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

Stuart C McDonald Excerpts

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 9th June 2020 Public Bill Committees

[Mr Robert Goodwill (Scarborough and Whitby) (Con)]

Q When the Bill was being formulated and opinion was being sought, the UK jobs market was entirely different from the one we shall see from the summer onwards, with many skills in very short supply—particularly for things like engineering, or even for people working in care homes or picking fruit. Do you not think that we shall see a situation in which a lot more British workers come into the jobs market, and that some of the concerns expressed in the past about the bureaucratic hurdles that might need to be coped with will actually not be such a great problem, because we will have a lot of very well-qualified and well-skilled British people? Is it right that the costs that we have just heard of from the Federation of Small Businesses will be a real incentive for companies to employ British people who are now, sadly, in many cases being thrown back on to the jobs market, in a situation in which we do not have, in effect, full employment? I think the FSB should be the first to answer that.

Martin McTague: I can see that there will be more incentive to look for indigenous employees, but the reality is that a lot of the shake-out, or the potential shake-out, that we are hearing is likely to happen will be among the least-skilled people. Companies are going to enormous lengths to try to hang on to the rare skills that they have. If they have managed to recruit somebody from, say, the European Union, they are going to enormous lengths to try to get them to apply for settled status and to reassure them about the covid situation. I do not think that a new influx of unemployed people, many of whom will have poor skills, will solve a lot of the problems for these companies.

Richard Burge: From a London point of view, I think the jury is out, literally. I do not think we really know what to expect as we come out of covid-19. The critical thing for London, and probably for all metropolitan areas, is the mobility of people, and the willingness of people to be physically mobile to go and find new work, possibly earning less than they were earning before. However, it is also about emotional mobility, too. Are people emotionally prepared to go and do new work, taking completely new tangents in their lives and probably earning less? That will be a real challenge. I think there will be greater opportunities, but not necessarily in a career path that people might have been expecting.

[Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)]

Q May I go first to the London Chamber of Commerce and then to the FSB? You have both spoken eloquently about the new challenges and red tape that the system will impose upon businesses. Looking at the other side of the coin, is there also not an extent to which this process puts some red tape and expense on potential employees from the European Union? It risks making coming to the UK to work less attractive. For example, I am from Germany and I have a job offer in London or I have a job offer in Dublin. Going to Dublin does not involve any charge or bureaucracy; going to London involves a visa, a health surcharge, and so on and so forth. Is there a danger that we are going to make this country much less attractive for skilled workers to come to?

Richard Burge: I think it is inevitable that it is going to be more difficult for people from the European Union; that is the consequence of leaving the European Union and not having an immigration policy for people from there. It is no longer an internal market; it is now a normal external market.

I think what we need to do is to make the red tape manageable. I think part of that is umbrella licensing. Part of that will be border clearance that is rapid and smooth, so it needs to be digitised and there needs to be e-clearance, and that also means that it cannot get cluttered up with tourism. We hope that everyone from the European Union will be able to come without a visa and not get caught in that process. Part of this process is the mechanism, and I think that one of the big challenges for the Home Office is to ensure that, while there may be more bureaucracy, it tries to make that process as smooth and as digitised as possible, and that is going to be a big ask before 1 January.

Martin McTague: I am really sorry; I can barely hear the conversation. Is there anybody closer to the microphone who could just repeat the essence of that question for me?

[Stuart C. McDonald]

Q It was a question about whether or not there is a danger that introducing this system for EU nationals will make the United Kingdom much less attractive as a place for them to come and work, if they have fees and visas to apply for, whereas the equivalent job offer in Dublin, for example, would involve none of that.

Martin McTague: I got the essence of your question. Most small businesses treated EU nationals just as part of the pool of labour; they would not even question where they originated, and it was just a very simple recruitment process. I think that the additional costs will act as a disincentive, but more importantly it is quite hard to persuade a lot of EU employees to stay in the country. They are leaving, and they are leaving with the kind of skills that are in really short supply.

