Background. Professor Christina Boswell, University of Edinburgh

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1 Enlightening the European Debate European Union Immigration Professor Christina Boswell, University of Edinburgh Migration has become one of the most prominent issues in the debate on Britain s membership of the European Union (EU), indeed some commentators are suggesting it might determine the outcome of the upcoming Referendum. Leave campaigners have argued that the UK will only be able to regain control over immigration by leaving the EU. Only by becoming exempt from EU provisions on the free movement of workers can the UK control the inflow of foreign nationals, and decide how many, and whom, to admit as labour migrants. Given widespread public concerns about immigration, the claim that Brexit will enhance UK sovereignty over immigration appears to have considerable traction with voters. Immigration consistently features as one of the major concerns of British voters. According to IPSOS-Mori, 44% of the population consider immigration to be the most important issue facing Britain today, making it the top issue of concern. Other surveys suggest that over three-quarters of UK residents want to see a reduction in immigration. If Brexit is considered as the best, or only, way to achieve such a reduction, then this argument may well have considerable influence on voting decisions. However, the arguments about how Brexit might influence immigration to the UK are complex, the debate is often confused, and many of the claims deserve some scrutiny. In this brief, I will review the various arguments being put forward in the debate, and consider how remaining or leaving the EU might affect immigration to the UK. Background European Union law enshrines a principle of free movement of EU nationals, meaning that nationals of EU member states are entitled to seek a job and work in any other member country. They are also entitled to equality in access to employment, wages and social security. This right is limited to those who move for work purposes it does not extend to those who relocate to take advantage of unemployment benefits. In the case of countries newly joining the EU, member states may impose a temporary restriction on their access to the labour market, lasting up to seven years. In the early decades of the UK s membership of the EU, EU immigration remained relatively low, indeed the UK generally exported more British nationals to Europe than receiving EU nationals in the UK. However, in 2004, when eight central and east European countries (the A-8) acceded to the EU, together with Ireland and Sweden, the UK decided to allow immediate labour market access for the newly acceding countries. The decision was made on the grounds that labour migrants would benefit the UK economy at a time of nearly full employment and economic growth; moreover, it was projected that levels of immigration from the A-8 would remain relatively low. However, the A-8 accession prompted a substantial increase in EU immigration. ONS figures suggest that A-8 immigration rose from around 45,000 in 2004 to over 100,000 by 2007/8. Currently, A-8 immigration is back down to just over 60,000. However, other flows from the EU have become more significant. Over half of EU immigration (120,000) is now composed of nationals of the old EU member states, primarily those from southern European countries hit by recession. At the same time, there has been a small but steady increase in immigration from Bulgaria and Romania (currently around 50,000 per year), whose nationals were permitted access to the UK labour market in

2 Overall, EU immigration currently now stands at around 250,000 per year. If we subtract out- migration of EU nationals, we reach a figure for net migration of almost 180,000 per year. This accounts for almost half of all net migration to the UK. These figures have become especially prominent in the context of the Conservative Party s net migration target. In 2010, David Cameron pledged to reduce net migration to the UK from the hundreds of thousands to tens of thousands. However, the Government has consistently failed to hit this target, with current net migration standing at over 300,000, higher than the peak of 2007/8. Indeed, levels of net migration are higher than at any time recorded. Figure 1: Long-Term International Migration UK, 1970 TO 2014 (annual totals) Source: International Passenger Survey (IPS), Long-term International Migration Office for National Statistics Figure 2: Immigration to the UK by citizenship, 2005 to 2015 (YE September 2015) Source: International Passenger Survey (IPS), Long-term International Migration Office for National Statistics 2

