The United Kingdom government published its Policy Statement: The UK’s Points Based Immigration System in February 2020. That statement sets out the government’s intention to adjust the UK’s immigration system in a way that it considers the British public want following the EU referendum in 2016. The first paragraph in the introduction states ‘This policy statement sets out how we will fulfil our commitment to the British public to take back control of our borders’. The problem is that what the UK government proposes makes little sense. Further, there is no evidence to support a contention that the lives of resident British citizens will be improved.
From 2021 there is to be one economic migration system for EU citizens and non-EU citizens/third-country nationals alike. Tier 1-type migration (where no-sponsor is required) under the Global Talent, Start-up, and Innovator routes, etc. will open to EU citizens, as will a revised version of the current Tier 2 (General) (sponsored work permit) scheme where the accumulation of points may lead to a grant of permission to reside and take employment. In addition, the Tier 5 (temporary migration) route will be opened to EU citizens, as will the route to enter the UK as a business visitor. EU citizens who wish to work in the UK will require entry clearance/ a visa before travelling to the UK. There is to be no general route for the self-employed outside of the very the limited provision made in the Tier 1-type routes.
The UK Government’s proposals cover the areas of movement for work, self-employment, and service provision, but do so in a patchy and inconsistent way. They are a poor substitute for the comprehensive mobility regime provided by free movement of persons and fail to engage with the structural reality of operating an economic migration regime for a country of 60 million+ inhabitants in a region dominated by the neighbouring EU; the latter’s territory being an area that has a single market, customs union, and free movement mobility regime for its 470 million+ inhabitants.
The proposals are introduced by statements that are simply fallacious. For example, the Policy Statement begins “For too long, distorted by European free movement rights, the immigration system has been failing to meet the needs of the British people.” For the reasons set out below, this is simply wrong. Further, the Migration Advisory Committee’s January 2020 Report (that preceded the Government’s Policy Statement) A Points-Based System and Salary Thresholds for Immigration does not address that issue. In reality, the Government’s proposals are little more than a scourge applied to EU citizens to purge the immigration system of the sin of free movement in an attempt to sanctify the result of the 2016 EU Referendum and the 2019 General Election. This is not serious policy-making underpinned by a solid basis in evidence. It is not in the national interest.
Jobs, Wages, Employment, and Taxes
It is worth beginning with four obvious points about current EU free movement migration. First, that it has nothing more than a minimal impact on wage levels. This is true at all levels of the economy, be it so-called low, medium or high skilled employment. Second, EU free movement migration has no impact on the number of jobs available to settled workers as result. For further discussion of these points see my blog post The Impact of BREXIT on UK Immigration: An Intermediate Solution intermediate-solution/ . See too my blog post on The Migration Advisory Committee Report: EEA Migration in the UK: Final Report (September 2018): A Note . Such evidence that there is shows no impact on wages and no impact on the availability of jobs. Third, there is not a pool of people waiting to find work in the UK economy. As the Financial Times has noted 2019 was a year of de facto full employment in the UK economy, see Jobs boom and growth gloom tell Britain’s story of 2019 . There is still unemployment, underemployment, in-work poverty, and precarious work for many British citizens but not as a result of EU migration. Finally, EU citizens are net contributors to the government’s coffers in fiscal terms, see The Fiscal Impact of Immigration on the UK and The Fiscal Contribution of EU Migrants Update and Scenario Analysis . Taken together, these points show that the evidence base for the immigration reforms that the government proposes to make has yet to be established.
The UK systems of immigration control and policy making
At the moment the UK has three systems of immigration control that regulate economic migration. For British citizens it has a true free movement system (the right of abode in the UK, so beneficiaries can live and work freely here); for non-EU citizens/third country nationals it has an Immigration Rules system, whereby prior permission to live and work in the UK is required; and for EU citizens and their family members it has freedom of movement under EU law. These systems operate together. The EU route permits so-called low, medium and high skilled migration from the EU. It does so in a circulatory fashion, whereby EU citizens can come and go from the UK without prejudicing their lawful residence. The EU route softens the effect of the rigid system of Immigration Rules control when unfilled vacancies arise in the UK economy. We simply do not know how the Immigration Rules will function if the have to cater for all non-British citizen migrants from around the world, including those from the EU.
