Home Affairs Committee
Oral evidence: Post-Brexit Migration Policy, HC 857
Wednesday 18 April 2018
Ordered by the House of Commons to be published on 18 April 2018.
Members present: Yvette Cooper (Chair); Stephen Doughty; Kirstene Hair; Sarah Jones; Tim Loughton; Stuart C. McDonald; Douglas Ross; Naz Shah; John Woodcock.
Questions 43–109
Witness
I: Professor Alan Manning, Chair, Migration Advisory Committee
Examination of witnesses
Professor Alan Manning.
Q43 Chair: I welcome everyone to our session of the Home Affairs Select Committee and our inquiry into post-Brexit immigration. I welcome Professor Manning to give evidence before us. We are also very grateful to you for agreeing to change the timing of your evidence session given the changes to parliamentary business yesterday. We appreciate that.
Professor Manning, could you outline for us what you are expecting the Migration Advisory Committee to do over the next six months? What are you expecting to produce and when?
Professor Manning: Yes. We have two active commissions from the Government at the moment, both of which we were asked to report by September this year. We will report by September this year—it will be in September, I think. One of those relates to the commission on EEA migrants. We issued an interim report just before Easter and the final report will be much more focused on an assessment of what the impacts of EEA migration have been on the UK, with possible pointers towards what the migration system should be post-implementation period. It is very much that our work was asked to be focused on what happens after the end of the implementation period—so 2021, it would look like at the moment. That is what we are planning to do on the EEA one.
Then there is also another report on international students. We were asked to do an assessment of the impact that international students have, both while they are here as students and after they stop being students. We will be producing that as well and possibly making recommendations about changes to the current student migration regime.
Q44 Chair: We would obviously be very interested in your thoughts and conclusions on the students, but can I just ask for a bit more on what you expect to produce on the EEA issue? Will you be looking at particular policy options or policy alternatives and what their impact might be?
Professor Manning: At this stage we are not absolutely clear, but I would expect that we may well have some degree of pointers as to what we think the post-Brexit migration system should be. It is likely to be at the level of broad principles rather than very detailed administrative rules about how you would do that.
Q45 Chair: Can you give me an example—not one that you might be putting forward, but just of the sort of thing that you mean by a broad principle?
Professor Manning: For example, for lower-skill work migration at the moment there is no current provision within the current non-EEA system. We may well be expressing a view about whether there should be a lower-skill work-related migration route and possibly what form that should take. We have not really had those discussions within the committee as yet, so it is a bit hard for me to do that. We will be looking at other countries, international experience, as one source but also thinking obviously about what works best for the UK.
Q46 Chair: Will you be looking at any possible interaction between migration proposals and trade arrangements?
Professor Manning: I think that is more difficult for us to do, because we are not venturing into the trade agreement area at all. Although it is the case that in that area, as in many other areas, migration policy interacts with many other aspects of Government policy, we have to limit our inquiry in some way. On the central question of whether migration policy is part of the negotiations or not, my understanding at the moment is that some decision might have to be made on that before we report in September. Obviously, there is the possibility for things to change between now and September, and we would hope that the report when we produce it will be timely and reflect the situation as it is then. Again, there is a lot of uncertainty at the moment.
Q47 Chair: So far you have not been asked to look at any interaction between labour market or economic consequences just of migration arguments, or between that and the economic impact of any trade arrangements as well?
Professor Manning: No. Our commission does not mention any trade negotiations at all. If you were to try to express a view about whether it would be a good idea or not to give something in terms of migration in return for something on trade, obviously you would have to do an assessment of all of the benefits in terms of the extra trade, and that is going rather a long way outside our remit and our expertise.
Q48 Chair: Are you aware of whether that work is taking place anywhere else? Have you been approached, for example, by the Home Office or by the Treasury or by other Departments to provide evidence to them so that they can do an analysis of the trade-offs between different trade and migration policy options?
Professor Manning: We have not been approached and that is not the way we would operate. We do not provide internal reports to Government. We publish our reports and that is what goes to Government. All I know about what is or is not being done within Government is really based on press reports. There are sometimes leaked documents about what has been produced within Government on various scenarios and so on. I do not have any more insight than what is contained in those.
Q49 Chair: Have you been asked by the Home Office or any other Department to provide any other kind of interim analysis, research or details between now and September?
Professor Manning: No. The original commission on EEA gave us the option to produce interim reports and we did take that option, but I think it is very unlikely that we would be producing any more before the final report in September. We certainly have not been asked to by the Home Office, and it is for us as the committee to decide whether we want to pursue that route, but I do not think we are likely to.
Q50 Chair: If the Home Office or if the Government as a whole or the Brexit Department decide that they want to include migration policy options in the negotiations in advance of the withdrawal agreement, they will not have any information from you in order to be able to base that on?
Professor Manning: At that stage they would not have anything. If they decided that today, they would not have anything beyond what we have published, for example, in the interim.
Q51 Chair: The Home Office and the Home Secretary told us that no decision had been made and that it would be a matter for the Prime Minister and the Brexit Secretary whether or not migration might be included. We are aware that the EU Commission has said it does expect migration to be included as part of the negotiations. If that decision has not yet been taken, have you been asked to do any kind of preparatory work just in case they decide to include immigration as part of the negotiations over the summer?
Professor Manning: No, we have not been asked to do that. I would think that is partly respecting our independence. We are not civil servants. It is not that if the Government say, “We want this piece of work”, we jump and produce it within a couple of weeks. From my perspective, the only way in which I think it would be acceptable for the Government to do that would be to issue a public commission, but I do not think the timeframe and the resources at our disposal really make that particularly—
Q52 Chair: If they did ask tomorrow, if they suddenly said tomorrow, “We need something by end of June”, for example, would you be able to provide that?
Professor Manning: I would be reluctant to provide that because we are an evidence-based body. From my perspective, it is more important that we come to the right conclusion rather than a rushed conclusion. I feel that would be rushing things a bit.
Q53 Chair: Okay. In terms of your assessments so far of basically how easy or difficult it is to work out what the right answers are on the basis of what you have looked at, do you think that in the end this will be a relatively straightforward process, that all of your evidence will lead you to some relatively straightforward conclusions, or do you think this is quite hard to work out what the best options are and what the consequences are?