3 EU Migration and Brexit The concern to limit immigration has become one of the main arguments marshalled to justify Brexit. Pro-leave campaigners argue that EU membership impedes the UK from meeting its immigration policy goals. EU rules on free movement undermine British sovereignty by obliging the UK Government to accept high levels of EU labour migrants. They argue that the UK will only be able to regain control of immigration policy outside of the EU. Once Britain has left, it will be able to pursue a more selective immigration policy, for example only admitting those with much needed skills. UKIP has even suggested that leaving the EU would enable the UK to meet a much more ambitious net migration target of 30,000. Claims about the effects of Brexit on immigration need to be examined from a number of perspectives. Would leaving the EU exempt the UK from EU provisions on free movement? Even if the UK were able to secure such terms, would this enable the UK substantially to reduce immigration? If the UK stays in the EU, are there other measures that might help reduce EU immigration? And would leaving the EU enhance or hinder UK border control? 1 Will Brexit exempt the UK from EU provisions on free movement? As we saw, one of the main claims of the leave campaign is that by leaving the EU, the UK would be able to withdraw from provisions on the free movement of workers. However, there are reasons to question whether the UK would be able to withdraw from EU free movement provisions while retaining full access to the Common Market. Free movement of workers is considered to be a corollary of the other freedoms : free movement of goods, and free movement of services. The mobility of EU nationals within the Common Market is seen as a fundamental principle of the EU. Thus it is highly unlikely that the UK would be able to retain full access to the Common Market while rejecting EU rules on the free movement of workers. Other countries benefiting from free trade in goods and services have been obliged to accept EU rules on the free movement of persons. This applies to members of the European Economic Area (EEA), which includes Norway and Iceland. It also applies to Switzerland, which is not a member of the EEA, but has its own bilateral agreement with the EU on trade, which includes provisions on free movement. When Switzerland voted in a referendum in 2014 to limit mass migration, including through putting a cap on immigration from the EU, this triggered a diplomatic crisis with the EU. The EU took retaliatory measures, including withdrawing research funding from Swiss institutions. The crisis remains unresolved. Swiss politicians favouring the cap on EU immigration are avidly watching the UK debate, hoping that a UK departure from the EU would strengthen their negotiating position. However, it is unlikely that EU member states would readily accept such an exception to the principle of free movement, which would set a precedent for other states to seek similar terms. Pro-leave campaigners suggest that the UK will have far more clout than countries such as Norway or Switzerland, and so would have more influence in negotiating a package that involves free movement of goods and services, but exempts workers. They point to Canada s free trade deal with the UK. However, it should be noted that this agreement excludes key aspects of services, and, moreover, was agreed after a lengthy negotiation process. This of course brings us to the wider question of what sort of free trade agreement the UK would be able to negotiate for more information, please see the RSE briefing on Trade and the 2016 European Referendum. For the purposes of this discussion, the main conclusion to draw is that there is no precedent of a country being a full member of the Common Market without accepting EU provisions on free movement. 2 Would exemption from free movement provisions enable the UK to reduce immigration? Assuming that the UK was able to secure a deal that exempted it from provisions on the free movement of workers, would this help the UK to achieve a reduction in immigration, and/or enable it to pursue a policy targeted at attracting more high skilled migrants? Clearly, a UK government could set a cap on immigration, including immigration from EU nationals. The question becomes that of whether such a cap could realistically be implemented, and how it would affect non-eu immigration. 3

