When it was reported that Liz Truss was planning a review of the UK’s visa system to tackle labour shortages in some sectors and boost growth, the reaction was predictably sceptical. Remainers and Leavers united, for once, to point out that relaxing visa rules was the exact opposite of what was promised by the Brexit the new prime minister once didn’t believe in but now champions with the dangerous zeal of an unschooled convert.
Some Brexiteers warned that higher immigration should not be the price paid for Truss’ “always growth” strategy. Others wondered whether the review was just another of the unpopular decisions Truss says she is willing to take to turbocharge the economy. Unpopular decisions like unveiling a mini-budget so fantastical that markets went into freefall causing the Bank of England to have to step in to buy UK bonds to protect the economy from the policies of… the UK government.
In fact, some experts say the much-maligned visa review does not necessarily represent another u-turn from a Tory party that is currently performing wild doughnuts in a burning car. It may actually just be the natural evolution of a system functioning without free movement and bludgeoned by global crises such as the pandemic and its long lockdowns.
“It isn’t inconsistent (with the Brexit-era promise to take back control) because it would still be the UK government deciding who can come and who can’t, whereas under free movement this decision was really up to the migrants themselves,” said Alan Manning, professor of economics at the London School of Economics. “Also in terms of immigration, people reduce it to a binary ‘more or less’, whereas actually, it’s just as much, and more, about who you let in,” he said.
Last weekend, the Financial Times reported that Truss was set to launch a major review of the visa system, including possibly updating the shortage occupation list to allow certain industries to bring in more foreign workers, like broadband engineers.
The paper also said there could be a loosening of the requirement to speak English in some sectors while a cap on the seasonal agricultural workers’ programme could be lifted and the six-month time limit eased. There are also reports that ministers are mulling proposals for a new visa for people who have graduated from one of the top 50 or top 100 global universities.
Under the post-Brexit system, introduced in 2021, a skilled work visa is available for people coming to work in a job paying more than £25,600, but that salary threshold can be lower for jobs included on the shortage occupation list, meant to plug specific labour gaps. There is also a health and care visa offering a streamlined and cheaper process for those working in the NHS and social care.
Basically, the new system made it easier for non-EU citizens to access the UK labour market but introduced visa requirements for EU citizens who had previously been able to work in any job. Because of this, low-wage jobs that used to rely heavily on EU workers are now mostly ineligible for work visas, with some limited exceptions for social care and seasonal workers.
The FT noted that the review proposals were meeting opposition from some of Truss’ more hardline anti-immigration cabinet colleagues – home secretary Suella Braverman, business secretary Jacob Rees-Mogg and trade minister Kemi Badenoch are all said to be opposed to any perceived relaxation of rules.
But the problem of labour shortages is real. A recent House of Commons report noted how the lack of workers meant fruit was left to rot in the fields while healthy pigs were having to be culled. Official figures show there were just over 1.2 million job vacancies in June to August, and unemployment is historically low at 3.6%.
Overall, immigration numbers are going up. In the year to June, the UK issued more than 330,000 working visas, more than in any other year on record, and 72% more than in 2019. Some of the increase is down to the introduction of entry visa requirements for EU nationals, although these only accounted for 10% of the total. The number of work-related visas issued to non-European nationals rose by 55% from 2019.
The labour shortages are mainly in the low-paid, low-skilled sector and experts say that is to be expected after free movement was curtailed – they are, in a sense, the result of the Brexit rubber hitting the road of reality.
Jonathan Portes, professor of economics and public policy at King’s College, London, said he expected the visa system review to yield relatively minor tweaks, noting that the shortage occupation list was due to be reviewed every year or so anyway.
“Nothing I’ve seen suggests it is more than changing the parameters of the existing system to deal with shortages in some areas, which is how the system was always supposed to operate,” he told The New European. “If you are going to make the strategic choice that you don’t want free movement… that you want to force businesses to adjust to a new world in which they don’t have a flexible, relatively cheap labour force, then I think either you do it or you don’t. And if you are going to do it, you should stick to it.
“Trying to solve the problems that you have deliberately created, which are a feature, not a bug, by some sort of central planning process, doesn’t really make a lot of sense in a strategic way.”
Manning said the post-Brexit system was intended to shift the focus of immigration, and that had happened with the pandemic intensifying the results of that reorientation.
“Post-2004, after (EU) expansion to eastern Europe, free movement by accident rather than design favoured low-wage, low-productivity migration and the sectors grew on the back of that. The intention post-Brexit was to reorient that towards a system that did not discriminate on the basis of what nationality you had to create a global system, which was easier to use for more skilled workers rather than the lower-paid workers,” he said, noting that the shift had, somewhat naturally, created pressures on some sectors, such as hospitality and agriculture.