Professor Manning: I think it is quite hard. There are a number of difficulties. One is that even if you are just interested in what the impact of this or that migratory regime on this or that aspect of the economy or society would be, often the evidence base is not that strong so it is hard to know. Even if you could know, like most things there are often going to be costs and benefits in different areas. Those costs and benefits fall in different ways on different groups within the economy, so you have to have some way of weighing up all those kinds of different effects. It would certainly not be the case that there is going to be a single right answer to what the best immigration system for the UK is. That is a complicated question.
Q54 Chair: If the Government end up having to make some decisions about immigration policy as part of the negotiations in advance of your research and your evidence, do you think, therefore, it is likely that they will make the wrong decisions?
Professor Manning: I do not know exactly what they have been doing internally. I do not know what evidence base they themselves are going to have. From what one reads in the press, there is work that is going on that in some sense is similar to what we are doing, but I do not really know over what timeframe very detailed decisions are actually going to be made in these negotiations or quite how long it is going to take.
Chair: None of us does.
Professor Manning: It may well be that these things go slower than one might think and that by the autumn we are still in a position where our report is a useful input into that.
Q55 Chair: Based on your sense at the moment of the evidence so far, would it be fair to say that if rushed decisions are required there is a greater likelihood of them being bad decisions?
Professor Manning: I am not sure I would put it that way. If one just takes a question like, “Should immigration be part of the negotiations at all?”, that is much more a yes/no question than details of what exactly is the negotiated agreement. I think sometimes one can use principles to decide whether something would be good or bad without necessarily having to specify every detail of what there is. I suspect the details take quite a long time to fill out.
Q56 Tim Loughton: Professor, can we talk about some of the drivers to migration and some of the research that your committee is doing? Do you think that there is a long-term skill shortage at the heart of migration from EEA countries or are there other greater drivers than that?
Professor Manning: Certainly, employers talked a lot about skills shortages as the reason for why they employ EEA migrants, but different employers are different. For example, complaining about skills shortages would not be among high-skill employers. It would be quite common among employers of what one generally thinks of as being lower-skill employers, and most of the increase in EEA migration since 2004 has been in jobs that would be classified as low-skill, but that sort of label would be disputed by quite a lot of employers.
It did seem to us in the report that there are big differences between some jobs in which perhaps it takes eight to 10 years for someone to get up to speed in doing the job, and a job like getting an HGV licence, which takes eight to 10 weeks. If you say, “We are terribly short of people with HGV licences and there is a terrible skill shortage and that is why we use that”, you would think there are ways to resolve that in a relatively short term in a way that would not be the case if you are talking about some consultant surgeon that you are trying to recruit.
Q57 Tim Loughton: If you take those two different ends of the skills spectrum, are you saying that mostly on the high-skilled end the job vacancies requirements can be satisfied locally, or are there drivers that are effectively looking to “poach” some of those higher skills of people who are already trained so that one does not have the training component of taking people on at a more rookie stage in the UK, and on the lesser skilled end there is more of a driver that actually wages might be lower?
Professor Manning: We deal with this in our report, and it is an oversimplification but I think it is helpful to think about high skill, medium skill and lower skill. In the high skilled, the reported skill shortages have probably been here for decades. They were reporting skill shortages in engineering, skill shortages in STEM skills, these kinds of things. These have been around for a very, very long time and have very little to do with recent EEA migration.
At the medium-skill level, one has issues around again decades-long perception of weak, poor vocational education in this country and failing to provide a domestic pipeline in a number of areas. Again, finding ready-trained workers from eastern Europe in some of these job skills—the construction trade would be an example—is attractive.
At the lower-skill level, I think what happened post-2004 was that employers in lower-skill sectors found that they suddenly had access to a labour force that—well, I think perhaps the best way to put it is that they thought it was good value for money. They did not necessarily use it to drive down wages, but it was high-quality labour for the wages that they were currently paying. This gave some of those sectors a tailwind, which they have used to expand over what is now almost 15 years.
We talk a little bit about the possible impact on wages of domestic workers in the interim report that we published, and we are going to be reporting in much more detail in the final report, so I do not have conclusions on that.
There are two things that we did say: first, the UK has had a terrible decade for living standards, real wages. Some people say it is the worst decade since the Napoleonic Wars. I do not know if that is quite true, but it is pretty bad; I think everyone agrees about that. But the timing of the downturn in real wages seems much more closely tied to the financial crisis than EU expansion in 2004, and it seems to have affected all wages in all jobs across the skill spectrum and not just, for example, lower-skilled jobs where EEA migration post-2004 has been greatest. A quick reading of it is that it does not seem to us that any effects on wages that there have been have been very large, but that is not really our final word on that topic.
Q58 Tim Loughton: In the construction sector, for example, would you conjecture that if we had relied to a greater extent on UK building sector workers, then wage levels would still have deteriorated relatively regardless of the pressures from a more generous source of building workers from, say, eastern Europe? Certainly I find, and I am sure other colleagues are the same, the complaint from people who are in the building trade is that they have effectively been priced out of the market because of an influx of people particularly from eastern Europe and it is, therefore, difficult to get work and if you do get work it is very much on the employer’s terms rather than because you are a much needed—
Professor Manning: Yes. As I said, across all sectors the first look at the evidence was as I have just described. We will be doing more detailed study.
One thing that is also important to say, which is highly relevant to construction, is that all of this evidence relates to employees and many people within construction are self-employed. None of the earnings data in the main UK surveys relates to the earnings of the self-employed. For the final report we are getting access to data on the earnings of the self-employed, and we are going to try to do a piece of work on that. There is essentially zero evidence to date on the impact, if any, of immigration on the earnings of the self-employed, but a lot of the complaints would be among, for example, self-employed tradespeople within construction. It is possible, but I do not know.
Q59 Tim Loughton: Looking further afield, if there had not been the ready access of EEA workers coming into the UK, what do you think the impact would have been if as many workers had come in but from outside the EU—so if, therefore, accessibility through some sort of permit scheme was much more open to other countries? Are you doing any work as to the impact of that, i.e. would that have driven down wages even more, perhaps? Are the skills available there at all levels or is a much greater and higher level of skills available through the EEA now that we will find it difficult to replace from outside the EU in particular?
