81.As set out in Chapter 1, the free movement of persons is a legal construct, and its foundations are in EU law. Free movement will thus end automatically when the UK ceases to be a member of the European Union and EU law ceases to apply, unless the Government negotiates continuing UK membership of the Single Market by other means, such as joining the European Economic Area, an option that the Prime Minister has explicitly ruled out.
82.The policy question for the Government, therefore, is to what extent it should seek to reproduce the free movement of persons, or elements thereof, in a future bilateral agreement with the EU. Switzerland’s experience demonstrates that it is in principle possible for a country outside the EU and the EEA to reach a bilateral agreement with the European Union on the free movement of persons.
83.For practical purposes, the free movement of persons as enshrined in EU law has two main dimensions:
84.In considering which aspects of the current arrangements to dismantle in any future agreement with the EU, the UK can in principle dismantle elements of one or both dimensions. It could seek to impose new restrictions on EU nationals’ ability to enter and/or reside in the UK, and/or it could seek to impose new, discriminatory (relative to UK nationals) terms and conditions for EU nationals taking up residence in the UK.
85.In this chapter, we focus primarily on the ‘immigration’ dimension of the free movement of persons, but we emphasise that the ‘equal treatment’ dimension is no less important, especially for migrants in non-work categories such as EU students (who currently pay tuition fees at the same rate as UK students) and those who are economically inactive, such as UK retirees (who are eligible to access healthcare on the same basis as nationals of their host country). We return to this at the end of this chapter.
86.Within the ‘immigration’ dimension, we focus on the right to long-term (more than 3 months) residence. This is because there was a clear consensus among our witnesses that the UK should not look to impose visa restrictions on EU nationals for short-term stays, both because of the disruption that could create given the sheer volume of UK-EU border crossings, and because it would be inconsistent for the UK to impose short-stay visas on EU nationals when it does not require visas for short-term stays by nationals of other countries to which it has strong economic ties, such as the United States.
87.We present below our witnesses’ views on three possible models for regulating EU immigration after the UK leaves the EU. We do not endorse any of these models, nor are they intended to capture the full range of options that might be available to the UK. They do, however, include some of the models the Government is reported to be considering.
88.The first two models—free movement with an ‘emergency brake’, and free movement with a job offer—retain the basic principle that EU nationals may settle in the UK for long-term stays, but would impose new restrictions on that entitlement. In both cases, we use the label ‘free movement’ to refer to that basic presumption, rather than to the legal provision that currently exists under EU law.
89.The third model—work permits—would require EU nationals wishing to take up employment in the UK to obtain a work permit in order to do so, and is in principle compatible with different approaches to EU nationals in non-work categories (such as the self-employed, the self-sufficient, and students), including continued free movement for those categories. There are precedents for a differentiated approach on these lines: for example, as set out in paragraphs 20 to 24, Bulgarian and Romanian nationals were subject to a work permit system from 2007 to 2014, and a work permit system currently applies to Croatian nationals, who are nonetheless free to take up residence in the UK as students, self-sufficient persons or self-employed persons.
90.A work permit model could, alternatively, also be part of a wider set of immigration rules restricting EU nationals’ ability to take up residence in the UK. This is the approach that the UK takes in respect of non-EU nationals. For example, non-EU nationals wishing to take up residence in the UK as a self-employed person need to meet the criteria of the Tier 1 (Entrepreneur) visa; and there is no dedicated route for self-sufficient non-EU nationals to settle in the UK—the nearest equivalent is the Tier 1 (Investor) visa, which requires investment of £2m or more in the UK.
91.It follows that although much of the focus below is on EU immigration for work—principally because the vast majority of EU nationals arriving in the UK are coming to work—some of the most significant policy choices facing the Government will be about how to treat EU nationals in non-work categories and about the terms and conditions of residence for EU nationals as a whole—in other words, whether they should continue to receive treatment on a par with UK nationals, or whether their terms and conditions of residence should be brought closer into line with those of non-EU nationals, for example in respect of access to public funds. Jonathan Portes made a related point:
“There is a huge difference between coming here as a European citizen, which for most practical purposes means you have the rights of a UK citizen, and coming here even as a high-skilled worker with a work permit of some sort. Your long-term prospects, integration into wider society and rights are different.”
92.An ‘emergency brake’ model can take different guises. In the ‘New Settlement for the United Kingdom’, agreed by the European Council in February 2016, ahead of the UK’s referendum, the then Prime Minister secured agreement to the creation of an ‘emergency brake’ that would have temporarily restricted EU nationals’ access to in-work benefits—permitting what might otherwise have been deemed a breach of the principle that the free movement of persons requires equal treatment of EU nationals compared to those of the host State.
93.The European Commission undertook that if, and as soon as, the Prime Minister notified the European Council of the UK’s decision to remain in the EU, it would seek to amend Regulation 492/2011 on the free movement of workers to introduce an “alert and safeguard mechanism” (or emergency brake), to respond to “situations of inflow of workers from other Member States of an exceptional magnitude over an extended period of time”. This would have authorised the UK to limit the access of newly arriving EU workers to non-contributory in-work benefits for a total period of up to four years from the commencement of employment. The Council would have been responsible for authorising the application of this emergency brake, and its use would have been limited to a period of seven years. The Commission’s undertaking lapsed upon the UK voting to leave the European Union.
94.In the aftermath of the referendum David Cameron was, however, reported to have considered seeking a different ‘emergency brake’ on EU migration as part of his renegotiation, namely one that would have allowed the UK to restrict the number of EU citizens moving to the UK in certain circumstances.
95.Precedents for provisions of this nature—also known as ‘safeguard’ clauses—can be found in the European Economic Area (EEA) agreement and in Acts of Accession of new Member States to the European Union. The 2005 Act of Accession of Bulgaria and Romania to the European Union, for example, set out transitional arrangements for the free movement of persons and included a safeguard clause, giving existing Member States the right to re-impose restrictions on labour market access by Bulgarian and Romanian nationals during the seven-year transition period, if they were undergoing or foresaw “serious labour market disturbances”.
96.Spain invoked that safeguard clause with regard to Romanian workers in July 2011. The Spanish decision was subject to authorisation by the European Commission, and the Commission’s Decision to authorise Spain’s action was itself open to review by the Council—with any Member State being entitled to request that the Council amend or annul the Commission’s Decision (by qualified majority vote) within two working weeks.