4 The first point to note is that over half of current immigration (and over half of net migration) to the UK is composed on non-eu nationals. Since 2010, the Home Office has introduced a range of measures attempting to reduce non-eu immigration. However, their capacity to limit immigration has been reduced by various factors some related to human rights and refugee law obligations, others related to economic interests. Among the latter is the UK s strong interest in attracting high numbers of foreign students, which is an important source of income to Higher Education Institutions. UK businesses are also highly dependent on skilled foreign labour, and have been particularly vocal in insisting that intra-company transfers remain unaffected. In short, it has proved extremely difficult even for a Government vocally committed to reducing net migration to bring down the level of non-eu immigration. If non-eu immigration is so difficult to reduce, would a post-brexit government have an easier time in limiting EU immigration? One argument why this may be so is that many EU migrants arrive in the UK as job seekers, rather than coming to a specific job, and many take-up relatively low-skilled jobs that UK nationals might be able to fill. In other words, the perception is that EU immigrants are competing with UK nationals for jobs. However, this argument overlooks the problem of labour market mismatch 1. Even in contexts of high unemployment, the available workforce does not always match job vacancies. This may be because they don t have the required skills; because they are living in another part of the country and are unable or unwilling to relocate; or because the salary or work conditions are not sufficiently attractive. All of these factors can mean that employers are dependent on foreign workers to fill vacancies. Indeed, recent research by the National Institute of Economic and Social Research suggests that British employers often turn to EU nationals because British workers are put off by low pay, seasonal or shift work, and hard-to-reach locations. This is also backed up by the Office for National Statistics, which suggest that 58% of EU nationals coming to the UK to work already have a job offer before they get here. This begs the question of what effect a ban on EU immigration might have on the economy. If EU nationals are filling so many jobs, then a significant restriction of immigration would create serious labour shortages, with damaging effects for those sectors most reliant on foreign labour: process plant occupations, cleaning, food preparation and hospitality, and health. Rather than leading to a reduction in immigration, it may simply create acute shortages, which would then need to be filled by either EU or non-eu nationals. One way of addressing labour market mismatch is to make jobs more attractive to current UK residents. And indeed, the new National Living Wage 2, which came into force in April this year (and which will be incrementally increased), could encourage UK nationals to take up jobs that they would not otherwise have considered. However, the Living Wage only applies to workers of 25 years or over. For under 25s, lower minimum wage provisions apply 3. So this might encourage businesses to circumvent the rules by employing younger workers and newly arriving EU immigrants tend to be in their early 20s. Moreover, where businesses feel they cannot afford these extra costs, then they may try to circumvent the rules and employ workers on an irregular basis and this would most likely mean employing foreign nationals. This implies the need to look carefully at the age thresholds. And, crucially, the rules will need to be rigorously enforced in order to avoid immigrant workers being recruited to undercut the higher rates of pay. To summarise, it is difficult to see how a UK government could substantially limit EU immigration without incurring significant economic costs, or simply necessitating increased levels of non-eu immigration. Governments have been unable to limit non-eu immigration; and there is little suggest that EU immigration is more expendable to the UK economy. Indeed, labour market policies aimed at improving the wages and conditions of lower skilled jobs and, crucially, policies to enforce such measures are likely to have a greater influence on labour migration than leaving the EU

5 3 Could a ban on access to welfare reduce EU immigration? If we accept that leaving the EU would not significantly enhance the UK s ability to reduce EU immigration, are there other ways of limiting inflows? David Cameron has sought to respond to concerns about EU immigration by reducing access to welfare. His argument, and that of other prominent pro-remain Conservatives such as Theresa May, is that limiting welfare benefits for EU migrants will help to reduce EU immigration. The assumption here is that EU immigrants are attracted to the UK because of its generous social and welfare system. Reducing their entitlement to benefits will thus lead to a reduction in inflows. The Government has already reduced access to out-of-work benefits and indeed, this has been relatively uncontroversial from the perspective of EU law, given that free movement provisions are designed to promote the mobility of workers. However, the Conservative Government has sought to go further, pressing for a ban on EU immigrants accessing in-work tax credits, and limiting their ability to export child benefit to children living outside of the UK. Prime Minister Cameron was able to negotiate a deal along these lines at the European Council meeting in February EU member states agreed that a country could impose an emergency break on EU immigrants accessing in-work credits in their first four years. The agreement also permits member states to index exported child benefit to the rates of the country of residence. However, as many commentators have pointed out, the proposed measures are likely to have a limited effect. The emergency brake would only be in place for a maximum of seven years. And it can only limit access to in-work tax benefits for newly arriving EU immigrants, for the first four years. Moreover, the text of the deal makes clear that over this four year period, benefits should be incrementally phased in, as immigrants become more integrated into the labour market. But more importantly, it is unlikely that a large number of EU immigrants would be affected by the provisions. As the National Institute of Economic and Social Research has found, only an estimated one in ten EU migrants claim some form of in-work tax credits, and that is typically a few years into their stay, when they settle down and have children. While the Department for Work and Pensions has been very reticent about releasing figures, the Guardian has estimated that only 84,000 households would have been affected by the emergency brake had it been introduced 4 years ago 4. Moreover, for those households that are affected, the ban may induce unintended effects. For example, households most likely to receive such credits are families with children, where only one parent works. In the case of two-parent households, one obvious response would be for the second parent to start seeking work. As for the plans to index child benefits for children living in countries of origin, parents may actually decide to move their children to live with them in the UK. Thus there is little evidence that these reductions would lead to a substantial change in EU immigration. 4 Will Brexit enhance UK border control? Pro-leave campaigners have also suggested that the UK would regain sovereignty in other areas of immigration policy. For example, it is often claimed that the UK would be able to implement more robust border control, becoming more effective in stopping irregular flows from Calais, or inflows of suspected terrorists. It is important to note, however, that the UK is not a member of Schengen, and so currently has full control of its borders. EU nationals do not require visas, and in some ports of entry may benefit from expedited queues at passport control. But the UK is already fully entitled to check the passports of every national entering its territory. Another argument is that the UK would be exempt from a series of EU directives on immigration and asylum. Here we need to observe that the UK has no obligation to participate in any common measures on immigration and asylum: the Government has already negotiated a special deal whereby it can choose unilaterally whether to opt in to legislation on a case-by-case basis. Indeed, pro-eu campaigners have suggested that the UK might lose its influence over other important aspects of European immigration policy