In the absence of any evidence to serve as a base for a change, it is a point worth making that the national interest does not require these immigration control changes that end free movement and make EU citizens subject to the Immigration Rules. In fact, the national interest requires that the economy and the society in which the economy operates is not damaged by a crude and inept set of changes that propose to alter the Immigration Rules in order to cater to perceived political pressures. The case that migration from the EU is damaging the economy, the labour market, or society is not made out and such political pressure as exists to take back control of UK borders needs to be carefully handled when considering the design of the immigration system from 2021 onwards. To mortify the UK’s economy through ill thought out immigration control changes to meet perceived political pressure is damaging to the national interest.
The Government’s proposals may not work on their own terms
Further, the proposals in the UK Government’s policy statement may be counterproductive. The drive is to create what the Government calls a ‘high wage, high-skill, high productivity economy’. The policy is to encourage more highly skilled migration from around the World. At the same time, the Government proposes to cut what it refers to as ‘low skilled’ migration from the EU. It does not take a social scientist to detect that if high skilled migration is to be encouraged and low skilled migration is to be discouraged, while the number of so-called low skilled jobs in the economy remain the same, the net effect will be to promote high skilled foreign nationals into high skilled jobs and to reserve low skilled work for the settled population.
The Policy Statement rather optimistically considers that low skilled work will be picked up by those millions of EU citizens and their family members already in the UK and protected under the Withdrawal Agreement. However, there is another, rather larger, pool of people for whom low skilled work will become a greater option: British citizens. It is inevitable that if high skilled positions are open to foreign nationals while foreign nationals are unable to take low skilled work, the obvious and most glaring pool of people for whom low skilled work will become a reserved occupation is the pool of British citizens.
EU citizens protected by the Withdrawal Agreement are free to take jobs at any level in the economy. The Government’s rather optimistic view that they and their family members alone will take low skilled work is fantasy. It ignores the reality of EU migration to the UK. It is true that many EU citizens upon arrival take low skilled work, not least while they perfect their English language skills and orientate themselves in their new host society. But over time many of those now equipped with English language skills and entrepreneurial spirit go on to take better paid more highly skilled jobs, have founded businesses, and supply services that cannot be easily replicated by the settled population. One should never underestimate the entrepreneurial spirit of a cohort of people who have already migrated from one country to another in order to make a better life. It is entirely unsurprising that such persons should in many respects prove to be ambitious and successful.
Moreover, if the UK Government’s expectation is that wages and salaries will rise as a result of employers being forced to skill-up the settled population they may be in for disappointment. What prevents wages rising in the economy is not EU free movement but rather very modest labour market protection, the level of the minimum wage, the lack of employment security, agency working, zero hours contracts, and the lack of collective bargaining/trade union organisation in the private sector.
Migration may rise as a result of the Government’s proposals
It is also possible that migration may actually rise under the Government’s proposals. In a free movement system, EU citizens are free to come and go from the United Kingdom without bringing their family members here for family reunion purposes. This is what is known as a circulatory system. If you move over to a wholly Immigration Rules based system where the primary highly skilled worker comes here to the UK but has to stay here for a period of time in order to achieve settlement, you strengthen the incentive for that worker to stay and remain in the UK and also to bring family members (who may take work at any level of the economy). The net effect is where EU citizen workers were free to come and go, albeit that many stayed in the UK, those workers coming under the Immigration Rules system will not only stay (because they have to do so in order to secure their residence) rather than coming and going, they may also bring family members able to work at all levels of the economy.
