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Let me move to my second point. All I wanted to establish in my opening remarks is that carefully controlled migration can make—and has historically made—an important contribution to this country. I shall not digress to comment on policies on family reunion and asylum, but concentrate on the next stages of the points system, which will be introduced later this
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year. I shall not dwell on policies on tier 1—the programme for highly skilled migrants—because it is now operational. However, tier 2, the system for work permits, and tier 5, the system for temporary workers, are still to come.

I believe that tier 2 will be the most important. It will replace work permits and is aimed at enabling UK employers to recruit individuals from outside the European economic area to take a specific job that cannot be filled by a British or EEA worker. Employers in that category can sponsor migrant workers for a visa application only if they have a licence that shows that we have checked them and confirmed that they are genuine organisations.

Tier 2 will operate according to five principles. First, migrants will be required to show some command of the English language. I will listen hard to the debate about the standard that we should seek. Secondly, all jobs that are not in shortage occupations or intra-company transfers will be required to fulfil a resident labour market test before a migrant can be recruited. If migrants wish to change employers once in the UK under the scheme, the job to which they want to switch will also have to fulfil a resident labour market test. Thirdly, migrants who are not filling jobs on the shortage occupation list will be required to earn points through their qualifications and prospective earnings. Fourthly, low skilled or no skilled migration from outside the EU will be ended. Fifthly, there will be a maintenance requirement to show that migrants have the ability to support themselves for the first month that they are here. Within the framework of those five principles there is of course an enormous amount of detail, on which I look forward to hearing the House’s views.

The shortage occupation list is so important that it is worth a few more words. The idea behind the shortage occupation list is that if particular jobs are extremely difficult to fill in the UK, we should make it easier for employers to fill them, with there being some kind of trump. A place on the shortage occupation list is therefore something of a prize. I am absolutely convinced that decisions about jobs that go on the shortage occupation list should not be made in a dark room in the Home Office, but debated in public and made on the basis of evidence.

Independent advice on such decisions is helpful, which is why the Migration Advisory Committee has started on the job. It has been asked to study three questions: what is a skilled job; what is a shortage; and what skilled labour shortages does it makes sense to fill through migration rather than domestic labour? The committee’s call for evidence has already been published. I would urge anyone who is interested to get hold of a copy of the questionnaire and send it back to the chair. I have written to all right hon. and hon. Members with a copy, but I shall write again after this debate. The study is important and the list will be produced around June. Getting that list right will be difficult, but the exercise will profit enormously from the contribution of right hon. and hon. Members.

Mr. Dismore: Occupation No. 5434 refers to cooks and chefs, of which there might not be a shortage in the country as a whole, but of which there is certainly a
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shortage in ethnic minority restaurants, such as Chinese and south Asian restaurants. Is the Minister prepared to consider breaking down that category to reflect the shortages in particular sectors within that skilled occupation which might not exist more generally?

Mr. Byrne: Absolutely. I congratulate my hon. Friend on his work not only on understanding the detail of the problem, but on bringing together the Chinese community in London and nationally to meet me and put across the arguments. He rightly draws attention to the problem in getting the policy right, which is that the evidence available to the Government from taking a top-down view will go down to only a certain level. However, shortages will quite often emerge in occupations that do not happen to have a Government statistic for them. Therefore, as David Metcalf, the chair of the Migration Advisory Committee, has understood and accepted, we need to solicit bottom-up information, too.

Ms Diane Abbott (Hackney, North and Stoke Newington) (Lab): I would like to amplify what my hon. Friend the Member for Hendon (Mr. Dismore) said about the concerns among south Asian and Chinese restaurateurs. The Minister’s Department is telling them that they must recruit Polish and Latvian cooks—

Mr. Byrne indicated dissent.

Ms Abbott: No, that is what the Department is saying. Those restaurateurs are insisting that to have the delicious south Asian food to which the British people have become accustomed over the years, they must recruit cooks, of whom there is a desperate shortage, from that region.

Mr. Byrne: I have not heard my officials or any others telling anybody that they need to recruit people from particular communities, whether they are from eastern Europe or elsewhere. If that has happened, it is wrong and I apologise.

