The Chairman: Does a member of the European Scrutiny Committee wish to make a brief explanatory statement about the decision to refer the document to the Committee?

Keith Hill (Streatham) (Lab): It is a pleasure and a privilege to serve under your stewardship, Sir Nicholas. I would like to take a couple of minutes to explain the background to the document before us and why the European Scrutiny Committee recommended it for debate.

Article 39 of the EC treaty establishes the right of European Union nationals to move freely to any member state to take up employment. Ten new member states joined the EU in 2004. The treaty of accession gave the 15 existing member states the right to put temporary restrictions on access to their labour markets by workers from the A8, which comprises all the new member states except Cyprus and Malta. Similarly, the 2005 treaty on the accession of Bulgaria and Romania, the A2, included the right of the 25 existing member states to put temporary restrictions on the access of Bulgarian and Romanian workers to their labour markets. Both accession treaties limit the total length of the transitional period to seven years.

Most of the old member states have now opened their labour markets to workers from the A8, but four continue to apply restrictions. From the outset, the UK has required workers from the A8 to register under the worker registration scheme but has never imposed a quota on them. Fifteen member states, including the UK, restrict access to workers from the A2. Those countries now need to decide whether to retain, amend or end those restrictions.

The document we are debating this afternoon is relevant to those decisions. It is a report by the European Commission on the effects of the transitional arrangements for workers from the A8 and A2 countries. It also contains much information on, for example, workers who have moved from other member states, the main countries of destination and the types of work they do.

In January the Minister for Borders and Immigration, who is with us today, told the European Scrutiny Committee that the Government had not yet decided whether to keep or end the requirement for workers from the A8 to register under the worker registration scheme, but that they had already decided to increase this year’s quota for the admission of Bulgarian and Romanian workers under the seasonal agricultural workers scheme and to keep unchanged for 2009 the quota for Bulgarian and Romanian workers under the sectors based scheme.

In the European Scrutiny Committee’s view, the Commission’s report contains much useful information on an issue of some political importance. We thought that it would be useful to supplement that with oral evidence from my right hon. and noble Friend, the Secretary of State for Business, Enterprise and Regulatory Reform and the Minister on some related questions, such as the posting of workers directive. We are grateful for their evidence, which is reproduced in full in our further report, HC 324. On 8 April the Minister told us that the Government had decided to retain the worker registration scheme for at least a further 12 months from 1 May 2009. I look forward to today’s debate on the report, which assumes greater importance in the context of the current economic downturn.

The Chairman: I am sure that the Committee is grateful to the right hon. Gentleman for the succinctness of his opening remarks. To help the Committee and those who perhaps have not attended many such Committees, I remind Members that no interventions will take place during the Minister’s opening statement, which will be largely factual and explanatory. Questions, of course, will follow.

The Minister for Borders and Immigration (Mr. Phil Woolas): It is a pleasure to serve under your chairmanship, Sir Nicholas. I thank my right hon. Friend the Member for Streatham for explaining to the Committee the background to the report and the relevant documents before us. There is only one point on which I will dare to disagree with you, Sir Nicholas: you said my statement must be largely factual. It will, in fact, be wholly factual.

I welcome the opportunity to discuss the question of accession workers and the access we give them to the UK labour market. In recent months we have made two significant announcements, one of which has already been referred to. The Commission’s communication, which we have before us, was published in autumn last year. It emphasised the positive impact of labour mobility arising from the enlargement of the Union since 2004.

As we might expect, the Commission’s general purpose in producing the document has been to encourage member states to lift the remaining restrictions on accession workers’ access to their labour markets. However, it is worth noting that the document itself seems to strike a cautionary note. The penultimate paragraph of the conclusion acknowledges that

member states have the right under the safeguard clause in the accession treaty to apply for the reintroduction of restrictions. In other words, the thrust of the Commission policy is to encourage greater liberalisation, but it sounds a cautionary note in light of the economic circumstances that my right hon. Friend and the European Scrutiny Committee also referred to.

The internal market in the EU is vital to our own economy. However, at a time of rising unemployment, we believe that it is important to take full account of the labour market situation before contemplating the lifting of transitional measures. The Government have approached the question of labour market access with an open mind. Of course, we must acknowledge the benefits that free movement and the internal market bring to the United Kingdom. When it comes to exporting workers to other member states, the UK is in the top five of all EU countries. Nevertheless, we do not wish to see British workers displaced. Labour migration should be managed and should complement, not substitute for, the availability of resident labour.

In 2004, our decision was that providing access to the labour market, with arrangements to monitor impact, was the right approach. More recently, we have taken the view that a more gradual approach is the right one. Recent decisions have been supported by expert advice from the established Migration Advisory Committee under Professor Metcalf at the London School of Economics.

I believe that the decision we took in 2004 was the right one in the circumstances that existed at that time. By allowing nationals of new member states access to the UK labour market, we aimed to ease labour shortages that existed at that point. The background to that decision is that the UK labour market has performed strongly over the last decade. Employment increased by 2.7 million people between 1997 and 2008, and it is not the case that all those newly created jobs went to migrants.

