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Keith Vaz (Leicester, East) (Lab): I accept that the Minister is painting a picture before moving on to the detail of the scheme, but may I bring him back to the subject of our debate? I congratulate him on all the work he has done to bring together 80 separate schemes, but is he satisfied that his new system will deal with the acute shortage of chefs in Indian and Bangladeshi restaurants?

Mr. McNulty: I am entirely satisfied that that is the case, but I told the sector that there are already problems with shortages. It is no good holding a fruitless debate about the impact or otherwise of the points-based system, as the sector broadly agrees that it will help, rather than hinder, recruitment. I am more than happy, however, to meet it to talk about its concerns about current shortages and training. It agrees that the points-based system will help, but we need to address the serious problems that already exist.

Mr. Andrew Smith (Oxford, East) (Lab): I welcome my hon. Friend's commitment to work with the
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restaurant sector on the issue, which is enormously important. Into which category will the workers in question fall under the points-based scheme? Is it the second category, under which relatively skilled people can stay after five years, or is it the third category of unskilled workers who have to go back after a year?

Mr. McNulty: The answer to my right hon. Friend, in short, is both. Once the sector has worked with the skills advisory body to establish that there is a shortage, those with skills who are performing skilled roles as chefs, under-chefs and such roles in restaurants can come in under tier 2. If it can be shown—from discussions with the sector I think that it can be—that neither the UK labour market nor the wider EU labour market can fill the gaps in the sector, those with a much lower skills base can come in through that route.

We must establish sector by sector where the cut-off point is between tier 2 and tier 3—the cut-off point in terms of skills, training, remuneration and qualifications. Between now and final implementation of the plan, we have the time and space to get discussions under way with the sector. I repeat the point made by my right hon. Friend the Home Secretary when we introduced the scheme: many of the concerns expressed by the sector, not just by Indian and Bangladeshi restaurants, but by the Chinese sector as well, need resolving now, rather than waiting for the system to be implemented.

Mr. Russell Brown (Dumfries and Galloway) (Lab): I am pleased to hear my hon. Friend's comments, but there are greater difficulties in rural localities. Some communities—cities and some larger towns—are more attractive to those who wish to come and work in that sector. It is difficult to draw them from the cities to rural areas.

Mr. McNulty: I accept that. Once the substantive shortages are clearly identified, such considerations must be factored into the process leading to the issuing of the work permit.

John Bercow (Buckingham) (Con): Can the Minister tell the House where he is now in the review of the food processing quota? The review, as I understand it, is due to be completed by June 2006. Given that the Government have said that on the whole they want to bring to an end low-skilled migration schemes from outside European economic area countries, does he accept that although that might be a good policy—Community preference as a matter of principle—he needs to allow for the possibility that there will not be a sufficient labour supply from the new accession states, and that in those circumstances the gap can properly be filled from other countries?

Mr. McNulty: On the hon. Gentleman's first point, we made it clear in the Command Paper on the points-based system what stage schemes such as the sector-based schemes, the seasonal agricultural workers scheme and those covering food processing had reached and how they would continue.

The hon. Gentleman is right to suggest, as did my hon. Friend the Member for Leicester, East (Keith Vaz), that much of the purpose of the points-based system is
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to reduce to the five tiers the 80-odd routes that have developed higgledy-piggledy for education, work and study. He is equally right—this is very important—that if the document is written on the assumption that some 350,000 workers from the A8 countries are filling many of the low-skilled positions in the UK economy, and that there will be a collective governmental "Oops!" in 2011 when all the barriers in all the European countries are down and nationals of the A8 countries have access to all the labour markets, the entire pool of labour filling the gaps from the A8 countries will suddenly dry up because it has gone elsewhere in Europe. The system must be and is flexible enough to take account of that.

I do not know and, if I may be flippant for a moment, the Home Office, given its previous record on futurology in these matters, does not know what will happen by the time we get to the transition from 2009 to 2011 and the barriers coming down across all European labour markets. I suspect that a residual element will still come to the UK for assorted cultural and other reasons because we have allowed them to come earlier rather than later. The number will probably not be 350,000, but the points-based system must be flexible enough so that if those gaps are not filled by A8 nationals once they are able to work throughout the European Union, the next step beyond EU preference will be to look in the wider international labour market.