Professor Manning: Generally, if you are looking at it, you would find that there are many more people in the world as a whole at all skill levels who would want to come to the UK to work if we said they could come than we would realistically take. The reason for that is that the UK is a relatively successful economy and society delivering a relatively high level of earnings. The single biggest driver of migration flows between countries is relative income levels. We got a lot of immigration from eastern Europe because living standards are much higher here than eastern Europe. If we opened up to the whole of the world, we would expect to see much bigger flows from lower-income countries than from countries who are perhaps at similar levels of economic—
Q60 Tim Loughton: Which would drive wages down. On the last point, it was interesting—had a hearing in Bedford, I think it was, and we had a number of employers from the agricultural industry. I think we will be coming on to that. They were concerned about who is going to replace a large reliance on European workers at the moment. When we put to them, “What about if you were able to recruit more freely from far eastern countries or whatever?” they were quite enthusiastic about that on the basis that potentially there was cheaper labour to do the same job. Is that something that you foresee? Do you think, on the other end, on the higher-skilled end, that effectively because we have had to have a preference for EU citizens freely able to come into this country we have been unable to take on potentially high-skilled people—your consultant surgeons or whatever— from other parts of the world because effectively EU citizens get first preference for coming into the UK?
Professor Manning: They do not get first preference in an explicit sense. You would have to argue that it becomes—
Tim Loughton: It is much easier, though.
Professor Manning: It is much easier. Yes, there is a potential very large supply of workers from the rest of the world who, if employers were allowed, they could conceivably employ. A good example of that would be to look at what happens in the Gulf countries: very large migration flows from various other countries, mostly the subcontinent, at an extremely low level of wages. We could have that if we wanted that. I am not sure that one would necessarily say that is a model that we want, and obviously we do insist at the moment on the national minimum wage, the national living wage, which has gone up relative to earnings in recent years. To some extent, we rely on institutions like that to prevent employers employing migrant workers at the lowest wage they would be prepared to accept. If you look at, for example, how much they are earning in the Gulf, that is a long way below our minimum wage.
On the other point that you asked about, the higher-skill workers, I think that is limited partly to certain occupations, graduate occupations, more than the minimum salary thresholds. Those minimum salary thresholds I do not think are that high. They are set at the 25th percentile of the relevant pay differential. Even someone coming in under a tier 2 work permit at the lowest permissible salary—which I know has been binding in recent months so that the actual effective minimum is different—would still be reducing the average wages. If you say that if we did not have free movement we would want to have lower salary thresholds in those graduate-level jobs, I am not sure it is completely obvious that that is what you would want to do.
Q61 Chair: Following up on those points, you are obviously looking at the issue of low-skilled migration and the impact on wages. Are you also looking at the impact on terms and conditions? Again at anecdotal level, a lot of the things we get are that it is employers with maybe the most punitive working conditions or organisations like Amazon or Sports Direct, who have difficult shift patterns and a punitive approach, for example, that most heavily recruit from abroad or depend on EU migration. Have you had a look at any of those sorts of wider employment standard issues or is it just looking at wages?
Professor Manning: We will try to look at the wider issues, but that is one of the areas where it becomes difficult to say anything very definite because, although there are perhaps some data sources that could tell us about some aspects of that—prevalence of zero-hours contracts, to give one example—and although we would get some accounts of a lot of the things about the climate of management and so on, we do not really have a very easy way to find out how representative that is. We did a little bit in the report, although again it is a difficult question to answer with any certainty, to have a look at whether we thought that compliance with the minimum wage was lower among EEA workers, and a quick cut of the data showed that we did not think there was that much evidence.
Q62 Chair: What about micro-level analysis, perhaps comparing different employers within a sector, for example, looking at turnover or retention, as an indicator of whether or not people wanted to work in a particular place?
Professor Manning: I think turnover is something that we can look at and it may be sensible to look at. In the interim report, we did look at, from a different side, absenteeism rates. The impression that we got on visits as well is that it is mostly eastern European workers. They want to earn money, so if the employer says, “I need someone to work an extra shift today” or something, they are there wanting to do that, whereas a resident worker might say, “Oh, but I have to take my son to football”, all that kind of thing. The interests of these workers and the interests of employers are more closely aligned in the sense that these workers wanted as much work as the employers could give them.
Q63 Chair: To the extent that you decide there are issues in this bit of the labour market that need to be addressed, are you looking at whether there are alternative labour market mechanisms as opposed to immigration policies that might address those problems?
Professor Manning: My predecessor in this role, David Metcalf, who is now director of labour market enforcement, is looking at a lot of those issues. The impression that I got, although it is hard to quite know, is that although there is undoubtedly some abuse of the rules most of these employers are following the letter of the law. There is no illegality in what—
Q64 Chair: I suppose then the question is: might you as part of your terms of reference include looking at whether there should be new employment laws or new regulations that are just labour market regulations, or are you only looking at immigration policy options?
Professor Manning: In a number of areas—and that is one possible example—as I said earlier, you cannot really see migration policy in isolation. You cannot see it in isolation from, for example, training policy. The question for us is how far we go into that territory. I think it is more likely that we would say something like, “We think somebody needs to look at this aspect of the problem” rather than that we ourselves are going to venture into that and make very detailed recommendations in that area.
Q65 Stephen Doughty: Ultimately, a lot of this is about some pretty fundamental trade-offs. Given that there are always going to be skill shortages in certain sectors at least, given the demographic change that you have identified, particularly in Wales, Scotland and Northern Ireland, and the demand that creates if we continue to be a successful economy and society that people want to come to, in the end are we really going to see any fundamental change? Isn’t this just moving around pieces on the chessboard, maybe replacing some EU migrants with migrants from outside the EU? Where do you think this is all going to end up? Are we going to see some substantial reduction in EU migrants or are we going to have to design a system that effectively allows certainly medium and high-skilled EEA migrants to come anyway because we need them?
Professor Manning: It is clear, and I do not think there is really any dispute about it, that there will be a system in which there are some migrants who come to the UK, but quite sizeable change from the status quo is possible. Over the last 15, perhaps going on 20, years now obviously we have had much greater migration flows than we had in other periods, yet some of those other periods were periods of relative economic success. It is not that I think that you have to do this.
The distinctive feature of what has happened post-2004 is the large increase in migrants in relatively low-skilled jobs. If you look at other countries in the world, even ones that one thinks of as fairly open to migration, Canada being a good example, they would be much more restrictive on lower-skilled migration than they are on higher and medium-skilled migration. I do think that it is probably in the lower-skill levels where you would be most likely to be looking for where change would be happening.
Q66 Stephen Doughty: We probably will not see as much change in terms of the medium and higher-skilled categories?
