Friday, 23 October 2015

Grow your own: skills as migration policy

by Mark Corney

The Conservative Government is taking forward three ‘stand-out’ skills policies.

The first is a UK-wide apprenticeship levy on large employers underpinning 3 million apprenticeship starts in England by 2020. The second is the immigration skills charge. And the third is the removal of the cap on the number of students in England entering full-time higher education.  

As well as representing the Government’s approach to expanding skills provision in England, they symbolise the emergence of a ‘grow your own’ policy in the face of rising net migration, an issue at the heart of the in-out referendum on UK membership of the European Union.

Long-term international migration refers to migration lasting longer than twelve months. Net migration is the balance between immigration and emigration.

Net long-term migration reached 330,000 between April 2014 and March 2015. Immigration was 636,000 and emigration was 307,000.

During the same year, long-term immigration from EU countries increased by 53,000 to 183,000. By comparison, immigration from non-EU countries increased by 39,000 to 196,000.

Around 228,000 migrants from EU countries came to the UK to ‘work or study’ in 2014/15. Of these, 80% of them came to work and 20% to study.

A similar number of migrants from non-EU countries came to ‘work and study’ in the UK. Of these, the split between work or study was roughly equal.

Immigration from the EU, of course, is almost uncontrollable. This is because of the cherished principles of the free movement of labour and non-discrimination between different nationalities within the European Union.
Greater control of EU migration could come about if the UK wins concessions from member states as part of the current renegotiation process.

Restricting benefit payments to EU migrants or redefining the free movement of labour in terms of ‘having a job to go to’ rather than ‘looking for work’ could reduce migration from European countries to the UK. So too could a promise of treaty changes after the referendum by the end of 2017.

Whatever the deal secured by the Prime Minister in the run-up the referendum vote, the UK would certainly gain control over EU migration if it voted to leave the European Union (BREXIT as it is known). The UK would then be in a position to introduce a points-based-system (PBS) for EU migrants as applies today for non-EU migrants.

Restriction on EU migration is code by the Government for employers to ‘grow your own’.  The statutory apprenticeship levy, which caught the skills world by surprise when it was announced, is the biggest change to further education in over a quarter of a century. The levy will fund apprenticeships from intermediate level – level 2 – all the way up to degree level.

The ‘grow your own’ message also extends to businesses seeking to source skilled labour from non-EU countries.

Unlike migration from EU countries, the UK can control migration from non-EU countries. Since 2008, this has been achieved through a PBS operating across five groups (called tiers).

Tier 2 relates to skilled workers. In the year ending to June 2015, around 92,500 entry clearance visas were granted to highly skilled migrants. This is 10,000 higher, however, than a year ago.

The Government has asked the Migration Advisory Committee to report by December on the increasing reliance of UK employers to fill skill shortages through Tier 2 and whether further restrictions are necessary. MAC will also provide advice on the operation of the Immigration Skills Change which will apply to the Tier 2 route.

Employers filling skill shortages from Tier 2 will face a levy, with funds transferred to BIS to fund training, particularly more apprenticeships. A charge of £100 on all employers at current Tier 2 recruitment levels would raise just over £9m, less than 0.6% of the £1.5bn joint DfE/BIS apprenticeship budget.

Even so, the purpose of the charge and tightening of Tier 2 is to encourage businesses to source the skilled workers they need from the resident UK labour market. More home grown apprentices it is hoped will be the substitute for fewer skilled migrants from non-EU countries.

Getting the design right for apprenticeship funding in England particularly will be essential. Setting the rate of the apprenticeship levy and the definition of large employer are important but so too is the cash contribution to be paid by small and medium sized firms and whether 16-18 year olds apprentices are fully funded for large and small firms.

But the ‘grow your own’ skills agenda extends beyond apprenticeships. It covers higher education as well. The cap on the number of full-time undergraduate students from England in the UK recruited by English universities and colleges has been removed.

An extra 30,000 full-time students are expected to be recruited from this change, eventually supplying more graduates to the labour market and reducing the need for employers to recruit non-UK graduates.

In fact, the removal of the cap on student numbers applies to applicants from EU countries as well as England. EU students - and non-EU students for that matter – in the UK count in the net migration total. Time will tell whether the removal of the cap on student numbers will increase EU migration.

Skills and migration policy are becoming ever closely entwined. Expanding apprenticeships and higher education are central to the ‘grow your own‘ and  ‘recruit from the resident labour market’ approach.

Out of sight and out of mind it seems is the role of further education in assisting employers to ‘grow their own’ and recruit from their local resident labour market.
Mark Corney is policy adviser to the Campaign for Learning and an independent consultant

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