Non-EU Citizens: Income Threshold

Lord Harrington of Watford Excerpts

Monday 7th March 2016 Westminster Hall

[The Parliamentary Under-Secretary of State for Refugees (Richard Harrington)]

I would like to say, and I am sure that all of us agree, what an honour it is to be at this debate under your chairmanship, Ms Vaz. That is not the usual platitude that MPs use; I really mean it. I hope that you agree, as we all do, that it has been an interesting debate. I thank the Committee, represented by my hon. Friend the Member for Sutton and Cheam (Paul Scully), for securing it.

The Government welcome the opportunity to explain our reforms. My hon. Friend made balanced comments, stressing the important point that the £35,000 threshold applies only to settlement applications in tier 2, the route for skilled workers at graduate level. It does not apply to other routes, such as those for students or charity workers. Of course the Government believe that immigration can bring considerable economic benefits and has enriched our culture. I speak as a member of a family only two or three generations away from immigration, and as a Member for a constituency with a large number of immigrants. I have seen the benefit that immigration can bring to this country. However, the sustained high levels of net migration in recent years make it difficult to maintain social cohesion and put pressure on public services, and they can drive down wages for people on low incomes.

[Martin Docherty-Hughes]

What about the impact on social cohesion of oligarchs who come into the city of London, buy up council housing and exclude the working class from the city? Would the Minister like to exclude that type of people as well?

[Richard Harrington]

I have not seen any examples of oligarchs buying properties in my constituency of Watford, so I cannot comment on something that I do not know about. I do not think that comment is very relevant. If some oligarchs have done that, I am sure that compared to the total amount of accommodation in the country, it is a comparatively small amount. I must say that I would not know an oligarch if I saw one.

I will return to the debate, as I am sure you would expect me to do, Ms Vaz, or I will be ruled out of order. The case that immigration is somehow mixed up with the European Union renegotiation has been made by my hon. Friends the Members for Sutton and Cheam and for Wycombe (Mr Baker), who is no longer in his place. Obviously, in many debates in the Chamber and here in Westminster Hall, Europe seems to come into the matter, and people have different views on it. The Government’s view, as we know, is to remain, and the Prime Minister’s renegotiation, which has led to an emergency brake on benefits and other things, is relevant, but most of the comments made by hon. Members in their contributions have not involved the European side of the issue. Rather conveniently, I will return to the overall—[Interruption.] Excuse me, Ms Vaz. My voice is disappearing somewhat.

[Margaret Ferrier]

Does the Minister agree that the UK has greatly benefited economically and culturally from the free movement of workers from other EU countries, and that in the event of a vote to leave the European Union, the income threshold will have serious ramifications for labour markets in the UK?

[Richard Harrington]

I agree that this country has benefited significantly from immigration, in labour markets and in every other aspect of life. It is true that a significant level of net migration comes from the EU —172,000 people in the year ending September 2015. However, what is often not said—I am sorry that my hon. Friend the Member for Wycombe is not in his place at the moment, but I hope that my hon. Friend the Member for Sutton and Cheam will pass this on—is that an even larger amount, 191,000, is the result of non-EU net migration. The Office for National Statistics estimated that there were 67,000 non-EU long-term immigrants for work, an increase of 2% compared with the previous 12 months.

[Paul Scully]

Just as a full stop on the European point, we have talked a little about the fact that the threshold may apply to European citizens. If we left the EU, the threshold might not apply in quite the same way, because we would have greater flexibility within our immigration policy.

[Richard Harrington]

I do not think anyone could dispute that we would certainly have greater flexibility if we were not in the EU, but many of us would argue that the benefits of being in the EU are so significant that that would be a small point. For the record, that includes me; I totally agree with that view.

It should also be placed on record that numbers of those using tier 2, the skilled work route, have increased by 35% since 2010. Even if we were not experiencing high levels of migration from the EU, I argue that we would still need to reform the rules leading to such large population flows into the UK. I have dealt as much as I can in this debate with the EU issue. I have certainly given the Government’s view, which—luckily for me —coincides with my personal view on these matters.