As regards whether or not EU free movement is in fact a political problem for the UK, it is worth pointing out that from when the UK joined the European Economic Community in 1973 until the accession of eight eastern European countries in 2004, free movement was not discussed as a major political issue in immigration control. In fact, despite some grumbling from persons who were opposed to the UK’s membership of the European Union, free movement largely operated without objection. In the 1990s, which can hardly be said to be a period when interest in migration control was not a live political issue, there was no particular anti-immigration sentiment about EU free movement as opposed to the movement of asylum-seekers to the UK from outside the EU.
Prior to the EU accession of eight eastern European states in 2004, most EU Member States were western European countries with economies whose prosperity levels were at or above the levels of the UK economy. When eight Eastern European countries joined the EU in 2004 and free movement was allowed for their citizens there was increased migration to the UK as many new EU citizens came to look for work. But that was a temporary phenomenon. It reflected the disparity in the levels of opportunity and prosperity between their home countries’ economies and the relatively strong UK economy. However, as those countries have become more prosperous and as their economies have evolved, migration from eastern European states to the UK has tailed off, see Net migration from EU to UK at lowest level since 2003, ONS says . This is not as a result of immigration controls but as a result of the rising prosperity of eastern Europe. In the result, were one to look at the issue of EU free movement starting from today’s standpoint, migration from the EU to the UK is not a problem in any sense.
The UK in the European region
The UK is located in the European region. Its next-door neighbour is the European Union. There are strong arguments as to why, whatever immigration control system is put in place, there ought nonetheless to be a system of EU preference. The impact of free movement from the EU to the UK, and vice versa, has created a system whereby the movement of people coming back and forth for the purposes of work, self-employment, and the provision of services (a circulatory system) has created an interdependent economy.
As a result of the physical proximity between the UK and the EU and the sheer number of journeys back and forth from the UK to the EU, there are immigration control pressures that spur a need for flexibility and, ultimately, free movement. It is simply not right to create an Immigration Rule system that treats Australian citizens the same as French citizens. An Australian citizen has to make a far bigger leap in order to come to the UK to take work. She is uprooting a life and coming to a place literally half-way around the world. The number of French citizens who might go back and forth between the UK and the EU is far, far greater.
In the European region it makes sense for there to be a system that caters for both UK nationals and EU citizens, to move back and forth between each other’s countries in the interests of stimulating economic activity. Indeed, in its own region, Australia itself see the same logic and has a free movement system with New Zealand. The fact that there are a large number of journeys back and forth between the UK and the EU is not a point to be deprecated but celebrated. It creates more economic activity, not just through the provision of services in which the UK has a particular interest but also in the trading of goods. To rip up the system of free movement and replace it with an Immigration Rules system with its inherent rigidities is to create a sub-optimal environment which does the UK no favours. Once again, it is worth re-stating: this is not in the national interest.
European Union Economic Migration Policy
Another matter conspicuously ignored in the UK Government’s Policy Statement is that the UK will operate its own inbound economic migration regime in the context of and alongside the EU having its own economic migration policies for the migration of UK nationals into the EU. The EU has shared competence with its Member States in the field of economic migration. It has various migration schemes including the Blue Card scheme for highly skilled migrants, as well as laws for family reunion and long-term residence. Individually, EU States also operate their own inbound economic migration policies. The UK’s economic migration system for inbound migration will be competing with the EU’s area within which other economic migration policies operate.
The UK is not as free to set its own economic migration system as its Government thinks. Firstly, because the EU and its Member States may set more competitive economic migration policies that could attract both migrants and businesses to operate inside the (much larger) EU rather than in the (much smaller) UK. If the EU or individual Member States do so, UK immigration policy will need to liberalise quickly to avoid the UK being a second-rate option for non-EU citizens/third country nationals. In addition, migrants and businesses setting up in the EU will be able to operate freely inside the EU’s single market and customs area. And, of course, EU citizens themselves will remain able to migrate freely and work in one another’s counties. Taken together these advantages could place considerable pressure on the UK Government to make its immigration policies more appetising to EU citizens and non-EU citizens alike.