[Stuart C. McDonald]

Q My other question relates to the proposals that we were debating this time last year, when the same Bill was going through Parliament, and there was a proposal for a 12-month visa for workers at lower pay levels. That was fairly controversial at the time, but now it has been scrapped altogether, rather than being improved, which some of us would have liked to see. Is that a change that you welcome, or would you want the Government to think again on that? Again, I will go to the London Chamber first.

Richard Burge: If I may start with that, certainly from a London Chamber point of view, and I think from the point of view of all my colleagues around the country, it was hugely disappointing to see that disappear completely from the Bill this time. It was a very sensible scheme. I think it demonstrated flexibility and a willingness to try to respond to helping people get through what will be a permanent change in the market. It is very sad to see it go. We would like to see the route for lower-paid workers—lower-skilled workers—being reintroduced in the same way as it was under the previous Prime Minister’s Government.

Martin McTague: I think I picked that up. We were disappointed to see the disappearance of the 12-month scheme; we thought that was addressing an important part of the labour market, and it is regrettable that it disappeared. Hopefully something can be done to implement something similar.

[Mr Richard Holden (North West Durham) (Con)]

Q I have a question regarding the change for non-EU migrants where it looks like the thresholds for wages are going to be coming down. The question is particularly for the London Chamber of Commerce and Industry. What impact do you think that that might have on the ability to get migrants with the right skills into the labour market in London and across the rest of the UK?

Richard Burge: It is helpful, because it is creating bigger diversity in terms of availability and access to labour. I think most small businesses, though, or any business will be keen to employ UK-based labour if they can. That is simpler and easier. In the end you do need to have access to global markets. We have to remember that we are a globally trading nation and, in the 21st century, trading tends to be in the skills of individuals and their brainpower and abilities. It is mostly about people rather than things, although we tend to focus on trade as being about things rather than people. The more we can do to keep our borders—within the Government’s requirements in terms of immigration for other purposes, social purposes—as open to people for work as they are for goods and services, the better.

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[Dame Diana Johnson]

Q Do you feel that by 1 January there will be a regime in place that will be sufficiently efficient to ensure that members of the Federation of Small Businesses will be able to have confidence that the scheme is going to work well for them and the requirements of their business? I am mindful of the very difficult situation that we are in with covid-19, as has been said already, and the bandwidth that is available in government at the moment.

Martin McTague: The short answer is that the time available is far too little for most small businesses to adjust to what is a completely alien system. It is relatively easy for the larger businesses with HR departments to make this adjustment. They may already be recruiting tier 2 employees, but for most small businesses it will be extremely difficult and costly. I think that all it will mean is that most of them will decide to scale back their operations and make sure that they adapt to a new world that has fewer skilled people.

Richard Burge: My view is that most small businesses will be able to get through this, if they know the rules soon enough, if there is a process by which they can use umbrella licensing, and providing that new systems are put in place by the Home Office. I think that is the critical thing. As I said, I have huge respect for the Home Office under the leadership of Matthew Rycroft and his team, but they are dealing with things such as covid-19 issues on immigration, refugees arriving over the channel, the situation in Hong Kong, and the immigration surcharge. They have a huge job list to do—and this is the only one in which they have a choice about the timing. I hope that the Home Secretary will be looking internally at the Home Office and its capability to deliver things that will then enable business to respond in a timely manner. I am concerned about the pressure being put on them.

[Stuart C. McDonald]

Q Since we have a little time left, to what extent does the shortage occupation list offer a partial solution to some of the challenges you face? We sometimes hear criticism that it is slightly unwieldy, slow and unresponsive. What is the experience of your members—from the London Chamber first?

Richard Burge: It is slow and unwieldy and should be faster. One way of improving that is to involve businesses much more directly in analysing what a shortage occupation should be. We can rely on businesses who are asked to join, say, an industry body, to work alongside the Migration Advisory Committee on that work. We can rely on them to be forthright but not to plead special interest. It needs to involve business much more directly and that, it is hoped, will enable it to be much more responsive to the marketplace. The marketplace is going to change very dramatically over the next 12, 18 or 24 months, and we do not really know how it is going to change, so we have to be light of foot.

