Examination of Witnesses (Questions 40-59)
MR LIAM
BYRNE MP, MR
CHRISTOPHE PRINCE
AND MS
HELEN EARNER
7 DECEMBER 2006
Q40 Chairman: You have promised to
write to us, Minister, specifically though on the question of
immigration which is associated with Eastern European migration.
Mr Byrne: Precisely. I have promised
to solicit an answer from my colleagues in DCLG.
Q41 Ms Buck: Almost certainly, I
think, less than the growth in second-home ownership would be
the answer to the housing question. As somebody who is broadly
sympathetic to this agenda, I have to say, representing a Central
London constituency, that we are not good and have never been
good at both projecting and compensating swiftly for the consequences
of population change on public services, and, although it is very
hard, and quite frequently impossible, to unpick which particular
strands the population change is responsible for changes in demand
in services. For example, by a month ago I had over 100 secondary
school children without a school place in the London Borough of
Westminster. I am not suggesting that they have even anything
to do with Eastern European migration, almost certainly they do
not, but, nonetheless, that is an example of the way in which
we are not responsive enough to the changes in pressure. Central
London also has a very particular problem (and I think this is
due to Eastern European migration) with street homelessness. I
think the first question is: if it is impossible to project accurately
a figure for Bulgarian and Romanian migration, how is it possible
for our public services to plan for the delivery of services such
as health, education and housing, and, if that is not possible,
what on earth are they supposed do about it and what kind of negotiations
are you having with other departments to enable them to make the
best possible job of it?
Mr Byrne: I think, Chairman, this
is a question of extreme importance. When I have gone round the
country talking to people from public services over the last two
or three months, what they have asked us to think through more
carefully is how we can provide the information that we do have
more readily to local strategic partners so that they can plan
and change services more effectively and faster. The Home Office
is about to go into a period of negotiating public service agreements
with the Treasury and different parts of Government. The other
opportunity I think we have over the next two or three months,
though, is, as part of those discussions, to develop in a far
more sophisticated manner the way in which we use local area agreements
to work together with local partners, and I give you an example
of the kind of question that this might help with. When I was
in Newcastle recently the leader of Newcastle City Council said,
"We want to grow our population in Newcastle by 7% over the
next 10 years. As hard as we try, we will not hit that target
by encouraging the good citizens of Newcastle to breed faster.
We are going to have to rely to a degree on immigration. If we
are making those kinds of changes to the local population base,
then we know that there will be community cohesion issues which
need managing. How can you, as IND, work with us constructively
and with our local partners to help us manage some of those questions?"
I do not think those questions are issues that can be addressed
satisfactorily by negotiating interesting PSA targets in other
parts of government; I think we have got to look much harder at
how we use local area agreements to share the information that
we do have. What I do not think that solves is your point about
futurology, I think that question is always going to be difficult,
but I think we can do a lot more to provide the information that
we do have and, indeed, the information that DWP has about patterns
of migration that we know about.
Q42 Ms Buck: It does not solve the
problem of futurology; it also does not wholly solve the problem
of responsiveness. For example, in a situation of quite rapid
population change such as we have in London, we are dealing with
local government grant settlements that are based on a population
that is two or three years out of date. Whilst the Area Agreement
Framework may be good sense in terms of policy, surely we do have
to do a great deal better in terms of allowing a funded responsiveness
to those local authorities and other public services that are
on the frontline. What representations have local government made
to you about that and what negotiations are you having with other
departments about that?
Mr Byrne: Public spending is obviously
a matter for the Chancellor, and you will forgive me for not encroaching
on that. The conversations I have had with local authorities have
really actually been about the way in which we can work together
in the future. It is absolutely right to say that there are things
that local authorities can learn from each other about how quickly
they respond to these kinds of changes in their local communities,
and actually one of the conclusions from the Prime Minister's
Strategy Unit work over the summer was that some authorities were
doing a pretty good job at changing public services in response
in the right kind of timeframe, and part of the work that colleagues
in DCLG will be doing, together with the Audit Commission, is
looking at how those strategies can be shared more effectively.
