Examination of Witnesses (Questions 1-25)
MR DAVID
RAMSDEN AND
DR ADAM
MARSHALL
20 JULY 2010
Q1 Chair: I call the Committee to
order for the first evidence session in its inquiry into the immigration
cap. I formally declare the interests of all Members of the Committee
which are shown in the Register of Members' Interests. My wife
is a solicitor and a partner in charge. I welcome to the dais
the two witnesses who are to start off the session, Adam Marshall
and David Ramsden. I start with a question to both of you. What
effect will the immigration cap have on investment in the United
Kingdom, especially its major cities?
Mr Ramsden: We
believe it will have an adverse effect. The FSB does not want
a cap. There is a certain immediacy when we have vacancies and
we believe a cap could prevent us getting the right persons for
the right jobs as soon as possible.
Dr Marshall: I agree with that
in a certain sense. I have in my hand a pamphlet from UK Trade
and Investment which says that 50% of European headquarters are
in the UK. There have been 469 headquarters projects in the UK
over the past decade compared with 86 in Germany, and that is
on the strength of the UK's business environment. As far as the
BCC and business community are concerned, we need to keep that
business environment working well and that investment will be
forthcoming only when we can get the skills we need for our businesses.
Q2 Chair: But the Prime Minister
has made it very clear that he wants the country to be seen as
open for business. Are you saying this means that we will be closed
for business? Do you feel that nothing could progress, or is this
something that will just be temporary?
Dr Marshall: I do not think that
is the case. The government is in an extremely tricky position
here. We and our member businesses acknowledge that there is a
strong public desire to control migration in terms of absolute
numbers and to limit its impacts. On the other side we know the
government realises there is a strong need to ensure business
competitiveness. I do not believe a cap would mean that somehow
Britain was closed to business. It would not give that signal
but it might make some businesses' immediate recruitment needs
very difficult and that could have knock-on impacts on employment,
recovery and tax revenues to the Exchequer.
Q3 Chair: Mr Ramsden, Ministers would
argue that we have a skill base in our country. Why is it not
possible for British industry to find those skills within the
United Kingdom? Why do we have to go abroad when there are so
many people with those skills here?
Mr Ramsden: What you say is absolutely
right. We have a skill base in this country and we have plenty
of people who could obtain skills. The problem is lack of training
and an inability to find the right level of training among UK
citizens which means that on occasions we have to go abroad. Under
the points system jobs must be advertised for a period of time,
but if we cannot get anybody from the UK workforce we say it is
necessary to go abroad to find those skills.
Q4 Chair: Can you tell me about consultation
between the government and yourselves on this cap? How much time
have you had to adjust to this proposal?
Mr Ramsden: Speaking personally,
I have not been involved but people within the FSB have been.
The FSB's position is that it does not believe a cap would be
advantageous to small businesses.
Dr Marshall: We are in consultation
with both the UK Border Agency and the Migration Advisory Committee.
The timescales are tight and many of our members continue to make
representations to us on this subject, so we are still collecting
evidence on it.
Q5 Dr Huppert: I want to explore
two related aspects about the effect of the immigration cap. I
am concerned particularly about some of the university issues
and high-tech businesses. I represent Cambridge where both of
these are very significant. I have evidence from the Campaign
for Science and Engineering, the Wellcome Trust and other organisations
which show that from the point of view of international working,
collaboration and global headquarters this measure could be devastating.
I would be grateful for your comments on that. I also note that
the consultations highlight the fact that there would not be any
change to the rules for ministers of religion and elite sports
people. Do you think that the message this country is sending
by saying we care about ministers of religion and elite sports
people but not scientists, teachers and doctors is the right one?
Dr Marshall: To start with the
"university" question, in part I have personal experience
of this because I arrived in Cambridge as an American student
over a decade ago and went through the system myself. I have been
on the journey through the system to become a citizen of this
country, so I declare that as a personal interest. Knowing the
number of people who came into those universities on work permits,
skilled occupation permits et cetera and the importance
that that had for collaboration and everything else, we believe
it could have a major impact, which is why we are concerned about
the mechanisms that might be brought in to deliver the government's
cap. We do not want any kind of business with a skill requirement,
be it in the public or private sector, to face restrictions which
ultimately could harm UK economic competitiveness.
Q6 Alun Michael: I want to probe
the question of the longer term. When I was Minister of State
for Industry I found this was an issue raised by companies when
considering investing in the UK in terms of questions like, "Do
you think there will be any change in the regulations?" and
their wish for certainty that they would have flexibility. Do
you believe there is a problem in relation to uncertainty about
how the rules might be applied over time?