Switzerland, which is a member of EFTA, is not a signatory to the EEA Agreement but has signed a series of bilateral agreements with the EU.
The aims of the EEA Agreement are: to guarantee the free movement of persons, goods, services and capital; to provide equal conditions of competition; and, to abolish discrimination on the grounds of nationality in all 31 EEA States—the EU 28 plus the three participating EFTA States.
By virtue of the Agreement, for example, the Citizens Directive 2004/38/EC applies throughout the EEA States so that nationals of Iceland, Liechtenstein and Norway enjoy the same free movement rights as those of EU citizens when they work and reside in an EU Member State. Similarly, nationals of EU States enjoy EU rights in the three EFTA States—subject to sectoral adaptations in the case of Liechtenstein.
The EEA Agreement includes a number of Protocols and 22 Annexes that set out the substantive rules that regulate the internal market operating within the EU and the EFTA states. Adherence by the EFTA States to the principles of EU law operating within the Single Market is policed in the three States by the EFTA Court and the EFTA Surveillance Authority.
The EFTA Court is mainly competent to deal with infringement actions brought by the EFTA Surveillance Authority against an EFTA State with regard to the implementation, application or interpretation of EEA law, for giving advisory opinions to courts in the EFTA States on the interpretation of EEA rules, and for appeals concerning decisions taken by the EFTA Surveillance Authority.
The EEA Joint Committee is a forum comprising the ambassadors of the EEA EFTA States and representatives of the European External Action Service (representing the European Union). It typically meets six to eight times a year and takes decisions by consensus on the incorporation of EU legislation into the EEA Agreement.
The EEA Council is a forum comprising the foreign ministers of the EEA EFTA States and the foreign minister of the rotating EU Council Presidency. It meets twice a year and provides political impetus for the development of the EEA Agreement.
Source: The European Free Trade Association, The European Free Trade Association:[accessed 1 March 2017]
97.Article 112 of the EEA agreement allows the Contracting Parties unilaterally to apply safeguard measures “if serious economic, societal or environmental difficulties of a sectoral or regional nature liable to persist are arising”. Such measures are subject to conditions and procedures found in Article 113 of the EEA agreement, and “shall be restricted with regard to their scope and duration to what is strictly necessary in order to remedy the situation”. Safeguard measures adopted on this basis are subject to “consultations” in the EEA Joint Committee, “with a view to finding a commonly acceptable solution”.
98.Upon becoming a member of the EEA, Liechtenstein was allowed to keep in force national provisions imposing “quantitative limitations for new residents, seasonal workers and frontier workers” in respect of EU nationals and nationals of other EFTA states until 1 January 1998, notwithstanding the EEA agreement’s provisions on the free movement of persons. This arrangement was reflected in Protocol 15 of the EEA Agreement (on Transitional Periods on the Free Movement of Persons). The regime was not itself based on Article 112 EEA, but instead appears to have been designed to avoid the need to invoke Article 112: the EEA Council declared that in reviewing the transitional measures provided for in Protocol 15, “account should be taken of the elements which … might justify the taking of safeguard measures as provided for in Article 112 of the EEA Agreement”, and that the Contracting Parties “shall in case of difficulties endeavour to find a solution which allows Liechtenstein to avoid having recourse to safeguard measures”.
99.After the expiry of Protocol 15 of the EEA Agreement, the Contracting Parties came to an arrangement known as ‘Sectoral Adaptations’, under which the free movement of persons applies to Liechtenstein in principle, but EEA citizens wishing to take up residence in Liechtenstein have to obtain a residence permit, and such permits are subject to quotas. These arrangements are reviewed every five years, with the next review due before May 2019. The European Commission concluded in 2015 that Liechtenstein’s “specific geographic situation” and “unusually high percentage of non-national residents and employees” continued to make it necessary to maintain restrictions on the number of annual permits issued.
100.These precedents have led to reports that a time-limited ‘emergency brake’ on the free movement of persons has been one of the options under consideration in European capitals and within Government, not least because the temporary nature of an emergency brake would in principle be compatible with a high degree of access to the Single Market. We canvassed our witnesses’ views on whether such an approach could provide a way of delivering ‘control’ over immigration from the EU.
101.Marley Morris of the IPPR suggested that an emergency brake system “would give Ministers some control over immigration because if there were evidence of real pressures in the labour market or pressures on public services, they could say ‘We want to use the brake’. They could use it for a certain period and restrict migration for that period”. He suggested that a brake could be triggered by the sorts of circumstances envisaged in the ‘New Settlement’ in February 2016. He noted that there would have to be agreement on how long such a brake could remain in place, but that the seven-year period negotiated by the then Prime Minister could offer a starting point for negotiators.
102.Mr Morris envisaged that for an emergency brake to work in practice, it would have to be linked to “some kind of registration system for all incoming EU nationals in the UK … perhaps a bit like the worker registration scheme for A8 migrants after 2004”. He envisaged that any quantitative restriction would be enforced in the labour market, by employers, rather than at the border. Madeleine Sumption, Director of the Migration Observatory at Oxford University, noted that there was “some uncertainty” over how a quantitative limit on the number of EU citizens who could join the UK labour market might be implemented, for example whether it would involve a restriction on the issuance of National Insurance numbers, or a requirement for employers to issue a certificate of sponsorship, or some other mechanism.
103.Ms Sumption also highlighted the significance of the level at which any numerical limit might be set, and the rules on what would happen if the limit were met (for instance, whether a backlog would develop or whether applications would be rejected and require resubmission at a later date). She suggested that if a quantitative limit were set only slightly below the level of demand among EU citizens seeking to work in the UK, the impacts on employers and the labour market “could be relatively small”, while a lower limit could have “more profound” consequences.
104.The British Chambers of Commerce made the same point, indicating that their stance would depend on the level at which a brake were set: “If it is to achieve a net migration target in line with current Government aspirations, this could be very damaging to business.” They also warned of “a danger that you do not do a good job of differentiating between different types of immigration”. The Institute of Directors told us they “could potentially support freedom of movement with an emergency brake, but it depends on how that emergency brake acts in practice”, for example whether it would work on a regional or national basis, and whether systemically important sectors such as healthcare could continue to recruit from overseas as necessary.
105.The NFU expressed concern around how much notice employers would receive: “Our concern would be whether there would be a two-year warning on a brake, or 12 months, or whether it would be weeks.” NHS Employers echoed this concern, indicating they would want to know “whether it was a handbrake being applied, or a slightly gentler brake in terms of a warning to the sector”.