Barry Gardiner rose—

Dr. Starkey rose—

Mr. Byrne: Before I give way, let me make one point about the three questions that the committee has to consider. When we study those, we have to look at what is happening in our labour market, too. We would all acknowledge, for instance, that unemployment in the Bangladeshi community is 9 per cent., which is almost twice the national average. In the Chinese community, the figure is 5 per cent., which is a little above the UK national average. If we look at a specific region such as my own in the west midlands, we find that the employment rate in the Bangladeshi community is 40.6 per cent. That is nearly half the national average employment rate.

The Migration Advisory Committee has to balance some difficult questions. Are there sectors of the economy in which it makes sense to continue to draw in skills from abroad? Are there parts of the economy in which, with Government investment, it makes sense to
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train up those who are out of work? I make no prejudgments about the answers to those questions, but I want to highlight these points before the debate gets into gear.

Barry Gardiner: I want to return to the point that my hon. Friend just raised about his officials not suggesting that Latvians or Poles should be employed as chefs in restaurants serving Chinese or other cuisines. If we say that low-skilled jobs must be filled only from within the EU—that often means eastern European migrant labour—the implication is that, although it might not affect the first or second tier of chefs, migrant labour from eastern Europe could be used to fill the jobs below that level, within the kitchen. That is the message that my hon. Friend’s Department has communicated, and it is the one that troubles people the most.

Mr. Byrne: That would be a troubling implication, which is why I am deliberately drawing attention to the fact that, in some communities and cities in this country, levels of unemployment are remaining high, despite the progress that has been made over the past decade. That is why we have to look long and hard to find the right balance between bringing in skills from overseas and providing investment in training for those in our resident labour force, especially those who are out of work.

Dr. Starkey rose—

Chris Huhne rose—

Mr. Byrne: I give way to the hon. Gentleman.

Chris Huhne: The Minister makes an eminently reasonable point, but if the House—and, I suspect, many of his Back Benchers—are to be persuaded that this is a serious point, perhaps he needs to tell us what discussions he has had with other Departments about the training that might bring unemployed people in the Bangladeshi community, for example, into these kind of roles. Surely it is not enough for him merely to wring his hands and say no.

Mr. Byrne: The hon. Gentleman is absolutely right. The work that we have to do in this area through our migration policy is inseparable from the work that has to be conducted in other parts of the Government on investment in skills and investment in getting people back to work. That is why immigration reform and the points system have to be seen in the context of a skills budget that will rise from £500 million in 2007-08 to more than £1 billion in 2010-11. The doubling of that figure will provide the investment that will take us from the position in 1994 when only 40 per cent. of people had level 2 qualifications towards our goal of ensuring that 80 per cent. of adults are qualified to level 2 by 2011. The hon. Gentleman is right to say that the questions are inseparably linked.

Mr. Peter Lilley (Hitchin and Harpenden) (Con): Does the Minister recognise that, to economists, the very concept of a shortage in a free market is a difficult one to grasp? If the wages for a particular skill are
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allowed to reach the market clearing level, the supply will, by definition, equal the demand. If demand changes, employers have to start paying more, but they might be reluctant to do so. They might prefer to employ cheap labour from abroad. In that sense, a shortage could persist only if a Government did not allow wages to rise to the market clearing level. When we kept nurses’ pay below the market clearing level, we had a shortage of nurses and had to import them from abroad. When we raised their pay—as I had long urged—we found that we had a surplus of domestic nurses.

Mr. Byrne: The right hon. Gentleman is right in much of what he says, having studied the question in some depth. I have studied his recently published Centre for Policy Studies pamphlet and he is right to say that our view of this question is affected by the time frame that we are studying. It is also right, as our noble Friends pointed out in the other place, that any immigration reform has to go alongside much tougher enforcement around the low-wage economy. It was absolutely right for the House of Lords to point out that low wages legislation needs to be enforced much more robustly, particularly for those wages below the national minimum wage. That is partly why we have increased the number of working operations regarded as illegal by 40 per cent. over the last year. Where there is abuse at the lower end of the wage market, it is important to try to drive it out.