Professor Manning: The higher skilled may be something similar to the current. Medium skill, again, does not come under the current non-EEA so there would have to be some thinking about what is appropriate for that. Most counties of the world have a bias towards more skilled migrants when it comes to work-related migration. It is easier. Those migrants have more rights. They might have an easier or any path to settlement and so on. I think it would not be that surprising if the UK in setting a migration system on its own ended up in that kind of place.
Q67 Stephen Doughty: But we will still need some lower-skilled migrants, so when you are talking about potential for substantial change, do you have any idea of the figure levels? When I looked at the Treasury analysis, for example—and I am concerned to hear that you have not been asked to input into some of those things—there were certain scenario plannings for certain reductions in the level of low-skilled migration and the impact on certain sectors in the short, medium and long term. What are we talking about here? Are we talking about a hundreds of thousands reduction, a tens of thousands reduction?
Professor Manning: It is a bit hard to say. For example, Canada does not have a low-skill, work-related route with a path to settlement. It does have some seasonal schemes and some temporary schemes, but it does not have anything that offers a low-skilled worker a path to settlement on that work-related route. I have talked to Canadians and they say, “We do get low-skilled migrants but they are coming through the family route, they are coming through the asylum and refugee route, and our view is that we do not need a low-skill, permanent, work-related route”.
Of course, for the sectors in the UK that I talked about as having had a tailwind since 2004, they understandably want that tailwind to continue. I think there are risks to that tailwind even absent changes to migration policy, but that is where it gets hard. The MAC when it makes recommendations makes them on what it thinks is in the interests of the resident population. I think that is more or less in line with one of the recommendations you had for being the objective in the report you produced before Easter. That would be the criterion that would be used.
Q68 Stephen Doughty: Okay. Given what you have said about businesses’ preparation and contingency planning—you said that many businesses are not well prepared for a changing and tighter labour market and there are obviously lots of concerns about uncertainty, particularly with the delay to the Immigration Bill and everything else and the complete lack of certainty there is overall around Brexit—could you just expand a little bit more on your worries about that? What consequences do you think that will bring? Do you think it will be more cautious decisions on investment or do you think it is just that they are going to hit the buffers and suddenly realise, “We do not have these people, we are in trouble here”?
Professor Manning: I think it is a variety. When we met with employers and so on, this sense of pervasive uncertainty was there the whole time because they do not know what to plan. It is almost that the risks are so widely spread, the scenarios are so widely spread, that it is impossible to plan for anything in particular.
Q69 Stephen Doughty: Is that leading to paralysis or is it leading to caution in taking decisions?
Professor Manning: Some employers told us they were putting, for example, some expansion plans on hold because of this.
Q70 Stephen Doughty: In which sectors?
Professor Manning: I cannot remember exactly what those sectors were. It would be individual employers. I would not particularly want to generalise to the sector, but it is employers therein. Some are doing that, but our sense of it was wider than just the migration-related issues. The unemployment rate is at a 40-year low, but one of the central puzzles in the UK labour market has been why wage growth has been so weak when the labour market seems so tight.
Employers did not really like the idea that if you are short of labour in a tight labour market, what we want you to do in a well-functioning market is start competing on wages. Just as in a well-functioning product market we expect producers and retailers to compete on price, we expect employers to compete on wages and maybe other conditions as well. They did not really seem to be thinking that kind of way, but I came away with the impression that many of them may be forced to in the not-too-distant future.
Q71 Stephen Doughty: Lastly, do you have confidence in the Home Office to be able to design and operate a system that is going to deal with this level of complexity, not least given the events of recent days, the issues we have already seen over the 3.5 million EU citizens here and wrong deportation letters being sent out? Do you have confidence that whatever decision is finally made, it is going to be able to be implemented and operated effectively?
Professor Manning: We do not get involved with the operational details. Again, I do not really have any more insight into that than what we have read. It should be said that, again from meeting with employers, it would be rare to have them express confidence. Even with some of the things that, for example, I think the Home Office think they have been very clear about, I am not quite sure that the message has gone down to employers. We went to Northern Ireland last week and a number of employers seemed very uncertain still about what the rights would be of EEA citizens who came in the implementation period, even though I think the Home Office thinks it has been relatively clear about that. They wanted to know what to tell their EEA workers. Small and medium businesses are nervous about it; they cannot ask a lawyer to do this. Things like clear guidance for employers about what this is and what they can tell their EEA workers come across as sensible.
In terms of delivering the final system, we just concentrate on doing our job, making the recommendations that we think are best. The MAC has always operated on the principle that we make recommendations but we recognise the right of the Government to ultimately make policy decisions, and we do not really get into commenting on those policy decisions if they are not in—
Stephen Doughty: What you have picked up from employers is certainly what I picked up from employers in my own constituency and elsewhere—lack of confidence and lack of clarity. We have talked previously in the Committee about trying to read the information on the internet about the current set of rules. Trying to understand that is a complete minefield, so it is interesting that you have picked up the same.
Q72 Stuart C. McDonald: Picking up on Stephen Doughty’s last point there, is there not then a danger that you end up producing your final report with certain recommendations or pointers as to what the immigration system should look like but you then find that the Home Office is not in a position to put that in place? Shouldn’t you take into account Home Office capacity or at least look at it to an extent?
Professor Manning: We concentrate just on doing what we have been asked to do. As I said, we operate on the basis that we recognise the right of the Government to do what they want with the reports that we produce. Obviously, we like it if the Government adopt the things that we think are good ideas, but we live with the possibility that that may not always happen.
Q73 Stuart C. McDonald: Yes, they might not want to or they might not be able to. Going on from that, in your answers to Mr Doughty you were speaking about the possibility of sizeable change. Again, based on some of our recent inquiries, I might not really see the Home Office as capable of sizeable change in a short period of time. Is there not a different way of doing things in that, for example, when you come to the end of the implementation period you have a starting point of continuing free movement or at least a light-touch scheme—for example, just registration of EU nationals—and you perhaps identify a sector or a couple of sectors where you begin to put in place restrictions if you think they are justified on the evidence rather than doing this in a wholesale method?
Professor Manning: It is one option that at the end of the implementation period you taper in the new system in order to lessen the impact, but one of the problems that you alluded to, and others have alluded to as well, is that adds more complexity to the system because suddenly you need to know what rules are in place this month and how it is going to change next month and so on. I think that needs to be weighed.