John Bercow: The Minister is being generous in giving way. He should not be embarrassed about, and I would not criticise him for, what I might call the statistical inexactitude of Home Office labour market predictions. There is nothing to be embarrassed about there at all. All it proves is that Governments on the whole cannot predict these things. In that context, does the Minister agree that it is therefore incredibly important to look to the skills advisory body for detailed, independent and authoritative advice, and to publish the reports of that body so that we can see the basis on which policy is made?

Mr. McNulty: That is absolutely right, and I remember the hon. Gentleman raising that point in Home Office questions. The skills advisory body will be extremely important not only across sectors, but within sectors, and will work with the sector skills councils, the skills development agency and others so that there can be confidence across industry, the economy and the public about their discussions and analysis of skills shortages. That will determine how we fill the gaps from   beyond an EU-wide labour market. The hon. Gentleman makes a fair point.

David Taylor (North-West Leicestershire) (Lab/Co-op): I pay tribute to the intelligence, creativity and tenacity, all of which are overdue, that my hon. Friend has brought to such a sensitive job in Government. Developing the point made by the hon. Member for Buckingham (John Bercow), which suggests that we are embarking on a journey akin to driving a car by reference only to the rear view mirror, rather than to what is happening in front, what lessons does my hon. Friend draw from the projections that the hon. Member for Buckingham suggested might be more accurate from employer and other associations? Around 2000, such organisations thought that demand for IT staff would
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remain substantial for the foreseeable future, but all of a sudden, almost out of a clear blue sky, the market and demand collapsed. Is my hon. Friend confident and convinced that the computer and other systems that will be in place will be sufficiently quick and adaptable to pick up trends more quickly than has been the case in recent employment history?

Mr. McNulty: They will have to be, in an increasingly dynamic, fast moving and global labour market. I demur from some of my hon. Friend's assumptions. Demand for IT workers still exists, but it is no longer located just in Europe. It is international. I describe the situation in terms of circularity. We need to go beyond—this underpins the points-based system too—the notion of the classic migration routes, where people moved from one place to another because the opportunities for their personal advancement were better. There is now increasing circularity.

IT skills are a good example. Indian investors who are investing significantly in the UK tell me that they would like second and third-generation British people of Indian origin to stay in the UK to fill jobs in the IT sector. Their fear is that because they are of Indian origin, people are going off for three, four or five years to Bangalore and various other "silicon valleys" in India, where they can have a far nicer lifestyle and greater reward for their skills. Indian investors would prefer them to stay in the UK and work for them here. That sort of circularity is increasingly part of the process of immigration—it is no longer simply a case of people moving from here to there in the classic model. I go along with my hon. Friend in part, but not in substance.

Central to the points-based system is the notion that economic migration is good. I am grateful that, across the piece, people have welcomed the publication of the paper. The CBI, the TUC, the British Council, Universities UK and a host of other organisations have given a broad welcome to the direction that it sets out. It does not give every single detail of where we are going to arrive at the points-based system. It is, in part, a response to a lengthy and extensive consultation process that took place from July to November, as outlined in the back of the document. It has not only received a broad welcome but created a broad desire among all the sectors that matter to work and engage with the Home Office to take things forward.

In terms of the time line, we think that we are about 18 months away from the full introduction of the overall points-based system. Bearing in mind that it started as an idea in the February 2005 speech that outlined the five-year plan, if the system is implemented by around February 2008, the most significant change in our migration policy in 34 years will have gone from a standing start to full implementation in the best part of three years, which is not slow in anybody's terms.

Last Friday, we held two post-publication events for what we are now supposed to call the stakeholders. The morning session was for the business community. Some 700 people turned up, and it went terribly well, with lots of questions asked and another broad welcome given. In the afternoon, between 250 and 300 people from the education sector discussed where we go from here. It is important that that engagement continues, and it shall.
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One of the realities underlying the scheme is that there is now a broader European Union labour market that needs to be factored into the equation. By the end of the transition period of 2009 to 2011, there will be an open labour market across 25 countries. It is important that the points-based system is seen in the context of everything else that we are doing as regards border controls, the new asylum model and so on. The system must be, and will be, robust against abuse. Only those of benefit to the UK should be admitted, and once here they should comply with their conditions of leave. Equally central to the scheme is that those who should benefit from migration, particularly employers and education institutions, should work far more readily with the Government to ensure that that is the case.

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