Dr. Starkey: Does the Minister acknowledge that in discussing the ethnic minority restaurant trade, it is important to understand how diverse it is in the sense that although the bulk of these establishments may be small family businesses spread across the UK—many of my constituents benefit from them—there is also a significant number of Bangladeshi and, indeed, Chinese restaurants that are quite up-market and have a completely different clientele and different labour market conditions? Should not any points system recognise the diversity in business size, wage levels and work experience required across this sector?

Mr. Byrne: I absolutely agree with that point, which is not unrelated to that raised by my hon. Friend the Member for Hendon. Relying on existing published Government statistics in this area is very difficult because those statistics do not go down to the level of specialism where shortages can emerge. We also need to acknowledge a geographical dimension to the question, as the availability of labour may be fairly sticky in some parts of the country. That is why the Migration Advisory Committee was asked to draw up a shortage occupation list for Scotland. There are two related problems: one is defining an occupation at a sufficiently detailed level in and of itself to understand whether it is skilled; but we also need to look, secondly, at bottom-up evidence for whether there is a particular shortage in a specific occupation. The chairman of the Migration Advisory Committee will thus need to look into movement in wage rates, as that might indicate a particular shortage in this area. The job cannot be done from a desk in the London School of Economics, where Mr. Metcalf is based. It is necessary to get out
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and compare the evidence in different regions in different parts of the country and in different industries.

Ms Abbott: Returning to the subject of ethnic restaurants, the Minister said that second-generation south Asian young people could be trained to do catering and cooking, but I have to say, with respect, that that is a real McKinsey consultant’s point of view. The point is that second-generation Bangladeshi young people do not want to be restaurateurs in the same way that second-generation Jamaican girls, of whom I am one, did not want to be nurses and second and third-generation Irish young people did not want to be labourers. Communities move on, which still leaves our ethnic restaurants requiring skilled labour to meet the demand for the delicious food we all enjoy so much.

Mr. Byrne: I was never good enough to work at McKinsey, Mr. Deputy Speaker, but my point was not about second, third, fourth, fifth or sixth-generation people; my point was about people who did not have a job, and we have to accept that there are some city communities in which the unemployment rates are very high.

Kerry McCarthy (Bristol, East) (Lab): Will the Minister explain what analyses have been done so far? I have been told by restaurateurs in the Bangladeshi community in my constituency that there is a difference between working in the kitchens in their restaurants and working in those that deal with other forms of cuisine. They say that the pressures are higher, for example. Is there is a skills shortage and are there difficulties in recruitment in other restaurant sectors, or are they specific to the Chinese and what we tend to call Indian restaurants?

Mr. Byrne: It is important not to prejudge. Having set up the independent Migration Advisory Committee to tell us where the skills shortages are and where it makes sense to fill those shortages from overseas rather than domestic labour, I do not want to prejudge that consultation and deliver my own answer this afternoon. We set up the Migration Advisory Committee because we recognised the problems caused by the Government’s plucking shortages out of the air. We wanted an independent study. The committee has been asked not simply to work on the basis of Government statistics, but to undertake proper field research so that the questions can be answered as accurately as possible.

Mr. Cash: I was a little disappointed by the Minister’s response to my point about local authority statistics. He said that he thought we would be able to solve the problem eventually when we introduced identity cards. The problem is that although the figures are available, there is still a huge information gap. On 9 May, I shall present my Foreign Nationals (Statistics) Bill to the House. Would it be possible for me to have a chat with the Minister about some of the issues on another occasion?


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Mr. Byrne: I always hate to disappoint the hon. Gentleman and should be delighted to have that conversation. I am mildly obsessive about statistics, and it would be good to set out the programme of work which—as I am sure he knows—the Office for National Statistics has in hand, and to discuss how it could be strengthened further.

