Why Reform’s Deliveroo law is bad for business

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Zia Yusuf has announced his proposal for a ‘Deliveroo law’ which would make it a criminal offence for CEOs and company directors to use or employ illegal immigrants, i.e., they’d face jail for non-compliance. And if that were not enough to discourage them, 10% of their global turnover could be seized for repeated breaches.

Irrespective of your view on illegal immigration, Yusuf’s proposal is an instance of vast state overreach and amounts to conscripting the private sector to do what is ultimately the Home Office’s job. This puts more sand in the wheels of commerce, and will only further compound the ‘papers please’ society in which we now live.

One of the alleged ambitions of Reform UK is to ease the bureaucratic burden on business in this country. Yusuf’s Deliveroo law, however, is a big step in the other direction. Under it, human resources would have to get passports, birth certificates, National Insurance numbers and utility bills off every single person they employed, at the very least. All are already required under the Asylum and Immigration Act 1996, but, no doubt, employers will have to think of new ways to make sure they’re compliant too given the size of the potential fine.

While presenting a passport is not much of a faff, it still slows economic growth – passports get lost and expire, or a young person’s might be sitting at their parents’ house, far away. If this whole process takes just one week off six months of employment, then output is cut by 4%. Although it’s already an official requirement, lots of employers in trucking, construction and food services are lax about enforcement, easing up the labour market nicely.

And 13.5% of the population – 8 million people – don’t have a passport at all. This means they’ll need to provide a birth certificate, which will often be lost, National Insurance number and a utility bill; usually these will have to be verified by going down to the Post Office. Yet more sand. And make no mistake: if a company director thinks he’s going to go to jail for non-compliance, he’s going to require the HR function to make sure everyone is squeaky clean.

At the margin, where you just want a couple of casual labourers on your building site for a few days, the threat of the 10% fine will result in simply going without said labourers. Why? Because the extra work they’d help with would be outweighed by the expected value of the fine or criminal offence. More opportunities will be lost for everyone to get their foot in the door, Britons and foreigners alike.

As well as gumming up the labour market directly, companies will have to expand the size of their human resource functions to deal with the bureaucracy. Britain already employs 1.6% of people in HR compared to 1% in America and just 0.8% in the EU. Yusuf’s proposal will only make that first number larger; and since human resource departments don’t create income, the money to pay them will have to come from some combination of lower wages elsewhere in the business, thinner profit margins and higher prices for consumers.

If it is accepted that employers need to root out illegal immigrants, must I check whether my local Indian is actually legally allowed to be here before ordering my Madras and onion bhajis? Obviously not; so why should the employer be treated any differently when buying labour? People should be treated as innocent until proven guilty; and it is the job of the state to prove people guilty, not the role of private enterprise. Reform should cancel Yusuf’s Deliveroo law and focus on cutting red tape, not cooking up more.

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