What are the implications of the UK's post-Brexit immigration proposals?

IN the last few days, immigration has re-emerged as a key battleground in the Brexit negotiations. Home Secretary Sajid Javid and Prime Minister Theresa May finally began to outline their ideas for a post-Brexit immigration system at the Conservative Party Conference, after months of delays. Their announcements were timely; they come just a few weeks before the “moment of truth” Brexit talks with the European Union at the summit on October 17-18, and just after the Migration Advisory Committee (MAC) announced its recommendations — which the Home Office commissioned last year to create an evidence base to develop a new migration system. So what has Javid proposed? And what are the implications for the UK’s labour market, citizenship rights and relations with the EU?

Javid’s Immigration Proposals: The Headlines

Javid’s immigration proposals – which are aligned with the MAC report – encompass a radical change to the rights of EU nationals seeking to work in the UK, while representing very little change to the structures of the much-criticised points-based system that the UK currently operates for non-EU nationals. We are currently waiting for the publication of a white paper on immigration, which will probably come late this year, with a bill planned for next year – most likely after the Brexit deadline on March 29, 2019. This timeline, crucially, means that the UK Parliament will be able to scrutinise the Immigration Bill before the UK officially leaves the EU.

1. End of Free Movement

First, we’re going to see the end of free movement. Currently, any citizen of an EU member state can come to live and work in the UK. However, post-Brexit, EU citizens will be given no preference and they will have to apply, like all third-country nationals, through the UK’s visa system. Equally, any employer wanting to hire an EU worker will have to go through the bureaucracy of the Tier 2 system as well as paying a £1000 skills charge for each year of the visa – a lot of money for SMEs dependent on skills from abroad, as the Institute for Directors has said.

2. Bias towards High-Skilled Labour

Second, we’re going to see a bias towards high-skilled, high-paid labour. EU workers will only be able to apply through the high-skilled Tier 2 route, which has this year become known for its high rejection rate. As a concession, Home Secretary Javid has indicated that he plans to scrap the current cap on Tier 2 migrants, in line with the MAC recommendations, which is 20,700 per year.

He also plans to expand the list of eligible occupations to include certain “medium-skilled” jobs. But the rub is that applicants will have to meet a minimum salary threshold, which currently stands at £30,000 pa. So any EU worker not making £30k – which some estimates say represents about 75% of EU nationals currently living in the UK – will find it very difficult to come to the UK in the future.

3. Decline in Low-Skilled Labour

We’re going to see a significant decline in low-skilled or low pay migration. Javid and May have indicated that they have no intention of opening up Tier 3 (the low-skill migration route, which has never actually been used since the point-based system was created in 2008), as they wish to deter low-skilled labour.

The only exception is agriculture: a few weeks ago the Government proposed a seasonal agricultural workers pilot scheme to address the shortages in seasonal farm workers, by enabling 2500 agricultural workers to enter the UK each year, though farmers unions say this is not nearly enough to fill the gaps. In general, this move to reduce low-skilled labour appears to be designed as a popular political move, in that the Brexit referendum was largely motivated by anti-immigrant sentiment, especially the feeling that cheap migrant labour was “stealing” British jobs (although academic research has shown that EU migration has had no such negative effect on the jobs, pay or public services enjoyed by UK nationals).

However, it is a potentially catastrophic economic move, as I’ll discuss below.

4. End of European Citizenship

Fourth, we’re going to see the end of European citizenship in the UK, in that British citizens will no longer have access to the multiple rights afforded to them by EU membership, i.e. to live and work in other EU countries, voting rights, legal protections of EU law, the European Health Insurance Card and so on. And equally, EU nationals will face increased obstacles to obtain rights in the UK, with Javid talking about creating a more restrictive ‘British Values test’ that all future citizens will have to meet.

Implications of Javid’s proposals

So, what are the main implications of these immigration proposals? I’d like to focus on eight different areas, though the effects are likely to be far wider.

1. Labour Shortages

First, we are going to see extensive labour shortages in key sectors of the UK economy. Businesses have been up in arms at the proposals to slash low-skilled migration, which will drastically reduce the number of workers able to do these jobs. Industries that will be particularly hard hit are the social care sector, hospitality, construction and health. The effects of labour shortages in these sectors are difficult to imagine, but potentially include a drastic reduction in housebuilding in future years despite existing shortages, a reduction in the number of people caring for our elderly – leading to potential problems around the health and welfare of some of our most vulnerable people, the potential closure of a number of hotels and restaurants across the country due to lack of staff, and increases in food prices and possible food shortages if farmers are unable to hire farm workers.