106.The Government emphasised the significance of the level at which any brake might be set: “If you set it at a very high level, then it would be irrelevant.” A brake set at a low level, on the other hand, could have unintended consequences: “You could have the situation at the start of the year where some employers might think, ‘If we reach the brake level, we may not be able to employ someone’. It might precipitate more people looking to employ people from the EU”. Mr Goodwill told us that, while he could see “a number of drawbacks” to a brake, the UK did already operate a cap as part of the immigration regime for non-EU workers, which he judged “works reasonably well—not because of the intrinsic way that a brake might work but because the level at which it has been set has had a negligible impact”.
107.Mr Morris envisaged that the operation of an emergency brake post-Brexit would require “some kind of independent adjudication body that was independent of both the UK and the EU which could decide whether some use of the brake was acceptable in particular circumstances”. He suggested that an independent arbitration system to resolve disputes over any future UK-EU treaty was likely to be needed in any event, and that the adjudication mechanism he had in mind could be built into that system. Stephen Booth of Open Europe noted that, under the ‘New Settlement’, “the European Commission and the European Court of Justice would [have been] the arbiters.” He predicted that was “not going to be a workable situation in the new relationship”.
108.Our witnesses were divided over whether the EU-27 would be receptive to the idea of the UK operating an emergency brake or safeguard clause. Mr Morris suggested there were “two main reasons why this proposal is most likely to see a potential compromise”: first, that an emergency brake would be “temporary”, and second, that it would “involve some evidence base”. In his view, the temporary nature of an emergency brake would mean that “it did not amount to a fundamental undermining of the principle of free movement” and would therefore be compatible with a high degree of access to the Single Market. Furthermore, having to provide evidence of pressures from migration “would make the European Commission and the other institutions far more comfortable with such a deal”. He noted that the European Commission had “already accepted, in the past year, the principle that there are these very high levels of migration to the UK, so there is something to go on”.
109.Zsolt Darvas, Senior Fellow at Bruegel, told us he could “well imagine safeguard clauses in the immigration treaty between the UK and the European Union”. He noted that many treaties included safeguard clauses, and that Cyprus had in 2013 used a safeguard clause in the TFEU to introduce restrictions on the free movement of capital, “on grounds of public policy or public security”. He argued there should be “very clear reasons spelled out in the treaty for when [safeguard clauses] can be triggered”, and that any treaty should specify “the exact conditions that have to be met in order for them to be activated”.
110.Stephen Booth suggested that the usefulness of a safeguard clause would depend on the relationship that the UK and the EU struck: “If, for example, the UK says, ‘We are going to go for quite a flexible and open starting point, in which we presume quite a lot of free movement, but we reserve the right to stop it’, that might be a safeguard clause you could describe.”
111.Camino Mortera-Martinez, of the Centre for European Reform, judged that a brake “would be very unlikely to be offered”. This was because, first, “an emergency brake is embedded against a wider free movement background” which the UK Government appeared to have set itself against; and second, “because any emergency brake—be it the one in the EEA treaty or the one that Spain triggered in 2011—is temporary and has to be justified”. She “struggled to see how the UK could even justify triggering this brake on the basis of economic considerations, because there is no evidence”. Lord Green of Deddington, Chairman of Migration Watch UK, told us he did “not think that this is negotiable”, and argued that it was in any event “not worth having if it is only temporary”.
112.In August 2015, Rt Hon Theresa May MP, then Home Secretary, wrote in The Sunday Times:
“Reducing net EU migration need not mean undermining the principle of free movement. When it was first enshrined, free movement meant the freedom to move to a job, not the freedom to cross borders to look for work or claim benefits. Yet last year, four out of 10 EU migrants, 63,000 people, came here with no definite job whatsoever.”
More recently, the current Home Secretary, Rt Hon Amber Rudd MP, has suggested that EU nationals arriving in the UK to look for work “might be an area we would want to look at”.
113.In the year ending June 2016, an estimated 82,000 EU nationals arrived in the UK looking for work—43% of the total number of EU immigrants. This was the highest estimate recorded, and a statistically significant increase of 21,000 compared with the previous year. In principle, then, restricting EU migration to those individuals that have a job offer before arriving in the UK could affect a meaningful proportion of those arriving from the EU.
114.This has led some to suggest that a light-touch work permit system, under which any EU citizen with a job offer in the UK would qualify for a work permit, could provide a way of reconciling the UK’s objectives on control of immigration from the EU and access to the Single Market. We present below our witnesses’ views on whether restricting free movement for workers to those with a prior job offer could provide a way of delivering ‘control’ over immigration from the EU.
115.A number of employers’ organisations told us they would support restricting free movement of persons to individuals with a job offer in the UK. The British Chambers of Commerce described it as “the most appealing” of the options, because it would allow businesses “to access the skills they want”, a view echoed by the CBI and the Institute of Directors. The NFU told us retaining the free movement of workers with a job offer was “by far and away our preferred option”. NHS Employers said that this arrangement was in their view the “most proportionate and sensible” of the options.
116.The British Chambers of Commerce drew our attention to the enforcement of a job offer requirement, suggesting that “given the flexibility that [this system] might offer to businesses, there could be a trade-off where businesses take a role in enforcement”. They warned that “businesses would be concerned if the Home Office were to do it, given the bureaucracy that might result from that.”
117.Madeleine Sumption, Director of the Migration Observatory at Oxford University, also considered how such a requirement might be implemented, asking “at what point the worker would have to demonstrate that they have a job offer, to whom, and using what documentation”. She emphasised that details such as whether any job would qualify (regardless of hours or level of pay), and the rules applying to the self-employed, “could significantly affect the impacts of the policy and the number of people who qualified under it”.
118.Ms Sumption also drew attention to the implications of operating such a system against the backdrop of visa-free travel for EU citizens: “It would still presumably be possible for workers to come to the UK to look for work but return home and re-enter with a job offer.” She judged that “as a result, this option probably represents the smallest departure from the status quo”. A similar verdict was reached by Jonathan Portes.
119.The Trades Union Congress (TUC) warned of possible “unintended consequences” from introducing a job offer requirement: “We would be worried about any expansion in the number of employment agencies recruiting solely outside of the UK, therefore not giving the opportunity to local people to apply for jobs”. They too judged that the introduction of a job offer requirement was “unlikely to make an enormous difference to the numbers”. Migration Watch UK also suggested that a job offer requirement “would be a boon for employment agencies”, and that it “would be unlikely to have any significant effect on numbers”.
