This blog examines the Migration Advisory Committee’s analysis on the impacts of migration from the European Economic Area (EEA) (EU member states plus Iceland, Norway and Liechtenstein), and its proposals for freedom of movement and skilled labour. It was originally published by SPICe (Scottish Parliament) on 29 October 2018.

You can read more about the MAC’s response to calls for regional variation in the immigration system here.

Immigration was one of the defining issues in the June 2016 referendum campaign for the UK to leave the European Union. Pro-Brexit advocates argued that European integration gave the UK less control over its borders and had resulted in excessive levels of immigration to the UK. Pro-Remain advocates argued that EEA immigration had resulted in net positive effects for the UK’s economy, public services and communities.

One year after the Brexit referendum, the then UK Home Secretary Amber Rudd commissioned the Migration Advisory Committee (MAC)   – an independent, non-departmental public body – to research the impact of EEA migration on the UK to “provide an evidence base for the design of a new migration system”.

The MAC received 417 submissions in response to its call for evidence – the highest ever response rate – from across all sectors of the UK’s economy and society.

Impact of EEA migration on the UK

In its final report on EEA Migration in the UK, the MAC sets out current and future patterns of EEA migration into the UK. The report discusses impacts of EEA migration on wages and unemployment, productivity, innovation, training, prices, public finances and public services. Its key findings are that:

“migrants have no or little impact on the overall employment and unemployment outcomes of the UK-born workforce”

“EEA migrants contribute much more to the health service and the provision of social care… than they consume in services”, and

“EEA migrants pay more in taxes than they receive in benefits” (p2-3).

Despite presenting evidence of the positive impact of EEA migrants, the MAC’s main recommendation is to end EEA freedom of movement in the UK:

“there should be a less restrictive regime for higher-skilled workers than for lower-skilled workers in a system where there is no preference for EEA over non-EEA workers”.

Freedom of movement

One of the MAC’s principal recommendations in its EEA Migration in the UK report is to end free movement. The MAC has argued that the:

“price of [free movement is] losing control over both the level and type of immigration into the UK. With free movement, the decision to migrate rests solely with the migrant” (p4).

Currently, any citizen of an EEA member state can come to live and work in the UK. The UK is one of the few member-states that has chosen not to implement EU legislation that allows states to control movements of EEA citizens by requiring them to provide evidence that they are working, studying or able to support themselves after three months.

After the UK leaves the EU, the MAC has proposed that EEA citizens will be given no preference in applying to live and work in the UK. Instead, skilled EEA nationals will have to apply, like all non-EEA ‘third-country nationals’, through the UK’s 5-tiered visa system, as discussed below.

High and medium-skilled migration

The MAC has found in its research that “high-skilled migrants [have] a clear benefit to existing residents while the same is not true for lower-skilled migrants”. As such, the MAC has proposed a post-Brexit migration policy that “provides greater access for higher-skilled migration”. EEA workers will be able to apply through the restrictive Tier 2 (General) route. The MAC has advised that the salary threshold for Tier 2 migrants should be retained at current levels, which are £30,000pa (or £20,800 for new entrants). Further, employers wishing to hire an EEA worker will have to pay a £1000 Immigration Skills Charge.

To offset these restrictions, the MAC has proposed that the cap on Tier 2 migrants – which currently stands at 20,700 per year – be abolished. The MAC has also proposed abolishing the Resident Labour Market Test (RLMT) which employers currently have to undertake to ensure that local workers are unable to fill the role. Finally, the MAC has proposed extending Tier 2 to include ‘medium-skilled’ workers in addition to high-skilled workers.

In their submissions to the MAC, many business organisations have been critical of the functioning of the Tier 2 system. For instance, the Confederation of British Industry (CBI) has called the system ”highly bureaucratic and cannot be extended to EU workers without major reform.” Furthermore, the IPPR has found that 75% of EU nationals currently living in the UK would be barred from the UK in the future, as they earn less than the £30,000 threshold.

Low-skilled migration

The MAC does not recommend an explicit work migration route for low-skilled migrants as it wishes to pursue “a more restrictive policy on lower-skilled migration”. The MAC has stated that low-skilled migration is not as beneficial to the UK as high-skilled migration, due to the smaller positive impact that low-skilled EEA migrants have on public finances and innovation. As a result of the MAC proposals, there will likely be a significant decline in low-skilled or low pay migration to the UK after the implementation period ends.

Business organisations, such as the British Chambers of Commerce, have welcomed the MAC’s proposals to abolish the cap on Tier 2 (General, Skilled) migrants and the Resident Labour Market Test.

However, businesses have also expressed concerns about reducing low-skilled EEA migration to the UK after Brexit. For instance, the CBI stated that the £30,000 salary threshold and emphasis on skilled workers would “block many essential workers from coming to the UK”, while the Federation of Small Businesses has said “expanding the Tier 2 general route to include EEA citizens will hurt small businesses, the wider economy and productivity”. Other business organisations have expressed fears that ending low-skilled EEA migration will lead to extensive labour shortages in key sectors of the UK economy, such as social care, hospitality, construction, tourism and health.

Oxford Economics has also raised the possibility of tax rises as EEA workers in the UK decline, given that EU migrant workers contribute £2,300 more per head to the UK purse than the average British citizen.

What’s next?

Despite widespread opposition from UK businesses and the Scottish Government to radically reduce EEA migration – and in particular low-skilled migration – to the UK, many of the MAC’s recommendations for a new post-Brexit migration system have been endorsed by the UK Government. The Home Secretary has indicated that a white paper on immigration will be published before the end of 2018, with an immigration bill to be presented to the UK Parliament at some point in 2019 – quite probably, after the UK officially leaves the European Union.

This blog was originally posted as a Guest Blog by Dr Eve Hepburn on SPICe Spotlight (Scottish Parliament), which can be read here.