Migration to London after BREXIT: a proposal

Introduction

 In the talk about what a UK immigration system would look like, if and when the UK leaves the European Union, London requires discrete consideration. As a region it draws a third of all EU citizens migrating to the UK. Further, until other English regions and the home nations benefit from sustained investment to increase their prosperity, the UK economy and the Government’s fiscal position will remain over-reliant on the London economy. In any plan being formulated for UK immigration control, it is important not to build in measures that would vandalise a successful and dynamic part of the UK economy.

Whether or not a post-BREXIT plan for a system of immigration control makes uniform provision for the UK as a whole, or whether it facilitates regional and home nation variation in routes for economic migration, London’s position needs attention.

It is not good enough to pretend that the introduction of a system of immigration control requiring work permits will not hurt the London economy, if and when the UK leaves the European Union. The introduction of such a system and, thereafter, sole reliance on it to regulate EU citizens’ permission to work, will inevitably damage the existing economy without providing a dynamic alternative that promotes the enterprise upon which London depends.

 At present London benefits from free movement from other EU states to supply significant numbers of so-called low and medium skilled workers. Often, those EU citizens take temporary work as a way of establishing themselves in the UK. They do so as employees or as self-employed persons. Many go on to more highly skilled work, perhaps once their English skills have improved, and find work in the UK more suited to their home state qualifications, skills and experience.

The impact of EU immigration

While London relies on free movement from other EU states to supply so-called low and medium skilled workers, the evidence does not show that there is a pool of British citizens and other settled persons who are thereby displaced from work. Nor does it show that there is a material impact on wages and salaries. In fact EU migration and the taxation of EU citizens in work leads to a net fiscal gain and provides the resources for the government to fund any extra provision for housing, education, and healthcare, etc.

The most useful way into analysing the data is to read the LSE study ‘BREXIT and the Impact of Immigration on the UK’. Looking at the UK as a whole the LSE study notes that ‘there is absolutely no statistically significant relationship (negative or positive) of EU immigration on unemployment rates of those born in the UK’, (p. 9). The report also notes that ‘Wages of UK-born workers changed at much the same rate in areas with high EU immigration as in areas where the change in EU immigration was low’, (p. 10).

For studies that buttress this report see also the UCL study ‘The Fiscal Impact of Immigration to the UK’ and Oxford University’s Migration Observatory reports on ‘The Fiscal Impact of Migration in the UK’ and ‘EU Migration to and from the UK’.

In the light of this evidence, the case for ending EU free movement and replacing it with a system of full immigration control and work permits needs to be justified by compelling reasons. There are no such reasons. UK workers are protected by UK employment laws, buttressed by EU provisions as to working time and so on; they are also protected by the fact that the ambit of contribution-based social security schemes and other schemes for social assistance is regulated at UK level.

In the light of the actual evidence as to the impact of EU migration on the job market, wages levels, employment protection and social protection, there is no case for damaging what works well. Designing a system of work permits solely to placate misplaced nativist sentiment will not do. Concerns about the impact of the recession, globalisation, fiscal austerity, and the failure of the Government to make adequate provision for education, housing and healthcare in particular areas, need to be directed to the Government rather than blamed on free movement.

Work Permits v Free Movement

 Any proposed scheme of work permit regulation, dependent as it would be on cumbersome efforts to identify labour market shortages on a sector-by-sector basis and requiring, as it would, applicants to obtain prior authorisation before beginning to work, would be insufficiently flexible and would fail to take account of the following matters:

  1. EU citizens exercising rights of free movement as migrant workers are well suited to jobs that require the short-term supply of services, whether it be so-called low skilled services such as working in a sandwich shop, or skilled work such as being an IT consultant or working as a surgeon (brought in on a short-term basis to cut waiting times for operations). EU citizens come from states physically close to the UK and are able to travel quickly and cheaply to and from the UK as required, and
  1. There is no fixed number of jobs in the economy (to hold that there is a fixed number is the ‘lump of labour’ fallacy): EU citizens exercising rights of free movement as migrant workers contribute skills and experience to UK businesses or start their own businesses. Thereby they contribute to the prosperity of those businesses and, additionally, of the businesses that contract with them. This leads to the expansion of the economy and the creation of more job opportunities.

Any top-down system of work permits would lack the manifest advantages of the current free movement system when it comes to short-term service provision, entrepreneurial endeavour and the development of innovative businesses.

A work-permit system can never match the way in which the present free movement system allows EU citizens to circulate in and out of the UK, remaining where successful, and returning home in fallow periods.

A free movement system is nimble, quick and responsive to shortages in the labour market and in service provision. It does not need a panel of academics to toil away in an effort to identify labour market shortages; it does not need an elaborate and cumbersome work permit authorisation programme.

The way people live

 A free movement system does something well that a work-permit system can never hope to replicate: it responds to the way in which people actually live their lives. In a system of free movement, migrant workers may take short-term work, perhaps thereafter building their way up to something better, chopping and changing from one thing to another, and then maybe finding something good and sticking with it. Along the way such persons may come up with their own ideas for growing both the businesses they work for and those businesses they run themselves. Such innovation and entrepreneurial flair can never be embraced in a work permit scheme such as the UK’s Tier 2 (General) programme, even where combined with the narrowly drawn and restrictive Tier 1 (Entrepreneur) programme.