120.The ‘job offer’ model described above is ultimately a variant of a work permit system. Under a work permit system, an EU national wishing to take up employment in the UK would require a work permit. A work permit system can be more or less restrictive, depending on the criteria for obtaining a work permit and the processes that individuals and employers have to follow (which may include paying fees). As we noted earlier, a work permit system would in principle be compatible with a range of different approaches—again more or less restrictive—to EU immigration for other purposes (study, self-sufficient persons, and so on).
121.The UK has experience of operating work permit systems in respect of EU nationals: the system of transitional controls on free movement that the UK currently applies to Croatian nationals, and that which it applied to Bulgarian and Romanian nationals from 2007 to 2014 (see paragraphs 19–23) were work permit systems, which applied to employees only. Nationals from those countries falling into other categories, such as students, self-sufficient persons and the self-employed, were able to exercise full free movement rights from the outset.
122.The UK also has experience of operating work permit systems in respect of non-EU nationals, for whom it currently operates an elaborate system of work visas (or permits)—the ‘Points Based System’ (PBS). The numbers of visas issued under the PBS in the year ending September 2016 are shown in Figure 7.
Source: Home Office Immigration Statistics July to September 2016
123.Tier 2, under which the majority of work-related visas are issued under the PBS, is itself made up of four routes: Tier 2 (General), Tier 2 (Intra Company Transfers), Tier 2 (Minister of Religion) and Tier 2 (Sportsperson). The number of visas issued to ‘main applicants’ (as opposed to their dependants) under each category in the year ending September 2016 is shown in Figure 8. The most-used route was the Tier 2 Intra-Company Transfer (ICT) route, under which individuals already employed by a company abroad can transfer to an office of the same company in the UK if they are in a graduate job and meet occupation-specific salary requirements. Professor Alan Manning, Chair of the Migration Advisory Committee, told us that the ICT route was currently “very heavily dominated by a few users, which are essentially Indian IT servicing companies”. Main applicants admitted to the UK under Tier 2 are entitled to bring dependants. Neither main applicants nor their dependants are entitled to have recourse to public funds (meaning that, with some limited exceptions, they are not able to claim most benefits, tax credits or housing assistance provided by the state).
Source: Home Office Immigration Statistics July to September 2016
124.Tier 2 (General) visas are capped at an annual limit of 20,700, and are available subject to minimum skill and pay thresholds. Tier 2 (General) is itself made up of two routes: the shortage occupation list (SOL) route and the resident labour market test (RLMT) route. Under the RMLT route, the employer needs to attest that there is no suitable resident worker available to fill the post, having advertised it to resident workers for a set period. Jobs offered through the RLMT route need to meet skill and salary thresholds (£30,000 from April 2017, subject to occupation-specific requirements). In 2015, 90% of Tier 2 General applications were made under the RLMT route.
125.Jobs on the Shortage Occupation List (SOL) are exempt from the requirement to meet the resident labour market test, and are subject to salary thresholds specific to each job (which can be lower than the RLMT threshold). Each year two SOLs are published: a UK list that applies to the entire United Kingdom (including Scotland) and a Scotland list that applies only to jobs in Scotland. In 2015, the top 5 occupations using the SOL accounted for over 50% of applications. These were: medical practitioners (19%), design and development engineers (12%), secondary education teaching professionals (10%), chefs (8%) and civil engineers (6%). Nurses were added to the SOL in 2016.
126.If the UK were in future to adopt a work permit system for all EU nationals seeking to take up employment, the Government would initially have to decide whether that system should treat EU nationals preferentially relative to non-EU nationals (to whom the system described in paragraphs 122–125 currently applies).
127.The CBI argued that “trade and movement of labour are frequently linked together, and linked with your closest neighbours, which is why it is important and sensible to have a preferential system for EU migrants”. Stephen Booth suggested that “given the huge number of people, both EU citizens in the UK and vice versa, and the geographical proximity, there is an argument for saying, ‘This is a different relationship’”.
128.By contrast, Migration Watch UK suggested that EU migration for work should be brought into the UK’s existing work permit scheme for non-EU nationals. Lord Green of Deddington argued that by restricting work permits to skilled workers, as the UK’s non-EU work permit system partly does, net migration from the European Union could be reduced “by something of the order of 100,000 a year”. He suggested that “we cannot and should not go on with a very large inflow of people coming to work in low-skilled jobs because of the implications for our population which are very severe”.
129.During the referendum campaign, the Leave campaign also advocated a system that “welcomes people to the UK based on the skills they have, not the passport they hold”—implicitly advocating a system that did not afford preferential treatment to EU nationals.
130.The employers’ organisations from whom we took evidence were uniformly opposed to the prospect of applying the UK’s current Points Based System to EU nationals. The CBI took the view that the non-EU system was “problematic for skilled workers, as it takes a long time; and it does not allow for the sorts of non-graduate labour that we need”. The Institute of Directors told us:
“The current UK system for non-EU migration is governed by 13 different Acts of Parliament, involving 10,000 pages of guidance, and has 1,400 different categories of immigrant. Visa applications typically take between three and eight months to process. The forms that an employer must fill out typically comprise about 100 questions and 85 pages for a visa. It is very time-consuming and onerous, particularly for our smaller members”.
The British Chambers of Commerce argued that “businesses are generally struggling with the current Tier 2 system for non-EU workers, because of the bureaucracy, the cost and the time it takes to navigate that system”, and said it was the model they “would be most likely to dismiss out of hand”.
131.The NFU said they would have “many concerns about a straight application of the non-EEA approach” to EU nationals. NHS Employers also argued that “if there is to be a single system … it should not be the present non-EEA system applied to everybody”. They told us that their recent experience of non-EU recruitment had “not been a positive one”, and that until nurses were added to the Shortage Occupation List, “the competition for Tier 2 permits was very fierce … social care and health organisations were losing out to other organisations that, in effect, paid more wages”.
132.The British Chambers of Commerce told us that the Tier 2 non-EU system was “riddled with complexity”, and “very difficult for small and medium-sized businesses to use”. Marley Morris of the IPPR also suggested that SMEs would “really struggle” with a non-EU work permit system for EU nationals, because they have hitherto been “able to recruit very easily from the EU, and many have not registered as a Tier 2 sponsor … it is a whole new bureaucratic process for them”.
