THE MIGRATION ADVISORY COMMITTEE REPORT: EEA MIGRATION IN THE UK: FINAL REPORT (September 2018): A NOTE

Introduction

  1. The Migration Advisory Committee Report, published on 18th September 2018, contains the Migration Advisory Committee’s (‘MAC’) report on current and future patterns of European Economic Area (‘EEA’) migration and the impact of that migration upon the UK. The MAC has sought to provide an evidence base for the design of a new migration system after the end of the implementation or transition period that begins when the UK leaves the EU. Such a system will come into force on 1st January 2021 as things currently stand. The report focuses on the MAC’s assessment of the impact of EEA migration and makes recommendations on the UK’s post-Brexit economic/work migration system.

Summary of Comment on the Report

  1. The MAC report is a disappointment because the recommendations it makes do not appear to be based on the evidence that it has analysed. Furthermore, it fails to consider the extent to which UK businesses at present rely upon EU migration by persons seeking to come to the UK as employees and as self-employed persons. The recommendations made are too narrowly focused and do not address the disruption that imposing a full system of immigration control on migration from the EU will bring about.

 

  1. The good news is that the MAC’s analysis of current migration shows that there is very little impact on the UK resident population occasioned by migration from the EU or indeed from outside the EU.

 

  1. The bad news is the recommendations made are not connected to that evidence. Further, the recommendations make no provision for the self-employed to migrate to the UK, would choke off low-skilled employee migrants, and would hinder and obstruct medium and high skilled employee migrants. It is striking how many sector-based employer bodies, as well as large, medium, and small business groups, have criticised the report. Moreover, the report shows no awareness that the EU 27 states are likely to impose reciprocal controls on British citizens were the UK to follow these recommendations. Nor does the report make any recommendation as to how services could be supplied from the UK to customers in the EU 27 states, where easy, short-term migration is needed to supply such services.

 

The MAC’s conclusions

  1. The MAC considers that the problem with free movement is that there is no guarantee that migration is in the interests of UK residents. That is a contestable point. Whilst migration from the EU in a free movement system is at the suit of the migrant, employing that person can only take place if a UK business seeks to hire him or her. Therefore, there are choices made by UK residents in their own interests: UK companies and employers choose whether or not to hire an EU citizen migrant.

 

  1. The MAC notes that free movement was not a political issue prior to 2004, when EU migration was, relatively-speaking, low. That was when the European Union consisted, in the main, of Western European countries. What changed in 2004 was that Eastern European countries joined. In other words, the MAC is saying that there was no problem when migration was solely from Western Europe.

 

  1. The MAC notes that flows of migrants are now falling sharply and there is reason to think that will continue. It notes that the UK will find itself in the position of ending free movement just as public concern falls about the migration flows that result from it.

 

  1. The MAC notes that the biggest gainers from migration are often migrants themselves and that preferential access to the UK labour market would be of benefit to EU citizens; such access it says is potentially something of value to offer in the negotiations. This is very interesting as an observation. What the MAC report contains is a recommendation that there be no preferential system for EU citizens as compared to persons coming from outside the EU to the United Kingdom. But the MAC has made this recommendation against the backdrop that preference for EU citizens is something likely to be offered as a carrot in any negotiations as to the future relationship between the UK and the EU. Whether that position is seen as tenable in the Brexit negotiations on future relations remains to be seen.

 

  1. In any event, what is also clear is that the MAC has not considered that it might be beneficial for British Citizens to have preference over other third country nationals when migrating to the EU 27 states. Moreover, it has to considered that it might be of benefit to British citizens to be able to migrate from one EU state to another, something not currently contemplated in the post-Brexit UK-EU relationship. In other words, it is not simply a carrot to offer EU citizens preference in access to the UK labour market in the negotiations to secure, say, free movement of goods; ‘preference’ is something that may need to be swapped (carrot for carrot if you like) for British citizens to secure preference when seeking work in one or more of the remaining EU 27 states.

 

  1. The MAC report also states that there are changes proposed by the EU to the Posted Workers Directive (96/71/EC) (that enables non-EU citizens, as well as EU citizens, lawfully employed in one EU state to be ‘posted’ to supply services in another EU state) and Article 112 of the EEA Agreement (that allows an emergency brake on intra-EEA migration) that suggests that free movement within the European Union/European Economic Area may be something that may be trimmed in certain circumstances. It appears that the MAC anticipates that there may be some give and take in the future as regards free movement within the EU/EEA and in any future arrangements between the UK and EU/EEA. Nonetheless, the MAC has recommended that there be no preference for EU citizens coming the UK.

