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Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

13/05/2019

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Alun Davies AM
David Melding AM
Huw Irranca-Davies AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Dr Victoria Winckler Tyst
Witness
Madeleine Sumption Yr Arsyllfa Fudo (Prifysgol Rhydychen)
The Migration Observatory (Oxford University)
Marley Morris Sefydliad Ymchwil Polisi Cyhoeddus
Institute for Public Policy Research
Professor Jonathan Portes Coleg King's Llundain
King's College London

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Rhys Morgan Ail Glerc
Second Clerk
Yan Thomas Dirprwy Glerc
Deputy Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 14:01.

The meeting began at 14:01.

1. Penodi Cadeirydd Dros Dro
1. Appointment of a Temporary Chair

Prynhawn da, bawb. Good afternoon, everyone. David Rees, the Chair, has sent apologies for today's meeting and Alun Davies has been nominated as temporary Chair. Are there any objections? Therefore, in accordance with Standing Order 17.22, Alun Davies is elected temporary Chair for the duration of the meeting. 

Penodwyd Alun Davies yn Gadeirydd dros dro.

Alun Davies appointed temporary Chair.

2. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
2. Introductions, apologies, substitutions and declarations of interest

Thank you very much. Another hard-fought election. Can I welcome everybody to this meeting of the External Affairs and Additional Legislation Committee? As people will be aware, this is a bilingual meeting, so headphones can be used for simultaneous translation, if needed, from Welsh to English on channel 1 or for amplification on channel 0. If I could remind people to switch off mobile phones and other electronic equipment that may interfere with broadcasting equipment. In the event of a fire alarm, please follow directions from ushers. Are there any interests to declare from Members? 

I only draw attention to my chairing of the EU advisory committee for the First Minister. 

Okay. That's noted. Can I say that we've received apologies this afternoon from David Rees, Joyce Watson, Delyth Jewell and Mark Reckless? 

3. Newidiadau i ryddid i symud ar ôl Brexit: y goblygiadau i Gymru—sesiwn cyflwyno'r cefndir gydag academyddion
3. Changes to freedom of movement after Brexit: the implications for Wales—scene-setting session with academics

The session this afternoon is on changes to freedom of movement post Brexit and the implications for Wales. Can I welcome Professor Jonathan Portes from King's College London? We're very grateful to you, Jonathan, for finding the time to join us this afternoon and to join our conversation on these matters.

One of the issues that we're looking at as part of our investigations into Brexit—the implications of Brexit on Wales, our economy, our people, our society—is that of immigration. Now, you're aware that immigration, of course, has been a significant political issues that has impacted not only the debate on Brexit itself but also a number of different elements of a much wider debate. Could you perhaps start by explaining, from your perspective and the research that you've published on this matter, how you believe a post-Brexit immigration system may impact upon Wales? You don't need to touch the microphone; it'll work automatically. 

Thank you very much for inviting me. I'm pleased to be here and happy to talk about both the broader issues relating to immigration and free movement after Brexit and specifically the work that I have done on behalf of the Wales Centre for Public Policy, for the Welsh Government. And I should say that I've undertaken two pieces of work for the Wales Centre for Public Policy that have been published by the Welsh Government. The first was included in the document 'Brexit and Fair Movement of People', which the Welsh Government published and which I'm sure you're aware of. My contribution there was annex C, the descriptive annex. And then more recently I was asked to look specifically at the likely impacts of the proposals set out in the immigration White Paper on the Welsh economy—the immigration White Paper that was published in December last year. 

So, first of all, I'll start by saying that what I looked at in that paper was the likely impact of the proposals set out in the immigration White Paper published in December, and that is obviously subject to two big sources of uncertainty. The first is Brexit itself and what happens with the Brexit process. The proposals in the immigration White Paper were formulated, of course—because they're written by the Home Office; it's a Government department and they have to take broader Government policy as given, quite appropriately—they took as read that the withdrawal agreement, as agreed between the Government and the EU, would be passed, and that we would then proceed into the transition period as set out in the withdrawal agreement, followed by negotiation to a final status agreement between the UK and the EU that broadly followed the lines of UK Government policy—in other words, did not contain very much specific about immigration-related issues. 

So, the White Paper was prepared on that basis. Of course, as all of you and we all know, we have no idea what will happen with Brexit, and the broader subject is not a topic for today. But obviously, if Brexit were to be reversed or to go down a radically different direction under a different negotiation stance by the British Government, then that would have consequent implications for the approach set out in the White Paper. 

The second big source of uncertainty is that there's a considerable amount of vagueness in the White Paper. There are some bits that are reasonably clear and some bits that are either left open for consultation or that, quite frankly, were clearly inserted into the White paper at the very last minute, and hence have little or no detail around them. So, we may come on to talk about the proposals for temporary work visas, which I think are interesting, controversial, potentially important, but there's really very, very little detail in the White Paper. So, that's the background.

What did I look at in trying to make an assessment? I've assumed that the key proposals in the White Paper, which are reasonably clear, are that after the end of the transition period, which could come as soon as December 2020, but could equally be delayed as long as December 2022—some way down the track, potentially—free movement would end. That is, for people coming from the EU or going from here to the EU after that point, their free movement would no longer apply, and European citizens would have to apply under the same system as for non-EU citizens. That is, there would be a unification of what at the moment are two completely different immigration regimes—a free movement regime for Europeans and other EEA nationals on the one hand, and the system for non-EU nationals on the other. 

For non-EU nationals, there isn't very much about the system that would apply to people who don't come from work purposes. The White Paper doesn't really talk very much about them, and I don't talk about them at all. So, we're looking here at people who come for work purposes after Brexit. The same system would apply to EU and non-EU citizens. It would be broadly the same system as currently applies to non-EU citizens; that is to say they would have to apply for a visa under either tier 1 or tier 2. Tier 1 is an assortment of small schemes that apply to entrepreneurs, people setting up new businesses, a few very special categories of various sorts. Tier 2 is the mainstream work visa system that applies for non-EU citizens if you come here to work as a doctor, as a teacher, as an engineer, as a university professor, as an accountant, for example. 

The proposal at the moment is that the system requires that people applying for those visas have a certain level of qualifications, and that they have a job offer with a salary exceeding a certain threshold, and various other requirements. The proposal is that, under the new system, this would be simplified fairly radically, and the skill level requirements would be simplified and reduced, but the salary threshold would remain and that would be the main criterion. This is a key point in the White Paper. The White Paper proposes a salary threshold of £30,000 but, equally, makes clear that it's open to discussion, consultation and negotiation. We know that the Cabinet itself doesn't agree on it and, of course, many business groups have expressed opposition to the threshold being set as high as £30,000.

So, what my paper does is analyse the impact on Wales, in very broad terms, given the data that we have, of that new—and making some stylised assumptions—threshold, and compares that to the impact on the UK as a whole And I think, for these purposes, we can divide migrants for work purposes into four groups and examine how the new system would affect them. So, for migrants coming from the rest of the world earning less than £30,000, well, they can't come now, strictly speaking, under a normal work visa, they couldn't come in the future—no change. For migrants from the rest of the world earning more than £30,000, the simplifications and the reduction in the skill threshold will make it somewhat easier for them to come. So, you might expect to see some increase in people coming from the rest of the world for skilled work. For EU migrants earning less than £30,000, that is where the biggest change applies by far. At the moment, they have the absolute right to come here under free movement. In future, they wouldn't. And, then, finally, EU migrants earning more than £30,000, well, at the moment, they can come under free movement. In the future, they would still be able to come, but they would have to pass these various tests, apply for a visa, have a job offer, pay various charges—the immigration skills charge and the NHS charge, payable by them or their employers. And their families might not have the same rights that they do currently under free movement. So, a significant new set of restrictions, but not stopping them altogether.

So, my paper looks and tries to make some stylised assumptions of what the impact of those restrictions would be, both on the UK as a whole, and on Wales in particular. And it estimates, over the next 10 years, a reduction in the number of migrant workers coming to Wales and to the UK, and the consequent impact of that on GDP in Wales. So, that's briefly what I've tried to do. And what it finds out is that I think the big picture is that Wales and the Welsh economy are less dependent on migration than the UK as a whole. Although, in some sense, that's slightly misleading, because a better way of putting it would really be that London and some other bits of the UK are much more dependent on migrants than the UK as a whole, and everywhere else has a somewhat lower level of dependency. So, Wales is not that dissimilar from much of the north of England, for example. But, within that, people coming to Wales would be more greatly affected than people coming to London, for example, and that's because the salary threshold would bite harder and because a greater proportion of people coming to Wales are from the EU rather than the non-EU that is the case, say, for London. So, the proportion of migrants from Wales who would no longer come—sorry, to Wales, who would no longer come—under this new system, is greater than it is for London, but the sort of absolute size of the effect is probably rather larger for London. So, you can look at it from either of those two perspectives. 

