In this month's Immigration update we look at the long awaited MAC report - EEA migration in the UK, the good news for Tier 2 general sponsors, prevention of illegal working, new seasonal agricultural workers pilot scheme, Home Office fee changes, no-deal Brexit technical notices, MAC recommendations on Tier 4 student visa rules, Windrush compensation scheme, passport problems for children of A8 EU nationals, and Judicial review - data protection and immigration.

Migration Advisory Committee report - EEA migration in the UK

What is it?

On 18 September 2018, the Migration Advisory Committee (MAC) released its long awaited report on EEA migration in the UK. The MAC is a group of economists, who were commissioned by the government to assess the impact of EEA migration and make recommendations for the UK’s post-Brexit immigration system.

Why does it matter?

The report follows a long period of gathering evidence from employers and others, including through round table sessions hosted by Birketts, followed by an analysis phase.

The government may or may not choose to follow the MAC’s recommendations, but it does often take them onboard and now the report has been published, we hope it will not be too much longer until we get the long promised Immigration White Paper.

What are the impacts of EEA workers?

The report includes a helpful summary of the MAC’s findings regarding the impacts of EEA workers (table 7.1):

Theme

Impact
Labour market: employment and unemployment

Overall no evidence that EEA migration has reduced employment opportunities for UK-born on average.

Some evidence that migration reduces employment and raises unemployment of some groups (e.g. the young and less well-educated) but subject to significant uncertainty.

Labour market: wages

Overall no evidence that EEA migration has reduced wages for UK-born workers on average.

Some evidence that migration has reduced earnings growth for the lower-paid and raised it for the higher-paid, but again these findings are subject to uncertainty.

Productivity Evidence that immigration has, on average, a positive impact on productivity. Some evidence that this impact is larger for high-skilled migrants than lower-skilled migrants.
Innovation High-skilled immigrants increase innovation.
Training No evidence that migration has reduced the training opportunities of the UK-born.
Prices

Evidence that migration, especially lower-skilled, has reduced the prices of personal services.

Evidence that migration has raised house prices, more in areas where housebuilding is more restricted.

Public finances

EEA migrants, especially those from EU13+, pay more in taxes than they receive in welfare benefits and consume in public services.

Net fiscal benefit is strongly related to earnings and to age.

Public services: health

EEA migrants make a larger contribution both in terms of money and work to the NHS than they receive in health services.

No evidence that migration has reduced the quality of healthcare.

Public services: social care

EEA migrants are a small but increasing share of social care workforce. Very few EEA migrants receive social care.

Growing demand for social care but wages and conditions make it hard to recruit and retain UK residents. May also struggle to recruit migrants with other options.

Sector needs a coherent approach to financing.

Public services: education

Migrants or the children of migrants make up an increasing proportion of the school-age population. EEA migrants are a smaller proportion of workers than students in primary and secondary education but a higher proportion in higher education.

Children with English as an additional language academically out-perform children with English as first language.

No evidence that migration has reduced the educational attainment of other children or the choice of schools.

Public services: social housing EEA migrants, especially NMS migrants, are an increasing share of new tenancies. Given low level of new construction of social housing this is very likely to be at the expense of someone else.
Crime No evidence that migration affects the overall level of crime.
Life satisfaction Overall, no evidence of an impact of migration on self-reported life satisfaction. Some evidence that positive effect among those with a more favourable view of migration and negative among those with a less favourable view.

What has the MAC recommended?

The MAC has made the following suggestions.