Q43 Ms Buck: Again, that is also
fine. I suspect the authorities that are doing best are those
that already have some spare capacity and the authorities that
are struggling are those which have already got a very severe
capacity constraint, such as in London. Let me come to one particular
problem which is that of street homelessness, that has been a
real challenge for central London. I wonder what negotiations
you are having with other departments to make sure that local
authorities that are having to deal with a rapid increase in street
homelessness are not losing out financially as a consequence.
Mr Byrne: We are supporting discussions
which are being taken forward by colleagues in DCLG simply because
we think it is local authorities who are in pole position to understand
these matters and understand how they can be responded to most
effectively. DCLG colleagues are in the lead on this, we are adding
our thoughts into it.
Q44 Chairman: Minister, perhaps you
could give us another note from the DCLG on that.
Mr Byrne: I will do that. Gosh,
their workload is piling up. [5]
Q45 Chairman: Minister, if we can move
on looking again at the background information that has led to
your decision on Bulgaria and Romania. The written ministerial
statement from the Home Secretary states that studies have found
no evidence that migrant workers have undercut wages, yet you
yourself this morning have pointed to Treasury studies that have
shown that inflation has been lower because of Eastern European
migration. The main reason, in fact the only significant reason,
that inflation is lower is because wage levels have been held
down by the Eastern European migration. By how much are wages
in this country lower than they would have been without the A8
migration?
Mr Byrne: That would be a question
which could be answered better by DWP and Treasury and I will
be happy to solicit that from them.[6]
I think the point that the Bank makes is that, just to delineate
two things, wage growth and, therefore, inflation is what is being
helped by migration rather than, as you put it in your question,
wage levels actually being lowered. I think focusing on the growth
is important. If I may, I will also appraise the work that the
DWP have done when I respond because, as I said, they have undertaken
two studies, which I think you, Chairman, know about, which have
also looked at this related question of displacement of the local
labour market which I think is also germane to the thrust of your
question.
Q46 Chairman: Would you accept that there
are sectors of the economy not covered by the Labour Force Survey
and not covered by the registration scheme, particularly, for
example, self-employment in construction and large areas of agency
work where there is at least anecdotal evidence that there have
been actual falls in the pay of some people working in those areas,
even if that is not the general experience in most of the sectors
of the economy?
Mr Byrne: There has been anecdotal
information that has been provided to us, not least from Southampton,
but the difficulty that the Prime Minister's strategy unit had
over the summer when they looked at this question was pinning
down a detailed analysis and an evidence base which was very,
very difficult and that was a big factor. The difficulty in assembling
that evidence base was a factor in our decision to say, "We
should only be opening our labour market gradually". There
is anecdotal information which is coming to us from the labour
market, there is anecdotal information coming to us from public
services, we have to understand that information better and satisfy
ourselves that the right remedies and policies are in place to
take account of them, if they are true, before we take any other
peak steps in immigration. Again, part of the decision for taking
a gradual approach to opening our labour markets in Bulgaria and
Romania was precisely because we felt that it was right to take
the time to understand precisely the kind of concerns that you
are outlining in a lot more detail.
Q47 Mr Heathcoat-Amory: Minister,
you say that you are taking into account the wider impacts of
immigration. Do you also take into account the fact that you cannot
control the numbers of people coming from Bulgaria and Romania
who will be using services like health, education and housing
because under the regulation which I alluded to earlier, which
was passed by the House in April, they get an unrestricted right
of residence here. I am puzzled about how you are going to control
this wider impact even if it is your policy to do so.
Mr Byrne: Again, I do not think
this is a new issue. The principle of non-discrimination in providing
access to social assistance was something that I think was in
the 1957 Treaty and enshrined when the Heath Government took us
into the EU in the early 1970s. I think that some of the principles
were recently codified in the Free Movement Directive which was
passed by negative resolution without being prayed against by
either party. The deal that we did in 1973 therefore does provide
people who are coming to this country and if they are accessing
work are entitled to receive in-work benefits. The evidence that
we have from the workers' registration scheme is that people applying
for in-work benefits has been quite low, but in a way I am slightly
surprised at the question because this is not a new issue, this
is a deal that we signed up to in the early 1970s.