[Stuart C. McDonald]

Q Mr McTague, what is the experience of your members with the shortage occupation list?

[The Chair]

We seem to have a technical problem. While we are trying to sort that out, are there any questions to Mr Burge?

[Stuart C. McDonald]

Q One final question, if I may, Mr Stringer. It is a broader question about the nature of this Bill, since, obviously, this morning we are going into the fine detail of a future immigration system. In fact, the Bill is pretty much silent on that and essentially hangs the powers to put that system in place on the Home Secretary. That would be the end of MPs’ involvement to all intents and purposes. Is that the appropriate way to go about making immigration policy?

Richard Burge: It is up to you in this House to decide how you use legislation to maintain scrutiny of Government. We would ask that, whatever means are chosen—through primary legislation or regulation—it is done in a transparent way and involves us. Instead of us in business being told what is happening, we should be involved in those discussions and make them as transparent as possible. As far as I can see, employment and immigration are not a national security issue; it could be discussed much more openly and transparently. We can resolve differences through public dialogue rather than through private discussion.

[The Chair]

May I just check that Mr McTague is there? Apparently, he is not. We will try to get him back.

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[The Chair]

Do we have Mr McTague?

Martin McTague: Yes, I am here. Sorry, the line dropped.

[Stuart C. McDonald]

Q Thank you, Mr McTague. Sometimes the shortage occupation list is said to be an answer to some of the issues that you have flagged up this morning. At other times, we hear criticism that the shortage occupation list has been a slow and clunky process. What has been your members’ experience of the shortage occupation list?

Martin McTague: The principle of the shortage occupation list is a difficult one for us, because it is a fast-moving situation and the shortage occupations can change from week to week and from month to month. It is better for them to be in a general category, but it is rather bureaucratic and clunky. It is a situation that we are prepared to stomach rather than appreciate.

[Stuart C. McDonald]

Q How would you try to improve it?

Martin McTague: Sorry, I could not quite hear that.

[Stuart C. McDonald]

What improvements would you want to make to the procedure?

Martin McTague: I would like to see a much more active engagement with business representative organisations so that, if there are changes, they can be quickly implemented and we are not waiting for a long, drawn-out bureaucratic process to work its way through the system. It is about keeping as much flexibility in the system as possible.

[Stuart C. McDonald]

Q My final question to you, Mr McTague, is a broader question about the Bill. We have spoken a lot about the future immigration system that has been proposed by the Government, yet the Bill is pretty much silent on that. In fact, it is basically just handing a blank cheque to the Home Office to implement that. Do you think that is the best way to go about scrutinising and making immigration policy, or would you prefer to see the rules made in a different way?

Martin McTague: I am really sorry, I can barely hear you. It is echoing and distant. Could someone closer to the mic help me?

[The Chair]

Can you try one more time?

[Stuart C. McDonald]

Q I will try again, Mr McTague. It is a broad question about how we make immigration policy. This Bill essentially gives the Home Secretary the power to put in place a system with limited scrutiny and oversight from Parliament. Do you think that is the appropriate way to go about things or would you prefer to see immigration policy made in a different way?

Martin McTague: I think the fact that the Home Secretary is in a position to vary it and respond to changes in market conditions is better than if it was written on the face of the Bill and we had to go through some sort of legislative process to get changes made. In terms of flexibility, my vote is for the most flexible system we can adopt.

[Stuart C. McDonald]

Q Is there no way you can have flexibility but with parliamentary oversight?

Martin McTague: Sorry, can you say that again.

[Stuart C. McDonald]

Flexibility does not mean that you cannot have parliamentary oversight, does it?

Martin McTague: No, it is not that. I think the Home Secretary will be answerable to Parliament about the decisions that she or he has made. That would be a way in which Parliament could ensure there was proper scrutiny. There needs to be a system that can respond in real time to some of the really big changes in market conditions. They will be even more marked in the coming months.

[Stuart C. McDonald]

Q Yet, ironically enough, you have spent most of your evidence saying that the Home Secretary was not responding to what business was saying at all.

Martin McTague: I’m sorry, I am struggling to hear you.

[Stuart C. McDonald]

I will stop digging there.