133.In contrast, the Government judged that the UK’s non-EEA immigration system was “very effective”, and that systems were working well, such that “it may be that some aspects of those non-EEA systems could be applicable to EU citizens”.
134.Marley Morris of the IPPR suggested that if the UK were to apply the PBS to EU migrant workers, the “sheer extent of those restrictions” would be “quite extraordinary”. He added that it would have “quite a sizeable impact” on sectors that have come to rely on EU workers but where the jobs on offer generally do not meet the requirements of the non-EU system.
135.Both Marley Morris and Madeleine Sumption drew our attention to research by Oxford University’s Migration Observatory on the number of jobs in different sectors that would meet the criteria for work visas for non-EU citizens. According to that research, skills-based selection criteria would affect employers’ ability to sponsor EU workers in some industries much more than others. Some of the occupations and industries in which employers have relied most on workers from EU countries in recent years are those in which the smallest shares of jobs are currently eligible for non-EU work visas. For example, the ‘distribution, hotels and restaurants’ industry category is the largest employer of EU-born workers, but only 6% of all employees in that sector were in graduate jobs paying at least £20,000 in 2015.
136.The potential for labour shortages in specific sectors if EU nationals were to be subject to the PBS was raised by employers’ organisations. The British Chambers of Commerce told us that there was “a crucial distinction” between skills shortages and labour shortages: “A lot of the angst in the business community is in lower-skilled opportunities and jobs that are currently filled by EU workers”. They went on to argue that there “needs to be a system for allowing migration to fill those jobs; otherwise some of those industries and sectors will be at risk”. The Institute of Directors also warned that “certain sectors are at risk of a simple labour shortage”, which was “not a skills issue but a numbers issue, and it could have knock-on effects on the supply line and the cost to consumers and to businesses”. The CBI said that many sectors “currently face skill shortages” in respect of skilled jobs, and “labour shortages” in respect of non-graduate labour.
137.The NFU warned that sectors such as horticulture “will shrink … to the size of the workforce”. They raised similar concerns about food processors and manufacturers, suggesting that “for them, labour is on red alert too”.
138.NHS Employers told us that they had seen “a growth in EU nationals joining our workforce” in recent years, particularly as trained nurses—with the number of NHS nurses from the EU doubling from 10,500 three years ago to 22,000 now. They also reported that the social care sector had seen “quite significant growth in EU nationals coming in to do the non-diploma, non-degree type roles, so the care assistant-type roles, domiciliary roles in people’s homes and in care homes”. They warned that, although 92% of the social care workforce and 94% of the NHS workforce were UK nationals, the cost of living in London and the south-east meant that “we are more reliant down here on EU nationals entering our workforce than we are in some other parts of the country”. They would face “regional challenges” were they to lose access to that source of labour.
139.Linked to the potential for labour shortages is the question of whether existing stocks of EU nationals in the UK may be able to compensate for restrictions on future flows. Migration Watch UK suggested that “there is no cliff-edge as far as employers are concerned”, because “EU migrants in low-paid jobs who arrived in 2004 are still here”. They argued that it was a “reasonable assumption that the existing labour force will decline slowly rather than quickly and that would help to give time for employers to adjust”. Marley Morris of the IPPR, on the other hand, noted that there was “limited data on the churn of EU migration”, and that employer groups reported “very high levels of churn in sectors such as hotels and restaurants”. He warned that “if we were going to impose a new system, it would affect new people coming in, and if there is lots of churn in the system in the form of short-term migration, that is going to have a big impact”.
140.A number of witnesses raised the prospect that a future work permit scheme for EU nationals could include special arrangements for specific sectors. Open Europe noted that there “might have to be special routes for certain sectors of the economy”, while Madeleine Sumption suggested there “may be some exceptions if the Government decided they wanted to facilitate low-skilled migration into particular sectors like agriculture, social care or whatever”. The British Chambers of Commerce argued that a scheme to allow “the key sectors of agriculture, hospitality and care to access those workers is crucial”, warning that those industries were “under pressure with the increase in the National Living Wage”, and that “further restrictions to the labour pool they can access, and the potential for them to drive up wages, could have a knock-on impact on prices”.
141.Migration Watch UK told us that the scheme they were proposing was in principle “adjustable in the light of the evidence if there is a clear case of a need for low-skilled workers that cannot be met by British workers”. Possible adjustments could include a seasonal agricultural workers scheme (SAWS), a shortage occupation list, and a youth mobility scheme, all of which exist, or have in the past existed, as part of the UK’s non-EU immigration system. Migration Watch acknowledged that any “transitional arrangements” of this nature would mean that the “100,000 figure [the reduction in net migration from the EU they estimate their scheme would deliver] would be lower”.
142.The Government seemed open to the idea of a sectoral approach, noting that “different models may apply to different types of worker and different types of people”, and that the UK already operates “shortage occupation lists and resident [labour] market tests for non-EU [nationals] and that is one aspect that may be relevant”. Mr Goodwill explicitly cited a seasonal agricultural workers scheme as “one model that might be worthy of consideration”, suggesting that “as that is short term [that is. migrants stay for less than 12 months], that does not affect net migration and has less impact on local communities”.
143.Jonathan Portes warned that “fine-tuning often feels like a good idea, but it is more difficult to manage”. He identified a trade-off:
“Do we try to create a system that responds in individual sectors to the different priorities the Government are trying to meet, potentially at the cost of having a system that is very complicated and may be more difficult to enforce because the Home Office would have to police the boundaries between different categories and manage sub-quotas of people?”
144.As noted above, an important aspect of any future immigration arrangements for EU nationals will be how non-work categories—such as students, self-sufficient persons, retirees and the self-employed—are regulated.
145.We heard conflicting views of how straightforward it would be to retain free movement—or something close to it—for EU nationals in non-work categories. Madeleine Sumption suggested that “if some people are authorised to work and others are not, you need a way of distinguishing between them; otherwise in principle everyone could say, ‘I am one of those people authorised to work’, and there is no verification process.” Professor Manning, Chair of the Migration Advisory Committee, made a similar point:
“It is very important to have an immigration system that you have an overall view of, rather than think of each route as a self-contained silo, because we have seen some evidence that if, for example, you make entry into the UK harder through one route, those people who would like to come to the UK move over to another route … you have to make sure in any system … that these are legitimate students, and that a self-sufficient person is a legitimate self-sufficient person. You have to have some verification, so in a sense there has to be some degree of control and of checking that they are what they claim to be. I am not quite sure whether that is exactly free movement anymore.”