  1. Ending free movement does not automatically mean visas will be required for all EEA citizens coming to the UK. It would be possible to differentiate between visitors and those wishing to live here.
  2. Any new immigration system may be influenced by trade negotiations. The MAC is not giving a view on whether the government should make concessions as part of a future trade deal.
  3. But to the extent that immigration is considered in isolation from the future trade relationship, the MAC suggests there should be no difference between EEA and non-EEA citizens. Latest press reports suggest the Cabinet has endorsed this approach.
  4. The MAC has suggested there should be greater flexibility for higher skilled migrants (because they benefit existing residents), than for lower-skilled workers. The MAC acknowledges that sectors relying on low-skilled EEA workers will lobby against this recommendation.
  5. The current Tier 2 visa system could be extended to cover EEA workers, subject to some modifications. In particular the MAC has suggested that the government:
    • continue the current Tier 2 Intra-Company Transfer system for secondments
    • abolish the Tier 2 General cap
    • revert to the pre-2011 position, where Tier 2 General visas could be used for roles skilled to RQF levels 3, 4 and 5, as well as level 6, i.e. for ‘medium’ as well as ‘high skilled’ roles
    • but retain the £30k minimum salary
    • extend the Immigration Health Surcharge to cover EEA citizens
    • extend the Immigration Skills Charge to cover EEA citizens, but an evaluation is required
    • reduce red-tape by abolishing the Resident Labour Market Test (RLMT), or if it is to be retained, lower the salary level for an exemption from £159,600 to £50,000
    • make it easier for sponsored workers to change employer, as this will improve labour market competition and avoid inadvertently supressing wages
    • review the shortage occupation list, note a MAC report on this is due in spring 2019
    • review the sponsor licence system (as it is so difficult for SMEs to use) and consider using sector bodies as umbrella sponsors, although this is a complicated area.
  6. If there is to be a route for low-skilled migrant workers, this should be through an expanded youth mobility scheme.
  7. There should not be sector based schemes. The only potential exception is for agricultural workers (currently 99% of this group are EEA nationals). But any scheme for seasonal agricultural workers should require payment of a higher minimum wage to encourage increased productivity.
  8. Self-employment routes (i.e. Tier 1) need to be properly evaluated.
  9. Despite the case made by different regions, there should be one set of rules for the whole of the UK, so no regional variation.
  10. There should be no special treatment for public sector workers. The MAC noted this is often called for on the basis that the value of the work is not reflected in the salaries paid, but actually “it would be better to pay public sector workers salaries that reflect the value of the work”.
  11. Social care is a sector where there is particular cause for concern but this is a wider problem. The MAC’s preferred solution is “that the financing of social care is changed to allow higher wages to be paid to workers alleviating recruitment and retention problems.”
  12. This report concentrates on work. Family migration also needs to be reviewed. Family migration may potentially help to address any lower-skilled shortages.
  13. The government should make better use of existing data to evaluate whether labour migration policies are achieving their intended goals.

What does this mean for employers?

It is important to reiterate that the government may follow all, some, or none, of the MAC’s recommendations. For example they may struggle to see how removing the Tier 2 cap and extending the youth mobility scheme is consistent with their stated goal of reducing net migration. Also, in times of austerity, where will the money come from to increase public sector pay and improve financing for social care?

If the government did adopt these suggestions, then we anticipate that whilst current Tier 2 sponsors would be delighted to see an end to the current uncertainty caused by the Tier 2 cap, and would also be pleased by the removal (or at least reduction) of bureaucracy around the RLMT, they would be concerned by the costs and administration that would be involved in now having to sponsor a wider range of workers.

Meanwhile for employers who do not already have a sponsor licence, there is likely to be considerable additional red-tape, even if this is somehow diluted by using umbrella bodies, the detail of which is still murky.

The suggestion that a minimum salary of £30k be retained means that in practice, many roles may appear to be eligible for sponsorship, but in practice would not be. Therefore, any reduction in minimum RQF level would need to be treated with caution.

The recommendations offer little to organisations that are reliant on ‘lower skilled’ and self-employed EEA workers, who would still struggle to recruit. For example in the social care and hospitality sectors (where key roles are classified as low skilled) and construction, they may rely on self-employed workers.

Latest press reports suggest the Home Secretary is alert to this problem and is encouraging the Cabinet to be more open-minded than the MAC about low-skilled workers.

How can I find out more?

If you would like to discuss the implications of the report or how your workforce might be affected by Brexit, please contact Clare Hedges in our Immigration Team.

New seasonal agricultural workers pilot scheme

A nationwide pilot scheme to bring 2,500 migrant workers each year to UK farms was announced on 6 September 2018.

The pilot will begin in the spring of 2019 and will allow fruit and vegetable farmers to employ non-EU migrant workers for seasonal work for up to 6 months, alleviating labour shortages during peak production periods. It will run for two years, during the Brexit transition period.

Whilst farmers and growers have welcomed this move, many believe it will not be enough to solve the labour crisis. In itself, an additional 2,500 workers per year sounds promising, but in reality this figure will not fill even the current shortage.

Good news for Tier 2 general sponsors

For the first time since November 2017, all valid requests for a Restricted Certificate of Sponsorship (RCoS) made in August were granted.

The government’s decision to remove doctors and nurses from the cap on RCoS, no doubt, played a large part in this. However, we do wonder if there may also be an element of employers finding other creative visa solutions, or alternatively just giving up.

Several employers who found their resident labour market test advertising had expired have been re-running the process, so we expect to see an increase in RCoS applications next month. It will be interesting to see if these can all be accommodated.

Prevention of illegal working

The Independent Chief Inspector of Borders and Immigration has called for evidence to inform an inspection into the Home Office’s approach to illegal working. This will examine the Home Office’s current policies, strategy, planning, guidance and operational practice. Employers are invited to submit evidence by 28 September 2018. Please see the ‘Call for evidence: An inspection of how the Home Office is tracking illegal working’.

