Brexit and the Labour Market Contents

Summary of conclusions and recommendations

Chapter 2: Migration Statistics

1.Increasing reliance has been placed upon the migration statistics to formulate and judge government policy. Many of the available measures are wholly inadequate. In particular the long-standing and widely identified problems with the International Passenger Survey mean that it cannot bear the burden placed upon it and cannot be relied upon to provide accurate estimates of net migration. (Paragraph 19)

2.The difficulties with the immigration statistics will become more acute as the Government seeks to develop and assess the impact of new immigration policies. Without greatly improved statistics the Government will be formulating policy in the dark. The Government must work urgently to improve the reliability of the data. The Government must also continue to monitor the stock and distribution of migrants to ensure adequate public service provision. (Paragraph 23)

3.The Government should prioritise plans for the comprehensive sharing of data across departments. We recommend that the Government develops a systematic understanding of the movement of immigrants within the UK economy. This will require analysis of multiple sources of information and should include:

(a)matching PAYE and National Insurance number registrations;

(b)matching self-assessment records for self-employed migrants and sole traders with issued National Insurance numbers; and

(c)using data on benefit claims and tax credits to ascertain whether those with unused National Insurance numbers remain in the UK claiming benefits. (Paragraph 27)

4.The re-introduction of checks on those leaving the UK provides an opportunity to count those entering and leaving the UK in a systematic manner. The Government should explore how the available data can be combined with other information and used to provide a long-term check to the information provided by the International Passenger Survey. (Paragraph 32)

Chapter 3: Adapting the UK Labour Market

5.We welcome the Government’s position that securing an early agreement on the rights of EU nationals currently in the UK is its first priority in negotiations with the European Union. This is urgent, particularly as there is evidence some EU nationals are beginning to leave the UK. (Paragraph 46)

6.We strongly recommend that the Government develop a new immigration policy for implementation once the UK has left the European Union. It should consult on the needs of business and on a timeframe for implementing the new policy. Any new immigration system should not make an arbitrary distinction between higher-skilled and lower-skilled work on the basis of whether a job requires an undergraduate degree. British businesses must have access to expertise and skills in areas such as agriculture and construction that would at present be categorised as lower-skilled occupations. (Paragraph 52)

7.As some of our witnesses highlighted, pay is not the only consideration but there are now a large number of migrant workers in some sectors who will not easily be replaced by domestic workers. Competitive labour markets will see some price adjustment in response to labour shortages, with an associated increase in local labour supply. However, in some sectors, business models may have to change. As noted in the example of agriculture, this is likely to lead to higher prices for consumers. (Paragraph 69)

8.We warned in our 2008 report on immigration that employment of migrant workers could lead to businesses neglecting skills and training for British workers. As the example of nursing highlights, these fears appear to have been realised. Training for the domestic workforce needs urgently to be given a higher priority. (Paragraph 80)

9.We welcome the Government’s Industrial Strategy as a starting point, in particular the desire to create a proper system of technical education to provide more of the skills that the economy requires. But it needs to go further to meet the challenge of retraining the workforce. (Paragraph 81)

10.The availability of cheap migrant labour in recent years may be a factor behind the low levels of capital investment and productivity in some sectors. The Government should consider ways it can help businesses, such as capital allowances for investment in automative processes. (Paragraph 89)

11.A suitable implementation period is likely to be necessary before a new immigration system for the European Union comes fully into force to allow for the necessary training of the British workforce and investment in new technologies. This could take a number of years and needs to take into account the fact that each region of the country will have different training and investment needs. (Paragraph 95)

12.The Government must also acknowledge that in order to achieve some of its other policy objectives, such as building 225,000–275,000 houses each year, lower-skilled immigration may be required in the medium term to provide the necessary labour. (Paragraph 96)

13.We are persuaded there may be some merit in a regional immigration system for Scotland and London but agree with most of our witnesses that this is beyond existing administrative capabilities. Before seeking to implement a regional system the Government should carry out a review and be satisfied about its administrative feasibility. (Paragraph 105)

Chapter 4: The Net Migration Target

14.We recommend that the Government expedites measures to accurately assess the number of students who leave the UK at the end of their university education. To monitor the impact on local housing, the Government should also ask universities to provide information on the accommodation provided to international students. Once this information is available students should not be included in in any short-term net migration figures for public policy purposes. (Paragraph 125)

15.The potential pressures on public services from a rising migrant population are not necessarily captured in a target monitoring the flow of people into and out of the UK. Future policy should also pay close attention to areas where there are such concerns arising from increases in the local population. This would enable the Government to provide investment in local services, including health and education, which may be under pressure due to the increased demand. (Paragraph 128)

16.The objective of having migration at sustainable levels is unlikely to be best achieved by the strict use of an annual numerical target for net migration. Instead, such a target runs the risk of causing considerable disruption by failing to allow the UK to respond flexibly to labour market needs and economic conditions, as the Secretary of State for Exiting the European Union has suggested is necessary. The objective of reducing migration to sustainable levels should be implemented flexibly and be able to take account of labour market needs, in particular during the implementation period. (Paragraph 133)

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