 

  1. The MAC recommends that there should be a less restrictive regime for higher skilled workers than for lower skilled workers, no preference for EEA workers over non-EEA workers, and that there ought to be an expanded system under the work permits regime found in the Tier 2 (General) immigration route in the UK Immigration Rules, to make provision for worker migration from 2021 onwards.

 

  1. Tier 2 (General) requires a business to have a sponsor license from the Home Office and it requires skills thresholds and income thresholds to be met by an applicant. What is clear is that the MAC has impliedly rejected any revised system of continued free movement for EU workers, even one subject to a requirement to register any work obtained.

 

  1. Moreover, strikingly, there is also no attempt in the report to outline a route for self-employed persons. As things stand there will be no migration route for the self-employed (the old Tier 1 (General) route for highly skilled migrants to come to the UK to seek work being already closed), as the only routes where a person can come ostensibly as self-employed are either under the Tier 1 (Investor) route (minimum investment £2 million) or the Tier 1 (Entrepreneur) route (minimum investment £200,000). Both routes require large amounts of capital. There will be no system for self-employed persons to come where their human capital is to be deployed in the absence of financial capital.

 

  1. The MAC recommends that the cap of 20,700 work permits (restricted certificates of sponsorship) under Tier 2 (General) is abolished and it recommends that the Tier 2 (General) scheme be extended to medium skilled jobs. But it does not recommend any changes to existing salary thresholds. Therefore, any employers with medium skilled jobs that are drawn within Tier 2 (General) route will have to be paying those employees more if they are to come through this migration route.

 

  1. As regards low skilled workers, the MAC does not see the need for a work-related scheme, with the possible exception of a Seasonal Agricultural Workers scheme. It has no real suggestion as to how to replace the low skilled migration currently coming from the EU, other than to observe, archly, that most the of the existing ‘stock’ (meaning EU citizens in low-skilled work) would remain and  that there would likely to be a continued flow of migrants through family migration and/or through the Tier 5 (Youth Mobility) scheme to do low skilled work.

 

  1. The suggestion that family members of migrants or settled persons (including British citizens) should be directed towards low skilled work is offensive. There is no basis to think that family migration to join persons lawfully in the UK is by persons who solely, or mainly, have an expectation of taking low skilled work.

 

  1. Furthermore, the existing Tier 5 (Youth Mobility) scheme, which exists for short-term migration to the UK from white majority Commonwealth States and prosperous East Asian States, is not a way of supplying people who necessarily wish to do low skilled work. Many of the people from those countries are highly educated and come here for other reasons.

 

  1. The MAC expresses concern about the social care sector but considers that that sector has needs that stretch across a range of policy areas, not simply migration.

 

  1. The MAC does not recommend that the public sector should receive any particularly favourable treatment.

 

The MAC’s analysis

 

  1. As regards the impact of migration on the labour market, the MAC finds that migrants have little or no impact on the overall employment and unemployment of the UK born workforce. In addition, as regards wages, the MAC reports that migration is not a major determinate of the wages of the UK born workers.

 

  1. The MAC found some evidence of UK lower skilled workers facing a negative impact however the magnitude of the impact was considered too small to be significant.

 

  1. The MAC noted that what, if any, impact immigration has on the economic prospects of the self-employed is not something upon which a firm conclusion could be made. The MAC noted that self-employed EEA nationals have lower declared profits than UK nationals on average.

 

  1. The MAC noted that immigration has a positive impact on productivity. The MAC noted also that highly skilled migrants have a positive impact on innovation. The MAC noted that there is no evidence that migration has a negative impact on the training of the UK born workforce and that there is some evidence that skilled migrants have a positive impact on the quantity of training available to the UK born workforce.

 

  1. As regards consumer and house price impact, the MAC found that migration, particularly from the Eastern European states and from outside the EEA has reduced the prices of personal services. The MAC also found that migration has increased house prices. However, the MAC noted that the impact of migration on house prices cannot be seen in isolation from other Government policies. The evidence points towards the higher impact of migration in areas with a more restrictive planning policy in which it is harder for the housing stock to increase in line with demand.