146.Jonathan Portes, on the other hand, did not see “any particular problem with retaining free movement for, say, economically self-sufficient people at the same time as saying we are going to end the free movement of workers”. He argued that “ending free movement will in practice be enforced in the workplace”, and envisaged that in practice, the UK would “still allow people who are economically self-sufficient to come here and do pretty much what they want.”
147.Migration Watch UK proposed that a work permit system for EU nationals who have been offered highly skilled jobs should operate alongside “continued free movement for European tourists, students, the financially self-sufficient, business visitors and genuine marriage partners”, but also envisaged that EU students should be treated analogously to non-EU students once in the UK. Marley Morris of the IPPR observed that the latter would “obviously not be free movement of students or family members in quite the same way as now—there would have to be restrictions across all those different groups, not just workers, if you were to implement a system like that”.
148.As described in Chapter 1, the free movement of persons encompasses not only the right to live, work, or study in another EU Member State, subject to certain conditions, but the right to equal treatment compared to nationals of the host State. Dismantling free movement rules therefore has implications not only for EU nationals’ right to be admitted to the UK, and their right to reside in the UK for different purposes, but potentially also for their right to access public funds, including the benefits system. As noted above, non-EU nationals and their dependants in the UK may not access public funds (with limited exceptions) unless and until they obtain permanent residency (known as Indefinite Leave to Remain).
149.Some of our witnesses anticipated that this aspect of the current free movement arrangements was likely to change post-Brexit. Stephen Booth observed: “At the moment, we treat EU citizens for some purposes effectively as UK citizens … For non-EU citizens, we say, ‘You have to be here for five years before you have those rights’. That is an area where it makes a lot of sense to look at parity between EU and non-EU”. Jonathan Portes anticipated that EU nationals were likely to face the same rules as non-EU nationals in future: “Presumably we will say that people cannot claim until they have established permanent residence”.
150.Mr Goodwill seemed again to envisage that the continuing entitlement of EU citizens to access public funds would form part of negotiations with the EU: “While we are discussing people’s rights or the ability to come here and work, quite aside from that is the ability of people to claim in-work or indeed out-of-work benefits. That is something else we would need to discuss”. He predicted there would be “reciprocal agreements, for example on access to healthcare”. He also suggested that whether or not access to in-work benefits such as housing benefit and tax credits was available “makes a big difference to the attractiveness of UK low-paid, low-skilled jobs”.
151.A number of witnesses highlighted the significance of the ‘equal treatment’ dimension of free movement for EU nationals in non-work categories. This included Mr Goodwill, who suggested that in respect of EU students, the “sticking point” was likely to be “how they engage with our existing system of tuition fees and loans, rather than necessarily the immigration system”, bearing in mind that even under the non-EU system, the UK has not placed a limit on the number of students that may be admitted to the UK.
152.The question of who would enforce any new arrangements was raised by a number of our witnesses, especially employers’ organisations. Madeleine Sumption noted that employers would need a way to understand who had work authorisation and who did not; and workers would need to be able to document that they were complying with the rules. She predicted that any new system that significantly restricted the right of EU citizens to work in the UK “would come with enforcement challenges, just as is currently the case for non-EU citizens.”
153.NHS Employers drew attention to the “balance between what the employer has to do and what the state has to do”, and advocated minimising “the burden on employers, large or small, in terms of that enforcement.” The Institute of Directors echoed this, noting that “in recent years, we have seen efforts by Government to control immigration by placing the onus on employers”. They pointed to “landlords having to do background or immigration checks before renting out a home, and employers having to do similar assessments of the paperwork they are given”, and argued that “the Home Office is inherently better placed to assess such paperwork, because it has expertise in this area”.
154.Jonathan Portes warned that any departure from the current system would be “an absolutely huge challenge” for the Home Office, who currently “do not have to worry about Europeans” from an immigration point of view. He argued that it would be “very important that the Government give the Home Office the resources it needs—people, systems and time—to make any new system work.” But he also emphasised that it would be important to design from the outset a system “not just on the basis of what is seen to be politically acceptable or desirable but on the basis of what can be enforced given the available resources”. In his view there would be “a very strong premium in designing any new system to make sure it is light-touch, non-bureaucratic, non-intrusive, does not require visiting every employer in the country and does not require employers to wade through huge numbers of forms so they have to call a helpline for it to be interpreted”.
155.The Airport Operators’ Association drew our attention to the current ‘soft border’ regime for EEA and Swiss nationals, focused on the verification of identity, contrasting it with the ‘hard border’ regime faced by nationals of other countries, who are subject to additional questioning by Border Force officers regarding the purpose of their visit. They suggested that “if EEA and Swiss nationals were to be subject to full border checks, this would be highly disruptive for passengers, airlines and airports alike”. They also anticipated that a ‘hard border’ regime for EEA and Swiss visitors “would require Border Force to commit significantly more resources to processing these travellers”, commenting that even if significant new resources were allocated, “queuing times for European visitors would still almost double”. The current Key Performance Indicators regime stipulates maximum waiting times of 25 minutes for EU/EEA and Swiss citizens and 45 minutes for all other nationalities.
156.As we noted in Chapter 1, the age profile of UK citizens who are long-term residents of other EU countries suggests that the largest group within that cohort are likely to be working in the EU, while the next-largest cohort are likely to be retired or nearing retirement. We asked our witnesses to comment on the implications that different options for regulating EU immigration in future might have for UK nationals wishing to move in the opposite direction.
157.Madeleine Sumption emphasised that whether UK citizens would face exactly the same requirements in the EU as the UK imposed on EU citizens in the UK would depend on whether the EU adopted bespoke arrangements for UK nationals (perhaps as the result of a negotiation with the UK), or whether it chose to treat them as third-country nationals subject to EU law and/or each Member State’s generic immigration policies towards non-EU citizens. Subject to that caveat, she anticipated that “an emergency brake with a relatively high quantitative limit would be expected to have a more limited impact on UK citizens moving to other EU countries than a full work permit system in which UK citizens had to meet the same criteria as non-EU citizens”.
