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David Davis (Haltemprice and Howden) (Con): I thank the Home Secretary for early sight of his statement although, frankly, I wish I had seen it even earlier—six months earlier to be precise. The enlargement of the European Union is not a concept that has suddenly emerged in the past six weeks. It has been on the agenda for years.

Britain's strategy for the free movement of labour, which impacts on British jobs and our public services, should have been clear, consistent and planned well in advance. Yet in the past few weeks, we have witnessed the astonishing spectacle of the Prime Minister inventing policy at the Dispatch Box, being contradicted by his official spokesman within hours, being put in his place by the Home Secretary and being blatantly ignored by the Minister for Europe. We have seen Ministers rushing to crisis meetings in Downing street to hammer out plans just weeks before enlargement takes place.

Nevertheless, the Government have, at last, recognised that there is a problem—albeit that they have misdiagnosed it and come up with a bureaucratic solution that carries unnecessary risks. The problems created by enlargement result from the massive differences in wages between the accession states and the United Kingdom. That is why the Home Office's predictions on new immigrants are wrong and have been challenged, not least by the Home Secretary's own advisers. A large number of people will come to Britain—some as benefit tourists, but most seeking work. That will put huge pressure on housing and our public services. The most straightforward and fair method of dealing with this is to use the work permit system, which allows us to control month by month how many people come in and the skills they bring.

Today, the Home Secretary has announced that, instead, he is toughening benefit rules by tightening the habitual residence test and access to benefits. We agree

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that benefit tourism needs to be stopped. Indeed, a Conservative Government introduced the habitual residence test under much criticism from the Labour party at the time. However, is he entirely satisfied that the provisions are compatible with our obligations under EC law? Is he confident that they will be sustainable in the British courts? What will the Government do if people from accession countries come to the UK—as they are perfectly entitled to do—but have no employment? Will they deport them? Their record on deportation has not been very successful so far. What will happen if people are left destitute? What if they have children? Will they be left to sleep on the streets? The legal position is unclear and the problem is compounded by the fact that we have only a few weeks before it can be tested.

Have the Government considered what impact large numbers of workers may have on our already overstretched public services? According to the Government's estimates, the UK already needs to build 39,000 more houses every year. Does the Home Secretary not therefore agree that mass migration may exacerbate the housing problem? Considering that London and the south-east is the preferred destination for two thirds of immigrants, has he assessed the impact on housing, health and education services?

Will the Home Secretary explain why he has decided not to use work permits? What are the advantages of reinventing the wheel through this clumsy and bureaucratic new registration scheme? How is it better than the proven, existing work permit scheme? Without any methods of enforcement, this is little more than another headline-grabbing initiative.

The Home Secretary said that it will be incumbent on the employer to check that the employee has registered with the scheme, but only eight people have ever been found guilty of employing an illegal immigrant. Who is going to enforce this system? He doubtless hopes that identity cards for immigrants will give him a tough-sounding headline, but the crux of the problem will arise in the next two years, and it will start in two months. When will his ID card system bite? Not, I warrant, in two months, or even in two years.

If the Government are right in saying that only 13,000 people from accession countries will come to work in Britain, the work permit system would cope perfectly well. After all, in 2002 Britain granted more than 120,000 work permits—as the Home Secretary said, the figure for this year is 175,000—including almost 14,000 to people from countries in eastern Europe. In other words, we already process 1,000 more eastern Europeans than the Government are forecasting will come here.

A policy of work permits would not mean slamming the door on migration but would allow us to control exactly how many people come to the UK, and what skills they bring, on a month-by-month basis. Why are work permits good enough for Sweden and the rest of Europe, but not for us? Have we not simply adopted the lesser of two options not on the ground of what is best for Britain, but to avoid the accusation of a U-turn or climbdown? Is that not what happens when crucial decisions are taken in crisis meetings at the last minute?

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This is not so much a policy of closing the stable door after the horse has bolted, as opening it to see whether the horse wants to run. Yet again, the British people have been badly served by this Government. The shambles that we have witnessed surrounding this policy sums up why Britain deserves better.