Mr Ramsden: I believe that will
cause concern to overseas companies thinking of investing in this
country and certainly people who attain skills and wish to practise
them in the UK. I believe that uncertainty is no friend.
Q7 Mr Winnick: I am a little surprised.
In all the publicity and controversy over immigration particularly
in the months leading to and during the general election undoubtedly
it was an issue and one that was not by any means confined to
extremist groups. It could be argued that one of the parties that
form the present government made much of immigration. I am just
wondering how far you put your point of view—I may have
missed it; I do not know—against a cap and the necessity
of people being allowed in to work for all the reasons you have
given. How far did you try to put your point of view—perhaps
you did not—by advertisements and every other avenue of
communication?
Dr Marshall: I believe businesses
have been scrupulous in trying to go down every route they can
to advertise jobs and get posts advertised appropriately before
turning to the option of overseas labour. I also believe that
businesses up and down the country and members of the British
Chambers of Commerce acknowledge the concerns that immigration
has generated in local communities. What members say to me on
a daily and weekly basis is, "We would love to hire local
people for jobs but ..." There is always a "but"
at the end of the sentence. Invariably, we get into a discussion
about employability skills—the soft skills—at the
lower end of the labour market that makes things difficult for
them. They say that they turn to EU labour and in some cases,
for example care homes, non-EU labour to try to fill the skills
gaps they face. I believe there is a strong volition on the part
of the business community to respond to those concerns and to
do the right thing.
Mr Ramsden: The direct answer
is that I do not recall specific adverts being taken out during
the election by the Federation of Small Businesses. However, I
am quite sure you received a copy of our manifesto, as indeed
should all candidates, in which there was a reference to this.[1]
Q8 Mr Winnick: It is hardly what
one would describe as extensive publicity. It is not that I am
necessarily criticising you—heaven forbid—but I just
wonder why you did not join in the debate at a public level because
the accusation was that the country was being flooded and that
the previous government was responsible for every possible immigration
sin. Without taking sides, I would have thought you would have
put the point of view you have today that restrictions could be
against the national interest.
Mr Ramsden: Equally, I do not
believe that the federation has ever kept its information secret.
Q9 Mary MacLeod: I would like to
put a question about the need for skills. Mr Ramsden, you talked
about the lack of training in the UK. I would like to question
that a bit further. Is it not the case that we have companies
with great training capabilities in the UK? We also have universities
that produce more students than ever before. What are the skills
we lack in the UK for which we must go elsewhere? Do we not have
the capability to train people across the age spectrum in new
skills as and when they are needed, especially at a time when
we are coming out of the recession and we also say we shall be
tougher in terms of some of the welfare policies?
Mr Ramsden: I think you need to
understand that the Federation of Small Businesses comprises small
businesses, often people with fewer than 10 employees. Training
can be very expensive. In particular, if you are running an Indian
or Bangladeshi restaurant and need a new chef it is not likely
that the training facility will be available in this country;
you will need to go to the particular country to get that trained
chef.
Dr Marshall: We need to ask how
we address the question of migration in concert with other areas
like the skills base and the benefits system, which we have not
yet mentioned today. The question I would put is: do the skills
being provided by our universities necessarily address the needs
of business? To be frank, quite often businesses are good at stamping
their feet and saying they are not happy with the skills offered
at the high end and they need to look elsewhere for them but they
are not good are articulating directly what their needs are. There
is a need to marry up any changes to the immigration system with
better consultation with employers so we ensure that over the
longer term universities and companies generate the type of training
and skills that will be taken up immediately.
Q10 Mary MacLeod: But what have you
been doing to try to make that happen? Strategically, businesses
should be working with education and understanding what they need
in future. I find it difficult to understand why this is a new
idea and something you need to do for the future because it should
be happening on an ongoing basis.
Dr Marshall: To take the example
of chambers of commerce, in local areas around the country many
are deeply involved in schools through the Young Chamber movement,
for example, in trying to tackle worklessness. They work with
local authorities to upskill people with bite size sorts of qualifications
that will get people into work so that a business can opt for
local rather than migrant labour et cetera. I believe you
will find that business organisations are engaged on the ground
where they have that local link, because at the end of the day
the local business owners involved in them know that if their
communities are doing better their businesses will do better.
Q11 Mary MacLeod: The fact remains
that many young people who come out of universities cannot find
jobs and I think more work needs to be done.