In the past, it has been too easy for some employers to choose to bring in workers from overseas rather than invest in training for our existing workforce. On average, employers in the UK underinvest in training compared with those in other countries, with a marked decline over the past 20 years. In an increasingly global economy, it is not surprising that many skilled workers come to the UK for a short time to fill a temporary skills gap, or perhaps to experience work in another country, but—this is an important point—reducing migration is not just about reducing the numbers coming here. It is also about being more selective in who we allow to settle permanently. In 2015, some 44%, or nearly half, of all migrants granted settlement in the UK—

[Patrick Grady]

How does the Minister answer the point that other countries with skill shortages are actively encouraging people to come? Moreover, what kind of message does he think this policy sends to other countries to which UK citizens might want to travel or emigrate?

[Richard Harrington]

I answer that by restating that the consensus is that this country has a significant skill shortage, and that it is easier—this is a question of fact, whatever values one adds to it—to get people with skills from abroad rather than train staff oneself.

[Keir Starmer]

How does the policy, under which an employer could simply sponsor in another person earning under £35,000 to fill the job that has just been vacated by the person leaving, help the skill shortage in this country?

[Richard Harrington]

If employers want long-term employees, they will have to concentrate on training them here. In the short term, the hon. and learned Gentleman is absolutely right.

The Government consulted on reforming the rules for settlement in 2011, as we do not believe that there should be an automatic link between coming to the UK to work temporarily and staying permanently. That is common in most countries: there is a difference between temporary work and permanent settlement rights.

The minimum earnings threshold was set following advice from the Migration Advisory Committee. The main purpose of the tier 2 category is to support the UK economy, not to provide migrants with a route to settlement. While the MAC considered a number of alternative criteria, such as age or qualifications, it advised—this is where some hon. Members would have disagreed with it—that the strongest indicator of economic value is salary, and those migrants earning more than a given amount are more likely to make the biggest contributions to the UK economy in future. There may be exceptions to that, but fundamentally I believe that in the majority of situations, that is the case.

Tier 2 is reserved for those filling graduate-level jobs; that is what it is for. The figure of £35,000 a year was not invented by politicians from nowhere; it was worked out professionally by the MAC to be equivalent to the median UK pay in skilled jobs that qualified for tier 2 at the time of the MAC’s consultation in 2011. Hon. Members should be aware that the most recent research that the MAC has carried out means that the equivalent figure today would be £39,000.

The MAC has also identified evidence of a wage premium for migrant workers with specialist skills that are in short supply. On average, tier 2 migrants—that is, general migrants—earn an extra £3,000 per annum compared with UK workers with similar characteristics.

However, the Government recognise that salary is not always the strongest measure of the importance of a job, a point made very strongly by many Scottish National party Members who have spoken today. I thank all the SNP Members who are here for coming to this debate, because without them there would be comparatively few Members here. The hon. and learned Member for Holborn and St Pancras (Keir Starmer) made the point that this debate unfortunately coincides with a Second Reading debate on the Policing and Crime Bill, but I still thank the SNP Members for coming to this debate.

Within tier 2, there are exemptions for migrants working in a PhD-level occupation, for example, university researchers, and for those working in recognised shortage occupations. The hon. Member for Edinburgh East (Tommy Sheppard) gave the example of a university researcher in the field of clean water technology and said that she would have to leave her job. As I say, there are exemptions for PhD-level occupations—

[Tommy Sheppard]

After the PhD.

[Richard Harrington]

Yes—after-PhD-level occupations. Therefore, that person would be exempt.

I mention that to show hon. Members that the £35,000 figure is not just an arbitrary amount; there are proper exemptions. The shortage occupation list includes nurses, as has been said, several healthcare professional categories, many engineers, many roles in the creative sector and some teachers.

The exemption extends to those in jobs that have been on the shortage occupation list at any time in the preceding six years. That guards against occupations being returned to shortage and provides reassurance to workers in those occupations against future changes to the list.

