Brexit: UK-EU movement of people Contents

Summary of conclusions and recommendations

1.Net long-term migration to the UK by EU nationals has risen sharply since 2004, but until end June 2016, remained lower than net long-term migration to the UK by non-EU nationals. Almost half of EU immigrants arriving in the UK in year ending June 2016 were from ‘old’ Member States, and 72% reported ‘work’ as their reason for immigrating, with the remainder mostly coming to study (13%) or accompany or join family (9%). Migration of UK nationals to other EU countries is smaller in volume, and different in composition, with the age profiles of UK citizens who are long-term residents in other EU countries suggesting that a larger proportion are retired or nearing retirement. (Paragraph 38)

2.The evidence base currently available to policy-makers responsible for devising a future framework for UK-EU migration is incomplete, in some cases insufficiently reliable, and dispersed across a range of sources that are not always directly comparable, for example because some use citizenship while others use country of birth to identify migrants. This is an unsatisfactory basis from which to start developing policy. For example, without data on the turnover of EU migrants, that is to say on how long each person tends to stay in the UK, it is difficult to assess whether the stock of EU nationals already resident in the UK could help mitigate adverse effects, such as labour shortages, that could arise from placing restrictions on new arrivals. Although action is in hand to improve and expand the range and quality of migration data, it is unfortunate that any improved data will not be available in time to inform the decisions of Ministers and officials developing the UK’s initial negotiating position—or those seeking to hold them to account. (Paragraph 39)

3.Different measures of who counts as a migrant can also prove misleading when used in public debate. For example, definitions sometimes include UK nationals, who made up 12% of immigrants in the year ending June 2016. In 2015, UK nationals also made up 40% of the 8.6 million UK residents born outside the UK. Use of the UN-recommended definition of a long-term international migrant may be appropriate for some purposes, but has the potential to skew policy decisions, since it means that some groups of migrants (such as students enrolled on courses of over 12 months’ duration) count towards net migration figures, while others (such as temporary or seasonal workers taking up residence in the UK for less than 12 months) do not. (Paragraph 40)

The UK’s objectives

4.The Government’s primary objective in putting an end to the free movement of persons appears to be restoring sovereignty: ensuring that immigration rules for EU nationals are devised and adopted in the UK. Although it is seeking to bring the policy levers back under national control, how it plans to use those levers to regulate immigration from the EU is less clear. (Paragraph 61)

5.In particular, the Government has thus far stopped short of saying it intends to limit or reduce net migration from the EU, although this can arguably be implied from the ‘tens of thousands’ target for net migration overall. We welcome the indication from the Government that its approach to regulating EU immigration will take into account the needs of the UK economy. (Paragraph 62)

6.Until end June 2016, migration to the UK from outside the EU was consistently higher than EU migration, even though the relevant policy levers are under national control. Restoration of national control over EU migration may or may not, therefore, deliver a reduction in overall net migration. Experience in recent years suggests that sharp fluctuations in net migration are more likely to result from other factors, such as the performance of the UK economy in both absolute and relative terms. (Paragraph 63)

7.We strongly support the Government’s intention to protect the entitlements that UK nationals currently enjoy as a result of EU free movement rules, but how realistic that objective is will depend on the precise manner in which the UK proposes to reform the equivalent entitlements enjoyed by EU nationals, especially those looking to come to the UK to work. (Paragraph 64)

Implications for Brexit negotiations

8.Just as the UK and the EU may find themselves negotiating a Free Trade Agreement in reverse—starting from a position of full integration, and seeking to maintain aspects of the status quo while reducing integration in some areas—so on free movement of persons, the UK and EU may find themselves negotiating on which elements of the current arrangements are to be dismantled. (Paragraph 76)

9.At one end of the spectrum of possible outcomes, this could lead to the dismantling of the current arrangements in their entirety, so that EU Member States treat UK nationals in the same way they treat third-country nationals and vice-versa. At the other, it could lead to new, reciprocal and preferential arrangements for UK-EU migration. These may fall short of free movement as it exists today but come close in some or even many respects. (Paragraph 77)