If a business can establish its base in the EU, so that it is able to provide services or sell goods across the EU, while also employing EU citizens moving freely from one Member State to another and such workers as it requires from outside the EU (under perhaps more liberal economic migration rules than apply in the UK), then such a business is more likely to locate itself in a state such as France or the Netherlands than the UK. In the result, the unattractive aspect of UK Immigration Rules-approach becomes apparent. Of course, the UK economy will continue to exist and of course it will to some extent prosper. However, it will be sub-optimal and its major competitors will gain real advantages. It is not in the national interest to create a permanent impairment to UK prosperity through Immigration Rules that treat EU citizens in the manner proposed. If the UK Government does so, it will hand an advantage to the UK’s main European competitors such as Germany, the Netherlands and France, and indeed to all other EU Member States.
UK nationals working in the EU
There is also a problem with the UK’s position in that it takes no account of the fact that many British citizens and other resident settled persons will wish to go and work in the EU. The UK Government proposals create an inbound UK immigration system with all its rigidities that is profoundly unattractive to EU citizens. In the UK Government, there appears to be no care about, or understanding of, the point that British citizens may be similarly treated where they seek to work in the EU. Nor is account taken of the fact that British citizens (unlike EU citizens) will be unable to move freely from one EU Member State to another). If British citizens are treated in like manner when they apply to work in EU Member States, the result will impact upon the UK economy because of the impact on the UK’s ability to supply services and export goods. British citizens will be hindered when seeking to move to the EU to work, learn skills, and create enterprises on behalf of businesses in the UK. It is not in the national interest to harm the ability of British citizens to work in the EU. The UK has a strong interest in agreeing a reciprocal employment route with the EU that is liberal in character and driven by demand.
Low-skilled Work, Service Provision, and Self-employment
The UK Government’s Policy Statement proposes to end so-called low skilled migration from the EU. The so called low-skilled route includes not just the caring professions (which have been much commented on) but also other areas of necessary economic activity including people working in service industries such as catering and those working on a consultancy or freelance basis in support of a multiplicity of modern service providers. It is not clever to end those areas of free movement upon which a modern, urbanised, service-oriented society relies. If there are far fewer people to provide work in those service industries upon which society relies, that work will simply go unfulfilled and there will be less economic activity in the economy as a whole. The proposed revised Tier 2 route, even with its proposed lower salary thresholds, is far too narrow to provide a satisfactory economic migration route for what an economy like the UK needs to really thrive.
Moreover, the Policy Statement show little understanding of the modern migrant journey. A person who works in a sandwich bar whilst perfecting their English language skills and making their way in the UK on arrival, may well go on to employ their degree (acquired in their home country) to work in a profession or industry once they have perfected their English, and then further go on to set up a business and employ other people over time. In other words that person is highly skilled but just working in a sandwich bar whilst they make their way in the world. Further, while in a free movement system such a person may switch back and forth between work and self-employment as a freelancer, and between low, medium, and high skilled work, under the Immigration Rules that will not be possible. Many highly skilled EU citizens will no longer see the UK (with its capital London as the main draw) as their obvious destination but will contribute their talents to other countries (both inside the EU and elsewhere) instead.
In addition, there is no suggestion that the proposed Tier 1 Global Talent category will be able to pick up the slack for the loss of freedom to provide services and freedom of establishment (for self-employment). At best it will be a small-ish migration route. The test for a Tier 1 Global Talent visa is set at too high a level to provide for the large scale of service provision migration at all skill levels that is required for the economy to work efficiently. While a few EU citizens may come to the UK under the Tier 1 Global Talent category, that is no compensation for the damage that will be done by ending the freedom to provide services and freedom of establishment (for self-employment) migration routes. It is also clear that the Immigration Rules for entrepreneurs with capital to invest (the Innovator route) does not work at present for non-EU citizens/third-country nationals and offers little or no opportunity for EU citizens.