2. Tax Rises

Second, linked to that, it’s possible that we’ll see a tax rise as the number of EU workers decline. That’s because research has shown that EU migrant workers contribute £2300 more per year to the UK purse than the average British citizen, which has eased the tax burden on other tax payers. If we see a reduction in EU workers making this positive contribution to our public finances in the future, it is very likely that the tax burden on others will have to rise.

3. Demographic Decline

Third, in the longer term, we could see a potential drop in the demographic growth of some regions and nations that are heavily reliant on EU migrants to maintain their current population rates, such as Scotland, Wales, Northern Ireland and the North-east of England. Slower population growth will put pressure on the current workforce, especially young people (which is already a shrinking demographic) to support people of pensionable age, which will negatively affect economic growth.

4. Barriers to Citizenship

Fourth, Javid has also talked about increasing barriers to naturalisation by toughening up citizenship rules, for instance by creating a new British values test and tougher English language requirements, that future EU applicants will have to pass. These proposals continue a trend of coercive civic integration in the UK, where migrants are held responsible for their own integration (or lack thereof), rather than seeing integration as a two-way process where society must also adapt.

5. Continuing Rise of Xenophobia

Fifth, linked to that, we are likely to see continuing hostility towards migrants in the UK, which has increased since the referendum with the rise of racist and xenophobic incidents. Javid’s immigration proposals have done little to offset the negative rhetoric about immigrants in our society. Indeed, May spoke yet again at the Conservative Party conference about the importance of reducing migrant numbers and how she didn’t want migrants competing with locals, while Javid talked about creating a ‘safe home’ by ending freedom of movement. This type of statement, which links immigration with a lack of safety, tends to drive public fear and hostility towards migrants.

6. System under Strain

Sixth, we’re going to have an even more overloaded Home Office once we add EU migrants to the current Tier 2 system – a system that is already painfully strained, with massive backlogs, notoriously long waiting times, and multiple mistakes being made (Windrush is the most tragic example of this). Adding EU migrants to the Tier 2 system without massively expanding the capacity of the Home Office will likely cause delays in processing applications, which may result in firms losing out on sponsoring migrant workers if it takes too long, as EU workers will probably just move somewhere else, far more easily, within the single market.

7. Retaliation from the EU against discrimination

Seventh, we’re starting to see a critical response from EU member states who are dismayed by Javid and May’s proposals to restrict future EU migrant flows to high-skilled only. The European Parliament’s Brexit negotiator, Guy Verhofstadt, has warned that UK nationals living in the EU will suffer if the UK introduces a system that discriminates against EU citizens. So, it’s very likely that UK nationals seeking to live and work in EU countries in the future will find it more difficult to do so. And I want to briefly reflect on what Verhofstadt meant when he spoke of ‘discrimination’. Because this not only applies to skills; it also applies to nationality. We know that prior to the 2004 EU enlargement, EU nationals from the old member states of western Europe tended to fill highly skilled positions; and that since 2004, EU migrants from the new member states have filled in low-skilled positions, even though they’re often vastly overqualified. This analysis was clearly made in the MAC report itself. But it also means that, by cutting out routes to low-skilled migration, this is going to have a disproportionately negative effect on workers from Central and Eastern Europe who have tended to fill crucial gaps in low-skilled or low-pay sectors such as care, hospitality, construction and agriculture.

8. Constitutional Crisis?

Finally, it’s highly likely that we’re likely going to see an increase in constitutional tensions amongst the constituent nations of the UK. Neither the MAC report, nor Javid and May, have taken into account extensive research and the Scottish Government’s policy recommendations to introduce a degree of flexibility in the migration system to account for Scotland’s distinct demographic needs.

Javid has spoken extensively about implementing a “single system” for the UK, however multiple research reports have shown that migrant flows and needs are very different in different parts of the country. Given that Scotland already voted in favour of remaining within the EU, a drastic restriction of EU workers coming to Scotland – who have largely been responsible for Scotland’s recent population increase since 2004 – will likely meet with defiance from the Scottish Government, providing another argument for why Scotland should gain independence from the UK.