My Lords, I recognise that it is late. This is an important proposal on which the House of Commons spent precisely five minutes during its wind-up in Committee. I have another important amendment still to come, Amendment 242S on the tier 1 investor charge, to which I attach a great deal of importance. I have received quite a lot of outside support and some outside briefing on both these amendments. I am conscious that time is short, but these are important issues. It is always the case that the last clauses of a Bill get the least attention.
The proposal for an immigration skills charge is a major innovation, not yet fully developed. It was first floated in a speech by the Prime Minister two weeks after the May election, less than nine months ago. He said,
“we will reform our immigration and labour market rules – reducing the demand for skilled workers and cracking down on those who exploit low-skilled workers. That starts with training our own people.
For too long we’ve had a shortage of workers in certain roles. Engineers, nurses, teachers, chefs – we haven’t had enough Brits trained in these areas and companies have had to fill the gaps with people from overseas. With Sajid Javid as the new business secretary we’re going to get far better at training our own people. This involves creating 3 million more apprenticeships – and we will consult on getting the businesses that use foreign labour to help fund them through a new visa levy.
And today I can announce we will consult on another big change. As we improve the training of British workers, we should – over time – be able to lower the number of skilled workers we have to bring in from elsewhere. So as we embark on this massive skills drive, we will ask the Migration Advisory Committee to advise on significantly reducing the level of economic migration from outside the EU”.
Note that the Prime Minister emphasised that the Government would focus on a massive skills drive and consult on another big change that would follow. He noted that some of the skills in greatest shortage are for teachers and nurses—he could have added doctors. However, in spite of an earlier reference in his speech to “a whole government approach” to the immigration issue, he does not note that these are public sector jobs, for whose training the Government lay down targets and conditions, and for which government departments such as health and education bear some responsibility. There is no mention of these departments in the speech—BIS is the only one mentioned.
The Government asked the Migration Advisory Committee to advise on how to take this loosely defined idea forward. The Migration Advisory Committee report was published on 19 January 2016, just three weeks ago, after the Commons had completed its consideration of the Bill. It addresses the issue of the introduction of a skills charge in the context of a review of the entire tier 2 visas category. It recommends raising the minimum salary thresholds, limiting the period in which skills shortages can be declared for any particular sector, and introducing a charge at a level it suggests should be between £500 and £2,000 per year—I emphasise “per year”. The Government intend this to be a perpetual charge, and they have chosen £1,000 for every year that someone from outside the EEA is employed by a British company, university, school or hospital. One university has estimated that this will cost it £800,000 a year; others suggest higher figures, particularly for universities with global reputations in science and engineering. The CBI has warned that it will impose additional charges on top of the new apprenticeship levy on innovative firms.
This new MAC report also notes in paragraph 1.25 that,
“the public sector may require time to transition to the new salary thresholds”,
since it is in the public sector that recruits from outside the EEA are paid less than their UK equivalents, rather than more. The MAC’s “strongest recommendation”,
“is for any changes to be kept under active review”.
It is hardly surprising, therefore, that James Brokenshire, in a speech in London in late January, declared that the Government are “in listening mode” on this proposal, which, as we all know, is code for saying that Whitehall has not yet worked out what it means and still needs advice from the outside.
So why are we being presented with such a blunt proposal today? Why have the Government not consulted further on its implications for the public sector, above all for the health service, universities and schools? The Prime Minister said that he was going to do so, but it has not yet happened. Have the Government yet consulted with the NHS and the education sector on the likely impact of this charge? Have the Treasury and the Department of Health taken into account the impact of this charge on the NHS budget once it is applied, or on BIS and the DfE, given the implications for the education sector? Will the Government allow the public sector time to manage the transition or are they going to impose it, just like that?
Overall, the Government are relying on the market to provide the 3 million additional apprenticeships they are promising, with the penalty of the apprenticeship levies to spur it on. The massive skills drive that the Prime Minister promised is to be left to the market; it neither starts nor finishes with the Government, in spite of what the Prime Minister says.