[Mr Andrew Smith (Oxford East) (Lab)]

I am sorry that I have come to the debate relatively late. I am sure the point has already been made about nurses, but can the Minister give us some explicit reassurance about nurses? A constituent of mine, Siân Marvelley, is very worried that the threshold is going to affect her and require her to stop working.

[Richard Harrington]

I thank the right hon. Gentleman for making that point and he correctly said that nurses have been mentioned several times already. So I shall respond to his point and the points made by several other hon. Members about the same subject. Basically, they were worried that an occupation’s position in the list was temporary and it could be withdrawn from the list at any time, which does not give people any certainty—the very points that the right hon. Gentleman just made.

The MAC, which Members should remember is not a political committee but an independent committee that operates very analytically with skilled staff who study data from the Office for National Statistics and any other data that are available, has just conducted a review of nursing, and the Government will consider that report carefully. We do not know what it says yet, because the MAC has not published its review. There was an interim measure and the change took effect in time for the December 2015 allocation of the certificates of sponsorship, which means that applications for nursing posts are prioritised.

In its latest investment plan, which was published at the end of last year, Health Education England—I am afraid that I do not have the relevant statistics for Scotland—proposed further increases in the number of nursing training places in 2016-17. So there is a lot of forecasting on this subject—the number arrived at is not just an arbitrary one—and there has been a full report.

At this juncture, I feel that I should consider the point about the regional salary thresholds, which hon. Members from Scotland discussed very eloquently. In its November 2011 report on the settlement threshold, the MAC could not see a clear case for differentiation on a regional basis. Its argument, and therefore the Government’s argument, as we have adopted it, was that having a single threshold provides clarity and simplicity for applicants and sponsors. The minimum salary requirements for occupations in tier 2 are for the most part set using annual surveys of hours and earnings. The data generated are very sophisticated and UK-wide, and therefore take account of salary levels throughout the regions.

[Kirsten Oswald]

Although I understand what the Minister is saying, does he not accept that this averaging does not take account of the needs of Scotland? Scotland needs an immigration policy that welcomes world-class talent from abroad, but in this case this ideological policy is doing more harm than good to our business sector.

[Richard Harrington]

I clearly disagree with the hon. Lady about that, and I have just said that the way the statistics are worked out includes all the regional variations, so the MAC is not just taking numbers that suit London and the south-east, as was the implication of many hon. Members’ contributions.

The Government clearly agree that those who have helped to fill vital skill shortages in the UK should be able to do so. The subject of skills and skill shortages was mentioned—particularly eloquently, if I may say so—by the shadow Minister. He said that upskilling was very important, because why would employers need to bring workers in from abroad if there are people here with the relevant skills? I think that we would all agree about that.

The Government have done a lot about skills. My previous Government role was as the Prime Minister’s apprenticeship adviser.

[Martin Docherty-Hughes]

The Minister says the Government have done so much on this issue since 2010. However, does not the fact that they have to set the type of limit that we are discussing today show that their skills policy is an unmitigated disaster and failure?

[Richard Harrington]

I disagree very much with the hon. Gentleman on that point; I do not think that the Government’s skills policy has been a failure at all. The number of apprentices is increasing significantly, and with the new apprenticeship levy, whereby larger companies have to pay a percentage of their payroll to fund training programmes, we will see a very significant upskilling of the workforce. I have seen many, many examples of this type of training going on in all parts of the country. Nevertheless, as usual the shadow Minister made a very considered point.

My hon. Friend the Member for Sutton and Cheam gave the curry industry as an example of an industry with skills shortages. Both he and I have been involved in our constituencies with the owners of curry restaurants; it is probably fair to say that my hon. Friend is more of an expert on the hotter variations of curry in those restaurants than I am. The curry industry has lobbied Government very extensively on the fact that it cannot bring in chefs from Bangladesh or other places in the Indian subcontinent, saying that it is a problem.

However, there is beginning to be a significant amount of training for such chefs, and so I think that we will see, as time goes on, exactly the point that we have been making today—namely, that the answer is making the industry, and people who want to be in it, put the resources, the effort, the money and the skills into training people to fulfil these roles. That is of benefit to everyone, particularly the industry itself. All of us realise the contribution of the curry industry to the country as a whole, and, from my personal experience I know that that is true from the north of Scotland down to the south-west of England.