Meanwhile, the number of civil penalties issued during the second quarter of 2018 has fallen dramatically (119 compared to 432 during the same period last year). It seems this is due to a temporary reduction in enforcement activity, as the government reviews its methods in light of the Windrush scandal.

Home Office fee changes

The Home Office has published updated fees from 8 October 2018, for visa and nationality applications, trumpeting the fact that there is actually no increase. However, we would note that fees normally increase in April rather than October, so this seems to be a bit of a red herring. It seems that the main purpose of the update was to add the £65 fee for the new settled status scheme, which is currently being piloted for EU nationals.

The government has previously warned that it plans to double the Immigration Health Surcharge (IHS) at some point this year. This is outside the scope of the fees table and so we wonder if this is where an increase will appear. Migrants planning to submit an application in October may wish to try and apply before 8 October 2018, just in case this is when the IHS increase is introduced.

No-deal Brexit technical notices

Over the summer, the government has published a number of technical notices with guidance for UK businesses and citizens on how to prepare for the UK leaving the European Union without a withdrawal agreement in place. They cover a variety of issues and explain plans that would mitigate the impact of a ‘no-deal’ scenario. See the government’s guidance ‘How to prepare if the UK leaves the EU with no deal’.

One of the notices covers travelling to the EU on a UK passport post-Brexit. This confirms that the UK and Ireland will remain a ‘common travel area’. It includes a brief overview of the Schengen visa system and also explains why the government has changed its practice when producing new passports. It used to be the case that when renewing your passport, it would be granted for 10 years, plus whatever time you had left on your previous passport (up to 9 months). From the beginning of September 2018 they have stopped adding the extra time and all UK passports are now being granted for 10 years, or 5 years for children.

The notice also states that the government will not start issuing blue passports until late 2019. Meanwhile Brexit Secretary, Dominic Raab, has stated that if there is no deal, then free movement will end but EU nationals already in the UK will not be ‘turfed out’ and the government would act quickly to resolve their position.

Migration Advisory Committee recommendations on Tier 4 student visa rules

On 11 September 2018, the Migration Advisory Committee (MAC) released a report on the impacts of international students in the UK. The 125 page report assesses the impacts of international students in a range of areas, as well as making some policy recommendations.

In particular the MAC has proposed a limited relaxation of the rules around post-study work.

Whilst the MAC found that ‘there is no doubt that international students offer positive economic benefit’, many in the sector feel that the report does not go far enough. In particular they are disappointed by the failure to suggest a return of the old Tier 1 post-study work scheme and the MAC’s stance that students should remain within the net migration statistics.

The policy recommendations include:

  • to retain no cap on the numbers of international students
  • international students should not be removed from the net migration statistics
  • rules of work while studying and dependant rights should remain unchanged
  • post-study leave period extended to six months for Master’s students, in line with current Tier 4 pilot
  • widening of the window in which applications for switches from Tier 4 to Tier 2 can be made
  • PhD students should automatically be given one year’s leave to remain after completion of their studies, replacing the existing Doctoral Extension scheme
  • Tier 4 students should be entitled to switch to a Tier 2 visa in the two years after graduation (even if they leave the UK in the meantime) on the same terms as those who stay in the UK – i.e. no Resident Labour Market Test, no Tier 2 cap and no Immigration Skills Charge).

The full report can be accessed here.

Windrush compensation scheme

The government is consulting on its proposed compensation scheme ‘to help redress the impact on the Windrush generation who have faced difficulties in demonstrating their lawful status under the immigration system’. The deadline for comments is 11 October 2018. See the government’s open consultantion report ‘Windrush compensation scheme’.

Apparently over 2,000 people have now been granted citizenship free of charge, but the Home Office is about to start issuing the refusals (for example due to serious criminality), so it will be interesting to see if there is any further backlash.

Passport problems for children of A8 EU nationals

It has been reported that children of EU nationals from ‘A8 countries’ (Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia) have recently experienced problems when trying to renew their British passports.

The problem arises because their parents were not asked to prove their registration under the A8 worker scheme when they got their first passport, but the Home Office is now asking for this historic document to be provided. The Home Office has now said it will assist affected children to get citizenship.

As a result of this, the Independent Chief Inspector of Borders and Immigration is expanding a current re-inspection to cover these cases. Evidence must be submitted by 4 October 2018.

Judicial review - Data protection and immigration

Following amendments to the Data Protection Act in light of the GDPR, some data rights have been removed if that data is processed for the ‘maintenance of effective immigration control’, or if it is deemed likely to prejudice that.

The Open Rights Group and the3million (which represents EU citizens in the UK), have argued that this will prevent people from accessing their personal data held by the Home Office, and will restrict their ability to appeal against decisions about their immigration status.

The judicial review seeks to have this exemption removed. The applicants are arguing that it is incompatible with the GDPR and also the EU Charter of Fundamental Rights.