 

  1. As regards the public finance and public fund impacts, the MAC noted that EEA migrants pay more in taxes than they receive in benefits.The MAC also considered the relationship between immigration and the allocation of public funding, in order to assess whether money flows to the areas where there is increased demand for public services. The MAC noted that existing Government formulae are very complicated and that it is not convinced that sufficient attention is paid to ensuring that increased migration brings forth the extra resources needed to manage the consequences of that migration.

 

  1. As regards public service impacts, the MAC noted that EEA migrants contribute much more to the health service and the provision of social care through financial resources and through work than they consume in services.

 

  1. The MAC noted that as regards the social care sector, it struggles to recruit and retain workers, something that is a cause for concern.

 

  1. The MAC found no evidence that migration has reduced parental choice of schools, nor reduced the education or attainment of UK born children.

 

  1. The MAC noted that migrants are a small fraction of people in social housing and a rising fraction of new tenants. Given that there is little building of new social housing this was considered to be inevitably at the expense of other potential tenants. However, it is clear that it is the want of new building and social housing that is the issue.

 

  1. The MAC found that migration does not impact upon crime and there is no evidence to suggest that migrants are linked to any increases in crime in England and Wales.

 

  1. The MAC found no evidence that migration has reduced the average level of subjective well-being in the UK.

 

Economic migration policy

 

  1. The MAC described free movement as having the virtue of being a low bureaucratic burden but at the price of losing control of the level and type of immigration into the UK. But the MAC failed to make the distinction between migration into the UK and the taking up of jobs once in the UK. It is true that in the current free movement system the decision to migrate to the UK rests solely with the EU citizen migrant. However, that is not an end to the matter. The decision to employ a migrant rests solely with the UK resident employer. Therefore, the check is on whether or not a job is offered; it is not at the border. The MAC fails to make the distinction between the fact that a free movement system allows people to enter as of right with the absence of any concomitant right to a job. In other words, there is no obligation on any UK employer to provide work. It is only where there is a vacancy and an offer made that the EU citizen migrant can take up work.

 

  1. At the moment the UK economy has large number of vacancies in the job market that remain unfulfilled. It is at this point, where the UK labour market requires extra persons to work, that the MAC is recommending that migration from the EEA be restricted.

 

  1. The MAC considers that ending free movement will not make the UK unusual and notes that Canada combines a relatively-open policy to migration without any free movement system. However, nowhere in the MAC report is the Canadian migration system analysed, its strengths and weaknesses noted, and evidence as to its efficacy assessed. It is not acceptable simply to cite Canada without providing a proper analysis.

 

  1. The MAC says that it does not see compelling reasons to offer a different set of rules to EU and non-EU citizens. However, the MAC does not state what arguments it considers for and against offering such preference.

 

  1. The arguments in favour of offering such preference are simply that the UK is part of a region, that region being Europe, and that circular migration takes place back and forth in Europe through the provisions of services, employment and self-employment at a level of intensity that is not true of intercontinental migration to the UK  and which is not easily replicable on an intercontinental basis. The number of journeys as migrants circulate in and out of the UK and around the EU is far greater in practice than intercontinental migration to and from the UK. Moreover, service provision across borders in the European region depends upon ready migration.

 

  1. Moreover, tt is one thing to say that you can have a common set of rules open to EU/EEA and non-EU/EEA nationals alike, it is quite another to say that even with those rules you will not offer, additionally, extra routes for regional migrants from the EU and the rest of Europe to come to the UK. The two things are not the same. The MAC report does not engage with this point. It needed to do so.

 

  1. Furthermore, the MAC fails to have appreciated that in rejecting preference for EU citizens, that what is sauce for the goose is sauce for the gander. British citizens can expect no preferential treatment in the EU 27 states nor can they expect to migrate as of right from one EU state to another once admitted to an EU state, if the MAC policy recommendations are adopted.

 

  1. The MAC places great emphasis on the fact that highly skilled migrants have a clear benefit to existing residents whilst the same is not true for low skilled migrants. That is not necessarily correct. Whilst highly skilled migrants may well be net contributors in terms of taxes and job creation, low skilled migrants, particularly in the service industries at all levels, are necessary in order for the economy to work at all.