6 The UK has voluntarily opted in to a number of instruments that are considered to be in the national interest, such as the Dublin Convention for determining which member state is responsible for assessing asylum applications, and the EURODAC database of asylum applicants. The Labour Government opted into EU directives on minimum standards for asylum procedures and reception of asylum seekers, as well as the definition of who qualifies for asylum (although the Conservative Government is less keen on participating in these measures). The UK has also actively participated in measures to combat irregular migration, including directives on carrier and employer sanctions, anti-trafficking measures, readmission agreements with non-eu countries, and it has participated in joint naval patrols in the Mediterranean. These forms of cooperation are seen as being in the national interest, and it is uncertain on what terms the UK might participate in such initiatives outside of the EU. Furthermore, pro-remain proponents suggests that should the UK restrict EU immigration, UK nationals living in other EU countries might face retaliatory measures. If the UK puts a quota on EU immigration to the UK, British pensioners retiring to Southern Spain, or UK engineers relocating to Germany, are likely to suffer similarly restrictive measures. The national living wage and, importantly, its enforcement may have a much more significant impact on EU immigration than the proposed reduction in welfare payments, or even than a putative withdrawal from EU mobility provisions. What this implies is that the answer to current concerns about EU immigration is not to limit immigration, or to limit access to welfare benefits We need to understand the reasons why the UK labour market acts as a draw to EU immigrants. And if this is seen as a problem it will be necessary to find ways to better match the supply of (resident UK) labour, and labour market demand. As a final thought, it is quite likely that levels of EU immigration will in any case decline over the coming decade. As we saw, the highest flows are from southern European countries affected by the financial crisis. These flows are likely to recede as their economies pick up. Polish immigration is already on the decline, and Romanian and Bulgarian immigration remains relatively modest. This implies that the focus of the debate on immigration will in the coming years shift to the question of non-eu immigration. Demand for foreign labour is likely to remain high, but concerns about EU free movement provisions as a source of unwanted immigration are likely to recede. Conclusion The analysis above suggests that the claim that leaving the EU would allow the UK to enjoy greater sovereignty over immigration and border control is misplaced. Indeed, the evidence suggests that a focus on EU membership as the key to resolving the immigration problems is misplaced, for several reasons. The UK is unlikely to secure a deal that combines full access to the common market with an exemption to rules on free movement. Even if the UK could negotiate such a deal, the demand for foreign labour is likely to persist, placing pressure on any government to ensure an adequate inflow of labour immigration. The current Government s difficulty in reducing even non-eu immigration demonstrates how difficult it is for pro-business administrations to reduce economically beneficial forms of immigration. 6

7 The Royal Society of Edinburgh (RSE) is Scotland s National Academy. It is an independent body with a multidisciplinary fellowship of men and women of international standing which makes it uniquely placed to offer informed, independent comment on matters of national interest. The Royal Society of Edinburgh, Scotland s National Academy, is Scottish Charity No. SC

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