Free Movement and London

Moreover, the very agility of a free movement system is well matched with the needs of a city of the scale and complexity of London, a city of over eight and half million lawful residents.

Anyone who considers that a work permit system – any work permit system – could serve London as well as the current free movement system (topped up as it is with non-EU migration under the UK’s Points-Based System) would do well to watch Luca Vullo’s film INFLUX, a documentary that, among other things, captures the way in which EU citizens (Italians in this case) build their lives in London. He or she would do well to watch the whole film and reflect on what it says about the dynamic way in which in EU citizen migrants contribute to the development of the economy and society.

As can be seen in the film, many EU citizens arrive in the UK and find temporary, low-skilled work. Successful establishment and the development of high-level English language skills often takes a little time; some of them fail and return home. However, over time many come to make sustained contributions to the business for which they work or start businesses of their own. Economic activity grows as a result.

The business and enterprises that these people have developed are a singular contribution to the UK economy and – absent free movement – would not have been replicated either by British citizens or by migrants seeking work permits under a rigid scheme such as the Tier 2 (General) work permit scheme (with its focus on identified gaps in skills provision), even where combined with the narrowly drawn Tier 1 (Entrepreneur) programme (which requires high levels of disposable capital for investment). Any advocate of work permits should watch this film and then reflect on the harm that will be done by ending free movement and relying solely on a system of full immigration control and work permits.

Free movement allows EU citizen migrants to contribute entrepreneurial skills and innovative flair because it is a bottom-up scheme that allows people to develop at their own pace and according to their situation and energy. It does so in ways that no top-down system of immigration control can hope to replicate.

The way ahead for London – a proposal

 The recent PwC report ‘Regional Visas – A unique immigration solution’, prepared for the Corporation of London, is a welcome contribution to the debate. The system of regional visas proposed would allow the English regions and the home nations of the UK to have their own work permit schemes (where prior authorisation to work was required before an EU migrant could take up a job).

However, merely having a visa scheme for the London region is not enough for the reasons given above. The Corporation of London, the Greater London Assembly and the Mayor of London need further options.

The case for retaining full free movement on existing terms for the London region is compelling and should be the first priority. It is the optimum outcome. Even if the UK leaves the EU, no good is done by ending free movement arrangements and imposing a full system of immigration control solely reliant on work permits; it is not in the national interest.

If free movement is to be controlled, the minimum impairment to its operation should be imposed. The London region – whether as part of a UK-wide system or otherwise – would be well served by the following system for EU citizen migrants:

  1. The right of admission to the UK for EU citizen migrants, without the requirement to obtain a visa or seek permission to enter,
  2. The ability to seek work without restriction,
  3. Free movement for the self-employed and those looking to establish businesses (i.e. freedom of establishment). This should be uncontroversial; no one suggests the EU referendum was about the self-employed,
  4. Free movement for students and the self-sufficient. This should be uncontroversial; no one suggests the referendum was about such persons,
  5. Any system of immigration control of employment to be limited to a requirement to register employment, once it has been obtained (similar to the registration scheme introduced in the UK for those EU citizens from the Eastern European countries that joined the EU in 2004), and
  6. A UK-determined system that permits the UK Government to determine deportation/removal criteria.

Such a workers’ ‘registration scheme’ has the following advantages:

  1. It would allow optimum labour market flexibility, while still allowing the Government to monitor the numbers of EU citizens coming to the UK to work and for which jobs,
  2. As a scheme of free movement for work, it would be a choice of the UK Government in the exercise of sovereignty (power) and could not be said to be an imposition under the EU Treaties,
  3. It would provide hard data as to the parts of the economy benefitting from free movement migration,
  4. It would avoid the cumbersome, rigid, approach of a work permit scheme requiring prior authorisation before a job offer was accepted,
  5. The domestic labour force would be protected by the continuing security afforded by UK employment law and, further, by the ability to determine at UK level the terms on which EU citizen workers were to be given access to contributory social security schemes and other forms of social assistance, and
  6. Were such a scheme to be restricted to the London region, it would be possible under existing law (the Immigration Act 1971) to impose requirements that residence and/or work must be in the London region.

Any final scheme for London, and for the UK as a whole, will be formulated against the backcloth of the need for British citizens to live and work in the remaining 27 EU states after BREXIT. Thus issues of reciprocity and of common standards are likely to be at large in negotiations between the UK and the EU. However before questions of bargaining and issue linkage intrude into scene, the optimum outcome for London requires consideration. Similar exercises will need to be done with respect to the other English regions and the other home nations.

Conclusion

A post-BREXIT system of free movement for the London region would be under UK control and in the exercise of UK sovereignty. It is manifestly to the advantage of the UK as a whole to allow London to retain a model of migration that allows for entrepreneurial flair and business innovation. It makes no sense to damage the region for political ends when those ends may be accommodated in a UK-controlled system of free movement.

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