Mr Ramsden: That may be right.
Perhaps what we need to look at are some of the degrees.
Q12 Chair: It is right that there
are people coming out of universities who cannot find jobs.
Mr Ramsden: Quite so, Mr Vaz,
but I think you need to look at the sorts of degrees they are
taking. In small businesses we are talking about specialised people.
Whenever we can get local labour of course we do so and we work
with universities and colleges in an effort to make sure they
understand our needs.
Q13 Steve McCabe: In your judgment
who will be caught by the cap? Will it be skilled or unskilled
people?
Dr Marshall: Unfortunately, the
worry is that unless the mechanisms are right the cap will catch
the skilled. If you look at companies in our membership, those
that take on unskilled labour, for example, often do so from within
the European Union and therefore it is those who cannot be restricted
legally by the cap. Our concern is over a company that comes to
us and asks: what if it needs an engineer with specialised skills
in October or November but the cap for that year has already been
exceeded? Does it mean the company takes the decision not to expand
its business? Does the company have other options open to it when
it knows that a British person with the same qualifications and
levels of skill may not be available for four or five years because
it needs to train the individual up from scratch? Therefore, it
is the skilled about whom we are concerned.
Mr Ramsden: My understanding is
that this cap will apply to tiers 1 and 2.
Q14 Steve McCabe: Can you give us
some idea of the types or levels of qualification or professional
experience we are talking about so we have a fairly good idea
of the kind of cap that will be applied and the sorts of skills
that will be unavailable?
Mr Ramsden: I have already given
one example: Indian or Bangladeshi chefs.
Q15 Steve McCabe: I think that is
quite a difficult one and that is why I pursue it. I am a Birmingham
MP. South Birmingham College is fully kitted out with a restaurant
and training workshop. The idea that you cannot train a balti
chef in Birmingham and have to bring that person in from Bangladesh
escapes me. I am curious to know what kinds of real qualifications
and skill levels—things that would not be easily done at
a local FE college—we are talking about.
Dr Marshall: Tier 1 is talking
of the highest levels of skills and the sorts of things for which
countries around the globe compete and will continue to compete.
I think your question is aimed more at tier 2 which covers such
a wide span of potential occupations; that is, everything from
a specialist engineer right through to a care home worker who
is on a shortage occupation list at the moment because we cannot
get enough care home workers to deal with our ageing population.
That is perhaps a better example. There are a number of private
businesses, many of which are in my membership or perhaps my colleague's,
that struggle to get the trained employees they need. That is
something which in a relatively short space of time—one
to two years—our further education colleges could upskill
local people to do. Business however has an immediate need. Therefore,
how do you simultaneously ensure that a business can meet its
immediate need whilst trying to remove that occupation hopefully
from that list and therefore ensure that more local people can
get it in the longer term?
Q16 Lorraine Fullbrook: Mr Ramsden,
you started by saying you believed a cap would be the wrong thing
to do because it would mean that the right person would not be
employed in the right job, but you went on to talk about the training
aspect of the UK skills base. I suggest that your argument does
not hold water. Your problem is not with immigration policy but
business skills policy. Therefore, are you not directing your
fire at the wrong policy?
Mr Ramsden: I do not think so.
If we can get sufficiently trained people from the UK workforce
that is what we will do. There is no advantage to a small business
in deliberately trying to get someone from outside, but the fact
of the matter is that we need on occasions to go beyond our own
borders to get certain specialist skills. You have heard of a
number of examples. Another one is perhaps specialist translators
where the level of training in this country is not such that we
can get our employees here.
Q17 Nicola Blackwood: As Member for
Oxford West and Abingdon I have two excellent sources of skilled
labour in my constituency: the University of Oxford and Oxford
Brookes. You are very welcome to come and hold a jobs fair there
at any time if you are in need of some skilled workers—tier
1 or tier 2. You have mentioned a number of times your concern
about the mechanism and how it would work. How do you believe
the cap can be fairly administered? Do you think it would be better
done through the existing points-based system or an alternative
system of which you are aware?
Mr Ramsden: As far as concerns
the FSB the simple answer is that it has no problem with the points
system and it being enhanced; it just does not want a cap.
Q18 Nicola Blackwood: Of any kind?
Mr Ramsden: Of any kind.
Q19 Nicola Blackwood: You have no
recommendations about the way in which it could work in the midst
of problems about how services will cope?
Mr Ramsden: Provided the points
system is sufficient then we believe that is the right strategy.