So, that's probably enough as a sort of opening summary. So, I hope that's helpful. 

14:10

Thank you very much, and we're very grateful to you, Professor, for that. You said in your paper that you find it difficult to make the case for a regional policy. Now, I think it's correct to say that there are number of states that do operate regional policies in this. Why is it that it is difficult, do you think, in the United Kingdom, and not so difficult elsewhere?

Well, I think I would draw a distinction between making an economic case and a political or democratic case, which is, in some ways, beyond my competence, as it were. So, the reason is that I think, looking at the data that we have, you would find it—for the UK as a whole, for Wales, or for the regions of England, or for Scotland—quite hard to say, 'Well, if I look at, say the north-east, Yorkshire and Humberside, even the north-west' and say, 'Well, there's a really strong case for having a differential policy, a more or a less attractive, a more or less liberal, attitude, a lower salary threshold, for example, for Wales than there is of those regions.' It would be much easier just to point at the map and say, 'Actually, there's a pretty good case for having a higher salary threshold in London relative to everywhere else.' That case I think you could make from an economic point of view. Of course, the political situation of Wales, Scotland, and, say, the north-east, are quite different, and there may well be political reasons why—just as there are for things like tax or the provision of services—you might argue that, regardless of whether or not there's an economic case for it, there is a case for saying, 'Well, Wales as a political entity should be able to set its own policy on x or y', and x or y includes, for various purposes, the immigration policy. But I think that's different from saying that, if you look at the economics, there's a stronger, there's a really good, case for saying we should have a more liberal system, say, in Wales than much of the rest of England. It's hard to do that from the data; you can't do that on the basis of average salaries—that really doesn't stack up. It's hard, at least on the data that is available, to see a strong case on a sector or occupational level either. Again, the sorts of sectors and occupations in Wales that have reasonably high levels of dependence on migrants, especially EU migrants, are not dissimilar to the ones that's the case for much of the rest of England.

14:15

I find that quite an interesting argument to make. Coming from my perspective, as a Member for Blaenau Gwent, we find it impossible to get medical staff, GPs, and the rest of it, to serve our needs. So, if I was looking at this from my constituency perspective, I'd be quite interested in having a policy that enabled me to do that—to fill those gaps, to fill those vacancies.

Well, that's absolutely right, but I suspect that it would not be very hard to find towns, and to find hospitals, in very large areas of England where that's absolutely the case. So, I'm not saying—as you probably know, my general view, as I've made clear in other things that I've written, is that I think that the Government's policy with respect to migration and free movement is misguided from an economic perspective and there is a case for a significant degree of liberalisation. I'm merely saying that—and you're making that case back to me, which I think is absolutely correct, but I'm merely saying that it's not obvious from the data that that case is any stronger for Blaenau Gwent than it is for Dunstable or South Yorkshire.

Okay. I'm sure we can pursue that. I think David wants to come in.

Yes. You gave a very subtle answer in response to the question of the possibility of regional or sub-state policies, and you said that you concentrate on economic assessment and not the political. You would probably have heard that the Scottish Government, over the weekend, did actually ask specifically to have the powers devolved over this area, so they could have a separate visa policy. Now, obviously, that brings into question all the issues about where the British constitution is going post Brexit and the need for inter-governmental relations to be overhauled. So, there's a big, big debate going on there. But, if that was conceded to the Scottish Government—because they're in a very strong bilateral position with Whitehall, I think it's fair to say—and that was the only concession given, so Scotland had these powers devolved but nowhere else, would there be any economic consequences on Wales still being locked into an England-Wales-Northern Ireland policy, whereas Scotland would have the ability to craft its own, and presumably have a much more liberal regime?

Well, I think there's a direct and an indirect question there, I guess. First of all, might Scotland then be able to attract, or poach, some immigrants who want to go to an English-speaking country—or a largely English-speaking country—and find that it's easier to go to Scotland than Wales and therefore go there? That's possible, and no doubt it would happen in some cases. Would it be quantitatively significant? Hard to judge, frankly, at this stage, because it would depend very much both on what policy changes Scotland did and exactly how Scotland marketed itself. Presumably, Scotland would be marketing itself so that they would say, 'We like immigrants, and the rest of this benighted country really doesn't, so you should really come here, as well as us having more liberal rules’. I think there would then be, as I say, some sort of—following on from that, potentially some sort of broader knock-on effects, because if Scotland not only had a more liberal policy but was quite aggressive about marketing itself—. Because, a lot of immigration policy, it's very much in the image and how it’s administered, as well as the system itself. In many ways, actually, many of the problems with our current system for non-EU migrants relate not to the specific rules but to the way that the UK Home Office chooses to administer them, and it might well be the case that Scotland, were it able to administer it itself, it might take a rather less bureaucratic and obstructive approach.

Given all that, you could say, 'Well, I think it would—'. I mean, this is very much speculative and goes beyond the sort of direct modelling that I or others would be able to do, but it would give Scotland a pretty clear set of—something to set alongside its broader offer in an international arena that would make it look much more like an independent country and economy. You know, if you can fly to Beijing or Mumbai and say, ‘Not only can we offer inward investment incentives like this, but we can also smooth out your visa issues and the rest of it’, then that’s not just about immigration, that also relates to foreign direct investment and trade links and so on. So, I think there are some potential broader implications, but they’re quite difficult to assess at this point.

14:20

I’m interested in your answer there, actually, Professor, because you took out administration of the policy from the policy. And I’m interested in that because we’ve had a debate on welfare here and elsewhere, in Scotland, where elements of welfare may be administered by a Government whereas a policy is actually set by, say, the UK Government. Do you think that would be an area where there may be some flexibility?

I mean—. In immigration?

The fact is that, as you are all very well aware, the UK Home Office and successive Home Secretaries have been very, very reluctant indeed to contemplate any devolution of immigration policy whatsoever. And, as you know, I was a civil servant in the UK Government myself some 10 years back, but, even when we had across Government a much more liberal attitude towards immigration policy in general and we were doing a number of experiments designed to pursue a more liberal policy, and the then Home Secretaries were relatively more liberal than they have been for the last few years, the Home Office was still institutionally very, very reluctant indeed to hand over any discretion at all over administration or policy, and I see no evidence so far that that has changed. The only thing that is likely to change it is, precisely as you said, the sheer political—whether, in a test of sheer political muscle, the Scottish Government is able to break that door down.

When we did succeed in having one relatively minor experiment, that was the fresh talent scheme for Scotland. This was a scheme under which Scotland was allowed to give leave to remain to students who’d completed their undergraduate degree in Scotland so that they could stay on for a couple of years and work. That was actually quite a successful scheme. It worked well, and the Scots were happy with it and there was no major evidence of abuse, which is the sort of thing that the Home Office typically worries about. But that doesn’t seem to have changed their minds very much.

That’s interesting. I think we’ve all been victims of the Home Office at different times, but I’m interested by that.

Huw.

Thanks, Chair. Could I go back to the macro issues with this? If we do pursue an approach as you’re describing, what is your read-in for the impact of that on issues like productivity, both at a UK level and at a Wales level as well?

So, as you've seen in the paper, I make, under my various scenarios—and these are very much scenarios and are subject to the uncertainties I mentioned before—I estimated that the impact on Welsh GDP over 10 years would be hit at about 1 per cent to 1.5 per cent. That, of course, is relative. That's not saying Welsh GDP will fall by 1.5 per cent over 10 years; it's just that the total growth will be 1 per cent to 1.5 per cent less. So, that's knocking 0.1 per cent to 0.15 per cent off GDP growth each year, which is the sort of thing that becomes noticeable over time; it's not in any one year. So, in other words, you are talking about a sort of unhelpful drag on growth that is significant but by no means disastrous. 

14:25

Subsequently, in the year that we've taken on tax-varying powers here within the Assembly to a limited extent, there's an impact of that clearly then, albeit small, but there's an impact on the revenue into the Welsh exchequer and the spend proportionately then on public services.

There is. I didn't try to calculate that because I wasn't exactly sure how to factor in the differential bits of the tax thing, but there would be two impacts, of course. There would be the impact because Welsh GDP and Welsh output would fall on the specific bits of tax that you get. There would also be an impact via the formula because UK level tax revenues would fall because UK level GDP would also fall, hence the amount of money flowing through to Wales to spend on public services would fall from that route as well.

