration of the economy as a whole, different EU and non-EU sectors, and areas of the country with high and low skills. There is a real mix in there. I agree that we must consider the economy as a whole and not just EU migration. That is why we explicitly asked the Migration Advisory Committee to do just that. We must take a holistic view of the whole labour market, all parts of the UK including tourist areas, high and low skills, and all sectors of the economy. We will do just that.

I understand the committee’s concerns that we will need suitable time to implement the new immigration system. The Government recognise this and that is why the Prime Minister, in her Florence speech, set out a number of proposals for an implementation period which will allow a smooth transition and provide certainty for businesses. The noble Lord, Lord Livermore, also talked about that. During this period, access to one another’s markets should continue on current terms and people will be able to come to live and work in the UK. However, there will be a registration scheme, which is essential preparation for the future system. The Prime Minister set out that this points to an implementation period of around two years. She also made it clear that those arriving in this period will have different expectations about their ability to stay in the long term, as they will be arriving post Brexit.

I would like to reassure the committee on its recommendation that the Government should consult on the needs of business in any future immigration policy and ensure that businesses have access to the expertise and skills they need. The Government have always been very clear that we will make decisions about future arrangements following discussions with stakeholders, including with businesses and with the EU, and based on evidence.

The noble Lord, Lord Shipley, and my noble friend Lord Balfe talked about the important issue of protecting employment rights after the UK exits the European Union. The PM has been very clear that the Government will ensure that workers’ rights will be maintained after we leave the EU, and indeed enhanced. My noble friend Lord Balfe mentioned the specific issue of equal pay. The Equal Pay Act was of course brought in before the UK became a member of the EU, and we intend to honour and enforce that Act. It is particularly pertinent in this week of the 100-year anniversary of women’s suffrage and the Representation of the People Act that we have equal pay for equal work.

The noble Baroness, Lady Smith, asked when we will publish plans on the implementation period and whether it could be longer than two years. The PM proposed an implementation period of two years but we will keep that under review, not least as we discuss the implementation period with the EU. We will set out proposals for this period and future immigration arrangements over the coming months.

As my noble friend Lord Forsyth and other noble Lords pointed out, we have commissioned the independent Migration Advisory Committee—the MAC, as it is called—to report on the impact of the UK’s exit from the European Union. These recommendations will play a vital role when the Government make any final decisions on the future immigration system. The noble Lord, Lord Sharkey, asked when the MAC report would be published and whether there would be an interim report in September. The MAC is independent, so I cannot formally answer a question on its behalf about an ongoing study—but its reports are always published, including interim reports, and that is what I expect it will do.

I welcome the report’s suggestion that we should carry out a review and be satisfied about the administrative feasibility of a regional immigration system before we seek to implement one. The Government have been clear that we want an immigration system that takes into account the social and economic needs of all parts of the UK. However, it remains a reserved matter and we will consider the needs of the UK as a whole. As I have said before, we are consulting businesses, industry, trades unions and many others from across the UK to ensure that we can do this and that it will complement the MAC’s work. Indeed, the commission to the MAC explicitly asked us to include a consideration of impacts on different parts of the UK.

The noble Lord, Lord Sharkey, asked about the timing of a White Paper. Our first priority was to reach a deal on citizens’ rights, which we did in December, and our focus now is on getting the right deal for the implementation period immediately following the UK’s exit. We are considering a range of options for the future immigration system and we will set out initial plans in the coming months. We will of course consider how we can update the House as negotiations progress.

I am pleased that the committee welcome the Government’s new ambitious modern industrial strategy, which sets out a clear vision for driving an economy that works for everyone and recognises that building the conditions for a competitive, leading centre for innovation, excellence and talent means focusing on developing people and skills in the various sectors. That is why, among other things, we are committed to raising investment in research and development to 2.4% of GDP by 2027 and announcing £725 million in our new industrial strategy challenge fund programmes to drive innovation.

My noble friend Lord Horam made the point that the economy will need to adapt to less EU migration and referred to the importance of skills and training for UK citizens. I agree with his broad sentiments and his welcome for the Government’s strategy. We must continue to promote and develop our dynamic economy. His points about skills and training for UK citizens are important and that is why we continue to invest in schools, our world-class universities and vocational training such as apprenticeships, which are overwhelmingly working well, to ensure that our own citizens have maximum opportunities to develop their skills.

The noble Lord, Lord Sharkey, referred to T-levels and apprenticeships. There have been more than 1.2 million apprenticeship starts since 2015, providing more opportunities to people of all ages and from all backgrounds. We are ensuring that smaller employers understand the benefits of apprenticeship training for their businesses and we are encouraging them to take advantage of the support available. On T-levels, we launched a workplace pilot scheme in September 2017 to test different models and approaches, and this will include an evaluation organisation. The noble Lord criticised inadequate providers. It is important that provision is of the highest quality and seven out of 10 of our further education colleges have been graded as outstanding or good by Ofsted.

Most of the points made today were about the robustness of the migration statistics. These are published by the ONS, as noble Lords have pointed out, and it is confirmed that the international passenger survey continues to be the best source of information to measure long-term international migration. Additionally, the Home Office publishes a wide range of statistics on the control of immigration and is already working with the ONS to analyse the new exit check data and other sources to provide a better understanding of migrant flows.

My noble friend Lord Forsyth talked about the different statistics from different sources, even for the same sectors, and I am glad he recognises the steps that both the Government and the ONS are taking to improve data. It is a complex area and we continue to work on it. That is why we have commissioned the independent Migration Advisory Committee and we look forward to its report in the autumn.

A number of noble Lords referred to the quality of data. We will continue to work with the ONS to improve the quality of data and this will include a variety of data sources, including administrative data from government sources. The ONS is independent of government and it is right to ensure that the public can have confidence in the objectivity of the statistics. We should not underestimate the generally extremely high quality of ONS data.

The noble Lord, Lord Burns, talked about the net migration target/commitment. We are committed to reducing net migration to sustainable levels. Whether it is described as a target, aim, objective or commitment, it is clearly what we want to do to address people’s concerns about migration.

The noble Lord, Lord Darling, asked about Home Office capacity. The Home Office already issues millions of passports and other visas each year. I understand the concerns but we are working hard to improve services.

We have been clear about our commitment to reducing net migration but that does not detract from our determination to ensure that we remain an attractive option for those with the skills and expertise across all sectors of our economy and who play an invaluable role in making the United Kingdom better still.

I again thank my noble friend and all noble Lords who have participated in the debate.