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Options for a post-Brexit immigration policy 16 May 2018

Options for a post-Brexit immigration policy

David Atherton, Austin Lee Resourcing Ltd

First published Institute of Economic Affairs, May 14th 2018

One of the fundamental macroeconomic components of a successful economy is labour mobility. A crucial facet for the UK as it leaves the EU is future immigration policy. As of May 2018, the basis of the UK’s trade arrangements has not been settled. Whether the UK is staying in the Customs Union, a derivative of it, or whether it becomes a free country making its own deals globally, is an issue which is currently dividing the Conservative Party especially. We know even less about what our future immigration policy will be.

The UK’s current employment record is
astonishing. Having absorbed 2.38 million EU workers, the UK now has a workforce of 32.2 million and an employment rate of 75.4%, with unemployment at 4.2%. This was last seen in 1975.

The neutral observer might see draconian immigration laws as unnecessary and potentially damaging to the UK economy. However, this is a matter of Realpolitik.
33% of Brexit voters indicated that control of our immigration policy was their top priority, and 49% cited “the principle that decisions about the UK should be taken in the UK”. The latter may include the subset immigration, meaning political desires may have to be accommodated.

I have over thirty years’ experience in UK, European and international recruitment in computer and IT professionals. Allow me to explore the potential options available. Many have pointed to the Australian points system as a way forward, but the UK has already had such a system (for non-EEA migrants) for the past 16 years.

Firstly, let me deal with existing EU workers. It is a myth that the UK blocks immigration from non-EU/EFTA countries. In 2016 for example
93,244 Tier 2 skilled work visas were granted in 2016. Mainly they are Indian IT workers who comprise 57% of the quota. Hitherto, (the Home Office has changed the rules for those transferred over by their companies), after 5 years of working in the UK you then get your permanent residency. Then you are able to apply for British citizenship which takes up to 2 years.

With existing EU migrants, taking the example of non-EU/EFTA immigrants, those who have 5 years tax returns get automatic residency and those who have 7 years tax returns, a British passport. Whether you include the citizenship test, which now has been expanded to getting residency, I will leave that to the bureaucrats.

Those currently here and who arrive before we exit the EU, should be given open employment status which allows you to work for any company of their choosing without any governmental form filling or box ticking.

Post Brexit how should we deal with fresh immigration? Let me first address skilled immigration. The Blair government introduced the
Highly Skilled Migrant Visa in 2002, which became known as a Tier 1 Visa. You did not need a job to be granted one and could arrive in the UK, CV in hand. It was successful. It was a points system, comparable to the Australian model. Here are the criteria when it originally came in, and 75 points were enough to get approved.
  • Qualifications (30 – 50 Points)
  • Previous Earnings: (5 – 45 points)
  • UK experience (5 Points max.)
  • Age: (5-20 points)

The Tier 1 scheme is not a bad place to start. It will not work for everyone, but an extended version of it could be part of the package. Its advantage is that it can be offered to any country or nationality. As well as European workers, there is an appeal to offer them to people in The Commonwealth or indeed any other country whose people reach the correct levels.

As a comparison Europe has what is called a
Blue Card scheme which is not dissimilar. Based loosely on America’s Green Card, the major disadvantage is that you need to get a job offer before you can apply. Its lack of pre-approval is a great weakness. Currently, the UK, Ireland and Denmark have opted out of the scheme as have the EFTA countries.

You can still employ on a limited basis, people on Tier2 visas which I have mentioned above, but you need a pre-approved job offer and the employer has to request permission for the people to be employed by the Home Office.

The majority of employers are just not prepared to go through the form filling, so it is a severe barrier to obtaining worldwide talent. I cannot stress too much the importance of pre-approval.

When I first came into recruitment in the 1980s, Australians and New Zealanders came over to the UK in particularly high numbers. In the meantime, the number of Antipodean applicants has been greatly reduced and today most tend to have British ancestry. Most worked on Working Holiday Visas (WHV) which is now known as a Tier 5. Aimed at 18 – 30 years old, valid for two years, it was always an outstanding means of gaining fresh talent. Now heavily restricted, you need in some cases a sponsor and you cannot accept a permanent position.

It would seem an easy step to alter the terms and conditions of the visa and with the added incentive that the person at the end of their two years can be sponsored for a Tier 2 work visa by the employer.

As I mentioned above the UK has absorbed 2.38 million EU workers, many in unskilled positions. The humorous observation is that if 650 MPs arrived from Poland, the government would soon end EU immigration. The classical liberal quite understandably
would suggest there is no need to change the open borders arrangement at the moment. In aggregate terms, EEA migrants are clearly net contributors. Most are known to turn up with their responsibilities as opposed to their rights, respected for their hard work, integrity and competence.

The economic benefits of free movement are immense. It may temporarily suppress wages in some sectors, but to the extent that it does that, it also keeps costs down. Thus, one can make a good economic case for simply keeping free movement for EEA citizens.

On the other hand, politically, immigration was a major factor for the vote for Brexit. Keeping both parties happy here is going to be a challenge. You could restrict the number of available National Insurance numbers, or use guest work permits, under which you can never achieve residency or nationality, but are allowed to work.

My instinct that if Liam Fox, the Secretary of State for International Trade and President of the Board of Trade is able to deliver free trade deals, which many countries seem eager for, the UK could have an economic renaissance. If we remove tariffs on developing world agriculture, have a bonfire of stifling and cost increasing EU red tape for UK internal use and for export, a booming economy could require more labour and employment rates could rise even higher.

Whatever the solution, open borders and free movement is optimal for a dynamic economy. Bearing in mind the late President Reagan’s quip that “Government is not the solution to our problem, government is the problem,” light touch regulation is paramount. In a nutshell, we should go for the most liberal immigration policy that is compatible with the spirit of the Referendum result.