 

  1. In other words, the economy may rely on the fact that certain low skilled persons, paid relatively modest wages, are present and willing and able to undertake work that other persons are simply not prepared to do. That is a clear benefit to existing residents in filling vacancies that would otherwise go unfilled; when vacancies are filled, there is more activity in the economy, which is stronger as a result. It is noteworthy that many EEA nationals from Eastern Europe do the jobs that British citizens are simply not prepared to do. In that context choking off a low skilled migration route does not necessarily mean that British citizens will fulfil the vacancies.

 

  1. As already noted, the UK economy currently has a large number of vacancies. Those vacancies are not being taken up by British citizens. There is no suggestion that British citizens are being shut out from applying for those vacancies. Those positions are simply going unfilled. Such vacancies are and will be at all levels of work and not just in highly skilled positions.

 

  1. Moreover, the MAC report does not look at the way in which the actual UK immigration system and the UK economy work together in practice. The reality is that gross inward migration from the rest of the EU to the UK in previous years has been around 200,000. It is pointless recommending the use of the Tier 2 (General) scheme when that scheme issues only 20,700 permits a year. Such a scheme would need to be expanded by several orders of magnitude in order to cater for the needs of UK business to recruit labour from the EU, even were migration from the EU 27 states to be at half exiting levels in the future.

 

  1. The recommendations for changes to Tier 2 (General) are simply picking at the edges of an already half-baked scheme for non-EU migration, in order to try and say ‘well you could use this sort of thing for EU citizens’. However, this is not living in the real world. A UK business with a unfilled vacancy that wishes to employ an EU citizen migrant on a short-term contract, may be a small or medium sized enterprise, it may have had no previous need to have had a Home Office sponsor license and pay the heavy associated costs. In that context the idea that it is going to go through the bureaucratic hurdles and costs of securing a sponsor license and pay an Immigration Skills Charge in order to hire a single migrant on a medium income is absurd. It places an unnecessary and grossly disproportionate burden such an employer.

 

  1. The fundamental mistake in the MAC report is the assumption that runs through it that somehow vacancies for jobs for British workers will emerge, paid at higher rates, if free movement is choked off. That assumption, which runs through their recommendations, is entirely negated by the actual evidence which they produce in the first part of their report. 

 

  1. The evidence that the MAC analyses in the first half of the report suggests that EU citizen migrants have no impact either on the availability of jobs or on wage levels. It is therefore an act of cognitive dissonance in the second half of the report to make a series of recommendations designed to provide extra vacancies and higher wages for the UK resident population. What appears to have happened is that a decent piece of analysis as to the impact of migration on the labour market has been cut and shut on to an unrelated series of recommendations about what to do in a future migration system. This will not do.

 

Migration for employment

 

  • The MAC Recommendations

 

  1. The MAC focuses on Tier 2 (General) and Tier 2 (Intra Company Transfer) routes in the UK Immigration Rules as templates from which a work permit regime can be extended to EEA nationals from 2021 onwards.

 

  1. As regards high and medium skilled workers it recommends the abolition of the Tier 2 (General) annual cap of 20,700, that medium skilled jobs should be eligible for the Tier 2 (General) route and not just highly skilled jobs, but that the salary threshold of £30,000 should be retained. It notes that by retaining this salary threshold of £30,000 for those with medium skilled jobs this would require employers to pay more for those medium skilled jobs. How this suggestion fits in with the pressure to increase UK productivity is not clear.

 

  1. In addition, the MAC also suggested the Immigration Skills charge, currently only paid by employers employing third country nationals from outside the EU, should also cover EU/EEA citizens. This burden will fall particularly heavily on small and medium sized enterprises.

 

  1. The MAC recommends the abolition of the resident labour market test for the Tier 2 (General). However, if the resident labour market test is not required, it is difficult to see why a company or employer should have the burden of maintaining a Home Office sponsor license at all. It is perfectly possible to devise a work permit system that sets skills and salary thresholds, without requiring the employer to have a sponsor license. The old system for work permits in Part 6 of the Immigration Rules, the system that was in place prior to the introduction of the Points Based System, had the virtue of providing an Immigration Rules category for work permits without requiring an employer to be a sponsor, with all the costs and burdens that entails.