158.Mr Goodwill envisaged that UK nationals would be subject to bespoke arrangements: “Whatever agreement we have with the European Union will be a two-way agreement. It will apply to EU citizens wishing to come and work here, and there will be parallel negotiations about British people who want to live, work or study in the European Union”.
159.Zsolt Darvas, Senior Fellow at Bruegel, predicted that “the EU-27 would be open to full labour mobility with the UK. That is very obvious … from the statements made by many Heads of State. It is the UK that wishes to restrict immigration and … one of the principles will be symmetry.”
160.Migration Watch UK anticipated that “whatever is agreed is likely to be reciprocal”, and suggested that “reciprocity in relation to work permits does not strike us as being a particular problem”. Marley Morris of the IPPR questioned whether a strictly reciprocal arrangement such as that envisaged by Migration Watch would appeal to the EU-27: “All those [UK] retirees can move abroad to Spain or France, but it does not benefit these many eastern European and western European migrant workers who want to come to the UK.”
Source: Richard Gordon QC and Rowena Moffat, The Constitution Society, Brexit: The Immediate Consequences (2016), pp 53–56
161.The free movement of persons between the UK and other countries in the EU is set to end automatically when the UK ceases to be a member of the European Union and EU law ceases to apply. The policy question facing the Government, therefore, is what aspects of the free movement of persons, if any, it wishes to see reproduced in any future bilateral agreement with the European Union.
162.For practical purposes, the free movement of persons as currently defined in EU law has two main dimensions: the right to entry and residence in another Member State, and the right to equal treatment compared to nationals of the host State. In any future arrangement between the UK and the EU, it would in principle be possible to reproduce elements of one or both dimensions. In this inquiry, we have focused on the immigration dimension, but it is important to emphasise that the equal treatment dimension is no less important, for example for prospective UK retirees in the EU and EU students in the UK.
163.Given that almost three-quarters of EU migrants to the UK come to work, or look for work, any new controls may focus on those categories. But any controls placed on EU workers in future are independent from the controls that may be placed on EU nationals in other categories, such as students, self-sufficient persons and retirees. It would in principle be possible to retain something resembling free movement for EU nationals in these other categories—an approach for which there are precedents—or the UK could treat them in the same way it treats non-EU nationals.
164.Placing EU students, self-sufficient persons and retirees on the same footing as non-EU nationals in those categories could have significant implications for UK nationals wishing to move in the other direction. At the same time, it is not a given that a strictly reciprocal arrangement for these categories will appeal to the EU-27, bearing in mind that the composition of EU migration to the UK is different from that of UK migration to the EU.
165.If the Government were to opt for controls on EU nationals coming to the UK to work, a work permit system seems likely. Such a system could be designed to put EU nationals on the same footing as non-EU nationals, or it could award preferential treatment to EU nationals.
166.Employers’ organisations were alarmed at the prospect that EU nationals might in future be subject to the UK’s non-EU immigration regime, the ‘Points Based System’. To do so would disproportionately affect some employers’ ability to sponsor EU workers, and could result in labour shortages in some areas, including in publicly-funded sectors such as the NHS and social care, and in horticulture, where the closure of the Seasonal Agricultural Workers Scheme at the end of 2013 was premised on growers having unrestricted access to workers from the EU.
167.To mitigate this, the Government may be tempted to consider a work permit system that is restrictive at first glance, but hedged with exemptions for particular sectors and schemes, such as a Seasonal Agricultural Workers Scheme. This approach could produce the worst of all worlds, failing to deliver a meaningful reduction in immigration while also proving more onerous and costly for employers, prospective applicants, and those charged with enforcement.
168.In considering various models for regulating future UK-EU migration, we have not sought to capture the full range of options that may be available, nor to endorse any specific approach, but to set out the implications of different models as we see them. There may be other, better models for managing EU immigration post-Brexit, which we have not considered. Moreover, there may be trade-offs between the level of access to the Single Market that the UK is able to secure in a future Free Trade Agreement and the precise arrangements for future migration between the UK and the EU. Rather than recommending a particular model, therefore, we emphasise that it is vital that the Government should not close off options ahead of any negotiation with the EU-27.
169.This said, we note there may be benefits to the UK in offering preferential treatment to EU nationals compared to non-EU nationals in the UK’s future immigration regime. That approach could increase the likelihood of securing reciprocal preferential treatment for UK nationals in the EU, and also improve the prospects of achieving the UK’s objectives on access to the Single Market.
97 Agreement on the Free Movement of Persons (, 21 June 1999). See footnote 23.
98 , . See also the Home Secretary’s evidence to the House of Commons Home Affairs Committee, as part of which she indicated that “having visa travel for the European Union in the same way that we have it for other countries is certainly something we would seek to avoid in any discussions”, 31 January 2017 (Session 2016–17), .
99 Financial Times, UK work permits at heart of Brexit immigration plan (16 January 2017): [accessed 22 February 2017]
100 Subject to obtaining the relevant registration certificates from the Home Office, see Home Office, Guidance for nationals of Croatia on obtaining permission to work in the UK (March 2016): [accessed 22 February 2017]
103 For further analysis, see European Union Committee, (9th Report, Session 2015–16, HL Paper 122), paras 199–215
104 Financial Times, Cameron pins Brexit on EU failure to grant UK brake on migration (29 June 2016): [accessed 22 January 2017); Huffington Post, Iain Duncan Smith: Germany blocked UK plans for Emergency Brake on Migration, (10 May 2016): [accessed 22 February 2017]
105 European Commission, Press Release: ‘The Commission accepts that Spain can temporarily restrict the free movement of Romanian workers’ (24 January 2017): [accessed 28 February 2017]
106 Commission Decision 2011/503/EU of 11 August 2011 authorising Spain to temporarily suspend the application of Articles 1–6 of Regulation No 492/2011 on freedom of movement for workers within the Union with regard to Romanian workers (, 12 August 2011, pp 22–24). This was extended by Commission Decision 2012/831/EU of 20 December 2012 (, 22 December 2012, pp 90–92).
107 of the EEA agreement provides that any safeguard measures taken “shall be the subject of consultations in the EEA Joint Committee every three months from the date of their adoption with a view to their abolition before the date of expiry envisaged, or to the limitation of their scope of application”. In addition, each Contracting Party to the EEA Agreement is entitled to request at any time that the EEA Joint Committee review a safeguard measure. provides that if a safeguard measure taken by a Contracting Party “creates an imbalance between the rights and obligations” under the Agreement, any other Contracting Party may take “such proportionate rebalancing measures as are strictly necessary to remedy the imbalance.”
