What’s the way forward for free movement reform?

For those who campaigned, like me to stay in the European Union, it's fairly obvious that the concern to reduce migration was at the top of voters list of ambition. But now we are leaving the EU, a new system will be needed to manage migration from the EU.

Those who want of to keep ties to Europe strong must now lead the argument for a sensible, moderate set of changes that don't wreck our economy - in the hope that in the long term, free movement policy in Europe might converge with the reforms we suggest. In the short term, we might persuade our colleagues to maximise our access to the single market.

So how do we think about change?

First we should acknowledge that migration is now at a new scale.

The proportion of the UK working age population that were born abroad doubled between 1997 (8%) and 2015 (16%). The 8 million working age people born abroad comprise 3.3 million from the EEA and 4.6 million from non-EEA.

Before 1990 the inflow of migrants was always below 300,000. Since then it has doubled. That should not surprise us. The whole world is on the move. While global migration had remained steady at around 3% of global population, the absolute numbers have dramatically changed. In 2015, the number of international migrants worldwide was the highest ever recorded, at 244 million (up from 232 million in 2013).
Britain’s migration system is deeply rooted in our history, exiting from Empire and then joining the EU. Since the late 1940s, there have been two big periods of immigration reform in the UK. Both were responses to big changes in the world community.

In the years immediately after the war, migration to Britain was limited. Some 130,000 Poles arrived, followed by 14,000 Hungarians after the failed uprising in 1956. But the controversy in the public debate was really sparked by the right, from 1948, of Commonwealth citizens to seek free entry to the UK. Between 1956 and 1960, some 813,000 new entrants were recorded on the Government’s migration scheme. One hundred and thirty thousand were from the West Indies; 55,000 from South Asia; and 24,000 from Africa. Not everyone of course, decided to stay, but by 1962 Britain’s black and Asian community was 0.5 million strong.

From 1954, working parties of civil servants began to survey the terrain. Thirteen Cabinet discussions ensued in a year. The Home Secretary and the Colonial Secretary divided. Watching briefs were established. Draft Bills were prepared and shelved. There were riots in 1958. Monitoring reports were established for the Home Secretary. Ministerial committees were set-up. Finally, in 1961 the decision was taken to legislate.

The questions debated were difficult;
• Which British subject should be allowed to come, and which should not? What of those in countries Britain still administered?
• How could a British subject be deported from Britain?
• How could we preserve the historic freedom of Irish citizens, whose country left the Commonwealth, to move around?
• How could the growing appetite of a growing economy for labour be satisfied?
• How could international relations with former colonies – relations which undermined the sterling area – be preserved?

In 1961, the bridge was finally crossed; a British subject no longer had the right to come to Britain. The Act, ending what Rab Butler called ‘the cherished tradition of the Mother Country’ was passed in 1962. It was followed by another 1 in 1968 in the wake of the Uganda crisis and again in 1971. But almost all the legislative provisions centred on the key question of controlling who could – and could not – come.

By the mid 1990s, Britain’s migration system was heading for big changes once again. As the Cold War ended, civil war exploded. During the 1990s the toll on human life inflicted by conflict inside states outstripped that inflicted by conflict between states. Britain was naturally affected. By the end of the 1990s, 374,000 people had claimed asylum; 23% from just four countries; former Yugoslavia – which had collapsed into bitter and bloody internal ethnic fighting; Iraq – under the brutal dictatorship of Saddam Hussein; Somalia – a failed State with no central government and no rule of law; and Afghanistan, under another brutal dictatorship, the Taleban.

Asylum applications increased, from less than 25,000 in 1992 to over 70,000 seven years later. Britain’s systems were simply not designed to cope with pressure on this scale. By mid 1998, there was a backlog of over 50,000 asylum applications, over 30,000 immigration appeals and nearly 100,000 citizenship applications. Appeals could take over a year to be heard, and another 3 months for the decision to be communicated. Yet in 1997 only 7,000 failed asylum seekers were removed.

Reform of this chaotic system dominated the Labour government’s legislative agenda for migration reform. Ten acts of parliament, beginning in 1999 were required alongside new border security arrangements stationed abroad and wholesale administrative reform. The change worked to such an extent, that removals of principal applications increased by 128% and in March 2007, I was able to say that in 2006, for the first time, we hit the ‘tipping point’ target – removing more failed asylum seekers than the number of unfounded claims lodged.

The final set of changes came with the introduction of the points system in 2007/08. As David Metcalfe, the first chair of the migration advisory committee, argued, migration could now be thought of as a 3 X 3 matrix. There are three main reasons for immigration : family, study and work, and there are three key groups : British, EU, non-EU. The points system controlled 3 out of these 18 flows – non-EU inflows for family, work and study.

Exiting the EU will be a change of even bigger significance than the points system.
Before setting out some proposals for reform, it's worth spelling out some guiding principles. I would suggest five, to get us started;
1. We should step up to do more to help Europe’s refugee crisis.
2. We should not interfere with a British citizen’s right to fall in love with whoever they like
and get married
3. We should let in the skills we need, to help grow the number of good jobs in Britain
4. We should allow free movement of scientists and students, to help foster a stronger
knowledge economy
5. We should seek a migration bargain that is good for British citizens, who want to live
abroad (like pensioners), but equally allow all newcomers to Britain, a path to ‘earned

Now, principles are one thing. But the reality is, the public mood is slow down the pace of change. But how slow?