Martin McTague: I apologise.

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[Holly Lynch (Halifax) (Lab)]

Q Bearing in mind what you have just said, what are the things that you would really like changed about the Bill? Alternatively, what would the Government need to do to support you to manage the impact that it will have on your businesses?

Matthew Fell: There are a few things that we would like to see in the proposed new immigration system. We believe that a temporary route for people to come and work in this country would be a helpful addition to the system as it is currently set up.

Secondly, I would say to accelerate efforts to streamline the proposed approach. The vast majority of businesses have never previously had to engage with the visa system; something like only 30,000 businesses in the country have grappled with it so far, because we have lived and worked with free movement of people for so long. It will be a big change, so I would say to accelerate the changes to streamline and improve the system, reduce red tape and so on.

The final piece, just to reiterate, is to accelerate efforts to get clarity and detail out there and known to businesses as soon as possible, so they can begin to familiarise themselves, prepare and get ready.

[Stuart C. McDonald]

Q Last year, when you gave evidence to the Bill Committee, you described tier 2 as a

“restrictive, complex and burdensome system.”––[Official Report, Immigration and Social Security Co-Ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c. 67, Q178.]

Could you say a little more about what you mean by that?

Matthew Fell: There are a couple of areas. It comes down to some of the red tape issues, and there are a few examples. The initial sponsor licence, businesses tell us, is very document-heavy, in their words—for example, on the HR practices side, having to evidence, track and monitor things that small businesses feel are perfectly obvious. If they employ 10 or up to 20 people and one person is missing, that is self-evident; they know if a person is not there.

There is quite a lot in the reporting requirements that could be streamlined. Lots of people say to us, “We have to report it if a migrant’s pay has increased, and we don’t quite understand why. If they were already given the green light because they cleared the salary threshold, why would we need to report that that has increased?”

Thirdly, people feel that the volume of documentation required to be kept on file, including details such as notes from interviewing candidates, is quite onerous. Those are some of the examples of red tape burdens that we would welcome efforts to streamline.

[Stuart C. McDonald]

Q May I also ask about the costs that will be involved now? How much more expensive will it be for businesses who have never done this before to recruit workers from the EU?

Matthew Fell: There will be a significant uplift in cost, particularly for businesses that have never grappled with this before. There is an ongoing cost, but there is also a first-time familiarisation effort that will cost more, particularly for small businesses. Larger companies who deal with high volumes of people are likely to have in-house HR and legal expertise. That is much less likely to be the case for small and medium-sized businesses, who will need to pay for external advice to be able to navigate this new system.

[Stuart C. McDonald]

Q To turn the question around a little and look at it from the perspective of prospective employees as opposed to employers, if somebody has a job offer in London or Dublin, is there a danger that imposing the tier 2 system is going to make London much less attractive than Dublin, if they are faced by, for example, visa fees and visa applications and immigration health surcharges?

Matthew Fell: That is an issue. It is an issue that companies will look at, for example, if they were a multinational business and they were choosing the location of business, so it is true from a business perspective. From the employee perspective, it might be down to the speed with which they can get certainty—“Can I go and live there and know that it is okay?” Clearly, there are others who would speak more for the employee perspective, but that would be my perspective on the employee view.

[Kate Green]

Q How important is access to social protections such as health cover or protection of pension rights to the recruitment and retention of EEA nationals?

Matthew Fell: I think it is an important factor. It is quite hard to say exactly where the detail of that lands, particularly in the context of the EU-UK negotiations that are ongoing; we will need to see where they land. Social security measures and the issues that you have just described are really important for reciprocity—not just migrants coming to work in the UK, but UK workers overseas—and that reciprocity is particularly important for mobility of labour as well as for migrants coming to work in the UK.

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[Angela Richardson]

In your first answer you said that 95% of workers in production are EU nationals. What percentage of that are UK workers?

Tim Thomas: Apologies—what I said was that 95% of our members employ an EU worker. Across the whole of the sector, we employ between 2.7 million and 2.9 million workers, of whom about 330,000 are EU workers.