The policy at the heart of the next stage of points reform relates to the principles that I have described, and I look forward to hearing the House’s views on it. Let me touch very briefly—because others will do it better than me—on the question that I expect to divide debate. I think there is a great deal more consensus on some of these issues than we would care to admit in public, but, in the spirit of the House, I shall dwell on the issue that divides us rather than those that unite us.

Dr. Julian Lewis (New Forest, East) (Con) rose—

Mr. Byrne: Before I do so, however, I will give way to the hon. Member for New Forest, East (Dr. Lewis).

Dr. Lewis: I am not sure whether I anticipate the Minister’s next remarks correctly, but will he say a word or two about retrospection? He will recall the meetings that we both attended with representatives of the people who are already in the country on the highly skilled migrants programme, and who were so adversely affected by the retrospective changing of the rules that has now been overturned in court—much to the benefit of, for example, the Nair family, who are greatly respected in my constituency. Can he assure us that there will be no further problems involving the retrospective application of new points rules?

Mr. Byrne: I shall certainly try my utmost, although I may not get it right on every occasion. In creating the points system, we are trying to remove a degree of the instability which has bedevilled changes in the immigration rules over the past 40 or 50 years. We want a system that is more open, transparent, predictable and stable, and an end to policy changes that are not anticipated and are often retrospective.

Although I believe that there will be a element of consensus on some of the basic policies, I also believe that we should be frank about the element that divides us. The cap which has been has been proposed does not constitute a limit on overall migration. According to the international passenger survey of 2006, 229,000 people entered the United Kingdom, about 77,000 of whom were returning British citizens. I am delighted that no Member so far has proposed to prevent British citizens from returning home. About 136,000 were European citizens. Again, I think that there is all-party support for the principle of free movement. It is a little-known fact that there have been some nine free movement directives since we joined the European Union. Seven were passed under Conservative Administrations and two under Labour Administrations. The 2004 directive was unopposed.

Of the people who entered the United Kingdom during the period covered by the survey, 114,000 were students. We are now educating people from all over
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the world, and it is an important part of our economy, worth some £8.5 billion. Another 74,000 of the people who came in were dependants—and there is now a degree of consensus that we should not reintroduce the primary purpose rule, which this Government abolished in 1997. That leaves the number of non-EU citizens coming to this country to work, which the Office for National Statistics says is about 101,000. If we were to add in a reasonable share of their dependants, that would mean that about 140,000 people will be affected by the proposed cap. That is, of course, only about 30 per cent. of the non-British people who came in. In effect, therefore, the proposed cap is not really a cap at all; it is more of a colander.

The number for the cap is a secret. The hon. Member for Mid-Sussex (Mr. Soames) has proposed that the net balance should be zero, whereas the hon. Member for Ashford (Damian Green) wisely said in The Guardian a year or two ago that it would be wrong to speculate too far in advance on what the right number might be; I acknowledge his caution, and he is probably right.

It would be helpful if Members of all parties made it clear that this cap would affect only, at best, 20 to 30 per cent. of the people who came into this country. When I look at these numbers, therefore, I see that there is probably more of a consensus in this House than a difference.

Mr. Lilley: The Minister seems to be saying that we should rely on a points-based system to restrict immigration, and that we should not rely on a cap as that affects only 20 per cent. of those currently coming in. As the points-based system affects only 20 per cent. of those coming in, he is simply trying to pull the wool over Members’ eyes.

Mr. Byrne: Not really, because the ambit of the points system would extend to the 101,000 people coming in for purposes of work and their dependants, and to about 114,000 students and their dependants. Therefore, the points system applies to about three in five people, whereas only one in five would be affected by the cap.

Mr. Bone: I think that the Minister might be slightly wrong on the EU issue. He said there could be no restriction on the numbers coming in from the EU, but there are restrictions for Bulgaria and Romania, of course. I believe that the Government have granted 40,000 work permits. Other EU countries, including France and Germany, have put restrictions on people emigrating from the accession nations. Therefore, what he said is not quite right.

Mr. Byrne: No, I was merely alluding to the fact that under the free movement directive EU citizens can exercise treaty rights to come to the UK and spend time here, but there are, of course, restrictions on their ability to work.


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