Q48 Mr Heathcoat-Amory: It is a new
issue because these regulations do go substantially beyond the
freedom of movement which was implicit in the original Treaty
of Rome. These regulations give very specific rights of residence
and there has been a succession of parliamentary written questions
since then, and I have one with me on health which shows that
right of residence automatically gives right to free hospital
and GP treatment. The same is true of education and a range of
benefits, though not all of them. You are trying to restrict immigration
from Bulgaria and Romania by the sole device of trying to get
the law abiding workers to register under your scheme. You have
no way of preventing them coming over here and legally living
here, and then they will either work in the informal black economy,
as happens all over Europe, and then they, their dependants, their
partners and everybody else who they bring with them, all quite
legally, will get automatically complete instant access to all
of these other services, so how are you going to prevent this
wider impact on immigration which you referred to earlier?
Mr Byrne: The action that we can
take is naturally constrained by the treaties that we have signed
up to and which were incorporated into British law. These are
not new issues, these are decisions which have been taken by governments
of a different colour over two or three decades, and most recently
we did incorporate the new regulations on free movement. As I
say, they were passed by Parliament under the negative resolution
procedure and they were not prayed against. It is an error to
say that we are trying to manage migration in this way because
ultimately people from Bulgaria and Romania do have the right
of free movement into this country and that is a deal which we
signed up to when we signed the Accession Treaty. As I say, what
we can do is exercise our derogation in controlling access to
the labour market. That does have knock-on implications for access
to benefits and so, to give you an example, there are benefits
which become available once people have been here for 12 months
and under the low skill quota scheme that we are proposing for
seasonal agricultural workers, the likelihood is that people will
only come and work for six months because the quota is issued
for six months, so people will not build up the rights to non-work
benefits. Access to in-work benefits is something that is well
established in this country.
Q49 Mr Steen: I am glad to have the
opportunity at last to ask you a question, although I was here
right at the outset of your attendance. There is a real problem
about the black economy which you have not mentioned understandably.
I do not know if you know it takes two months for a European national
to come into Britain to work and to get a National Insurance number.
Until they get the National Insurance number they cannot be taxed
or paid. A bank will not open an account without a home address
in this country and they also want a bank statement with a home
address in this country from the bank in the country where they
lived previously, so they want a change of address from the bank
in wherever it is to their home address in England. They cannot
get a home address in England because they cannot have a bank
account and they cannot get paid. As a result of that, there is
a massive growth of the black economy. Because people cannot do
things legally they do things illegally. I will pass over the
housing issue for the moment as well. I believe this is widespread
with the 600,000, but it is going to increase with the Romanians
and Bulgarians coming in. How is England going to deal with this?
I only spoke to the tax inspector yesterday who said it is up
to two months, it can be longer, to get a National Insurance number,
therefore people will not get paid legally.
Mr Byrne: This issue of illegal
working is very important and I think over the course of the next
12 months the Committee will see us put the question of illegal
working far more central in our strategy for tackling the broader
issue of illegal immigration. We already said a week or two ago
that we will accelerate the provisions of the Immigration and
Nationality Act which will allow us to bring in a civil penalty
regime, which will make it easy for us to find employers who are
breaking the rules and employing people illegally. It will also
introduce a knowing offence which, if there is a criminal conviction,
will expose the employer to unlimited fines and potential imprisonment.
Against the backdrop of the implementation of those powers we
have also said that we will double the resources for enforcement
and removal over the next few years, that is potentially an extra
£100 million a year. In the new year we will publish our
enforcement strategy which will explain to the House precisely
how we will put some of these things together with our exploitation
of new tools, such as biometric identity cards. In answer to the
precise question, this is something that has been put to me by
a group, we have a group in the Home Office called the Illegal
Working Stakeholder Group, it has got some great representatives
from the business community on there, including Mark Boleat who
speaks for a lot of operators in the agricultural sector, and
at our last meeting this was an issue that was put to me and at
the time I thought it sounded a pretty practical difficulty which
we should try and solve. I committed to that group to have a look
at this together with DWP colleagues to try and—
Q50 Mr Steen: Help them with some
specific information.