Q74 Stuart C. McDonald: That is not too different from the way the immigration rules seem to operate at the moment, though, is it? It is constantly changing.
Professor Manning: Yes, but again change for change’s sake is problematic. Obviously, change to make things better is generally kind of good.
I think particularly when it comes to lower-skill sectors, all the organised voices are on sectoral lines, but there is a question about whether that is the appropriate approach for lower-skill workers. Lower-skill workers are much more mobile across sectors almost by definition. They do not have a specialist skill, which means that more or less their employment is confined to one sector. If you suddenly say, “This sector gets easier access to migrant labour”, you are essentially privileging that sector relative to another one, when you might want to have them competing on a level playing field with each other.
Q75 Stuart C. McDonald: Would there be an alternative way to try to have a broader scheme that focuses on low-skilled labour, then? If you are saying that there are difficulties in doing it on a sector-by-sector basis, is there a way that you can identify or define in essence what low-skilled labour is? Because that is one of the issues we have had: what is low-skilled labour?
Professor Manning: Often it will be defined by what it is not. It is someone in a job that is not classified as high or medium skill, so it is all the rest. One has to also understand that any changes are going to be affecting the flow more than the stock. Sometimes there is a risk that people talk as if the stock is suddenly going to collapse, where it is more about restricting the flow. Even in the extreme case where you did not have a low-skill work migration route, for example, there would quite probably be a flow of workers on family unification from EEA workers who are already here, so that becomes a potential supply as well. I do not think even in the extreme case it is necessarily quite as cliff-edge as some people seem to imply.
Q76 Stuart C. McDonald: Could I just raise a quick question that ties in or follows on from what you said about Government doing what they want with your reports? There has been concern expressed in some quarters that the Home Office essentially writes your commission and there is no input from this Committee or any other organisation at all—no real scrutiny of the scope of that commission. Have you ever been concerned with exactly the scope of your commission? Have you ever felt that things are maybe left out or that you would like to comment on certain things that you have not really been asked to and that you feel almost restricted in your response?
To give you one concrete example, I think most controversial would be the advice that the Government sought on spouse visas, where essentially the question was framed in such a way that the MAC had to come back and provide a couple of answers, which ever since have been used to justify the financial threshold, whereas the MAC in itself goes out of its way to say, “This is purely because of the way we were commissioned”.
Professor Manning: That particular one was before my time either as member or chair. I have not felt that the commissions that we have been given, while I have been a member or chair, have been so constrained as to really affect it. Hypothetically, yes, and I would not be comfortable about it in that circumstance, but at the end of the day if it was very, very serious, we have the freedom to write what we want. If the Government say, “That is not what we asked for” we just say, “Sorry, we misunderstood”.
Q77 Stuart C. McDonald: Would it be impossible in terms of workload, for example, if this Committee was allowed to commission short pieces of work from the MAC, or the Welsh Assembly or the Scottish Government for example?
Professor Manning: I do not have any view one way or the other on that. We would be happy to take commissions, but it is not something that we would express a view on.
Q78 Stuart C. McDonald: In your interim report, have you identified the sectors of the economy that would struggle most if the EEA labour supply was restricted and what are the particular hurdles those sectors are facing?
Professor Manning: The sectors that would struggle most depends on what the future system is, but if one thinks that it is going to bear down more heavily on lower-skill migration, I think you would be looking at agriculture, food manufacturing, hospitality, and some other ones like maybe warehousing and things like that. There is also some degree of concern around social care, but social care at the moment is more heavily dependent across the country as a whole on non-EEA workers. For the key jobs like care assistant, they do not have a work-related route open to them, so they rely on picking up migrants through these family routes or refugee routes. The social care issue is a bit wider than just the EEA.
Q79 Stuart C. McDonald: Have you made up your mind yet as a committee whether there are particular sectors that should continue to have access to free movement of European labour, or is that work that is still to happen?
Professor Manning: That will be one of the questions we will potentially seek to answer in the final report about the costs, benefits, advantages and disadvantages of sectoral-based schemes.
Q80 Stuart C. McDonald: Going forward, say we manage to get in place an initial system, as time progresses the task that the Government then face is trying to analyse how we should change the system for particular sectors and whether there should be tweaks to a particular sector. Do they have the capacity to do this analysis of what each sector of the economy requires? Would that be something that the MAC might end up having to do?
Professor Manning: It is possible that the MAC might be asked to do it. The Government can, but they do not have to, ask us migration-related questions. They can choose to do it in-house or not. They have made lots of changes to the immigration rules without consulting us and they do not have to do that. Both of those possibilities are open.
Q81 Stuart C. McDonald: Do I have time for a couple of quick questions on regional immigration? Thank you, Chair. Obviously, a good part of the report looks at some of the evidence that has been submitted on the possibility of a regional or differentiated system, and your consideration of that is ongoing. To pick up on one or two of the alternative policies that seem to be suggested almost in passing, one might be described as particularly controversial, I think, if I could put it like that. That is raising the state pension age. Realistically, that is something that I do not think anyone is going to be rushing to put in their manifesto. Is it a realistic alternative to immigration policy?
Professor Manning: The simulations that we put in from the ONS are the actual proposals that are currently proposed, so someone put them in. I am not sure they appeared in any manifesto necessarily, but it is current Government policy. The reality is that the state retirement age was set over 100 years ago when most people did not actually live to ever see retirement. As people have lived longer and healthier lives, I think it is natural to seek to extend people’s working lives.
Q82 Stuart C. McDonald: You are not advocating a further increase in the pension age?
Professor Manning: That would be something I would regard as going rather outside our remit, but the point that we are trying to make is that you would need very large increases in immigration to maintain dependency ratios, for example, at current levels, whereas if the state pension age changes you get more bang for the buck, really.
Stuart C. McDonald: Yes, it can make a difference more quickly.
Professor Manning: Yes.
Q83 Stuart C. McDonald: Have you done a detailed calculation of how much additional immigration you would need even just to close the gap in terms of the dependency ratio, or even if you are not keeping it the same as it is just now, just alleviating the deterioration in it?
Professor Manning: It depends how much you want to do. For example, in the case of Scotland the baseline projections are that the working-age population in the next 20 years is going to go up by 1% and the over-65s go up by 25% or something like that. The simple way to understand how much migration you would need to stabilise that is that you would need migration over that 20 years of 25% of the labour force to bridge the gap. That is a huge amount. That is a faster rate than we have had over the past 20 years. Obviously, you can have some of that and it will alleviate that, but it is hard.
