What is the change? The Migration Advisory Committee has published its final report detailing its study of EU/EEA workers in the UK. The report considers the total impact of EEA labour on life in the UK, including economic and social impacts on domestic wages, unemployment, prices, productivity, training, the provision of public services, public finances, community cohesion and well-being to provide a researched basis for migration policy.

The report makes key recommendations to the UK Government on regulating EEA workers after the UK leaves the European Union and the post-Brexit implementation period ends on 31 December 2020. Its recommendations are not binding, but the report suggests that the UK will move towards a single, unified immigration system for EEA and non-EEA nationals in which low-skilled migration is substantially cut, and the existing Points Based System Tier 2 routes for skilled workers are reformed for wider use.

Key recommendations:

The MAC report recognizes that “Free movement has the virtue of a low bureaucratic burden but at the price of losing control over both the level and type of immigration into the UK”. The MAC therefore recommends government policy should be to:

  1. Maintain visa-free travel from the EEA, but introduce restrictions on how EEA nationals settle and work in the UK prioritising higher skilled migration;
  2. Assume a single set of immigration rules for both EEA and non-EEA nationals;
  3. Resist demands for employer-led sector-based routes for low-skilled workers (other than seasonal agricultural workers), regional variations, or variation for Northern Ireland or the public sector;
  4. Maintain the existing Tier 2 (ICT) route; and
  5. Extend the scope of the existing Tier 2 (General) route to medium-skilled workers.

Specific Tier 2 (General) recommendations include:

  • Removing the cap/quota;
  • Reducing SOC skill level to include medium-skilled occupations;
  • Maintaining the salary threshold at £30,000;
  • Applying the Immigration Skills Charge to EEA nationals;
  • Abolishing the Resident Labour Market Test; and
  • Ensuring that the process for changing employers in the UK is straightforward.

Background: The MAC is an independent committee of experts that produces reports and recommendations to the UK Government to provide an objective evidence basis for migration policy. In July 2017, the Home Office commissioned the MAC to study current and future EEA migration patterns and the impacts of EEA workers on the domestic labour market, as well as to make recommendations on how to align the UK’s post-Brexit immigration system with modern economic goals. The committee conducted a Call for Evidence and published interim results of responses from business and other stakeholders in March. Those results indicated that businesses remain concerned about a future immigration system that limits their ability to access EEA labour.

Analysis & Comments:  The MAC research produced detailed evidence to support its findings on the impact of EEA migration on the UK, which are summarized below.

  • No or little labour market impact on the overall employment outcomes or wages for UK-born workers.
  • Positive impact on productivity and levels of innovation, and potentially positive impact on training (no negative impacts on training were found and no robust conclusions could be made regarding investment levels).
  • Migration from New Member States (NMS) and non-EEA countries has some impact on reduced prices of medium- and lower-skilled personal services and increased housing prices.
  • EEA migrants pay more in taxes than they receive in benefits.
  • The positive net contribution to the public finances is larger for EU13+ migrants than for NMS migrants, which supports a more selective approach to higher earning EEA migration.
  • Migration does not reduce the quality of health or social care, choice or attainment at school, average level of subjective well-being in the UK, or increase crime.
  • More attention could be paid to ensuring that extra public resources go to places of higher migration to better manage the consequences.

The report is lukewarm in its support of the move to a managed migration system for EEA nationals, recognizing “A managed migration system could benefit the resident population though there would be winners and losers and the size of the benefits are likely to be modest”. However, its proposed shift towards higher-skilled migration means that while the end of free movement will cut low-skilled EEA access to the UK from 2021, changes to the existing Tier 2 visa system (by removing the cap, widening the range of jobs permitted, and reducing bureaucracy as detailed above) should either maintain or widen access to the UK for medium-skilled workers. Many employers would welcome an improved and enlarged Tier 2 system, although arguments that employers made during the Call for Evidence for sector-based schemes to ease loss of lower-skilled workers in retail, hospitality, social care etc. or regional variations have not been accepted by the MAC.

Source: Deloitte LLP. Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 1 New Street Square, London EC4A 3HQ, United Kingdom.