That's really helpful to know. If I can turn to the individual sectors, rather than the overall impact on the economy and Treasury, did you identify certain sectors in Wales that were particularly exposed to the type of policy you're describing? Because there is an alternative policy, of course, if the negotiations currently going on come to a different conclusion, such as a customs union, but in the scenario you're describing and your analysis, do we have particularly exposed sectors—public sector or private sector?

Yes. The most obviously exposed sector in the data is manufacturing. This is because not only do EU workers make up quite a significant proportion of manufacturing workers and that there are quite a few unskilled workers working in manufacturing, but also you have people who are semi-skilled or medium skilled working in manufacturing from the EU and the vast majority of them would still fall below the £30,000 threshold. So, it's not just that you lose the raw labour, but you actually lose people who are filling jobs that do require a certain level of skill training or occupational-specific competence.

This is an important theme about the whole new system, which is we talk about high-skill and low-skill workers as if the UK economy was divided up into nuclear scientists on the one hand and people who pick strawberries on the other, but actually most people—and that's 'people' whether they're British people, Welsh people or Europeans—are actually somewhere in between. Actually most people are, so quite a lot of the workers we're talking about here are middle-skilled workers working in manufacturing. So, that's one area that is vulnerable.

Another area is a combination in food services—these are particularly workers at the bottom end of the wage distribution—and then health, social work, caring occupations. And here you have people working in the NHS—doctors and nurses who would typically, almost certainly under any new system, still qualify, but that doesn't mean that they would still come, for the reasons that I've set out before. And, of course, even before Brexit we had seen a very sharp fall in the number of EU qualified nurses coming here, despite the fact that they have just as much right as they did three years ago. But, perhaps, not unreasonably, they find the UK a much less attractive prospect. So, there are people who would still undoubtedly qualify to come here, but might find us, or may already be finding us, less attractive.

Then, at the lower end, there are people—particularly people who work in the care sector, where wages are considerably lower and the skill thresholds are considerably lower—who, again, would simply not qualify under the rules, at least as the White Paper indicates, although what would happen in the care sector, I think is—. I suspect that that battle has yet to be fought within Government. 

14:30

This is an interesting area of inter-governmental discussion at the moment. I'm sure that the Welsh Government had made it clear that the care sector is one of its prime concerns. As you rightly say, under the system described, it falls below, out of the tier 2 approach to skills, which many, I have to say, in the care sector would say is not a reflection of modern care and the way it's developing. The drive currently in Wales is towards level 3 skills within the care sector. They've just gone through professional registration of domiciliary care. There's an upward drive, also to try and drive the wages up as well over time.

But they also will point to the demographic changes going on in Wales, as elsewhere, but particularly in Wales—that move towards an older population, typical within the UK, and with it those issues of co-morbidity, multiple issues to deal with, living longer, but more carers needed with more skills. And yet they don't feature within this at the moment. So, do you have sympathy with the view, not that there's necessarily devolution of some of these powers—the other view that says that what needs to be got right is, in those discussions between Welsh, Scottish and UK Ministers, they need to give the flexibility so that nations and regions can say, 'Well, actually in Wales, our demographic time bomb is approaching more rapidly than in some areas of England and, as such, we need to futureproof it against areas like social care and so on'?

Yes, absolutely. As I say, leaving aside the political aspects of that—

There is clearly a case and, frankly, it extends over very large parts of the UK. As I said, I think we've ended up in this place on the care sector because of—. You can ask Madeleine about this in half an hour when she comes, and she may or may not be able to tell you. The Migration Advisory Committee took what I think is frankly a fairly naive approach, which was to say—. Essentially, its message on the care sector was, 'Look, there's no reason why these jobs can't be filled by UK-born people, except for the fact that the Government has underfunded the sector progressively for 20 years, and migration's really not the right answer to that and the Government should just fund it properly.'

I think one can have a considerable amount of sympathy with the broader sentiment expressed there, while at the same time recognising that that just is not the real world that we live in now or are likely to live in in the immediate future. I think that, for that reason, that sort of made it into the White Paper. I very much doubt, frankly, whether that is going to survive into the final policy, because I think that the pressure not just from you but from the NHS, from the Department of Health, from local authorities on the Government will not make that sort of purist position, as set out in the White Paper, sustainable.

In your paper, however, you say that the productivity position for immigrants of lower skills is slightly negative, which seems to perhaps point away from some of what you're saying here—that we're not necessarily benefiting from our over-reliance on migration to fill some of these jobs. When you made your calculation about the GDP effect, how did you model the inevitable adjustment that would occur within the economy to meet some of these predicted shortfalls of labour? Whilst that might only be a partial effect, presumably the economy does adjust. We innovate more, we automate more, for instance. 

14:35

It's absolutely true that the economy will adjust, and there's certainly nothing here that would suggest that reductions in migration would be a catastrophe for the Welsh economy or the UK economy as a whole, just a modest additional drag to add to the drag that would come from trade-related changes after Brexit. The question of the impact of migration on productivity is very controversial indeed, certainly in the UK. I will try and make this short, because I could have an entire lecture on this. Briefly, there were a lot of people making the argument you made before the MAC report— 

Yes, the argument that you stated. It's not a crazy argument; it's a perfectly reasonable argument. Certainly, in some sectors, for some occupations, it seems likely to be right that migration does reduce the incentive to innovate, to invest in labour-saving machinery and so on. On the other hand, there are also, potentially, countervailing effects that go the other way. So, the MAC commissioned a number of research projects on the impact of migration on productivity—one from me, one from a colleague at the University of Essex, and one by Jennifer Smith at Warwick, who's actually a member of the MAC as well—and all three of us found, separately, using independent methodologies and data sources, that the overall impact of migration was actually to push up productivity, whether it's because people fill gaps because they are complements—. Even low-skilled workers, remember, can make high-skilled workers more productive, if that's the nature of the production process. It's difficult to quantify this effect. What I did here was to assume—which I think is quite conservative given what the evidence actually shows—that the impact of low- and medium-skilled workers on productivity was neutral, neither positive nor negative, and the impact of high-skilled migrants on productivity was positive, which I think is almost universally accepted and, therefore, the reductions lead to some drag on productivity as a result. But, it's fair to say that there's quite a bit of uncertainty about those estimates.

I have attempted, yes.

I was interested also in the effect of the salary threshold. A radical shift from £30,000 to £20,000 you indicate would not be as efficacious as perhaps one would initially think. I just wonder where we are at that and whether it is still worth, in the consultation responses to the White Paper, looking at the £30,000 threshold and arguing for a significantly lower rate.

Well, as you say, it makes some difference, but perhaps not as much as you would expect. I think one thing I did attempt to really illustrate or draw out here—. One point that is perhaps worth making is that in that £20,000 to £30,000 band, you do have quite a lot—. Although the numbers may not be that huge, there are quite a lot of the people that you might think are actually quite important. So, for example, some of the care workers, particularly if those salaries are pushed up, and the medium-skilled workers working in the manufacturing sector, those sorts of people—I think one of the top occupations is plant, process and machine operatives in the manufacturing sector, whose median income is about £23,000—would be affected by this. But you're right—that's a judgment as to how much effort Welsh Government wants to put into arguing, or collectively, Welsh business wants to put into arguing for a different salary threshold, or whether to argue for complete devolution in some—

The £30,000 threshold has been there a few years. Am I correct—it's now stretching my memory—in terms of what I've read?

14:40

Yes, although there are—. As always, the more you look at the system the more complicated it gets, so there are different salary thresholds for some different occupations. But yes, for most occupations it has been there for years.

And was the £30,000, when it was originally set, done so in your view with rigorous methodology?

No. It was plucked out of the air, essentially. There was never any particular attempt to justify it, as far as I know.

So, a reasonable position, perhaps, for this committee, would be to urge the Welsh Government to ask the UK Government to look at the assessment and set something that is more rigorous in terms of its calculation and likely predictable effects.

Yes.

The other point—. I'm not sure you'll be competent to talk about this, but the EU settlement scheme, which is for people who are already here, has been criticised in the House of Lords for being—potentially, anyway—overly bureaucratic, and we might have the sort of Windrush difficulty of people just not having the documentation. I put this to you specifically because it just so happens I'm in close contact with the Greek community in south Wales. Many of them, of course, came over in the 1970s after the conflict in Cyprus, and others have been here for decades even if they didn't come in the 1970s, and documentation might be not as complete as we would want. So, do you think there are any lurking dangers there that might affect quite embedded communities, frankly, who until recently must have made the rational prediction that their situation in terms of being able to live here was not going to get affected by any political change, but now it has been?