109 , Declaration on p.26
110 European Commission, , Communication from the Commission to the Council and the European Parliament, Liechtenstein Sectoral Adaptations—Review, 28 August 2015
111 The Observer, Brexit: EU considers migration ‘emergency brake’ for UK for up to seven years (24 July 2016): [accessed 22 February 2017]; Financial Times, UK work permits at heart of Brexit immigration plan (16 January 2017): [accessed 22 February 2017]
116 Supplementary written evidence from Madeleine Sumption (). See also Jonathan Portes, ‘The EEA Minus Option: Amending not Ending Free Movement’ (5 July 2016): [accessed 22 February 2017], where he highlights the practical difficulties around using National Insurance numbers to operate this type of system, notably because a significant number of EEA nationals not currently resident in the UK have been issued with an NI number.
117 Supplementary written evidence from Madeleine Sumption ()
123 The annual cap of 20,700 on main applicants under Tier 2 (General)—see para 124.
126 . On this issue see also Annex A on dispute resolution mechanisms in the Government’s White Paper, .
132 Article 65(1b),
137 Theresa May MP, ‘A borderless EU harms everyone but the gangs that sell false dreams’, The Sunday Times (29 August 2015): [accessed 22 February 2017]
138 Oral evidence taken before the House of Commons Home Affairs Committee, 31 January 2017 (Session 2016–17), (Theresa May MP)
139 ONS, Quarterly Migration Statistics (1 December 2016): [accessed 22 February 2017]
140 See for example Financial Times, ‘William Hague backs work visas for EU citizens after Brexit’ (13 January 2017): [accessed 22 February 2017] though note that Lord Hague’s proposal also involves scaling back EU nationals’ access to welfare support (public funds).
146 Supplementary written evidence from Madeleine Sumption ()
147 Supplementary written evidence from Madeleine Sumption ()
149 Supplementary written evidence from Madeleine Sumption (), and Jonathan Portes, The EEA Minus Option: Amending not Ending Free Movement (5 July 2016): [accessed 22 February 2017]
152 Technically this category covers all foreign nationals except EEA and Swiss nationals, but the term ‘non-EU’ is used here for simplicity.
153 Home Office, ‘Work Visas’: [accessed 28 February 2017]
155 See Home Office, Immigration Rules Appendix J: codes of practice for skilled work, 3 January 2017: [accessed 28 February 2017]
156 Professor Sir David Metcalf, Chair of the Migration Advisory Committee and London School of Economics, Work Immigration and the Labour Market, slide 17, (June 2016): [accessed 22 February 2017]
157 Professor Sir David Metcalf, Chair of the Migration Advisory Committee and London School of Economics, Work Immigration and the Labour Market, slide 11, (June 2016): [accessed 22 February 2017]
160 Supplementary written evidence from Migration Watch UK ()
163 Vote Leave Take Control, Why Vote Leave: [accessed 28 February 2017]
174 Migration Observatory, University of Oxford, Potential Implications of Admission Criteria for EU Nationals Coming to the UK (2 May 2016): [accessed 22 February 2017)
176 Migration Observatory, University of Oxford, Potential Implications of Admission Criteria for EU Nationals Coming to the UK (2 May 2016): [accessed 22 February 2017)
189 . The Seasonal Agricultural Workers Schemes allowed fruit and vegetable growers to employ migrant workers as seasonal workers. The last such scheme applied to Bulgarian and Romanian workers, who were eligible to come to the UK for up to six months at a time, subject to an annual quota of 21,250 SAWS participants. The scheme closed at the end of 2013, ahead of the lifting of transitional labour market controls on Bulgarian and Romanian nationals from 1 January 2014. Prior to 2007, the SAWS was open to non-EEA nationals. It was restricted to EU2 nationals in 2007 with a view to phasing it out as the EEA labour market accessible by the horticultural sector expanded. For further details, see: Rt Hon Mark Harper, Written Ministerial Statement on the Seasonal Agricultural Workers Scheme and the Food Processing Sectors Based Scheme, 12 September 2013: [accessed 1 March 2017]
198 Supplementary written evidence from Migration Watch UK (), para 1
206 Supplementary written evidence from Madeleine Sumption ()
209 . See also
210 See also para 122 of European Union Committee, (10th Report, Session 2016–17, HL Paper 82) with regard to the challenge of requiring EU nationals resident in the UK to apply for Indefinite Leave to Remain.
213 Written evidence from the Airport Operators Association (), paras 16–19
214 Supplementary written evidence from Madeleine Sumption ()
215 Supplementary written evidence from Madeleine Sumption ()
220 Regulation 562/2006/EU of 15 March 2006 on the Schengen Borders Code (, 13 April 2006, pp 1–32) (and associated implementation secondary legislation); Regulation 539/2001/EC of 15 March 2001 listing the third countries whose nationals must be in possession of visas and those whose nationals are exempt from that requirement (, 21 March 2001, pp 1–7) and Regulation 810/2009/EC of 13 July 2009 establishing an EU code on visas (and associated implementation directives).(, 15 September 2009, pp 1–58)
221 Council Directive 2009/50/EC of 25 May 2009 on the conditions of entry and residence of third-country nationals for the purposes of highly qualified employment (, 18 June 2009, pp 17–29)
222 Council Directive 2014/66/EU of 15 May 2014 on the conditions of entry and residence of third-country nationals in the framework of an intra-corporate transfer (, 27 May 2014, pp 1–22)
223 Council Directive 2005/71/EC of 12 October 2005 on a specific procedure for admitting Third Country Nationals for the purposes of scientific research (, 3 November 2005, pp 15–22)
224 Council Directive 2014/36/EU of 26 February 2014 on the conditions of entry and stay of third-country nationals for the purpose of employment as seasonal workers (, 28 March 2014, pp 375–390)
225 Council Directive 2004/114/EC of 13 December 2004 on the conditions of admission of third-country nationals for the purposes of studies, pupil exchange, unremunerated training or voluntary service (, 23 December 2004, pp 12–18)
226 Council Directive 2003/109/EC of 25 November 2003 concerning the status of Third Country Nationals who are long term residents (, 23 January 2004, pp 44–53)
227 Council Directive 2003/86/EC of 22 September 2003 on the right to family reunification (, 3 October 2003, pp 12–18)