Mr Byrne: Some practical remedies,
yes, absolutely, I think it is a very good point.
Chairman: Minister, thank you. I think
we will need to move on. You have largely anticipated what was
going to be the next question, so I will move to Nia Griffith.
Q51 Nia Griffith: Minister, you remember
back in 2004 that we were one of only three countries who opened
our doors immediately, with the other states opting for a more
transitional approach. There is a mechanism by which the UK could
have asked the Commission for permission to suspend the right
of freedom of movement of workers from A8 countries to the UK
if, for example, there had been serious disturbances in the labour
market and given that only three countries opened their doors
and other countries chose not to, that may well have exacerbated
our particular problems. Was any consideration ever given to using
that mechanism?
Mr Byrne: I do not know whether
any explicit recognition was given at the time, I will certainly
dig through the files to provide an answer to that.[7]
The briefing which I have been given on this question is that
it is in urgent and exceptional cases that Member States can suspend
Community law provisions and they then obviously have to notify
the Commission as to why they are doing that. I understand that
a good example of the kind of rationale which a country could
use in order to take that step would be if there had been acute
difficulties in a particular region or a particular occupation.
I think on the basis of the evidence that we have got, and which
I have talked about this morning, I am not sure if we would have
been able to construct a robust enough argument to invoke those
provisions.
Q52 Nia Griffith: When you think about
the difference between the estimates and the actual number of
people who came, there might well have been good material there
to invoke that.
Mr Byrne: However, the evidence
that we have got is that there have not been negative impacts
on, for example, UK claimed account unemployment. The reports
that DWP have provided show that there has not been a displacement
effect on the local labour market either. Although the University
College London, despite the cheque it got from the Home Office,
did not get the projections quite right and the number has been
significant over the last few years, I do not think today we have
got the evidence to take a further step and say the impacts have
been so negative that we want to present a case to the Commission
to suspend the Community law.
Q53 Nia Griffith: When we are considering
the issue of Bulgaria and Romania, has there been any consideration
given to using this mechanism if when they join the EU we suddenly
find that there are much larger numbers coming over than perhaps
had been anticipated, using that rather than singling out these
two particular countries to be treated differently from the other
eight?
Mr Byrne: There has not been explicit
consideration of that question because the evidence that we have
got from the previous large scale movement has been that there
have not been particularly negative consequences other than the
anecdotal evidence which I talked about before. My judgment would
be that we would find it difficult to make that case but it could
be perhaps something that we reflect on when we construct our
12-month review a bit later down the line because what we have
to look at is not just the numbers of people moving but the impact
that they are having, whether it is positive or negative.
Q54 Mrs Cryer: Minister, do you have
any information on the impact on other EU countries of the restrictions
that they imposed on entry post-2004?
Mr Byrne: Chairman, we are not
aware of any systematic study of the effectiveness of restrictions
across the EU. It is the case that the European Commission published
a report on the functioning of transition arrangements in 2003.
Some members of the Committee will not be surprised to learn that
the focus of that report was on making a positive case for free
access and it therefore focused on the benefits of free movement
rather than emphasising the difficulty in applying controls. That
has been the only systematic study that officials have been able
to dig out.
Q55 Mrs Cryer: So we have no idea?
Mr Byrne: We have not got a systematic
study of the effectiveness and restrictions of other EU countries,
no.
Q56 Mrs Cryer: Have you any concerns
about the restrictions that we are going to impose on Bulgaria
and Romania and do you think it may just increase the number of
people who are bogus self-employed migrants or undeclared workers
who are coming here from Bulgaria and Romania?