Absolutely. I mean, I think we should start by saying that, in fairness to the Home Office, in contrast to previous times, they have made an attempt to make this—. Because it's mostly online and the nature of the process for a large majority of people is relatively straightforward, they have done their best, I think, to try and make this as streamlined as is possible, given the constraints they were under. But the simple fact is that we are talking about—we don't know how many people. We do not have records. We are talking about potentially well over 3 million people, and inevitably, among that number of people, there will be large numbers of people that if you applied a normal standard of evidence that a Government department requires, will not have the evidence, and it does not take an error rate—. You know, the Home Office has never, as far as I know, in its entire history, run a scheme that has an error rate of less than 20 or 30 per cent. Because I think they're doing a much better job on this, they may be able to get the numbers who are non-problematic down to 5 or 10 per cent. That would be a very good result, but we would still be talking about a very large number of people.

So, the real question it seems to me is: what do we do in order to ensure that those people who, for whatever reason, do not get through the first round or even the second round of the test, how do we deal with them and how do we not treat them the same way that we treated the Windrush people? So, you then go to the broader questions about the hostile environment policy. Are we, in future, going to try and have a policy where we try not to behave inhumanely towards people because they don't have their documentation, and instead ensure that somehow we manage to sort it out before it gets to that point? Because that, of course, was the failure of the hostile environment, not that it isn't right that people should be required to have some documentation for some things, but the presumption was that you could say to a kidney patient, 'Well, you know, you don't seem to have the right documentation even though your story adds up, and therefore we can't treat you.' We don't want that to happen with this group.

Thank you. On a different point, there are those out there who will argue, and it's quite a popular argument that has rambled on for years, that we just don't need these levels of immigration because we should be able to fill this from—and I hate this, but in quotes—'our own people'. That sort of argument: there are reams and legions of people out there who need to be out there working. And if we're in the curious conundrum at the moment that we have, we're told, the stats will show, some of the lowest levels of economic inactivity for decades, the highest levels of employment, albeit some of it is part employment—. So, in your assessment, from your analysis, can we fill those gaps that may emerge in the sectors that you've talked about, the health, the tourism, the social care, the manufacturing, education? Can we do that? Are those people out there, with the attractive-enough salary package, the attractive-enough training and so on? Are they out there, bearing in mind when that clashes up against what is seemingly a very vibrant employment market at the moment with people in work?

14:45

Well, as you say, employment levels are at their highest in recorded history. As you also say, there are plenty of issues with the UK labour market, but the level of employment is not one of them, and I think the last 10 years have just demonstrated pretty conclusively, if we didn't know it already, that there isn't a trade-off between immigration and jobs. The simple idea that, overall, if you restricted immigration, we'd have more people here working, as you say, doesn't seem to add up looking at the economy as a whole, and none of the econometric and now more detailed econometric analysis suggest it either. So, I think we can be reasonably clear about that: that, overall, if we have fewer immigrants, it does not mean more people in jobs.

When it comes to sectors and occupations, I think then that's where you get a more differentiated picture. So, going back to the care sector, do I believe that if we were to reverse the underfunding of this sector and put salaries up by the sort of amount that you'd need to to make it attractive, 30 or 40 per cent, and had good pathways into that for people, would that reduce the need for immigration in those particular areas? I think it would, yes. It would be expensive and we'd, of course, have to make sacrifices elsewhere. So, you'd have to pay more taxes or cut other services in some other respects. But potentially could we do it? Yes.

And then in other sectors—. You have sectors where, unlike the care sector, where the number of jobs should mostly be driven by demand, there are other sectors where it's driven more by supply. So, higher education is an example of one. We don't need to have as many universities in this country as we do. We have them partly because we have an education sector that's quite good at attracting people from abroad to staff it, and that lets the sector grow. My university—. There would not be more jobs for British people if my university wasn't able to attract immigrants. We would just have to shrink the whole place by quite a lot because we wouldn't be able to staff it and we wouldn't be a world-leading university in the way we are now. So, it does depend very much on the particular sector, and that's true, I think, of manufacturing to some extent. The manufacturing sector has been able to sustain itself in part because it has access to reasonably motivated people from Europe who quite like working in manufacturing.

But I'm interested in this absolute numbers issue of if you have an employment market that is operating—. Let's assume the data reveals an employment market that is operating efficiently. At the moment, it is doing a pretty good job of maximising the number of people in work, albeit some of it might be low-paid and some of it might be short-term contracts and all of that, but people are in work, the level of economic inactivity's right down. So, if we were to suddenly find people moving into social care and moving in from the UK population to health and tourism, and tightening up on migration, it just seems to me in my very simple analysis that those people are coming from other sectors, not out of—

That's right, yes.

There's little more else that we can squeeze, I'm thinking.

14:50

That's right, yes.

Yes. It wouldn't increase the number of jobs held by British people; you'd be shifting British people around. Now, whether or not there's more we can squeeze is another, as it were—it's probably not the metaphor I would use. Whether we can raise levels of economic activity and employment still higher is an open question; we don't know. It may well be possible, but reducing immigration is not the way to do that. The way to do that is: in the UK, it's mostly about finding ways of helping disabled people get back to work because the people who—. To the extent there are people out there who, in an ideal world, would like to work who are not working, there are people who, for various reasons, are not able to because of barriers that come, primarily from disability—mental or physical—and we have made some progress on that, but there probably is more we could do. But that really doesn't have much to do with reducing immigration—it wouldn't really help with that—other policy levers are what you need.

Professor Portes, we're very grateful to you for your time this afternoon and we're grateful to you for the evidence that you've given. A transcript will be sent to you for you to check for inaccuracies, but the committee now stands adjourned until 15:05.

Thank you.

Gohiriwyd y cyfarfod rhwng 14:51 a 15:05.

The meeting adjourned between 14:51 and 15:05.

15:05
4. Newidiadau i ryddid i symud ar ôl Brexit: y goblygiadau i Gymru—sesiwn cyflwyno'r cefndir gydag academyddion
4. Changes to freedom of movement after Brexit: the implications for Wales—scene-setting session with academics

Thank you very much. The committee is in session. Can I welcome our next witnesses to the meeting? Can I welcome Mr Morris, from the Institute for Public Policy Research, Dr Winckler from the Bevan Foundation, and Madeleine Sumption from the Migration Observatory in the University of Oxford? We are discussing immigration policy, as you know, this afternoon, and we're interested in the impact of what the United Kingdom Government has published on Wales, but also the role that the Welsh Government can take in addressing some of these issues.

Can I start by asking the three of you whether you believe there is a case for any regional variation to any aspect of immigration policy, and perhaps what form that would take? Shall we start on the left, Mr Morris, if that's convenient for everybody?

I'm very happy to. Yes, I think there is a case for some regional variation in our immigration policy. So, in the Institute for Public Policy Research, we've made that case for the last couple of years, and I suppose there are two elements to that. On the one hand, we've argued that there's an economic case in some parts of the country—for instance, they might want to be able to attract migrants to particular parts of the country to be able to address some of their population challenges, to be able to address some particular some skills shortage, and there should be some flexibility in the immigration system for them to be able to do this. And then, I think, probably more importantly, there's also a political case for particular parts of the country to be able to have more control over how their immigration system works. And that's because I think there's a case for local people to be able to have more of a direct say over how immigration works in that area. Given there are such considerable concerns about immigration across the UK, people being able to have a bit more of a say and a bit more control over what that system looks like we think might be able to help to alleviate some of those concerns.

And also, we recognise that there are different political actors and different political voices across the UK and they may want to shape immigration policy in their own way. I mean, you can do those in different ways. We've talked about a potential devolution of powers, or more moderately, there's a way of perhaps the devolved administrations and the UK Government working together to develop a joint collaborative system where the control over immigration policy resides with the Home Office still, but the regions and devolved nations have some say over how that policy works, and you have some flexibility, for instance, in salary thresholds, depending on the region or nation of the UK.

I'd like to slightly reframe the question, if I may. We've been working on immigration issues for about nine months now, and we started off by, for shorthand, saying the project was about 'Should immigration policy be devolved?', and the answer that we always got straight back to us was 'no'. And then we started saying, 'Who should decide who has the right to live, work study and seek refuge in Wales?', and we started to get quite different answers. And I think if you start from that question, rather than 'Should there be regionalisation or devolution?', then you get some different answers. And when you start by asking who should decide, I think, first of all, that draws your attention to the demographic case, in that Wales really needs migrants in order to retain and grow its population. There are then the economic and social grounds that Marley outlined better than I could. And then I think there's an almost in-principle case, which is that, where functions are already devolved—particularly I'm thinking of higher education or skills—it seems to me to be a matter of principle that the decision about who participates in those devolved functions or who benefits from those devolved functions should also be taken by the devolved administration.

