Brexit and the Labour Market (Economic Affairs Committee Report)

Lord Turnbull Excerpts

Thursday 8th February 2018 Lords Chamber

[Lord Turnbull (CB)]

My Lords, this was a very difficult report to prepare, the main sources of difficulty being the unsatisfactory evidence base and confused policy objectives. The noble Lord, Lord Forsyth, has highlighted the deficiencies in the statistics. The main source of the figures is the International Passenger Survey, based on 20-minute interviews—which I do not think are compulsory—with a sample of passengers passing through 19 airports and ports. Of those, only 4,000 to 5,000 were identified as migrants. It is on that that this whole policy is based.

The data on those leaving is acknowledged to be especially poor. We go through airports and our passports are swiped. This, I believe, is part of a control measure so that the right people get on the plane; I do not think that as yet it forms part of the evidence base. We also have problems with the number of students and how long they stay. Therefore, not enough is known about why people come, what they will do, what skills they have and how long they will stay. If migration is such a high-priority issue, I too am left wondering whether the UK should reconsider its traditional hostility to registration of identity, regardless of whether it is embodied in a card.

The confusion extends into the policy objectives. We were told that the Government wanted to reduce net migration to under 100,000 per year from over 250,000 to 300,000 in recent years, although, as has been mentioned, the Government were unclear about whether to call this a target. It would have been better if the study commissioned from the Migration Advisory Committee, referred to in the Government’s response, had been undertaken before the figure of 100,000 had been plucked out of thin air.

Part of the justification for Brexit was the need to take back control of our borders. However, only control of migration from the EU would be enhanced by Brexit. This channel has accounted for just under half of the total, and its level has fallen significantly since we reported. So, even if EU migration were reduced to zero, we would still not achieve the target unless new measures were brought forward to tackle non-EU migration.

Two phrases came up repeatedly in the referendum: “regaining sovereignty” and “taking back control”. They sound like synonyms, but they are not. One can regain sovereignty—that is, the ability to make one’s own laws—but that may not improve control if it reduces the co-operation that we get from other countries. For example, we could tighten laws against inflows across the channel but find that we were getting less help from France. We should not lose sight of the fact that collaboration with other countries is one of the instruments for advancing our objectives.

The third problem with the target of less than 100,000 is that it is not rooted in the structure of the labour market. The evidence that we saw showed the extent to which some sectors have, over the last two decades, become extremely heavily dependent on workers from overseas, notably health and care, construction, agriculture and food processing, and hospitality.

At this point, we need to recognise the difference between stocks and flows. Even if net migration were zero, there would still be about 5.6 million EU and non-EU nationals in the UK, of whom about 3.6 million or two-thirds are working. If we control net migration, there will still be a large stock of overseas labour to call on. Nevertheless, any attempt to reduce net migration rapidly has to take account of how fast employers would be able to train and recruit UK nationals or provide investment to mechanise production. The best example is housing. It is difficult to imagine that the Government’s objective of increasing the number of houses being built from 200,000 to 300,000 will be achieved without any increase in overseas workers. It will require a massive increase in construction training to turn this around.

The issue of overseas students came up frequently, with many arguing that students should be excluded from the statistics. This muddles up two concepts: the statistics and how the policy target is specified. Students should be in the migration statistics because they are a component of the population and net migration is meant to measure the increment to the population each year. But they do not need to be in the metric used for designing policy. There are many examples of where we take a statistic as measured by the ONS, using agreed definitions, some of them international, but then modify it in setting policy objectives: for example, RPI minus X; the public expenditure planning total minus privatisation proceeds; CO₂ emissions excluding aviation and shipping. Students should not be in the metric used to measure the Government’s progress in reducing immigration. Overseas students in our schools and universities earn foreign exchange; they are like click-and-collect exports, where the buyer comes to us rather than our sending the product abroad. Normally, we want to promote exports rather than constrain them. I think this is helpfully acknowledged in the Government’s response. If student movement is outside the target, it will still need to be monitored. If it turns out that the rate of students staying on is significantly different from what was expected, then an adjustment to the target would need to be made.

Finally, there is one issue on which I agree with the Government’s response. Our report, in an effort to produce consensus, said that there might be some merit in issuing work permits on a regional basis—for example, for Scotland or London. I always thought, and made the argument but lost, that this made no sense. Take a construction firm based, say, in Ealing. If there were London-only permits, does that mean that any of its overseas workers could work only inside the M25? Could British Gas engineers based in London service boilers in Windsor? What kind of apparatus would be needed to check that employers were deploying people only inside the designated region? We have a flexible labour market nationwide and issuing permits which bear no relation to travel-to-work areas makes no sense.

In conclusion, it would be ironic if, between the referendum in 2016, in which “taking back control” featured so prominently, and our exit in 2019, the net EU migration figures fell to zero—I am inclined to bet that that might happen—rendering the whole exercise pointless. But then there would be crises in many areas of our economy: in public services, in the housing sector, in agriculture and in food processing. Supporters of Brexit should be careful what they wish for.