Q84 Stuart C. McDonald: Sure. What I am getting at is that it would be very handy to know, for example, even if we wanted Scotland to keep up with the dependency ratio of the rest of the United Kingdom how far you would have to go to do that—not completely but to maintain it as it is.
Professor Manning: You could do that kind of calculation. It does not require that much difficulty, because you just need to work out what the required increase in the labour force is and that tells you how many migrants you are going to need over that time horizon. It is not that difficult to calculate.
Q85 Stuart C. McDonald: That is useful. We have had discussions before about the issue of retention and you have also obviously been speaking to people in Canada. There was a recent publication I think by the Treasury in Canada, a review of their provincial nominee programme there. I am not sure if it was the first time but it is certainly one of the best analyses, I think, so far about the actual figures about retention rates. It seemed to suggest that in the majority of provinces you are looking at retention rates even over a decade of 80% to 90%. It does seem to be something that can work. Is that something you might look at when you are considering options?
Professor Manning: We will be looking at international experience and we will be looking at the regional dimensions, so possibly. In the Canadian case there is a huge amount of variation. I think the general rule is that areas that are booming and thriving will have retention rates that are like that, but if you go to the more remote areas and areas perhaps not doing so well economically, like the Atlantic provinces, that is more like 40% or something.
Q86 Stuart C. McDonald: Yes, I think they have identified that there is a challenge in the Atlantic provinces: places like Manitoba, for example, which I do not think is an economic powerhouse—I might be completely wrong about that. I understand that there are some areas that are not falling into the description of economic powerhouses but that nevertheless, just by focusing their targeting efforts, managed to retain 80%.
Professor Manning: Yes. I think Manitoba economically, although to many of us it does not sound the most appealing place to live maybe, is actually doing—
Stephen Doughty: My brother works there in the north. There is lots going on.
Professor Manning: There is lots going on there, so it is booming economically. I do not think of that as really a remote, struggling part of Canada.
Q87 Stuart C. McDonald: Okay. My final request for information is something that has been raised in the Committee before. Sometimes it is not easy to get information from the Home Office about how different visa systems for non-EEA migrants are working out across the different parts of the United Kingdom. For example, for tier 2 visas, it is not always easy to get information about how many tier 2 sponsors there are in Scotland and how many tier 2 workers actually end up there. Similar questions would arise in terms of the entrepreneur visa and so on. That would help inform debate about whether or not there are tweaks that could be made to them.
Professor Manning: We are in favour of always having more data and using that because we are an evidence-based body. We are trying to get better data, not just on the regional aspect, but it is not totally straightforward. It is something that I am always trying to press forward, the principle that you are going to have better policy if you have a better evidence base.
Q88 Kirstene Hair: My constituency in Angus in the north-east of Scotland is heavily reliant on overseas workers for our soft fruit industry, and migrants obviously make a substantial contribution to the local economy. Has the MAC undertaken any research on the impact of leaving the EU without arrangements in place for seasonal workers in places such as Angus?
Professor Manning: I am not quite sure what you mean by places such as Angus. As we have gone through the country, I met a soft fruit farmer in Scotland. They are feeling that they are struggling right now to recruit labour. They struggled last season and they are worried about the coming season. I think there are different ways of seeing the very real problems that they are having. There has not currently been any change to the migration rules that restricts their access to the workers that they had hired a couple of years ago. What has happened, though—well, there are a number of factors, but one of them, for example, is that the fall in the value of the pound following the referendum meant that for these workers, who previously came to the UK but have other options in other EU countries, suddenly UK wages fell by almost 15%.
The problem that has happened is that these workers are still there for hire. There are no changes to the immigration rules stopping them hiring them, but they are no longer available at a wage that probably your constituent feels they can afford. Most of the ones that we have talked about feel their margins are really squeezed.
That is one way of looking at the problem that they face. These workers have options. Because they are seasonal workers they are very mobile. They do not have to come to the UK; they have other options. As the eurozone revives as well, exchange rate movements affect that. The problem they are facing at the moment has not really been caused by any change in the migration rules, although there are issues about whether the climate has altered in a way that makes the workers less likely to come here.
The other way of looking at it is that they used to have the seasonal agricultural workers scheme, and the MAC, when it did a report before my time on it, expressed generally favourable views of that. The Government decided to discontinue that in 2013. What that scheme had done was to essentially give agriculture privileged access to a source of labour that did not have so many other options, which at the time were Romanians and Bulgarians but now they would be looking to go further afield, say Ukrainians or Belarussians or whatever.
Q89 Kirstene Hair: Can I suggest from that information that the submissions to your consultation from the farming community were largely in support of the reintroduction of the seasonal migrant workers scheme, and that you do not believe there are any other alternatives to sourcing it, which has now become quite an urgent issue, other than the reintroduction of a similar scheme that was abandoned in 2013?
Professor Manning: I think the alternative is that they compete for labour on a level basis with everybody else, which is the current status quo, without the special scheme for them. That would likely put upward pressure on the wages they have to offer, which would then feed through ultimately into prices and so on. I understand that is not terribly attractive for the individual farmers. That may or may not be so attractive from the perspective of the UK economy as a whole.
Most other countries, including other EU countries, do have some form of seasonal agricultural workers scheme that essentially gives the sector privileged access to a source of labour that does not have many high-wage alternatives, and so even minimum wage in the UK is very attractive. I think it is difficult for very seasonal work to fill those jobs with settled workers because you need a large number of people in one place for a very short period of time. That is the reason most countries have a seasonal agricultural workers scheme. It is possible. It is possible, and other countries use it a lot. I would not say I think it is the only option.
Q90 Kirstene Hair: Okay. Obviously a number of farmers in my constituency and, indeed, across the UK are reporting real difficulties now. It has become a problem where they have lost almost 15% of their workforce, and specifically at the end of the season they are struggling to recruit. This year we saw fruit left to rot in fields. Do you agree that the submissions that you received reiterated the urgency that I have described? You mentioned that you think that is not the only alternative; that is not the only option. Could you give us a bit more detail of what another suggestion may be that would help alleviate this?
Professor Manning: The other option is to let the current situation run, which basically does not give them special privileged access to labour—it would have to be some non-EU countries at the moment—and that forces them to compete on a level playing field with someone else. It is quite likely that the sector as a whole would lose out from that competition, and obviously people in that sector are not likely to look favourably on that.