15:10

For me, I think this is really a political question, much more than an economic one. If you think about the economics, there are certain ways in which you could have some differentiation in policy—for example, the salary thresholds that apply to different categories of visas. That's something that it would be relatively straightforward to differentiate. In practice, actually, a lot of regions in the UK are quite similar, so you'd probably be talking about just a higher threshold for London and the south-east, rather than a dramatically lower threshold for most other regions. But if you're talking about more substantial economic differentiation of policy, I think one of the real issues here is that we would struggle to identify in data what the different needs of different parts of the UK actually are, and often the needs of a sector—you know, the manufacturing sector operating in Wales might not necessarily be so different from similar manufacturing operations in the north of England and Scotland. So, often, it's not the nation or region that is the most important unit of measurement, as it were.

From my perspective, I think it's difficult to make a really strong economic case for differentiation. The stronger arguments, I think, probably are political. There are different types of arguments. If there are certain parts of the country that are comfortable with higher levels of migration, for example, that might be an argument for some differentiation. Ultimately, I think it comes down probably more importantly than that to a matter of principle—this question of: where should power lie in these questions? And that is something that I think is a level above the kind of economic costs and benefits issues but really a constitutional issue that I don't think necessarily immigration policy experts can give you the answers on.

Fascinating answers. But could I ask you, Victoria: if you take that argument, which you put, which is that, in principle—? You answered the last respondent's question. You said, in principle, it should be taken closer to the people. But does that necessarily imply devolution of those powers? Could it not, for example, be done in a different mechanism in parallel to these discussions or discussions going on about future inter-governmental mechanisms? Should it not be something that is in a strengthened Joint Ministerial Committee, Council of Ministers process, where the Home Office is at the table but not dominating the table—[Laughter.]—look, I know I may be dreaming of something here—[Laughter.]—but it would actually be settled there and those things over particular nuances or significant differences in areas—I'm sure we will touch on social care in a moment—but those can be decided there in a UK context.

I think you're right to ask that question. Madeleine touched on some of the different mechanisms in her answer. I think that's why reframing the question is quite helpful because, even if the Welsh Government or the Assembly does decide the variations it would like—whether that's a different regime for students or a lower salary threshold or its own shortage [correction: shortage occupations]—whatever those are, there are a lot of different mechanisms of taking that forward. So, it could be that the Home Office retains responsibility but that it does so taking account of Welsh Government input and other devolved administrations' input. It could even be that UK immigration policy is broken up, for example, so that the Department for Education leads on student visas. I don't know. But I think we shouldn't muddle the mechanisms with the principles, and, until we are clear in Wales what would work best for Wales, the questions about the different mechanisms that might be adopted afterwards come later.

Fascinating. Could I just return to the comments made by Mr Morris? That idea that, if you did get power being taken closer to those people who are affected by decisions over immigration, then that may, in some ways, soothe the beast around immigration, the more heated discussion around it—that it's out of control, that we've got no grip on it and so on. Well, we now have a grip on it, we pass it closer to the people, in one way or the other, through democratic institutions or through behind-the-scenes mechanisms. Do we have any evidence that people, then, would go, 'Right, we're happier with this because we've now got control over it'?

15:15

At IPPR, we've done a series of what we call local migration panels around the UK, where we've spoken to people about their experiences and perspectives on immigration, and we've worked with local government to try and think through some of the challenges around immigration policy and to talk about some of the potential solutions. And we have discussed this idea in a few different places. It gets mixed responses. I wouldn't say it was universally popular, but, at the same time, I think there is some appetite for this idea.

I think the principle behind our thinking is that people want—one of the common themes that comes out of a lot of the research that we've done and the focus groups that we've done and that others have done, such as British Future and their national conversation on immigration, is that people want control over immigration policy. That idea of control is a very important theme in the focus groups, and so one of the things that could be done to address that—I stress 'only one'; I don't think it's the solution to everything—certainly, one idea is to say, 'Well, we're going to bring that control closer to you by saying that at a more local level, or reasonable level at least, you'll have more of a say over how policy works in your region or your local area.'

And, intuitively, as somebody who is democratically elected, I'd say, 'That's a good thing, let's get the power closer to the people', but I think if you somehow introduce that model into Boston in Norfolk, I'm not convinced that those with polarised opinions on the ground would thank you for giving them control, because it would still be split—the opinions as to whether we actually need those volumes of seasonal workers or not. The farmers would be saying, 'We absolutely do', and some local residents would be saying, 'Not on my life do I want those—'. So, it's this question of needs analysis and data-driven decision making between populism and hard reality.

Yes, and I think it's true that, obviously, views on immigration aren't simply divided on the basis of region. You go to a region and you're going to have different views, just as you will have at the national level. So, you're right. At the same time, I think bringing things down to a regional, to the individual nations of the UK—. What it can potentially help to do is to crystallise some of the trade-offs in immigration policy, so, for instance, as you were kind of alluding to, say, in Boston, it might shed more light on the trade-offs involved between businesses that are seeking to recruit migrants to expand their sectors versus the concerns and perspectives of local residents. In some ways, that can help to, I think, build more of a constructive debate, because it grounds it more in meaningful local realities and not just in some abstract national discussion.

I'm not arguing against, by the way, the principle of actually trying to find some way to have much more regional and Wales and Scotland input into it, but I'm just not convinced by the argument that it will lead to any further degree of rationality within the debate. Sorry, Chair.

I think that the question has been covered largely, but I would put it to you that if we accept there aren't many economic imperatives that work here, that are demanding we have different system and devolve it—. In fact, it seems to me the only economic argument that's been made for a devolved system would include London, really, as it has a devolved Assembly and definitely has a very different economy, but the south-east of England, as well, I suppose you could argue requires quite a different approach on thresholds, for instance, and they're more cosmopolitan generally, or at least London would be, and might tolerate higher levels of migration. But if your arguments are politically driven, then the most likely outcome in the short term is that we will have considerably less migration, or people coming to work in our economy. What sort of hit do you think that might deliver to our economy in south Wales, particularly in the areas that would be most strident, potentially, in their call for a tighter controlled policy that responds to their political misgivings about immigration in general?

15:20

Jonathan Portes's paper, which you referred to when you sent the call for evidence—I think that very ably provides an overview of the broad economic impact. I wouldn't want to disagree with that. I don't know if the others on the panel would. But I think in some ways that paper focuses on the relatively short-term economic impact, and I think there's a bigger question, which is that if Wales wants to retain and grow its population, which it should, then if it's not going to do it through migration, what is it going to do? Otherwise we are looking at a slowly shrinking and ageing population, in a way that no other—well, possibly only Scotland faces, certainly not England.

I think the second thing I would say in response is that Jonathan's paper is really broad brush, and while it does say—and it's hard to argue with it—that there isn't a strong economic case, what it doesn't pick up are some of the relatively small nuances and differences that, in a small country, have the capacity to really trip us up. So, for example, while it might be that Wales has the same doctor shortages as in Yorkshire or in East Anglia or anywhere else, it might well be that we have a specific shortage of anaesthetists or, I don't know, orthopaedic surgeons—just off the top of my head—and that because of the broad-brush UK-wide approach taken in shortage occupations, things like that get swamped out. I think there is then merit for the Welsh Government to be able to say, 'Well, for us, here and now, we have that specific challenge'. I'm not sure if that has actually answered your question.

Would you be as sanguine over those immigrants that come in as semi-unskilled workers for our manufacturing industry, for instance, and engineering, at or about the £30,000 threshold? They come in in their hundreds into the Welsh economy, presumably a lot more than the odd anaesthetist. I put it to you that we could end up with the Welsh economy, particularly Cardiff and the M4 corridor, where these jobs are, having a migration policy dictated by Wales as a whole that is much, much more reluctant to see levels of immigration along the historical pattern.

I would—. I'm sorry to jump in, but I would question the extent to which public opinion is as anti-immigration full stop as you might be suggesting it is. That is because there's been quite a lot of work done, by British Future and others, that suggests that opinions cluster toward the centre rather than being polarised, and that opinion is more nuanced than being full-stop anti-immigration. It's about, as I think you said, Marley—

You're going to be in difficultly, aren't you, if you eschew an economic criteria, which I think we all agree is not demonstrated, to put it no more strongly than that—then it's going to be a tough old argument to then rely just on these general political abstract arguments that you might be making.

15:25

I think there are practical reasons for some decision making to reflect specific circumstances in Wales. 