[Kirsten Oswald]

My point is not about curry. Although the Minister says that he sees things improving, last year the skills shortage in Britain worsened for a fourth consecutive year—Britain was one of the most severely affected countries in Europe—so his arguments do not stack up. We still have people who should be able to work here being sent away.

[Andrew Rosindell in the Chair]

[Richard Harrington]

I agree that a lot of work needs to be done on the skills shortage. The Government set a target of, I think, 3 million new apprentices for this Parliament. The courses are good and the standards high. The effect of the apprenticeship levy will, in the end, come through and companies will start to employ people from here rather than having to get skilled people from abroad.

Just to finish on curry, the industry has had access to numerous transitional immigration routes in the past—the key worker scheme in the 1990s and the sector-based scheme in the early 2000s—but I argue that a flow of lower-skilled migrant labour militates against the industry taking action itself. I am sure that the curry industry, which is a bastion of small enterprise in the whole of the United Kingdom, will rise to the challenge, in a short period, of training its own staff. I think it has a rosy future.

In the end, the curry business is a good example. We want to nurture more home-grown talent and encourage young people in this country who want to pursue a skilled career, and that means the restaurant sector offering training to attract and recruit resident workers to meet its staffing needs.

I would like to make an additional point, if I may, Ms Vaz—

[Andrew Rosindell (in the Chair)]

Ms Vaz is no longer in the Chair.

[Richard Harrington]

I do apologise, Mr Rosindell. I was so preoccupied with speaking that I failed to see you take the Chair. I am sure that you will continue to chair the debate with the spirit and discipline with which Ms Vaz started it.

[Andrew Rosindell (in the Chair)]

I intend to. Thank you, Mr Harrington.

--- Later in debate ---

[Richard Harrington]

I welcome you to the Chair, and I apologise. No offence was meant when I called you Ms Vaz.

[Andrew Rosindell (in the Chair)]

Please continue.

[Richard Harrington]

I would like briefly to respond to the points about the notice period. The view was expressed that it was unfair that people who had come here to work believing that it would lead to settlement had no idea about the changes that were going through. The Government made it clear that new rules would apply to migrants who entered tier 2 from 6 April 2011, and employers have had time to prepare for the possibility that their workers might not meet the required salary threshold for remaining in the UK. Workers who cannot meet the threshold may extend their stay in tier 2 for up to six years and may, during that period, apply to switch into any other immigration route for which they are eligible. It is not on or off, black or white; there is a transitional period.

I know that hon. Members recognise the importance of sustainable immigration. We must ensure that the UK economy can thrive while also reducing pressures on schools, hospitals, accommodation, transport and social services. We believe that the minimum earnings threshold for settlement under tier 2 ensures that the tier 2 route plays its part in the Government’s overall strategy to control net migration and that settlement is reserved for those who provide the greatest economic benefit to the UK.

[Keir Starmer]

I do not think that the Minister has touched on the impact on net migration. I am reading from the impact assessment, signed off by the right hon. Member for Ashford (Damian Green):

“We estimate that these restrictions on settlement will lead to some reductions in net migration of between 0 and 4,000 per year”.

Does the Minister accept that the policy could have no impact on net migration? That must be inferred from the impact assessment.

[Richard Harrington]

As the hon. and learned Gentleman would expect, I do not accept that. That impact assessment was from the previous Immigration Minister, my right hon. Friend the Member for Ashford (Damian Green). I would like hon. Members to look at the policy in two years’ time and see its effects.

In part based on my many years’ experience as an employer—I am proud to have had many employees from all sorts of backgrounds—I think that the policy will make a significant difference to the number of skilled UK residents being employed here while, at the same time, because of the significant exemptions regarding qualifications and shortages, allowing reasonable numbers of skilled and qualified people to come here. I do not agree with the shadow Minister’s view and I think that, in time, the policy will be seen to be sensible, reasonable and measured.