Brexit is not the only reason for the dearth of workers in the UK. An August report by ReWAGE and the Migration Observatory at the University of Oxford found that the end of free movement had exacerbated recruitment issues in the UK, but the pandemic, international sector-specific labour shortages and an increase in early retirement were also to blame. Recruiting difficulties were particularly acute in industries that used to rely heavily on EU workers, such as hospitality, transport and storage.
Madeleine Sumption, director of the Migration Observatory and one of the authors of the report, said the war in Ukraine and the global disruption that resulted also played a part, with other countries also experiencing tight labour markets. Another problem is the fact that many of the UK jobs that relied on EU workers are fundamentally unattractive, with low wages and poor conditions. She believes some of the glitches will work themselves out, but employers will also have to adjust their operations by either paying higher wages, recruiting fewer people, or using more automation.
She did not think tweaking the visa rules was the best way to manage these shortages.
“Even if in theory there is an economic argument that immigration policy could be this fine scalpel that brings in these people and not those, all optimised towards increasing growth, in practice, it’s not really possible. Immigration policy is a pretty crude instrument and it’s hard to fine-tune it to the needs of the economy,” she said.
Experts have also challenged the widespread idea that more migration is needed to boost growth – it’s not as simple as headlines would suggest. Yes, migrants can drive gross domestic product higher just by dint of swelling the population, but what is more interesting is the effect on GDP per capita.
“There’s a reasonable consensus that high-skilled migration and people coming into high-paid jobs have a range of convincing economic benefits, like tax payments, productivity increases etc, but the evidence of people coming to low-wage jobs is not very clear-cut,” Sumption said. “I think the summary from the studies and modelling is that the impacts are quite close to zero so you can have more or less but it doesn’t actually affect how well the UK economy is doing.”
Easing immigration rules by, for example, providing new visas for low-skilled workers may not actually boost wages, and thus growth. If a job is included on the shortage occupation list, the amount that employers have to pay to qualify for a skilled worker visa can be reduced. For example, when care workers were added to the list, the salary to qualify was lowered to £20,480. And then there is the risk that a low-paid worker, tied by a visa to particular employer, could be open to exploitation.
“If people are linked to a particular job and employer, and even if in theory they can switch to a new one, there are barriers to them doing that and we see from these programmes around the world that exploitation is really difficult to stamp out,” Sumption said. “The thing about free movement is that people came in, they could work in any job and they had a lot of rights. These sorts of schemes (potential new visas for low-paid jobs) may be seen conceptually as a replacement for free movement but they are very different, and the people who come on them do not have many rights. It’s not just replacing one with another.”
Portes agreed that the post-Brexit regime had done little, so far, to improve wages in the low-wage sector – dealing a blow to the Brexiteer mantra that it was European workers who were responsible for pushing down wages for UK workers. “At the moment, migration is pushing up the skill and wage profile of the migrants coming in but at least so far, it has not done anything visible to help low-wage British workers,” he said, noting that the long-term impacts would take a while to show.
So if we take the visa review at face value, rather than as another hot-button issue in the never-ending Brexit good/bad debate, what should the government be considering if it wants to improve the system, as it exists now post-free movement, and tackle those labour shortages in a fair way?
Sumption says one fix could lie in extending the Youth Mobility Scheme, which offers a visa to live in the UK for up to two years, to citizens of the EU. She admits it will not work for all sectors but it could be useful in providing stronger protections to lower-paid workers.
“The benefit of that scheme is it does not tie people to employers. They don’t have a lot of rights in the sense that they can’t bring family members with them and they can’t access benefits and they can’t stay permanently but they are not tied to an employer so if they are treated badly, at least in theory they can move. The previous government had said it wanted to negotiate the Youth Mobility Scheme with EU countries and it hasn’t done it. The nice thing is also that it is reciprocal and it brings benefits to Britons who might want to go to those other countries.”
Other tweaks could involve reducing the fees for skilled worker visas and stripping back the bureaucracy so that take-up increases.
For now, the jury is still out on the effect of the post-Brexit immigration system on overall numbers.
“I don’t have a strong pronouncement on whether Brexit delivered low immigration. It’s a more restrictive system for EU citizens. It certainly delivered a reduction in EU migration. The non-EU side is a bit more complicated,” Sumption said.
The details of the visa review are due to be unveiled in the coming weeks, with all the usual caveats that apply in this era of revolving-door Tory governance. Who knows whether Truss will still be in her job by then? I’d place a bet, but I think we’ve all had enough of gambling for now.