[Stuart C. McDonald]

Q Given what you said, Mr Thomas, and everything that is going on, would it be helpful for the implementation of the new immigration system simply to be postponed?

Tim Thomas: I think that would simply lead to more uncertainty among manufacturers. We expect the UK Government to implement the new points-based system on the timeline that they guaranteed, and to provide businesses with the full suite of material—the statutory instruments and guidance—by the end of the summer at the latest so that we have a significant period to familiarise ourselves with it before January. If we delayed implementation, that would cause more uncertainty among businesses. Clearly, we need time to adjust and to see what the new system is. However, we naturally do not want a delay to the implementation date.

[Stuart C. McDonald]

And, quickly—

[The Chair]

Order. No, sorry. Robert Goodwill, very briefly.

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[Mr Goodwill]

Q Is it more likely that EU workers will come and stay? If they are deterred from doing so, we might have more workers from outside the EU, who might not stay so long.

Brian Bell: I certainly have not seen any evidence of that. It is a difficult one, because there has been a different rule up until this point in time. I have not seen any evidence that suggests European Union workers are more or less likely to stay on a long-term basis than non-EU workers. The data are not very good on that kind of thing, but it would be an interesting thing to look at.

[Stuart C. McDonald]

Q Professor Bell, may I take you back to what the Minister asked you about regional variations? It is important to be precise about exactly what the MAC recommended. The Minister suggested that the report recommended against regional variations, but you were very careful to say that your report addressed regional variations and salary thresholds. The MAC was not looking at the broader issue of regional visas or devolution of immigration control.

Brian Bell: That is correct. Immigration is a reserved matter, so we were asked to report just on that.

[Stuart C. McDonald]

Q On the salary threshold?

Brian Bell: Yes, on the salary threshold.

[Stuart C. McDonald]

Q Is it fair to say that your report says the decision was finely balanced, that there were arguments on both sides and that the majority of people responding to the consultation supported the idea of regional variations in salary threshold?

Brian Bell: I agree it was certainly finely balanced, although there was an extensive discussion on the maths. It is fair to say that that was primarily driven by Northern Ireland. The differences in wages between Northern Ireland and the rest of the United Kingdom are more significant than in other devolved Administrations, and they had different issues because of the land border.

You are probably right that the majority of our respondents were in favour of it. That partly tells you that when you call for evidence, you get very interested parties on one side, and not many on the other. A classic example is that when we did our major report in 2018 on the impact of immigration from the European Union, we got some 450 responses, almost none of which were not in favour of freedom of movement. Almost all were kind of in favour, which did not properly reflect what the British people as a whole thought. That is the nature of a call for evidence.

[Stuart C. McDonald]

Q The report called for a pilot scheme about our remote areas. What was the reason for that, and are you troubled in any way that the scheme seems to have since disappeared?

Brian Bell: The reasoning was that we received reasonably strong evidence, not just from Scotland but from other areas, nations and regions of the United Kingdom, that there are rural communities that find it difficult to recruit in the way that employers can in more urban and suburban areas. Often those employers are key to that small community, so they are sometimes more important than your average employer in a big city. That was our thinking about that.

We suggested a small pilot—it is important to emphasise that we thought it should be a small pilot. Such a scheme has clear risks, two of which I suppose I should highlight. One is that you issue a visa to someone and say, “You have to stay in one small area, with one employer, and you cannot move, because it is a rural scheme.” We generally do not like the idea of saying to workers that they have to stay with one employer, because that gives the employer lots of power and does not give the worker much power. There is an uncomfortableness about that kind of scheme.

The second problem is our worry that it does not deal with why rural communities are losing population. As soon as you have this type of scheme, you might get an immigrant to go there, but as soon as they have freedom to move—for example, if they get permanent leave to remain and can go anywhere in the UK—if the reasons why people in those communities do not want to stay in the first place still exist, why would we not expect that migrant to move as well?

There are problems, but we recommend the scheme. As I understand it, the Government have not yet decided whether to have such a pilot or not. If I have to be honest, part of that is because an enormously complicated system is about to be introduced. You want to go in steps, so the Government are focused on the main work route at the moment.