The Explanatory Notes to the Bill suggest that the Prime Minister’s creation of 3 million additional apprenticeships will depend almost entirely on this charge. It says:
“The primary purpose of this clause is to increase funding available for apprenticeships in the UK and address the current skills gap in the UK workforce”.
How many apprenticeships will the estimated £240 million to be raised from this charge pay for? Will it get anywhere near funding 3 million apprenticeships? Business, not unnaturally, sees the double imposition of the levy and the immigration skills charge as adding to the burdens on the private sector, without a coherent government approach to labour market policy that is linked to education, at all levels, and to training. In the public sector, the Government have lifted the cap on numbers in nurse training while, at the same time, ending nursing bursaries, and so deterring potential nurses from entering the profession. They have done that at the same time as they recognise the need to increase their numbers.
There are particular issues for UK universities and for medicine—and I thank Universities UK for the brief that it gave me. The global reputation and quality of UK universities and medical research depends on the international circulation of academic and medical careers, with British students spending time studying and working abroad, and overseas students and professors coming to work in the UK. I have visited universities in several countries as an academic where the majority of the staff began their careers as local students, moved on to conduct graduate research there, and were then appointed to the faculty, without much, if any, intellectual challenge from exposure to other institutions or countries. None of these universities is anywhere in the global rankings, but our world-class universities depend on scholars coming in and out. The Prime Minister loudly declared that he wanted to attract the “best and the brightest” from outside the UK; imposing this charge is more likely to keep them out.
This charge will obstruct the circulation of scholars into the UK, and impose additional burdens on university budgets. It will have a particularly adverse effect on the STEM subjects, where over 15% of current staff are from outside the EU. But then, a substantial proportion of UK citizens in these disciplines in British universities have studied and taught overseas in their turn. Have the Government thought through how far this principle of penalties and charging might extend? Should British universities receive credits, say of £1,000 a year in perpetuity, for attracting British scholars with American PhDs back to this country? My son has just taken up a post at a UK university, having benefitted from American funding for his entire graduate education and two post-doctoral fellowships. Should that benefit to the UK as he returns generate a financial credit for the British university that has hired him, or does the Home Office assume that the traffic in academic excellence is all one way—foreigners into Britain? If we are so concerned about the nationality of those employed in the higher education and medical sectors, should the Government also impose fines on UK-trained doctors who then opt to leave Britain to practice elsewhere? Would the British Government be happy if a future Republican Administration in the United States were to impose charges on American institutions that sought to recruit from the UK?
I see no evidence that this has yet been thought through. Some free market economists, no doubt from some right-wing think tank, appear to have convinced the Home Office that the price mechanism will sort
everything out, without the need for more active government intervention. That is as daft an idea as imposing central London economic rents on core government buildings in Whitehall, to be then taken off existing departmental budgets—but then the Government have just said that they are going to do that as well. What is even more striking is that the Government do not propose to apply the price mechanism to tier 1 investor visas, in spite of recommendations from the Migration Advisory Committee, where super-rich foreigners would no doubt bid happily against each other for the privileges offered. We will come to that in a later amendment.
We therefore offer in this group a number of amendments which protect the public sector, require consultation with those affected by the charge, and require, as the MAC report suggested, the earliest possible review. We particularly emphasise that it would be idiotic to impose the charge on teachers in shortage subjects in the UK, given the Government expect that domestic demand for education and training in shortage sectors will have to rise, and when funding for further education is already being cut savagely. Two weeks ago, I met three secondary head teachers who told me that maths and computer technology teachers are so hard to recruit that they are looking to Australia to find them, without yet realising, of course, that that would bring an extra charge on their budgets of £1,000 per maths teacher for the foreseeable future.
This clause attracted almost no attention in the Commons. In any event, the Government had not provided the information on which to assess the proposal. That makes it even more appropriate to test the opinion of the House on Report, unless the Government can come up with their own substantive amendments and a good deal more explanation of what this means in practice. I beg to move.
6.45 pm