Q20 Dr Huppert: I notice that the
UKBA's consultation paper on the limits talks about the relationship
between the list of national occupational shortages and testing
the local labour market. It suggests restricting it to cases where
there is both a shortage and the local market has already been
tested which would represent quite a change. Do you have any comments
on what effect that might have?
Dr Marshall: Unfortunately, I
believe it would create a new process burden for businesses, especially
SMEs which often do not have a big HR function to help put this
through. We have to remember that businesses are subjected to
a huge amount of regulation. The question raised earlier about
certainty comes into it. There is employment regulation of a variety
of different types. When you start to change the migration tests
to which businesses must subject jobs you could create additional
uncertainty for businesses. There is also the problem that many
jobs are unique; they may not be on a national shortage list.
The job that got me my first work permit was unique; it featured
nowhere. My employer, like other employers, had to go to UKBA
with a job description and then test it in the labour market.
I believe that to create additional barriers to business getting
the skills it needs by merging those two routes would be a bit
of a distraction and problem.
Q21 Chair: Since you raised your
own work permit, obviously you are now settled here, are you?
Dr Marshall: I am a UK citizen,
yes.
Q22 Bridget Phillipson: The UK Border
Agency consultation asks whether intra-company transfers should
be included in the cap. Do you have a view on that?
Dr Marshall: Quite a clear one.
We do not support the inclusion of intra-company transfers under
the cap. If we go back to the question of European headquarters
destinations, the UK is the place for European headquarters in
part because intra-company transfers are permissible and are relatively
easy to do. Therefore, it could affect business location decisions
for inward investors and create additional cost and process burdens
for existing sponsors. We are not in favour of it.
Mr Ramsden: That is the FSB's
view, though it is outside our remit.
Q23 Bridget Phillipson: The concern
would be that it is a process open to abuse. Do you think safeguards
have been put in place to stop that kind of abuse happening or
are further ones required?
Dr Marshall: We are confident
that businesses are using the intra-company transfer route, especially
in cases of inward investment to the UK, to get the right skills
into the economy at the right time and ultimately the net economic
benefit to this country is significant.
Q24 Mr Winnick: I want to ask about
the possibility of people coming in along the lines we have been
discussing where businesses should provide private health care.
Is that desirable?
Mr Ramsden: As far as concerns
the federation there are already enough restrictions. We do not
believe that an additional burden of providing private health
care should be imposed on us.
Dr Marshall: There could also
be some perverse consequences. Effectively, you are creating a
benefit which could be denied to existing staff in that institution
which could give rise to employment law cases brought by UK residents
who might want that benefit but would not be able to access it.
Equally, it is a cost to business. We would rather look at the
migration impacts fund and perhaps look at ways for businesses
that need migrant labour at times of shortage to make a contribution
via that route. Obviously, I do not want to start creating additional
costs for my members, but if there is a need for businesses to
contribute to match the migration impacts fund then perhaps that
is something that can be explored.
Q25 Mark Reckless: It is good to
hear that business is prepared to contribute to the costs and
pay something in terms of migrants who come to benefit their companies.
To the extent it is suggested that a cap is some sort of crude
measure that will prevent particular individuals from hiring people,
is the alternative not to have an auction system where we have
certificates of sponsorship and if businesses want to bring in
someone they can bid against those? If they decide it is not worthwhile
to bring in someone that is their decision.
Dr Marshall: We are still consulting
members over particular mechanisms. As you might expect, a lot
of them have very strongly-held views. Auctions are an idea I
have seen proposed on a number of occasions, but I believe they
would require a co-ordinated global approach rather than just
a UK-only approach for it to work.
Mr Ramsden: It is something new
to me and I should like to write to you, if I may.
Chair: Mr Ramsden and Dr Marshall, it
would be very helpful if you could write to us on any issues that
you believe are relevant to this inquiry. The consultation period
is only 12 weeks and therefore we have limited time, but if you
have specific examples we will be very keen to look at them. Members
may want to be in touch with you during the recess if they wish
to look at any of your local members and visit them to see how
this will affect them. Thank you very much for coming this morning.
1 The witness later stated that "In my response
to question seven I said that we had raised the issue in our 2010
election manifesto, which was published towards the end of 2009.
On a detailed reading of our manifesto this is not the case, but
I would like to stress that the FSB has always played its part
in the ongoing debate and that we will continue to do so. As we
have repeatedly stated the introduction of any form of cap on
Tier One and Tier Two migrants would have a significant impact
on small businesses." Back
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