I think they would be around shortage occupations, around the salary threshold, around student visas and higher education and, possibly, around family migration as well. 

Can I come in on that briefly, if that's okay? My sense, and correct me if I'm wrong, is that the Welsh and Scottish Governments, their broad policy positions on immigration tend to be somewhat more liberal than the UK Government. So, if they were to have more of a say over immigration policy, I think all things being equal, it's likely that they would adopt a slightly more liberalised policy on immigration. That could change. 

Yes, but that could be a gap between the citizens and the politicians, couldn't it, which—. Your earlier arguments seemed, to me, anyway—. I mean, I'm just exploring these things. These are not my views, necessarily, but obviously we're in a sensitive area where a lot of what's happened to the United Kingdom over the last few years has been driven by popular attitudes to immigration, and they're not necessarily the ones you hold and are expressing.  

Okay. Mrs Sumption, do you have anything to add to this? 

No. I think the main challenge, really, is just that public opinion does—. If you look at overall metrics of public opinion—so, for example, how many people saying immigration should be reduced—they do actually tend to be relatively similar across the UK, even Scotland, where the debate often operates on the premise that Scottish people are much more liberal. Scottish people answering surveys do also often have quite a sceptical attitude towards immigration. Some of the bigger differences are polarisation within each of the nations and regions, so differences between urban, suburban and rural settings, for example. You would still have to deal with all of those issues internally if it was devolved to Wales. 

Can I return for a moment just to the statement that you made, Dr Winckler, which is that we absolutely need growth in immigration in Wales because of the change in demographics, the needs we know now, but also what's coming in different sectors, and also to drive productivity and all of those arguments? Would you share that view—that we need possibly the existing level, but at least this level maintained, nuanced, targeted well, and so on, but we need that in order to—? Would you agree with that analysis, that we need possibly additional levels of immigration, whether it's to grow—you are nodding—additional levels of immigration, well targeted, in order to maintain growth in the economy? 

I think that's what the demographics tell us, yes. 

I have a different view. I don't think that it is possible to say that the UK as a whole or any area of the UK needs a specific amount of immigration. Immigration goes up and down over time, and the impacts of that don't tend to be actually very big. From an economic perspective, it's astonishingly difficult to try and define any optimal amount of immigration, which is actually one reason why the Government's tens of thousands net migration target has been so difficult for them to justify using economic principles. It's useful when thinking about immigration not to get too bogged down in this idea of need, and also the idea of shortage, both of which imply some kind of right amount of people in different jobs that will fill the necessary vacancies. 

Yes, and I think it's very challenging. Different methodologies come up with different answers. There are some cases where you can start to think about absolute numbers of people where the market itself is driven by demand—so, something like social care, nursing or teaching, where you say, okay, we know how many pupils there are going through the schools, and if we make some basic assumptions about the ratio of pupils to teachers, then you can come up with sensible numbers. If you're looking across private sector-dominated occupations like engineering, trying to work out how many engineers Wales needs or the UK needs I think is exceptionally difficult.

And so, I think the more productive way about thinking of this is not so much, 'Do we have a shortage of those people, do we need a certain number of people', but what's economically beneficial. And there may be cases when we don't have a shortage, but having even more of a particularly highly skilled group of people is economically beneficial, and so there's a perfectly good rationale for doing it. So, I, in general would discourage people from looking too narrowly through this lens of shortage and need, and try and think more broadly about cost and benefit. 

15:30

I could use some doctors in Brynmawr, you know. [Laughter.] Well, it's a serious point, because I don't see how we are going to, with an ageing population—and people moving into Wales tend to be retired in many cases as well—. How do we maintain basic services, as well as economic activity that contributes to our tax base, with a population that is ageing? To me, that equation just doesn't work. 

Yes, and I would put doctors in the same group as public sector occupations like teachers and nurses, where I think you can have meaningful numbers about what is needed if you have some basic assumptions about how many doctors you need per member of the population. 

Sure, but also, the working age population that's going to pay their taxes to pay those doctors' wages—the evidence that we have available to us at the moment is that the tax base in Wales will, if no Government actions are taken, decline. It will be eroded, shall we say, over the years. Therefore, one would anticipate that a Government that wishes to maintain spending on public services would wish that tax base not to be eroded, and therefore it would want to increase economic activity and increase the amount of taxation, and that points in a direction of an immigration policy that supports and sustains that, rather than an immigration policy that doesn't. 

Yes, but it's not the absolute number of people that matters. From a fiscal perspective, basically what matters is the economic activity, what people are earning and how much they get taxed. And so if you're thinking about how to boost public finances, really you want to be looking at higher productivity people and not just worrying about the absolute number of working-age people as a proportion of the total population. 

It's a part of the calculation, but there are, of course, many people, within either the migrant population or the UK-born population, who have a negative fiscal impact. So, there could be cases where additional people actually makes it harder to sustain certain public services, if they're not making a net contribution. 

But we know, in Wales, that people who are immigrants tend to have higher productivity and contribute more than many who aren't. 

Yes, so there's a distribution—

Therefore, if you take away people in that category, then it doesn't help the tax base. 

It depends—. Well, at the moment, we're talking about taking away. Let's assume we're talking about future flows and not actually taking away people who are already here. It depends who you're taking away, because within both the migrant population and the UK-born population, you're going to have a distribution. There will be many people who are net fiscal contributors and many people who are not. And, so, any future policy, if you care about the fiscal impacts of that—just because a group, on average, has a positive net fiscal impact, it doesn't mean that every single member of that group does, and that you couldn't, therefore, at least in theory, have an even higher fiscal benefit if you changed the composition of those people towards higher paid, higher productivity people. 

Thank you. I agree with Madeleine about the point about needing migration. I think that probably is the wrong way of thinking about it. But as Madeleine said, that doesn't mean that there aren't clear economic benefits to immigration. We know that there are benefits, for instance, when it comes to productivity, particularly for higher-skilled immigration. The other point to make, I suppose, which links back to Jonathan Portes's analysis, is that, obviously, restricting immigration means that you restrict employment growth, particularly in those sectors that have particularly relied on immigration, and that means that, as Jonathan Portes's analysis shows, you have a lower growth in GDP. Now, that can also filter into a lower growth in GDP per capita. So, I guess the question is: how important is that for Government policy? Some people think that's very important. The Migration Advisory Committee, in their report, suggested that wasn't so important. 

I think the key question for me is: what do we want our immigration policy to do for our economy, how do we want it to benefit our economy? We know that some forms of immigration can be beneficial for our productivity, we know some forms of immigration can be beneficial for us fiscally. And we know that some forms of immigration can be beneficial for particular industries that we're wishing to grow—so, industries such as social care, such as health, where we need that growth, perhaps other industries, such as, for instance, construction; we might want to grow our construction industry so that we can do infrastructure projects, so we can do house building. Perhaps we want to grow our tourism industry so that we can boost our exports, and so on. So, there are various reasons why we might want to grow particular sectors, and, obviously, restricting immigration means that we restrict growth in those sectors, and that's potentially a cost, if you have a particular industrial strategy that wants to grow those sectors.

15:35

Now, you were suggesting that the Government is too straitjacketed in its current White Paper approach, because it doesn't see the same potential as you are outlining within some of those sectors—whether it's social care, whether it's hospitality. If you have an influx of good people who can provide good social care, who keep people more independent for longer, less reliant on NHS services, et cetera, the benefits are not only in the taxes that they pay and so on, but the lowered reliance on other services rescuing them further down the line. And you could make a similar argument in terms of the potential of Wales as a tourism destination—probably unsurpassed here, this green and glorious country. So, you are suggesting that the straitjacket we're in here at the moment is not providing adequate freedoms for some—sorry, I don't want to put words in your mouth, but I'm inferring from what you're saying that it needs more flexibility to reflect Wales's desires, Wales's needs, Wales's potential.

Yes, and I'd agree with that. I think the current approach in the Government White Paper—the £30,000 salary threshold, the skills threshold—doesn't account enough for the desire of, for instance, other parts of Government that do actually want to, or other regions or parts of the UK that want to grow particular sectors of their economy, for a particular reason, such as construction, such as, for instance, maybe our higher education sector. I think that's the important thing. The other important thing I'd say is that I'm concerned about the Government's proposals because of their dramatic impact to the labour market. So, I think, if you were going to introduce such a big change, such a restrictive policy, you would need to transition this slowly. And I think the risk is that, by making such a big change quite suddenly, it has a bit of a shock effect on the labour market.

Yes, possibly. [Laughter.]

