The Prime Minister may be right to suggest that there could be a need for a transitional phase as a new system for EU migration is brought into effect. Much depends, of course on what that system turns out to be. We have recommended visa free access for visitors, students and the self-sufficient but free movement of workers cannot continue. For workers there will have to be a system of work permits similar to that which now applies to non-EU workers. We estimate that a regime of this kind would reduce net migration from the EU by about one hundred thousand a year – a major contribution to the government’s objective.
It is EU workers, particularly those who are low-paid, who have added so greatly to EU migration to Britain. For the first thirty years of our membership, net migration from member countries was very small – for example it averaged only 12,000 a year between 1985 and 2001. The expansion in 2004 to include one hundred million people in the new member states of Eastern European led to a massive inflow. This was followed by significant numbers from the EU14 as youth unemployment rose to very high levels in Southern Europe. To cap all that, Romania and Bulgaria have come to the end of their transition period and are now adding 50,000 a year to net migration.
Public concern is therefore entirely justified. Net migration from the EU together with a similar number from outside the EU are contributing to a population increase of about half a million a year – the equivalent of building a city the size of Liverpool every year for the indefinite future. This is clearly absurd.
So can it be done? Can we get the numbers significantly down without doing serious damages to business? Of course we can – and for two key reasons.
The first is that 80% of EU workers who have arrived in the last ten years are in low-skilled, low-paid jobs. Their contribution to our economy is limited. In his final report as chairman of the government’s independent Migration Advisory Committee, Sir David Metcalf reported in June 2016:
Low skilled migrants have a neutral impact on UK-born employment rates, fiscal contribution, GDP per head and productivity.
Indeed, data released by HMRC in August 2016 show that East Europeans pay only half as much income tax as the average UK tax payer. Furthermore, in 2013/14 over £4 billion was paid out in working age benefit claims for EEA nationals.
The second reason is that East European workers are most unlikely to disappear in a puff of smoke. On the contrary, they have proved to be rather a settled population. Our analysis of the stock of EU10 migrants by year of arrival reveals that their numbers appear to have been increasing rather than decreasing. This must mean that few long-term EU10 migrants have left the country and that, actually, some who thought they would only stay for a short period have in fact stayed for much longer. It follows that there is very unlikely to be a cliff edge for employers as their workers suddenly disappear when the UK leaves the EU. Why should they, when they have been settled here for some years and are earning three or four times what they would earn at home?
Meanwhile, individual sectors are queuing up to claim that continued migration from the EU is vital for their business models. Each case should be examined very carefully by the government’s Migration Advisory Committee before any special arrangements are made. Options such as raising pay or improving production methods should be thoroughly examined. Indeed it is quite possible that an unlimited supply of cheap labour has been a disincentive to investment in machinery. That said, one potential source of temporary low skilled labour would be to expand the present Youth Mobility Scheme. This permits young people from a few countries, such as Australia, to come to the UK to work for a maximum of two years and then return home. In the European context this would have the additional and important advantage of nourishing and developing our social and cultural links with our EU partners.