10.The Government has told us that it expects to negotiate with the EU as a bloc on this issue, and seems likely to pursue preferential arrangements for UK-EU migration after the UK has ceased to be a member of the EU. We support this objective. However, it is not self-evident that the negotiation envisaged by the Government will be within the scope of Article 50. Indeed, the precise scope of those negotiations is itself likely to be a matter for negotiation between the UK and the EU-27. Nor is it self-evident that current rules on the free movement of persons can be fully absorbed into UK law in the Great Repeal Bill or a separate immigration bill, since UK nationals’ current entitlements require reciprocal commitments from other countries. This raises the prospect that, if negotiations under Article 50 were to conclude without an agreement on this issue, UK nationals would become third-country nationals for the purposes of EU law and the domestic immigration rules of EU member states once the UK leaves the EU. (Paragraph 78)

11.In view of the link between the free movement of persons and access to the Single Market, it is conceivable that new arrangements for future migration between the UK and the EU will not be finalised until the contours of a Free Trade Agreement (FTA) have taken shape, which could take longer than the two years provided for in Article 50 TEU. Transitional arrangements could therefore be required if the UK were to leave the EU while negotiations on an FTA are still underway, or yet to begin. (Paragraph 79)

Dismantling free movement

12.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. (Paragraph 160)

13.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. (Paragraph 161)

14.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. (Paragraph 162)

15.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. (Paragraph 163)

16.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. (Paragraph 164)

17.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. (Paragraph 165)

18.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. (Paragraph 166)

19.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. (Paragraph 167)

20.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. (Paragraph 168)

EU migration for low-skilled work

21.To the extent that the Government has set out a direction of travel for how it wishes to manage migration of EU nationals in future, that vision seems to consist of three elements: first, that high-skilled immigration will remain welcome; second, that low-skilled immigration is potentially of concern; and third, that the UK should seek to reduce dependency on low-cost migrant labour. Each of these elements merits closer scrutiny. (Paragraph 198)

22.It is not self-evident to us that migration for high-skilled work should be treated preferentially relative to migration for low-skilled work—not least as the increase in the number of graduates in the UK has not been matched by an increase in high-skilled jobs. (Paragraph 199)

23.The Government is making a link between the availability of migrant labour from the EU and the incentive to train or upgrade the skills of resident workers in the UK. The evidence we took suggests that there is not a sufficiently strong evidence base to judge whether that link is robust. Nor is it clear why any such link should exist for low-skilled work but not high-skilled work. (Paragraph 200)

24.We note that when it comes to investing in the skills of the resident workforce, successive Governments have not led the way: doctors, teachers and nurses feature prominently among the migrant workers recruited through the Shortage Occupation List. In the case of nurses, the MAC has suggested that this may reflect a failure to invest in training places, and a reluctance to use pay to aid recruitment and retention. In the public sector, there may thus be a trade-off between spending levels and immigration: reducing immigration in the future may require more public investment upfront. This presents the Government with hard choices—for example, nurses’ pay accounted for about one tenth of NHS expenditure in England at the time of the MAC’s report in March 2016. (Paragraph 201)

25.Reducing EU immigration is unlikely to provide a quick fix for low wages. Indeed, the evidence we took suggests that the effect of migration on wages at the bottom of the wage distribution has been modest, and that other factors such as the National Minimum Wage, National Living Wage and inflation were more significant in driving (or impeding) real wage growth. There does, however, appear to be a case for examining more closely the effect that self-employed EU migrant workers and posted workers may have had on the UK labour market before devising any new, post-Brexit arrangements for EU immigration in these categories or their future equivalents. (Paragraph 202)

26.As for the Government’s assumption that resident UK workers will eventually fill the jobs vacated by EU migrant workers, the evidence base to support or refute that assumption is simply not there. The outlook may in any event vary sector by sector, and hinge not only on skills but also on factors such as labour mobility within the UK and the potential effect of incentives such as higher wages. We therefore recommend that the Government focuses on improving its evidence base before further entrenching the skills-based immigration policy that the UK already operates in respect of non-EU nationals. (Paragraph 203)

27.Were the UK to adopt immigration rules for EU nationals that restricted, or indeed choked off, the supply of EU nationals to fill low-skilled jobs, employers’ responses would probably vary sector by sector, and it has been beyond the scope of our inquiry to examine those potential responses in detail. But if the Government’s ultimate objective is to reduce dependency on low-cost migrant labour, the considerations in play will reach well beyond immigration policy: a reassessment of the Government’s industrial strategy, its education and skills policy, and its public spending plans may also be required. We must recognise that crucial sectors of the economy are highly dependent on migrant labour. It is essential that any changes do not endanger the vibrancy of the UK economy, and that any transition to a new equilibrium is phased in gradually over time, as the evidence base available to policy-makers becomes more robust. (Paragraph 204)

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