I'd like to ask Madeleine Sumption—the one area where there could be an economic justification for devolving this is that if—. Because we're in this extraordinary constitutional—'settlement' is probably too grand a description of our current situation, but the Scottish Government announced over the weekend that they wanted to set their own visa regime. And just because of the dynamics between England and Scotland at the moment, there must be a chance—I don't think it's probable, but I think there's a chance—that those sorts of powers will be conceded to Scotland. If that happens—and let's assume that they're not given to Wales, so Wales is in a system with England and Northern Ireland—do you see that there could be some economic loss for Wales in terms of being less attractive to inward investors, for instance, and that more general economic policy would get adversely affected by Scotland having that freedom to set its own policy?

This is, ultimately, an empirical question, and I think it's very difficult to predict. I think the argument would be that, if Scotland is able to market itself on a more liberal immigration policy, and therefore attract more highly skilled people, then maybe fewer people would want to go to other areas of the UK, including Wales. Whether that would be the case in practice I think would depend a lot on what it was that Scotland was offering and the rights and benefits that we are able to offer to the individuals, particularly highly skilled individuals, who are the ones who have the greatest economic benefits. If that was a really attractive package, then it could potentially mean fewer people going to other parts of the UK, but, at the same time, we often see with immigration that where people go—. Immigration policy is not the—. It’s just one piece of attractiveness, and people move—they don’t move necessarily because of immigration policies. Immigration policies facilitate or detract from their ability to do that, but, really, people are moving for opportunities or for family networks or for particular study opportunities and so forth. And it’s probably those underlying dynamics that I would say are most important, then, of course, filtered through the question of are these people actually allowed in if they want to come. So, I would say that while, in principle, it’s possible there could be an impact on Wales of Scotland having a more liberal policy, and while it's very, very difficult to predict, my instinct is that it wouldn’t be huge—but, yes, difficult to say.

15:40

And then my second question to you is that, given the—. I think the critical area in the whole debate is around those that come into tier 2, and that’s where, for good or ill, there’s a public perception that immigration policy has been too slack—I think there has been a strong view, whether we like it or not, and that has affected some political behaviour, it seems. But is the £30,000 threshold a reasonable or optimum threshold in your view, and was it set using rigorous criteria that we can be reasonably confident of applying for the short to medium term?

I don’t think there is a single right level of salary threshold. When we talk about the £30,000—and I do it as well, talk about ‘the £30,000’—it is actually a system of salary thresholds, and so there are quite a few people who don’t need to meet it. There are exemptions, for example, for workers in the NHS. This is something that is actually often overlooked in the debate. And new entrants to the labour market only have to meet a threshold of £20,800. They then would have to qualify for the £30,000 threshold after a few years.

So, in terms of whether, with that caveat, £30,000 is reasonable, that salary threshold was based on the system—. It originally was produced for a system where only graduate jobs were eligible for tier 2, and it was designed to allow the majority of people in graduate jobs, based on their earnings, to qualify, basically to prevent the lowest paid people in graduate jobs from not being able to get in. There is a question that when you extend the—. If you extend it as the Government said it will do—if you extend eligibility for tier 2 visas to middle-skilled occupations—do you need a different salary threshold? I think there would be arguments for and against that. I think partly it depends on the extent to which you want the salary threshold in middle-skilled jobs only to be letting in the most skilled people, on the basis perhaps that it is easier to find recruits at lower salaries within the occupation in low and middle-skilled jobs. On the other hand, the argument that you could make for a lower salary threshold is that at least some people will be net fiscal contributors, even on a lower salary, or there may still be occupational shortages below that level. It’s very difficult to measure those things in practice. So, I think principled arguments could be made for a range of different salary thresholds. This is something where reasonable people will disagree.

I don't know if the other two witnesses have any reflections on either of those two points about what might happen in Scotland or the threshold as it is at the moment.

The only thing I would say is that the salary threshold obviously does need to be looked at in line with the skills threshold, because even varying the salary threshold with the current skills threshold won't necessarily make a huge difference, particularly as many EU migrants are currently working in jobs that won’t qualify for the skills threshold anyway. So, I think there’s probably been a bit too much of a focus on just that £30,000 figure. As Madeleine says, there are various exemptions anyway, and it's a bit more complicated than that. But, even if you were to vary that salary threshold, it doesn't fundamentally change the fact that you're introducing a significantly new, quite dramatic change to the immigration system and that many people who currently are eligible to work in the UK, if they were to come in future, wouldn't be.

15:45

Two things I wanted to ask: one flows on from that. Welsh Government have suggested to the UK Government that there should be quantitative allocations of tier 2 visas to respond to labour and skills shortages within the Welsh economy. Now, do you have a view on that, whether that is an appropriate response to some of the concerns you've highlighted? It'll give Wales a little bit more flexibility, so that they release, in effect, a quantum of visas for things that we've targeted in sectors and skills that we've targeted and we've said, 'That's important, more important to Wales.'

I'm fairly sure I know what Madeleine's going to say on this. It might be similar. My view, just briefly, is that we shouldn't have any kind of cap or quantitative restriction. The way to look at it should be through eligibility conditions rather than through an overall cap, and so I don't agree with that approach.

I would agree. Certainly, anything based on numbers is going to be inevitably a very blunt instrument, and, if the public emphasis is on control, it's not just about numbers. 

I would agree. Caps are very difficult to manage.

Okay. In which case, could I just turn back to some comments you made earlier on about that the motivations for people who migrate are not purely to do with work? It's also opportunity and you mentioned the issue of family as well. I think that's something that certainly a lot of people would recognise, and Welsh Government has made that point as well in its 2017 immigration paper. Now, what should that mean for the way we shape our immigration policy going forward, post Brexit?

This is a tricky question. Actually, family is one of the bits of the post-Brexit immigration system that doesn't get discussed very much, even though, for EU citizens, we're talking about a really big change. So, EU citizens who are coming here as family members would be subject to the same restrictions as currently apply to non-EU citizens, and that's one of the most restrictive policies that exists in the OECD at the moment. So, you would expect there to be many fewer people coming here as EU citizens able to come here to join, for example, a British citizen partner.

The other big change is accompanying family members, and this is—. So, if someone were to qualify for a tier 2 visa, the family members would be able to accompany them, and that's a relatively liberal policy in the sense that they have full work rights, they can work in any job when they get here. That is one of the things that is thought to be quite important, particularly for highly skilled workers, in making a country attractive, because highly skilled people, generally, their partners also tend to be highly skilled, and so they're likely to be more reluctant to move if they're constraining the career opportunities of their partner.

The short-term work route that is proposed in the Government White Paper would not allow dependents. Now, many EU citizens would be able to bring their dependents if they qualified. So, if it was just a couple with no children, and both of them are EU citizens, they both qualify under the route and so that wouldn't create any restrictions for them. In the long run, we know that people who are here with family are more likely to settle permanently, and so if that's an objective then you would want to allow family members to come. That said, the short-term work route is explicitly a short-term work route, and so, by design, they're required to leave after a certain amount of time. So, I think—. These are all important considerations. I don't think there's a single answer in terms of will this make Wales or the rest of the UK less attractive; it will depend a lot on which group you're looking at. 

Just—I mean, the work that we've done suggests that, for people who are EU citizens who are already resident here, this is a major, major concern. There are all kinds of fairly blunt proposed legislation that doesn't accommodate people's often very complicated lives, and I think that you can't separate—as Madeleine was hinting, you can't separate family migration from economic migration, because workers don't come alone, basically.

15:50

I agree. I think that the proposal in the White Paper to allow accompanying family members through the temporary work route—and, indeed, the general policy on family migration—is generally, I think, designed to discourage long-term settlement. Obviously, there's a broader objective to bring net migration down to sustainable levels. So, I think, in a sense, that's all part of the Government's wider political priorities.

We do seem endlessly conflicted on what we're trying to do with this overall policy. Could I just extend this into the issue of community cohesion as well? I know that, in my own community—the community that I came from in Ystalyfera—people have migrated there, have brought their families over many years and have added immeasurably to the value of those communities and the community strength within there. They have bonded. They have integrated. They have added immeasurably, and they wouldn't have done that if they hadn't have been able to bring their families and settle and make lives. So, as it's currently shaped, what are your feelings on the proposals going forward, in terms of that developing of communities that are not purely economic numbers being shuffled across a board, but are actually groups of people who come together and live together and thrive together and set up businesses together as well, but also grow together, economically and socially? How do the current proposals fit with that?