I know from my interactions with farmers that they feel there is a real sense of urgency now, and they get a little bit frustrated when I say, “Our work is about the migration system in 2021 at the latest”. We are not writing a report next week on whether a new source should be introduced for the coming season, and I suspect that even for the coming season it may already be a bit too late to think about something for that. I am not too sure how quickly they think they could turn things around, but I would think time is running out.
Q91 Douglas Ross: You have had a couple of discussions so far about tier 2 visas. Can I ask how well you think it is performing at the moment, the cap on tier 2 visas?
Professor Manning: The cap, as I am sure you are aware, has been binding for the last few months.
Douglas Ross: Four months. That is right.
Professor Manning: Four months, yes. That had only happened once before, and before it had only been for a couple of months. This time it looks like it is a bit more permanent. I think it is not entirely clear what exactly have been the drivers of the binding cap. This perhaps goes back to the questions earlier about the information, for example, on where the increase in applications has come from, what sorts of jobs they are, and what regions it is.
Q92 Douglas Ross: I will come to that; it is a point I wanted to raise. Previously we had that information in 2013 about the location of tier 2 sponsors. It is five years since we have had that information, but it is just in the last four months that we have seen the cap being reached. I am not convinced that that lack of information would be a reason for the cap being reached.
Professor Manning: No, I did not mean to say that. I am saying I do not know quite exactly why the cap has been reached or where the increase in applications has come from, because that current data is not available. Of course, in some sense it exists somewhere, but I have not seen it.
Q93 Douglas Ross: What can your committee do to look into that, then? Are you doing anything further on that?
Professor Manning: At the moment we are not looking into that because it is not part of a current commission. Obviously we are in a general sense interested in it, because if we think about recommendations for a future system that might or might not include something resembling a tier 2, how it is currently operating is kind of relevant to us. We are not the first responders to the cap being met, if you want to put it that way.
Q94 Douglas Ross: You are monitoring it in case that should form an element of your work in the future?
Professor Manning: Yes. I do not have information at the moment, for example, on where the increase in applications has come from or what jobs are being turned down. Obviously we have newspaper reports of individual cases but, I do not know, if you really do an analysis of everything that is happening, what has been happening.
Q95 Douglas Ross: Given your role and what your committee does, can you understand any reason why the information that Stuart McDonald was mentioning earlier, and I mentioned to the Home Secretary when she appeared before us before recess, should not be available?
Professor Manning: No. I am in favour of them generally publishing that information.
Q96 Douglas Ross: Yes, you said that to Stuart McDonald, but can you think of any reason why that could not be published if it was previously in 2013? We knew that 63% of tier 2 sponsors were in London, so if we were able to know that in 2013 can you think of any reason why we should not be able to know that now? If not, you obviously agree that that information would assist planning going forward.
Professor Manning: I guess I can think of a reason, but my personal view is that it would be helpful if this information was published on a more regular basis. It would not just be the regional thing; it would be the occupational distribution and so on. I think that probably would be helpful to users of the systems as well. We went up to Edinburgh in February and had a meeting with some NHS representatives there. We asked them, “Are you aware of people in NHS Scotland having applications turned down?” They said they were not at that time, but obviously we are now a couple of months on from that, and I do not know if that is the case now.
Q97 Douglas Ross: I do not want to go too much into an issue that I have raised a number of times at this Committee. It is not directly NHS Scotland, but we have an issue in Moray with not being able to recruit optometrists because we have reached the cap for the last four months. We were previously able to get them in with a tier 2 sponsor, but we have not been able to for the last four months. It is health-related, although not NHS, and it is causing some problems.
Professor Manning: Yes. There is a cap in the system, and when the cap binds there is a mechanism that decides who should get preference. At the moment those on the shortage occupation list would get first preference. After that there is PhD level, effectively—that is probably rather small—and then it is on salary. Optometrists are likely to be towards the lower end and not meet the salary thresholds that we have seen in the past few months.
Q98 Chair: Following up on a couple of those further issues, have you been asked to look as part of the Brexit options at policies that would also meet the net migration target?
Professor Manning: No, we have never been asked to do that. The MAC has always based its recommendations on what it thinks is in the interests of the resident population. Sometimes that might be a more restrictive policy recommendation, sometimes it might be a less restrictive one, but that is what we have always done and continue to do.
Q99 Chair: Do you think that in practice any of the options that you are likely to look at would deliver on the net migration target, if you assume all other things being equal on non-EU migration?
Professor Manning: It is hard to say. The target is not being met if you take the IPS figures on non-EU at the moment. Now it is net migration, so conceivably making the UK such an unpleasant place to be that lots and lots of people leave would mean you could have huge net emigration of EU citizens, which would help you meet the target. These migration figures can be extremely volatile. We have seen that with the EU net migration. It is not impossible, but the thing with the current system that we have is you cannot guarantee it because there is only a numerical cap in one small part of the system, which is the tier 2 general that we have been talking about, and there is no guarantee that the other parts of the system can deliver an overall net migration.
Q100 Chair: If you assume—just for the sake of working out what the Brexit policy options might be and for EU migration—that all other things remain equal on non-EU migration, on British emigration, and so on, and just looked at EU migration, would it be accurate to say that you would need net emigration of EU citizens in order to meet the net migration targets?
Professor Manning: I think that is the current situation, and that would remain the situation unless net migration of non-EU or British citizens changed. Those changes are not impossible because all these things can be quite volatile.
Q101 Chair: Again, just assuming all other things are equal in terms of what the EU options might be, are any of the options that you are likely to look at likely to end up with net emigration of EU citizens?
Professor Manning: I think whether we end up with net emigration depends much more on how the British economy as a whole is faring with regard to the rest of the EU. This is mostly people migrating for work. They are going to go where the opportunities are. If the opportunities stop being in one place and are more somewhere else, then they start going in that direction. We are used to the UK labour market being stronger than most of the eurozone. The eurozone has been reviving lately, but the UK labour market in terms of unemployment is fairly robust at the moment. Of course, if there was some serious recession here that did not happen in the rest of Europe, that would possibly cause net emigration.
Q102 Chair: Does that mean it might be possible to meet the net migration target if there was a huge recession here?