Workers from member states that joined the EU in 2004—the A8—have taken jobs, particularly lower-skilled jobs in sectors where hard-to-fill vacancies are well known to have existed. That includes the manufacturing and distribution sectors, the horticultural and food processing sectors, hospitality and, critically, the care sector.

There is no evidence that migration from the A8 states has had a negative impact on the position of the resident work force. Successive studies by the Department for Work and Pensions have found there to be no statistical evidence that such migration has either displaced resident workers or impacted on wages.

It should be noted how our approach to accession workers has fitted into our overall policy on labour migration. Although we took a more laissez-faire approach to accession workers in 2004, at the same time we started to phase out low-skilled migration schemes for non-EU nationals.

The quotas for non-EU nationals under the seasonal agricultural workers scheme and the sectors based scheme stood at 45,000 places in 2003. Those quotas had been more than halved by 2006 in light of the availability of EU labour, before they were closed altogether to non-EU nationals when Bulgaria and Romania joined the Union.

On the decision to continue restrictions when Bulgaria and Romania joined the EU, we have acknowledged that while there have been clear economic benefits from labour migration from the EU, there have also been wider impacts, such as increased pressure on public services as a consequence of that migration. That is why we decided to take a more gradual approach when Bulgaria and Romania joined the EU. We therefore maintained work permit restrictions, so that workers from those two countries—the A2—were subject to skills and labour market tests except when they came under the quota-based arrangements for low-skilled work in the horticultural and food-processing sectors.

We have subsequently sought expert advice from the Migration Advisory Committee to inform the decision on whether or not to maintain the restrictions. The MAC gave very detailed consideration to the case for keeping them. Its advice was that the existing restrictions should not be lifted. A key element of its thinking was that as we entered an economic downturn, the possibility of larger flows from other countries would increase the risk of displacement of resident workers. As a result, we have announced that restrictions on A2 workers will continue, and we have pledged to review that in a year’s time.

At the same time, I made it clear that there would be no prospect of launching low-skilled migration schemes under tier 3 of the points-based system—that is, non-EU migration—in the foreseeable future. The Government have also recently announced a tightening of criteria for non-EU highly skilled migrants under tier 1, and the strengthening of the resident labour market test for skilled workers under tier 2. We have also asked the MAC for its advice on whether or not the worker registration scheme for A8 nationals should continue. Again, the advice was that it would be sensible for the scheme to continue on the basis that there may be modest, but adverse, labour market impacts if it were abolished.

As has been said, we announced on 8 April that the worker registration scheme for A8 would, therefore, continue. I am aware that some have not welcomed that decision as they view the WRS as an unnecessary burden on business. In other economic circumstances, we may well have taken the view that those arguments outweighed the case for maintaining the scheme, but in the current circumstances it is right that we maintain our ability to monitor the possible labour market impact on resident workers of migration from the A8 states. The WRS provides us with detailed information that we need to do that. It is clearly right that, in the current situation, we take steps to ensure that labour migration does not displace resident workers. That is why we have taken the decision to maintain the WRS and to continue restrictions on A2.

I hope that explains our policy. I will try to answer any questions during the course of the debate.

The Chairman: We thank the Minister for his opening statement. We have until 5.34 for questions to the Minister. May I remind hon. Members that the questions should be brief, and entirely relevant to the motion that we are debating? It is open to a Member, subject to my discretion in the Chair, to ask related supplementary questions together. That means that as long as Members indicate to me that that is what they wish to do and the questions are not too long, I am very happy for them to ask a group of questions together. It would be appropriate for me to ask the Opposition spokesman to put the first question or questions.

Damian Green (Ashford) (Con): I shall start with one now, but save a couple more groups for later. The Minister mentioned that it is possible, as the Commission said, for member states to invoke emergency economic conditions to reimpose restrictions that they had previously lifted. On a factual basis, given that Britain has never had those restrictions on the A8, would it be possible for him to invoke those emergency procedures and, given the state of the economy, is he considering doing so?

Mr. Woolas: My understanding is that it would be possible. As the hon. Gentleman rightly says, economic criteria are used. I think I am right in saying that there are no other criteria. However, other than scoping, no consideration has been given to doing so.

The Chairman: Does the right hon. Member for Sheffield, Brightside wish to put a question?

Mr. David Blunkett (Sheffield, Brightside) (Lab): If restrictions were imposed for the first time on the A8 countries that had unrestricted access but were subject to the worker registration scheme from 1 May 2004, in the current economic circumstances, is it my hon. Friend’s view that if people from those countries found that there was the possibility of a job, but there was no longer registration and legally they were restricted from working here, they would simply do what they have done in Germany, France and elsewhere? In the early years of those countries’ imposing restrictions on such people working, they worked in the sub-economy.