Yes, I agree. One of our recommendations in the past is for all immigration policy to be tested against integration criteria. So, your immigration policy, is it designed appropriately to support and foster integration? I think that, probably, the big concern for us in the Government's White Paper on integration is the temporary work route because, by its very nature, it is short term, it is likely to encourage churn and transience in communities as people come and go, and it doesn't really incentivise migrants who come through that route to integrate into the community. Certainly, some of our research at the local level suggests that there is quite a lot of concern about that form of migration because people value integration, they value that kind of community dynamic where they can get to know newcomers and where people can settle in. So, that's our major concern about the White Paper. 

I share that.

I think that the idea of having a temporary work route is controversial. I think that the proposal in the White Paper is quite radical. It would be actually one of the most liberal immigration policies in the world—well, in the high-income world—as far as I can see. If the numbers of people coming through are quite big, then you could see real impacts on transience and churn in local areas. But, I think it's very difficult to predict at the moment how many people will come through that route, and it's possible that, once you divide all of these people across the UK—and bearing in mind the fact that there won't be a lot of net growth in that population because they will have to return after a year—it could be that the impacts end up quantitatively being relatively small. We just don't know. 

As far as I can see, locally, the temporary worker scheme has the potential to exacerbate what are already sometimes quite tense local relationships. So, at the moment, we can think of places across Wales where there is a local factory on the edge of town or a local employer who employs relatively large numbers of migrant workers, and there are already issues around their integration and their relationships with the resident community. At least at the moment, they have the option of settling down and remaining, which a growing proportion are doing. Replace that with a temporary worker scheme and you actually make the prospect of those people settling down and integrating—. Well, it is impossible. They cannot stay. So, I think that you are building into the immigration policy, actually, a whole lot of trouble. 

I've one further question if I can, and it's related to that. Some concerns have been expressed over the temporary work system—that this could also lead to exploitation because what you'll end up with is a hidden passage of migration in to do a task, in a way, and, of course, there are many good employers out there, but we know the hidden dangers of exploitation. That's why we set up the gangmasters authority all those years ago. Do you have any concerns that that temporary approach is going raise the propensity of that to happen—that we will see more exploitation?

15:55

I think there are a few different things going on here that actually push in different directions. So, on the one hand, if you've got more temporary people, one thing we know about people who've been in the UK for less than, say, a year, is they speak less good English, they have less local knowledge, and so they're probably going to be less aware of their rights, for example. And that would suggest a greater risk of exploitation, compared to a system where you have people staying many years and getting a greater understanding of how things work.

The thing that I think is important to say about the temporary work route, and which is probably most unusual about the policy, is that it does not tie workers to their employers. Now, if you look around the world at low-skilled work programmes and, indeed, in the UK, at what's being suggested for some occupations, like in social care, it is quite common for work visas in low or lower middle-skilled jobs to be tied to a specific vacancy and, therefore, to a specific employer. And that also creates risks of exploitation, because the person can't leave a bad job—they know that, the employer knows it—and so their bargaining power is likely to be much smaller. So, I think, in one way, what the White Paper proposals do that's really interesting is that it studiously avoids giving employers that power over their workers, which would be expected to mitigate the risks of exploitation, compared to a system in which workers were brought in to fill specific jobs. 

Can I just add very briefly—I?  think I agree with Madeleine. My only concern with this route, and from an exploitation perspective, is the time limit. Say if you're employed for six to eight months in a certain job, and, at that point, you may want to move employers, but because you've only got a very short period of time left on your permit, you're effectively tied to that employer. So, I think it does potentially pose risks of exploitation through that route, in the sense that workers still don't have a huge amount of bargaining power, even if they are able to switch employers.

I just wanted to ask a question about the EU settlement scheme, which covers people that are already here, and this has been criticised, potentially, or—. The House of Lords committee that looked at this said there was a potential that we could have Windrush 2 if we're not careful. I'm in contact with the Greek community in south Wales, for instance. Many of them came here in the 1970s as a result of the conflict in Cyprus. But, anyway, that community has many people that have been living here since whenever Greece became a member of the EU in the 1980s, and there's a danger that documentation, for instance, that these people hold may not be quite the level that Government departments expect, and we could get a repeat of the situation in dealing with these embedded communities. Do you have any knowledge of this? Are you picking up any anxiety in these communities?

We haven't, other than picking up generalised concerns about awareness, as you say—people who've lived here for a very long time not realising that this means them. A lot of concern about process and cost and some concerns about outcomes not always being what people expect. But nothing specific. We've not been able to look at that.

I wrote a report last year called 'Unsettled Status?' and it looks at possible vulnerable groups of people who might fall through the cracks in the system and not secure settled status. And there's a lot of information there about the nature of different groups and how large they are. I think, in terms of the general design of the scheme, I would say a few things. One is that if you compare it to other Home Office processes, this has been designed to be really easy for people to use. The whole culture of the team implementing it is very different from other parts of the Home Office, so, in many respects, I think a lot of people in the migrant rights sector, for example, do recognise it as good practice in terms of immigration policy in the UK.

I think there are two specific concerns that will come up. One is whether people who are eligible for settled status because they've been in the UK for at least five years are actually being given pre-settled status, because they don't have the evidence that they've been here that long, and pre-settled status for most people will be just as good. It won't make any difference. They will need to convert to settled status, but it won't have a big impact on their lives. There are some cases, like for example automatic citizenship for children, where it actually does matter whether you have settled status. There are some kinds of quite specific technical issues, but nonetheless meaningful ones.

I think, probably, the biggest question is what happens after the deadline and what happens if and when large numbers of people who are living in the UK have not applied, either because they couldn't for some reason—vulnerable groups, for example—or, probably more likely, because they just didn't realise that they had to or they didn't get round to it. One thing that we know, when we look at participation in other Government programmes, whether it's paying your taxes on time or claiming child benefit for which you're eligible, is that people don't always do what's in their interest. Their lives are chaotic, people are disorganised, and there may be—. It's possible that there will be quite a lot of people who, for no particularly good reason, just don't go through the system. Now, the default position is that, when the deadline expires, those people lose their legal status here, so they become irregular migrants overnight. Now, the Government has said that they will take a proportionate approach where there was a good reason for missing the deadline. They haven't said very much about what that actually means in practice and whether 'I forgot' or 'I didn't realise' would count as a good reason. We'll see, obviously, over the next few years, how many people apply, and we'll start to get a sense of what share of the EU citizen population we think this is likely to be. But if the numbers are quite large, I think the big policy question that comes up is: what's the strategy for dealing with people after the deadline? Will the deadline be pushed back—possibly removed entirely? When you look at all of the issues that could create vulnerabilities or the problems that people might have, in some ways it all comes back to this question of, 'Okay, after the deadline has expired, is that it and people lose their status, or will there be procedures to try and get them back through the system, even though they missed the first time round?'

16:00

It sounds as if it's going to be messy, even if it's well designed, because there are hundreds of thousands or indeed possibly millions of people in this category, and if you get 95 per cent compliance you're probably breaking all sorts of records for Government schemes, aren't you? So, at any reasonably predictable level of compliance, we're still going to have an awful lot of people embedded in our communities who may be—. Well, if the law were applied without any consideration, we would have many, many hard cases that would be quite shocking, I think, to the general public.

Yes. I think it will be messy, and even if the Government does a brilliant job both in designing the scheme and then communicating it, it won't necessarily be their fault if some people don't come forward, and so the question, I think, is how do you deal with that after the deadline has expired.

Overly complex and messy is probably a good way to leave a debate on the post-Brexit world. I'm grateful to the three of you for the evidence you've given this afternoon. You will be provided with a transcript to check for factual inaccuracies, but, otherwise, the committee is very grateful to you for the time that you've taken to give evidence and to answer our questions today. Thank you very much. 

5. Papurau i'w nodi
5. Papers to note

The next item on our agenda is papers to note. We do have correspondence from Oliver Dowden MP to the Chair, regarding the agreement on Government procurement. We'll note, also, correspondence from Bruce Crawford MSP to David Lidington MP, regarding inter-governmental relations, and correspondence from David Lidington to the Chair, regarding inter-governmental relations. Those two pieces of correspondence are very important, of course, and have been discussed by us and other committees at different times. With your consent, I will talk to the Chair about how we can ensure that we are able to have a substantive conversation on those items.

The final piece of correspondence is from the Counsel General and Brexit Minister to the Chair regarding a meeting of the Joint Ministerial Committee (European Negotiations), which took place last week.

16:05
6. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
6. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

If there is no other business, can I move a motion under Standing Order 17.42(vi) to exclude the public from the remainder of this meeting? 

I see that it's agreed, so we will move into private session.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 16:05.

Motion agreed.

The public part of the meeting ended at 16:05.

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