17 May 2018

The Government must end the madness of skilled migrant quotas


This week we learned that 1,600 IT workers and engineers were denied entry to the UK between December and March because the quota for skilled non-EU migrants had already been filled.

That’s on top of the more than 1,800 healthcare workers who had a job offer but can now not enter the country – this at a time when NHS staffing could hardly be a more pressing issue. Much like the Windrush scandal, these depressing headlines are another consequence of an immigration system that veers between the dysfunctional and the downright barmy.

Apparently the Government wants firms to look to British workers before trying to recruit from overseas. Given the almighty faff, not to mention fees, involved in recruiting from abroad, it’s a pretty safe bet that employers would recruit a British worker if a suitable one were available.

It’s as though the higher echelons of the British state have signed up to one of the silliest ideas going, the “lumpen labour fallacy”, in which the economy only has a fixed number of jobs to dole out between would-be applicants.

There’s a broader philosophical objection to add to the economic arguments – after all, what business is it of the state to tell companies they should employ someone on the basis of their nationality? There’s also something rather unseemly about trying to shift blame onto businesses for a skills shortage that has far deeper roots in our education system.

The idea of a “Shortage Occupation List” compiled in Whitehall seems modelled on the worst aspects of a planned economy. Are we really telling businesses, many of which will be going through rapid growth, that they can’t take on the staff they want because someone in Whitehall hasn’t added a particular profession to the list?

What’s especially galling about today’s news is that we are missing out on workers in the very high-tech sectors where the UK is a top international performer. To what possible benefit? These are not people who would have been some kind of drain on the British state, given they would have had to  be on at least £35,000 a year (more on which later). What’s more they would have arrived in the UK without the British taxpayer having contributed a penny to their training.

“The tragedy is that this policy doesn’t work for anyone: the government, employers or the public,” says Sarah Main of the Campaign for Science and Engineering (Case) – and it’s hard to disagree with her assessment. Indeed, it’s hard to think of a more explicit rejoinder to ministers’ claims about having an immigration policy that attracts “the brightest and the best”. More worrying still is the signal it sends to the budding entrepreneur or scientist, the kind of people whose endeavours benefit all of us, about coming to work in the UK.

The economic irrationality of an arbitrary cap on migrant numbers is pretty obvious, but let’s just focus on the politics for a moment. The whole rationale behind “getting tough” on immigration comes from the idea that swaths of the public are dead against more people coming in. While there is clearly substantial scepticism, recent polling suggests a more nuanced picture among the British electorate. Ipsos Mori found, for instance, that more than half of Brits would welcome more higher-skilled migrants after Brexit.

And why wouldn’t they? These people are clearly adding value to the British economy, without our taxpayers having contributed to educating them. If they are graduates of British universities, they will have paid the very much higher non-EU student fees, helping sustain one of our most competitive sectors.

Unfortunately, the Prime Minister fails to appreciate the nuance in the public’s views on immigration. The result is a refusal to accept sensible and widely supported tweaks to the system, such as excluding students from the headline immigration statistics.

At least the Government has the chance to put some of this right when it designs its new post-Brexit migration system – though as with everything Brexit-related, it’s taking a long old time. The process has at least been somewhat depoliticised by the Migration Advisory Committee, whose report will feed into whatever system the Government comes up with – though if May is still at the helm we shouldn’t be holding our breath.

Let’s assume, purely for argument’s sake, that EU nationals will continue to get preferential treatment of some kind, possibly as the price for greater market access. What should the system look like for skilled non-EU migrants?

First, we must do away with both the overall net migration target and sector-specific quotas. It’s for businesses and public sector employers, not partisan politicians, to decide what staff they need for themselves. We should also get rid of the nonsensical £35,000 salary threshold. Setting the wage limit that high arbitrarily excludes a whole host of professions that most of us would certainly consider “skilled”. As the academic Jonathan Portes has noted, the majority of electricians, physiotherapists, nurses and primary school teachers would count as “unskilled” in this definition.

On a side note, the £35,000 limit may also force some firms to pay higher salaries than they would ordinarily do just to get the applicant they want, and that’s after the time and money they need to put into the visa support process. The salary threshold is also particularly troublesome requirement for self-employed people – the very entrepreneurs we hear so many warm words about – whose incomes are naturally more vulnerable to year-on-year fluctuation.

What chance of these sensible changes? In Sajid Javid we at least have a Home Secretary who understands the demands of the private sector and, as has been repeatedly noted, is himself the son of immigrants. He has made some encouraging noises so far, but the question is whether he is given both the time and the political room for manoeuvre to implement an economically sensible post-Brexit immigration system.

The Government has made a lot of noise about a Global Britain. For that to be more than mere platitudes, it has to mean not just flogging British goods and services abroad, but making the UK an economy that is as open as possible to the rest of the world’s talent.

John Ashmore is Deputy Editor of CapX.