Mr. Blunkett: I am genuinely bewildered as to whether the hon. Gentleman—[Hon. Members: "The right hon. Gentleman."] I must get it right. I am genuinely bewildered as to whether the right hon. Gentleman is in favour of allowing people to come here to work, or not. Listening to him, there seems to be one difference between us: whether there should be a pre-entry system of work permits, or a post-entry registration scheme. The CBI, the TUC and the British Chambers of Commerce favour the post-entry registration scheme that we propose. The director general of the BCC is on record as saying:

That is clearly what it would mean, and for the reasons that I am about to spell out.

The existing work permit scheme is for those who do not have automatic right of entry to the United Kingdom. They have to apply and to have a pre-ordained job before they come here, and the employer has to apply to the work permit system—it is based in my own city—to obtain a permit to get the person in. That costs the individual a great deal of money, and the employer a great deal of time. Doing that for those who have right of entry—those who can come into the economy and work legally—would simply push them into the sub-economy, where they would be exploited by the worst employers. The minimum wage and working conditions for existing employees would be undercut, and national insurance and tax would not be paid. What sort of economy is that? What sort of politics is that?

It is the politics of despair and immorality because it pushes employers and individuals into an immoral situation in which, in order to compete, they start to undercut the rate by employing clandestine workers. Our policy is to clamp down on clandestine working and allow those who have access to come freely into our country to work freely, but they should do so openly, pay their dues and be entitled to their residency.

Under the residency rules, we should be able to apply stringent tests to avoid people claiming benefits because there can be only two reasons why people wish to come here: to work to earn their living, or to draw down on services. If we are stopping people drawing down on services and benefits yet allowing them to work legally, what on earth are the Opposition talking about? What could be the risk? I have never said that there would be only 13,000 people.

David Davis: Yes, you did.

Mr. Blunkett: No, I have not. We published independent research on the website last summer, with its methodology. The figure of 13,000 has never crossed my lips. We will not know the situation until people apply for the vacancies that exist in our economy,

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including, it must be said, in construction. Building houses requires construction workers, and if we get construction workers to fill vacancies, we will actually be able to build houses—that is also a simple economic reality.

Conservative Members preach flexibility, free movement of capital and labour and an economy of balance in which labour market forces balance out those who want jobs with the jobs available. They say that that is good for Britain, but the minute we do it, they are against it on purely opportunistic grounds. Well, not all of them, because the hon. Member for Woking (Mr. Malins), who is sitting on the Opposition Front Bench—

The Parliamentary Under-Secretary of State for the Home Department (Caroline Flint): He has gone.

Mr. Blunkett: No wonder, because the hon. Gentleman must have known that I would quote what he said on this morning's "Today" programme. He said:

I agree entirely with him. If people want to come and work in Britain openly and legally, that is right. If they want to come and claim our benefits, that is wrong. I commend to the House what we have done.

Mr. Mark Oaten (Winchester) (LD): I thank the Home Secretary for advance notice of his statement, but I hope that he will at least acknowledge that the Government have left it very late in the day to resolve these critical issues. With just weeks before the accession countries join, today's announcement is either the result of bad planning, a panic response to tabloid pressure or the sign of a disagreement in the Cabinet. While I welcome the positive language that he used on migration, why has he decided to introduce the measures from 1 May? He acknowledged that he was not sure of the figures involved, so would it not have made more sense to wait and base the policy on fact rather than prediction, and to review the situation in six months to determine whether there really is a difficulty with migration and benefit abuse?

With that in mind, will the Home Secretary take it upon himself to produce a quarterly report on migration figures from the new countries so that we can see the facts? When deciding on work registration certificates, will he clarify whether restrictions will be imposed on issuing certificates in areas with job shortages? What right of appeal will individuals claiming those certificates or benefits have if they are refused?

Finally, does not the whole episode show two things? On Europe, the Government must decide if they really want a full Europe or a two-tier Europe, and, on immigration, they must decide whether they want a policy based on facts or on tabloid fiction.

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