Professor Manning: If the implication is that anyone is proposing inducing a world recession to meet that, I am not sure that is quite the case. Spain had an absolutely massive recession and a financial crisis, and I think went from net immigration of plus 300,000 a year to something like minus 300,000 a year.
Q103 Chair: But that is not likely to be a MAC recommendation as a way to meet the net migration target.
Professor Manning: I do not want to give too much detail at this stage, but I think it is very fair to say it is very unlikely that that would form part of our recommendations.
Q104 Chair: One other thing: we did not ask you earlier about employment agencies. I think that is included in the scope of your EU programme. What are you looking at on agencies?
Professor Manning: One thing is we will be looking at whether the way in which EEA migrants get jobs is different from the way that UK residents get jobs. The MAC previously has done a bit of work on that, and I would expect that conclusion to be more or less the same, which is that agencies are more important for EEA migrants than for UK residents. We know that some of them are located here and some of them are located in, for example, eastern Europe, but the balance of the proportions is something that we do not really know. I think these intermediaries have been quite important in facilitating some of these flows. They can be quite effective. One of the farmers that we visited said that if suddenly there was a rush on they would have contacts in Romania, and people would be on the coach more or less that evening to arrive 24 hours later.
Q105 Chair: We were asking you about the wages and so on; that we were in supposedly a tight labour market but might not be behaving like that in practice. Does the existence of these employment agencies and their ability to directly recruit at that pace mean that in practice there is no tight labour market for low-skilled workers?
Professor Manning: That is a good question. That is one of the things we will be looking at. Where there are conventional measures of how tight a labour market is, we look at the unemployment rate, the employment population rate, and whether they quite work. We know that the relationship between wage growth and unemployment that traditionally exists has broken down in recent years; not just in the UK, it is a more general phenomenon. One possible hypothesis—but there are other hypotheses as well—is that we are not measuring labour market tightness correctly anymore and that in some of these sectors they have had essentially in the past from their individual perspective what is more or less an unlimited supply of labour at the current wage. For a number of reasons, not just changes to the migration rules, that situation may be changing anyway.
Q106 Chair: Let me ask two follow-up questions that go back to the questions I asked at the beginning. On this interaction between enforcement, labour market measures and immigration measures, will you also be looking at issues around both enforcement and labour market standards where agencies are involved? Or is that beyond the scope of what you are looking at?
Professor Manning: Possibly. I think I will be looking to see a little more before deciding exactly what we are going to do. I will look at what the new labour market enforcement—the David Metcalf thing—produces on that. Obviously there is a bit of that in the Taylor review as well. My first impression is that most of them are following the letter of the law. There is undoubtedly some abuse, but most of them are following the letter of the law, but they will be paying minimum wage. That is the minimum legal wage, but it is not against the law to pay the minimum wage.
Q107 Chair: Yes. I think that is why my question is partly about whether either you, or David Metcalf, or anybody else, is also looking at other kinds of labour market regulations or rules and so on. It is about whether the nature of the labour market has just changed so substantially with the operation of the agencies, with EU migration and so on, that that also changes the issues around labour market regulation as well as labour enforcement.
Professor Manning: I believe those are a lot of the issues that David Metcalf is going to be looking at. We have not really gone into those in detail. A lot of it is, I think, wider than just migration. It is things about the gig economy and so on. Immigration is part of that, but it is wider than zero-hours contracts and wider than just migrants.
Q108 Chair: The final question from me: I asked you earlier whether or not there were decisions that could be made over the summer as part of the negotiations process that might pre-empt or need your evidence base Suppose the Government decided, for example, on something like preferential access for EU workers as part of the negotiations, or suppose they decided to mirror the tier 2 level, for example, with an arrangement to maintain free movement for jobs above a certain salary level, or something like that. If there was that level of detail do you think that the Government would be able to make decisions on that level of detail of policy on the basis of the publicly available evidence, or do you think that level of detail of policy would be better done with more research and more of the level of granular research that you are looking at?
Professor Manning: I tend to have the belief that making the right decision is more important than rushing into a decision, but I understand that with the dynamics of the negotiations there is a timetable there that you cannot pick and choose. Sometimes you might have to make quick decisions when you might, in a perfect world, prefer to be able to take a bit longer. I would sort of understand why conceivably the Government might end up in that situation, because the clock is ticking on other things.
Q109 Chair: We are very grateful for your evidence and the detail of your evidence. In our previous report we recommended the strengthening of the MAC to give you more independence, and more ability to commission your own research, and to do so on a rolling basis.
Professor Manning: Yes. We appreciated that.
Chair: Do you have any personal thoughts on our recommendations on that, and is there anything we should reflect on further?
Professor Manning: Yes, I did. First of all, I did interpret it, and I hope rightfully, as a sort of vote of confidence in the way the MAC has operated in the past. It was mostly due to my predecessor, but I hope to continue that.
One point on our ability to commission our own research: in our framework agreement there is the provision for us to work on things that we think will be related to possible future remits. From my perspective we do not feel totally constrained by having an active commission from the Government. As you know, there was a period of six months last year when we did not have an active commission, and we started doing Brexit-related work in that situation. My interpretation is we are not quite as constrained as that.
You also made the recommendation of an annual migration report, and that, I think, is interesting. I have slightly mixed views about it. I am not sure that the migration questions lend themselves to an annual cycle in quite the same way that, for example, the OBR work does or the Low Pay Commission does when every year they would be recommending an annual increase. The migration issues are more varied, and not every issue comes up every year. The current way of operating in some sense is that, and I would not want any annual report to become a tick-box exercise and so on.
I do think there are some good ideas. You gave the example, for example, of the Canadian annual report to Parliament and so on as a possible model. In terms of content, that report is not a million miles away from the Home Office immigration statistics at the moment, but what is rather different is the way in which it is framed. They do a sort of consultation about it. I think the last consultation starts off by saying, “We are laying out here the numbers that the Canadian Government will welcome in the coming year”. There are two elements of that. There is “will”; it is a range rather than a single target for all the different sorts of migration, and then actual outturns against that target. Both the Canadians and the Australians think it important for public confidence to have a sense of control and so on. That is the “will” part of it, “We will have these numbers”.
The “welcome” part of it is, “Once people are here they are welcome. We do not let in everybody, but once they are here they are welcome”. I think your Committee said to do more about managing the impacts of migration when people are here, and that is also something I think will be a good idea.
Chair: Thank you very much, Professor Manning. We really appreciate your time this afternoon. That concludes our evidence session.