 

  1. It is feasible to require employers to issue certificates of offers of work to persons with sufficient skills and to whom they intend to pay a qualifying salary, to pay any Immigration Skills Charge online (if there is to be a skills charge at all), and then for the Home Office to allow EU citizens (as non-visa nationals) simply to present this certificate containing a job offer at port on arrival when seeking admission to the United Kingdom. Such a solution would obviate the need for a Tier 2 (General) regulatory control, a sponsorship licence regime, and all the obstacles that apply when seeking to bring staff to the UK under the Tier 2 (General) route.

 

  1. The MAC also recommends that those on the Tier 2 (General) route should have an in-country ability to change employers. That is welcome. However even greater flexibility is needed. The MAC report fails to understand the nature of the migrant journey into the UK. Many persons come to the UK from the EU and elsewhere and on arrival initially take so called low-skilled work while they find their feet and improve their language skills, then they go on to be medium skilled or highly skilled migrants at a point when they are able to use their home qualification, skills and experience to better effect in the UK.

 

  1. It is not simply a question of changing employers between medium skilled and high skilled employers, sometimes migrants make the journey from low skilled work to medium skilled work and then even to setting up a business and then to recruiting people from the resident labour force. In so doing they rely on the fact that they can cut back and forth between employment and self-employment and between highly skilled, medium skilled, and low skilled work, in order to make their way in the world. This is the life of a contemporary economic migrant in a 21stCentury European economy. A person may not be simply low-skilled or highly skilled. Much depends upon context. In this context, as noted, the MAC report contains no recommendation for a route for a person to come as a self-employed person.

 

  1. The MAC report does not recommend a migration route for low skilled workers with the exceptional of a Seasonal Agricultural Workers scheme. As noted above it suggests, without condescending to particulars, expanding the short-term Tier 5 (Youth Mobility) scheme. None of the evidence that the MAC analyses in terms of the impacts of migration to the UK concerns such a scheme. It is pointless referring to this scheme without analysing its prospective effect in detail. Similarly, there is no analysis of the previous Seasonal Agricultural Workers Scheme, when suggesting that its re-introduction may be required.

 

  1. At paragraph 7.4 of its recommendations the MAC says it makes recommendations for the objective of maximising the welfare of the resident population. However, it is not clear what it means by the welfare of the population. If there is a substantial adverse effect on UK business by shutting off migration routes for work from the European Union, without there being any compensating open policy under the Immigration Rules, it is hardly likely to benefit the welfare of the resident population.

 

  1. The MAC seems to have failed to engage with the current state of the UK economy or the number of vacancies in the UK economy, and with the disruption likely to be caused by choking off future employees from migrating from the EU 27 states (other than those who get though the (revised) Tier 2 (General) route). And as noted elsewhere, it has also failed to take into account damage that will be done by choking off the self-employed route of migration from the EU 27 states.

 

  1. At paragraph 7.12 of its conclusions the MAC once again returns to suggesting that Canada has no freedom of movement regime but appears to be open to migration. As noted above there is no analysis of the Canadian migration system and its impact on Canadian society. The MAC notes there are a few bilateral agreements that do exist as regards free movement are between counties of similar levels of economic development: Australia and New Zealand are cited as an example. But that is a poor example and one not subjected to analysis. For the UK, free movement between Western European countries is the true mirror image of the system between Australia and New Zealand; Western European countries broadly having a similar level of economic development among themselves. Where is that MAC analysis of the loss of that aspect of free movement?

 

  1. What the MAC says at paragraph 7.13 of its conclusions is that ending free movement would not mean that visa free travel of EU citizens would end, just that a visa would be needed to settle in the UK and to work there. This is of course the case. However, that is not the point. Of course, there will be visa free travel for British citizens into Europe into the remaining EU 27 states and vice versa. The point is whether or not you need prior authorisation to work in a  host country not whether you travel visa free to it.

 

  1. Vandalism will be done to the UK economy were the MAC conclusions to be implemented by in introducing a version of the Tier 2 (General) migration route for EU citizens that would choke off the supply of labour from the EU with replacing it with anything that was equally quick, mobile and flexible. It ought to be reiterated that there are large numbers of vacancies in the British economy and the MAC has totally failed to engage with the reality of the situation on the ground.