Mr Byrne: I think with any restrictive
regime, de facto you create risks which you have to police
and that is why we are very grateful for the co-operation that
the Bulgarian and Romanian Governments have given us in, for example,
tackling organised crime. Some of the intelligence we have suggests
that three-quarters of illegal immigration into the UK is in the
hands of organised criminals, therefore part of our preparations
for accession have been through closer liaison with organised
crime-fighting authorities in Bulgaria and Romania so that we
can understand these questions in a bit more detail. Any regime
of restrictions creates the risk of abuse and we have to make
sure that we have got the right preparations to police that in
place, but when you have got a situation where pretty much all
of the other big European economies are making the same kinds
of decisions as us, that gives me some cause for comfort.
Q57 Jim Dobbin: My question is about
the cost of implementation of all of this. Could you tell the
Committee what extra resources the Home Office is going to receive
to make all of this happen? I will just mention three particular
areas: for example, to process the applications for accession
worker cards and registration certificates; to alert employers
to the new arrangements; and to provide information to potential
migrants in Bulgaria and Romania about the new arrangements to
make all this work properly.
Mr Byrne: Chairman, we cannot
finalise the costs until we have got absolute certainty that our
regulations will fall into place and so, subject to the debate
this afternoon, if, as I hope, the regulations are approved that
will put us in the position over the next couple of weeks to finalise
those costs. We also have a number of parliamentary questions
on this issue, so I can commit to come back to the Committee with
the final costs once they are documented.[8]
Q58 Mrs Dean: Minister, following on
from that, how will the new offences of taking employment without
authority and employing workers without authorisation be enforced?
Will you be employing more inspectors checking on workers and
making sure they have got the correct paperwork?
Mr Byrne: Yes, absolutely, that
is exactly what we will be doing. As I said in response to an
earlier question, over the course of the next year this whole
question of tackling illegal working will move far closer to the
centre of the stage for our strategy of tackling illegal immigration.
I do think that we need a significant step-up in the resources
which we invest in enforcement and removal and we need a much
sharper focus than we have today on illegal working in particular.
The Home Secretary already announced a week or two ago that we
want a significant increase in the number of frontline immigration
staff to help us tackle this problem. In particular though, we
will be strengthening our capacity in the field of intelligence-gathering
and we will propose some potentially quite helpful new powers
in the Border and Immigration Bill in the new year, for example
to access the kind of data we need in order to pin down where
employers are breaking the rules, but we also want to strengthen
our ability to analyse and assess that information. Some of the
work we are doing jointly with the police is about how we can
access a lot of the expertise that the police have built up in
economic investigations over the last few years, so the Home Secretary
has already announced that there will be a significant increase
in frontline staff, something of the order of 800. A large number
of those new staff will be investigators because when you are
trying to go after dodgy employers you need to invest that bit
more in pinning down who they are. I might just say that some
of the evidence we have got from a pilot which we ran in our own
region, the West Midlands, called the Joint Workforce Enforcement
Pilot showed that where we found employers who were employing
illegal immigrants, they were also breaking every other rule in
the book as well, they were also breaking the national minimum
wage regulation, and health and safety regulations and they were
very often exploiting people who had come here in search of a
better life. Part of what we are going to do next year is work
far more closely with other agencies which are looking at this
field of vulnerable worker protection so that our efforts can
be co-ordinated and made more effective.
Q59 Mrs Dean: Will you be able to
guarantee enforcement will begin on 1 January and, following from
what you have just said, will you be working with employers to
understand the rules and regulations regarding employing people
who have originated from other countries, because sometimes there
is a problem that they fit the rules differently than they are
and say somebody cannot be working when they can, so there is
a two-way need for education of employers, I think?
Mr Byrne: Yes, I have a great
deal of sympathy for this because when I was in business I used
to employ people from abroad and often found it difficult to understand
their entitlement to work. We have made investment in helping
employers understand their obligations. We have just recently
written to about half a million businesses up and down the country
reminding them of their obligations to check somebody's immigration
status before they take them on and we are also strengthening
the employers' helpdesk and helpline we provide for employers
in January. We work quite closely with organisations like the
CBI to help us get this right and yes, of course, we have got
a number of operations which are planned from 1 January to send
a very clear signal very quickly that we are going to take abuse
of these rules seriously.
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