The failure to provide a self- employment route for EU citizens and their family members in the proposed Immigration Rules is a mistake. There is no basis in evidence to justify not having a general self-employment route. In addition to the impact on service provision and on the role that self-employed persons/contractors/free-lancers play in buttressing expanding businesses by allowing them to take on new work and service it quickly, there are certain jobs that simply will not be able to be replicated in the economy if there is no route for self-employed persons. For example, one cannot replicate the know-how of a person who comes to the UK as a self-employed journalist from Italy and who is able to write and sell stories to the UK media and to media back in Italy and elsewhere based on her knowledge of Italy and the United Kingdom. There is no way in which a resident UK national worker could ever replicate such work. Such an EU citizen may sell stories to British print media and on-line media where there is a story that involves a situation in Italy, and trade on her know-how of the British scene in order to sell stories to the Italian media. Such a person works and pay tax in the UK and contributes to the dynamism of the British economy. By having no general route for the self-employed, in the future such a person will not be able to live and work in the UK. What possible public policy objective is served by that?
Temporary Migration, Business Visitors, and Investors
It is also clear that the UK Government’s proposal to open the Tier 5 temporary migration route to EU citizens is no panacea for the loss of free movement. The Tier 5 route is a route for temporary economic migration in certain areas of endeavour. It is open to people from advanced economies in far-away places such as Australia, Japan, and the United States. If you live locally in the European Union region, you already live in a very attractive country nearby and can move freely to other very attractive EU states in the exercise of your free movement rights. Moreover, in circumstances where EU citizens can easily come to the UK as a tourist for up to six months and pop home easily if funds run out, the route’s existence supplies little incentive to choose the UK as a destination. In addition, there is no route to settlement and permanent residence. No doubt many EU citizens will take advantage of it if it is opened up to them. But many more will not, people who might have come to the UK and have contributed under the free movement regime had it continued.
There are also problems with expecting the end of EU freedom to provide services to be satisfactorily replaced by the Business Visitor route. The latter does not allow fees to be taken from a UK-based client and restricts the areas of permitted activity. Even its carved-out Permitted Paid Engagements route is far too narrow in its scope to allow the sort of work generally done at present under the EU’s free movement of services. In other words, the UK’s visitor rules routes are too narrow to allow meaningful service provision by EU citizens in the UK.
The UK Government Policy Statement makes reference to the World Trade Organisation’s (WTO) General Agreement on Trade in Services (GATS) mobility commitments as a source of prospective mobility for service provision. But this is illusory in substance as the Policy Statement makes it clear that the UK considers that its visitor rules are already compliant with its GATS commitments. In other words, as things stand, there will be no widening of the visitor rules to enable further provision of mobility to provide services in the United Kingdom.
The UK Government should be careful not to close its mind to better arrangements. There is no reference in its Policy Statement to the fact that the Political Declaration (that accompanied the Withdrawal Agreement between the UK and the EU) makes reference to possible arrangements for mobility for service provision in defined areas, see my blog post Migration between the UK & The EU after Brexit: The Political Declaration . The new UK-EU trade treaty to be negotiated could provide a basis to allow service-provider and investor migration routes to be increased for EU citizens coming to the UK and for UK nationals moving to the EU.
In addition, the UK Government’s Policy Statement has no tailored route for EU citizens to come to the United Kingdom as investors. The UK’s Tier 1 (Investor) immigration route requires millions of pounds to be invested in order to obtain a visa. It may be appetising to Chinese nationals or Russian nationals who wish to move their money and themselves to a liberal democratic state but it is likely to be off-putting to a French citizen investor who may live freely anywhere in France and the EU and who will enjoy a lifestyle that leaves little scope to hunger for a UK residence permit. There is a need for the UK to operate an investor migration route that is appetising to EU citizen investors who wish to invest in the UK and who wish also make the short hop across the English Channel and reside here.
The proposals are little more than a scourge applied to EU citizens, to purge the immigration system of the sin of free movement, in an attempt to sanctify the result of the 2016 EU Referendum and the 2019 General Election. This is not serious policy making underpinned by the necessary evidence. It is not in the national interest.