 

  1. Moreover, by its own admission, the MAC does also not examine the routes for people who come into study and how they go on to work in the UK economy, nor does it look at family migration where such family migrants are permitted to work. In other words, it has only looked at part of the issue as regards economic migration.

 

  • Service provision

 

  1. As noted, the MAC reports that access to the UK labour market is valuable to migrants, especially to those from lower income countries. The MAC notes that the UK may be able to therefor trade off some preferential access to EU citizens to the UK in return for benefits in other areas of the negotiations. As already noted, the MAC seems to be unaware that British citizens may wish to go and work in other EU countries and that there may not be a trade-off at all.

 

  1. Even more importantly, it also seems to be unaware that businesses based in the UK may wish to employ, British citizens, other EU citizens, and third country nationals, to perform service contracts in other EU states. For example, a global accountancy firm headquartered in London may secure a contract to provide services to a Hungarian business in Budapest. The UK based global accountancy firm may have British citizens, other EU citizens, and third country nationals amongst its staff. In order to post such workers to Budapest to fulfil the service contract – at present – the freedom to provide services under the EU treaties allows all three classes of persons (British citizens, other EU citizens, and third country nationals) to be posted to Budapest to fulfil that service contract.

 

  1. Post-Brexit, if MAC has its way, the UK-based accountancy firm may retain far fewer employees from the EU 27 states and third-country nationals (non-EU citizens), and such British citizens and third-country as it employs will not be able to be deployed to Hungary (as freedom to provide services will not survive Brexit). British citizens would have to apply for a work permit to go to Hungary as would the third country nationals based in that UK accountancy firm.

 

  1. This means that the Hungarian business that seeks accountancy services from a firm outside of Hungary well may look to Frankfurt, Paris or Amsterdam for those accountancy services, where accountancy firms based there are able to post their staff (EU citizens, British citizens, third country nationals) to Hungary under the EU freedom to provide services, without going through a work permit application procedure. In other words, British firms seeking to supply services to Hungary will be disadvantaged and will, inevitably, lose business.

 

  • A revised Tier 2 (General) route

 

  1. In making recommendations for the reform of Tier 2 (General), were it to be expanded to migrants to the remaining EU 27 states, the MAC recommends the retention of the minimum salary thresholds at £30,000, the extension of the Immigration Skills Charge to employers hiring EU citizens, and allowing any job now at RQF/NQF level 3 or above to be eligible for a Tier 2 (General) work permit. According to the MAC this would make an additional 142 occupations available.

 

  1. As regards the salary thresholds the MAC suggests retaining the £30,000 salary threshold, although at paragraph 7.26 of the conclusions it notes that the salary threshold would be difficult but not impossible to meet for medium skilled jobs. There is no evidence that the MAC has analysed whether or not medium skilled jobs, which currently may well be about £20,000, could have their salary thresholds raised to £30,000. It is absurd to suggest that small to medium size enterprise could afford to pay an employee in a medium skilled job an extra £10,000 in order to satisfy the MAC system. It is also unreasonable to expand the Immigration Skills Charge of £1,000 to employers hiring EU citizens. If EU citizens have no impact on wages, the availability of jobs for UK residents or on the costs of public services, why charge their employers £1,000 in order to bring them to the United Kingdom? There is no case for it.

 

  1. Whilst it is welcome that the MAC has plucked up the courage to recommend the abolition of the Tier 2 General cap, given that the Government is welded to the net migration target it is not obvious that that recommendation will ever be accepted.

 

  • Low skilled migration

 

  1. As regards low skilled migration, it has already been noted that the MAC is expecting that there will be no change to the existing ‘stock’ (as it puts it) of low skilled migrants, and that it assumes that there will be a continued flow of low skilled migrants through the family route. MAC says that it is not convinced that there needs to be a work route for low skilled workers but it simply has no recommendation whatsoever as to how to replace low skilled workers that currently come from other EU states on or after the end of the transition period in 2021.