[Stuart C. McDonald]

Q I appreciate that there are challenges, particularly around tying a person to an individual employer, but that is not dissimilar to what we do now with tier 2. There are procedures to transfer to another employer, if criteria are met. That is a something worth exploring. In relation to Northern Ireland, did the report go as far as saying that consideration should be given to regional variations in salary there?

Brian Bell: We did not go as far as that. We said that we thought the argument was most compelling in Northern Ireland, but in the end we did not think the differences were quite big enough to justify having the more complicated system.

[Stuart C. McDonald]

Q Is that simply because you could be an employer in Northern Ireland and just a few miles down the road somebody is able to access labour without reference to tier 2, experience, salary thresholds or whatever else might be in place?

Brian Bell: There is a clear difference because of the border. To be clear, the shortage occupation list that we are reporting on at the moment has the ability to have a Northern Ireland SOL that is separate from the UK-wide SOL. If there are representations made to us that there are particular recruitment problems in Northern Ireland in some occupations, that are not true for the UK as a whole, we have the ability to recommend to the Secretary of State that they be put on the Northern Ireland SOL but not on the UK-wide SOL, as is true of Scotland.

[Stuart C. McDonald]

I think—

[The Chair]

I call Kate Green.

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[The Chair]

I cut off Stuart McDonald earlier, and I think he had another question. We have a little more time, so he may finish.

[Stuart C. McDonald]

Q Thank you, Mr Stringer. To go back to the shortage occupation list, I am sure that it will be very welcome that there will be a shortage occupation list for Northern Ireland. However, when I speak to businesses in Scotland, and also elsewhere, there is a criticism that people find it slow, not very responsive and rather clunky. You spoke a little about the work to try to make that a better process. Could you give us a broad understanding of when a job becomes a shortage occupation? A couple of vacancies in Cornwall or Caithness are clearly not enough. Where is the point at which it becomes in shortage?

Brian Bell: Obviously, there is a difference between there being a UK-wide shortage and a devolved Administration shortage. For the second, we only look within the country. Broadly, we are looking for a broad shortage across employers. That is the first thing. As you say, it would not be very compelling to us if one employer said, “We find it difficult to recruit,” because our first response might be, “Perhaps you are not a very good employer.” We want to see, broadly within that occupational sector, that there is a recruitment problem. We want to think that it is more than just an extremely short-term problem. To be honest, this work route will not be ideal if you just want to fill a very short-term vacancy, for the simple reason that you have to pay fees and go through the process of applying. It is more suitable for permanent, long-term positions. We want to see that the shortage is likely to last into the medium term.

The final criteria that we use, which in one sense is the most important, is that we want to be convinced that migration is the appropriate response. In answer to your earlier question, we were talking about how skills are an important aspect of all this. One thing that we say to employers is that, if they want to be put on the shortage occupation list, and if they want us to recommend that, they need to show us evidence that they are going out and trying to train up British workers. They need to show that they have a training programme themselves, or that they are working with further or higher education colleges to try to increase the supply of British workers.

Either that takes time, which we understand, and which is an argument for putting it on the shortage occupation list until that has successfully come to fruition, or quite frankly, if they can show that they have done that kind of thing and it just has not worked, we also think that that is quite strong evidence. That suggests that there are structural problems in that sector or industry, so we perhaps have to accept migration as a response to that, and that British workers either do not want to do those jobs or there are alternatives that they would prefer to do.

[Stuart C. McDonald]

What do you say to those who have criticised the system for being too slow and not responsive? What is changing?

Brian Bell: Historically, it has been, because, as I said, we only ever reviewed the SOL when we were asked to. It was, frankly, probably low down in the priorities, so, often, it was looked at every three or four years. We will recommend to the Government how we should review it going forward. I cannot tell you what that will be, because we have not decided, but I will say that most other countries that have an equivalent, such as Australia, Ireland and Canada, usually have a regular review process about once a year. I think there is a trade-off. If you do it too often, you do not actually get any new information; the employer just sends you the same thing they sent you last time—

[The Chair]

I am afraid that brings us to the end of the questions today.