Let's say for the sake of argument we wanted to slow down migration to the levels before accession of east Europe in 2004.

In 2015, some 300,000 Brits left the country - and some 600,000 arrived, putting net migration in the area of 300,000.

Personally, I don't think we should count students as part of our inflow; generally speaking, students leave at the end of their course and while they are here, they fuel one of Britain's greatest export industries: education.

Nor would I suggest we seek to reduce flows of newcomers from outside Europe who apply through the points system. The points system works well - and around half of those coming through the point system come through Tier 2, of which most come through Intra-Company Transfers. These workers are very good for the economy. They are highly skilled, and already have a job. The Migration Advisory Committee reports they help British workers become more productive.

This implies that the burden of slowing down migration flows should fall on EU citizens.

If we wanted to slow EU migration back to the levels last seen before east European accession and assuming 300,000 Brits continue to emigrate each year, work based migration from Europe down would need to slow to 177,000 a year - that's 130,000 less than the number of arrivals from Europe in 2015.

How could such a slow down be achieved?

The logical reform is two-fold.

First, to extend the Tier 2 skilled workers visa to skilled workers from Europe. This would still mean that jobs in the U.K. need to be offered to British citizens first - before being offered to someone from abroad (the so-called Resident Labour Market Test).
We could start by applying to the EU migrants, the same thresholds as we apply to others: newcomers would need to apply for a graduate level jobs, earning at least £30,000. In addition, we should allow a generous Intra-Company Transfer scheme (uncapped), provided workers were coming to do a managerial - not a routine - job. Tier 2 should remain uncapped.

Given we want privileges for Brits working in Europe, it might make sense to privilege EU
citizens within the new framework.
Four privileges makes sense.

First, there should be generous allowances for an EU intra-company transfer scheme. Firms working in Britain, especially in financial services and manufacturing are highly integrated across Europe. They need the flexibility to move people around flexibly and at short notice.

Second, we could allow EU citizens generous short term visit visas (perhaps 12 months) and allow EU citizens to switch their visa to a work visa in Britain, rather than forcing workers to return home to apply.

Third, we might allow workers to transfer their visa to a new UK employer within a certain timeframe.

Fourth, we might allow EU citizens fast-track access to British citizenship, within say, three years instead of the standard five.

These privileges could be crystallised in a new Green Card system offered exclusively to skilled EU citizens.

The second set of changes is to low skilled migration. There are 13 million low-skilled jobs in Britain - and two million of these (16%) are held by migrants. The MAC reports, 40% of these workers are EEA citizens. A million migrants in low-skilled jobs have come to the UK in the last decade. Half of them were from Central and Eastern Europe following enlargement. That implies, broadly speaking, low skilled migration from Europe has averaged 100,000 a year for the last decade.

How should this be managed in the future? The logical answer is to create a fixed quota system.

We provided for this in the points system by creating Tier 3 - low skilled migration. But this was never opened up.

The logical step is to now open this to EU workers only and to fix an annual quota - or rather quotas, fixed sector by sector.
We have a precedent for this. When we operated transitional controls on Bulgaria and Romania, we put in place a fixed quota system for the agricultural industry. It worked well and we asked the Migration Advisory Committee to tell government the right quota each year, taking into account the needs of industry but also the capacity of public services to adequately support newcomers, as they should support all tax-payers.

If we want to slow EU migration down by 130,000 a year, then we may need to keep this quota close to zero for several years. A more rational approach however, would be to create sector-based quota schemes, and ask the Migration Advisory Committee to recommend, sector by sector, what the quota should be. This would help take the politics out of the decision.

This 'Green Card plus Quotas' approach has the advantage of helping things as simple as possible, allowing a demand-led approach to high skilled migration and offers privileges to our neighbours in the hope of something in return.

There are however four big implications of this new approach - that touch on domestic reform. Over the years, it is domestic policy (like skills) that has the biggest impact on movement of people.

First, we have to ensure that the new training levy, which is introduced in 2017 (and scored at £2.7 billion a year) could transform levels of training in industries that currently import lots of workers. Several industries are especially important. Low skill industries like food manufacturing, accommodation, and warehousing, all employ lots of EU nationals. But amongst high skill industries, Computer Programming and consultancy stands out as a industry that is heavily dependent on foreign workers.

Second, public services - and in particular the NHS - have to get their act together. For instance, nurses were recently added to the Shortage Occupation List. Government should have forecast the rising demand for NHS workers; total population is rising and, on average, living longer. The NHS is being put in on 7 day working and nurses have taken on more responsibilities. Yet, the number of training places fell by one fifth 2010-2013.

Third, we still need to transform enforcement. David Metcalfe, reports the following;
“vulnerable low skilled workers – natives and migrants – need protection…There are insufficient resources devoted to key regulatory bodies such as HMRC which enforces the national minimum (now living) wage (NMW) and the Gangmasters Licensing Authority. Similarly, the penalties for breaching the regulations are not severe enough. Consider NMW enforcement: an employer can expect an inspection visit once-in-260 years and a prosecution once in a million years. This hardly incentivises compliance!’

Finally we need to reinstate the Migration Impact Fund. The reality is that some parts of the country have seen much faster change than others, and that inevitably puts pressure on public services, in a world, where people move faster than money. There has been a (small) negative impact on wages of low paid workers, and crucially, there has been serious exploitation of some migrants. Fixing these problems takes money.