 

  1. As noted above, any expansion of Tier 5 (Youth Mobility) scheme would be a poor way of replacing low skilled workers’ migration. There is nothing to suggest that those from the white majority Commonwealth states of Australia, New Zealand and Canada, nor from prosperous East Asian states such as Japan would wish to come to the UK to pick up low skilled work. The idea that the Tier 5 (Youth Mobility Scheme) could be extended to EU states with a similar level of economic development as the UK, and the citizens of such countries would wish to take low skilled work in the UK as a result is fanciful. It may well be the case that some persons from Romania or Bulgaria would take advantage of this route but is it seriously suggested that persons from Canada do, or from Germany would, seek to come to the UK and take up work under this route. This recommendation is simply not realistic.

 

  • Comparing migration ‘packages’

 

  1. The MAC recommends allowing switching from Tier 5 (Youth Mobility) route into the Tier 2 route, as part of a process of seeking a pathway to settlement. There is no analysis on how such a settlement and citizenship package would compare with others in other countries,  when migrants seek to decide whether to come to the UK or to go elsewhere. The UK ‘offer’ in terms of its Immigration Rules for people seeking to migrate to the UK and settle here, will be compared to similar offers from the EU 27 states when people seek to migrate to or within the EU 27 states, or to offers from Canada or the United States to migrate and settle there. There is little that is appetising at all about the current UK Immigration Rules ‘offer’; as a result, many talented people that the UK would wish to attract currently do and  in the future will go elsewhere.

 

Migration for self-employment

 

  • General considerations

 

  1. As regards self-employment, paragraph 39 of the report, page 6, that notes that the Tier 1 (Exceptional Talent) (currently for 2,000 persons per year) and Tier 1 (Entrepreneur) routes should be better evaluated to see whether they might apply to EU/EEA self-employed migrants.

 

  1. However, often, EEA migrants bring human capital, in other words their ability to get on and graft, as self-employed persons coming to the UK. The notion that a French citizen or a German citizen is going to want to satisfy the Tier 1 (Investor) (investing £2 million) route, Tier 1 (Entrepreneur) (investing £200,000) route, or Tier 1 (Exceptional Talent) (the ‘genius’ category) route in order to come to the UK is wishful thinking. Whilst these routes may be attractive to persons coming from outside the EU, such as Russian nationals or Chinese nationals, there is little merit in trying to persuade a German national to invest £2 million in the UK in order to be a Tier 1 (Investor), nor is such a German national likely to stake £200,000 of capital to come to the UK to set up a business. He or she will have already a very nice life in Germany/Western Europe and the incentives to migrate to the UK must be fairly modest. Thus, their entrepreneurial flair and human capital will be lost to the UK if the MAC approach is adopted by those that seek to build on its work.

 

  1. What EEA nationals do when they come here as self-employed is get on and graft; it is human capital that they deploy. Were self-employed EU migrants to lose the benefit of a freedom of establishment under the EU Treaties, that might be partially off-set if the Tier 1 (General) migration route (or a variation thereof) were to be restored. Though even then, there would need to be novel provision for medium skilled and low-skilled self-employed persons and not just for the highly skilled, if the damage caused by ending freedom of establishment for the self-employed persons is to be mitigated. However, the Tier 1 (General) migration route has been abolished. Therefore, there is and will be no route for self-employed migration into the UK.

 

  1. As regards self-employed EEA migrants, paragraph 1.48 the MAC report notes that there are particular concentrations in certain sectors and occupations, noting around 40% of self-employed EEA workers can be found in 3 sectors (construction of buildings, specialised construction activities, and services to buildings and landscape), and that around 1/3 are concentrated in just 5 occupations, construction and building traders, cleaners and domestics, carpenters and joiners, elementary construction occupations, and painters and decorators).

 

  • Self-employed professionals

 

  1. There seems to be absolutely no consideration at all of self-employed persons in the professions, such as financial services and legal services. It is nothing short of a scandal that the MAC had not considered at all the number of self-employed persons either in the tech and IT sectors, in financial services, or in legal services. At every level where financial services and legal services are provided there are often numerous people working in companies, or as consultants to companies, or as external persons brought in on a project-by-project basis, who are self-employed, and who are not on the payroll of the business in question. Whilst numerically such persons may not be as large as those involved in the construction sector, they are vital in the way in which professional services are supplied in the UK (not least in London), to other businesses in the UK, and across the European Union. The MAC seems to have no awareness of this. They have not considered it at all. It is a large gap in their analysis.

 

  1. The MAC makes no recommendations for a self-employed migration route but its report in suggesting the future of migration to the UK can simply be catered for by an expansion of Tier 2 (General) route, will be taken as the template for post-Brexit migration by many in Government. In that context, it is a dereliction of duty for it to not have considered professional persons who are self-employed and who supply services.

 

  1. To consider but one example, at present the Bar Council has a Tier 2 (General) licence to enable Chambers to take on tenants from non-EU states, notwithstanding that they are self-employed persons. However,  this is a small scheme for third country nationals. Ordinarily, the Tier 2 (General) route is for employees not the self-employed. At no point does the MAC analyse whether the Tier 2 (General) route can be expanded and provide for overarching sponsors, such as regulatory bodies, who could sponsor a person, so that they could be self-employed. There is simply no analysis of this and it leaves the self-employed EU citizens vulnerable to the fact that there will be no appropriate migration route for such persons to come to the UK in the future. This is detrimental to London and indeed the UK as a whole as a global centre of legal services, financial services, and connected service industries. It is also detrimental for self-employed British citizens who seek reciprocal, easy, access, to the EU 27 states.

 

  • The future

 

  1. As regards self-employment, at paragraph 7.82 of its conclusions the MAC notes that the Government has recently announced an intention to introduce a start-up visa designed to attract the best global talent and encourage innovation in the UK. However, there is no analysis by the MAC as to the position of those self-employed people who wish to come to the UK and do not wish to be involved in start-ups: what are they supposed to do? What is to be done about persons who come  merely to be self-employed and fulfil the large number of vacancies or opportunities in the UK economy for self-employed persons?

 

  1. Self-employed persons are inherently flexible people who can be deployed by businesses who already have sufficient staff on their books when they need extra capacity. The MAC does not seem to appreciate that self-employed people allow businesses in the UK to take on extra obligations at short notice and contract out some of that business to those self-employed persons. It appears to consider that as most self-employed people in the UK are brick layers or otherwise working in construction, etc. no more thought on the issue is required.

 

  1. There is nothing wrong with working in construction in the UK, and many persons working in construction (British citizens, other EU citizens, and other third-country nationals) are self-employed persons. But even as regards this sector, the MAC does not suggest that there is a replacement number of British citizens who wish to enter the construction industry who will replace self-employed persons from the EU. Its recommendations risk damaging a system that, according to the analysis in the first part of its report, appears to work well at present.

 

  1. For self-employed persons there would be no route for EU citizens to come to the UK after the end of the transition period (i.e. from 2021) other than under the Permitted Paid Engagement route, which is a form of temporary visitor migration route in very limited areas such as the provision of legal advocacy. The route allows a person to come to the UK for up to one 1 month’s work. The route  is the only visitor route in which a fee may be charged to a UK-based client.

 

  1. The other form of visitor migration route that allows a person to come into the UK on business is provided for in Appendix 3 of the Visitor Rules in the Immigration Rules. Again,  the business activity that may be undertaken is narrowly drawn. It is important to understand that this visitor route, which permits a visit for up to 6 months, does not appear to allow a person to charge a fee to a UK-based client.

 

  1. If the UK is to be open to EU citizens of the EU 27 states coming to the UK as self-employed persons to provide services on a short-term basis, in the expectation that self-employed British citizens will gain reciprocal access to the EU 27 states, then a root and branch reform of the Permitted Paid Engagement route and the Visitor routes will be required, so as to allow work for up to at least six months at a time, in any area of endeavour, and where a fee may be charged to a UK-based client.

 

Conclusion

 

  1. As noted at the outset, the MAC report is a disappointment because its recommendations do not appear to be based on the evidence that it has analysed. Furthermore, it fails to consider the way in which UK businesses at present rely upon EU migration by persons coming to the UK as employees and as self-employed persons. Its recommendations made are too narrowly focused and do not address the disruption that imposing a full system of immigration control on migration from the EU will bring about.

 

  1. The good news is that the MAC’s analysis of current migration shows that there is very little impact on the UK resident population occasioned by migration from the EU or indeed from outside the EU.

 

  1. The bad news is the recommendations made are not connected to that evidence. Further, the recommendations make no provision for the self-employed to migrate to the UK, would choke off low-skilled employee migrants, and hinder and obstruct medium and high skilled employee migrants.

 

 

 

 

 

 

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