Theresa May meets European Council president Donald Tusk for talks at Downing Street on Thursday Credit PA
By Peter Foster, Europe Editor
8 September 2016 • 9:50am
Theresa May was forced to publicly dress down her Brexit minister at Prime Minister’s Questions, chiding David Davis at the dispatch box for “prematurely reveal[ing] our hand” in Britain’s approach to the coming EU-UK divorce talks.
But it was notable that the Prime Ministerial irritation was directed at Mr Davis more for giving the game away than the substance of what he actually said – namely that it was “very improbable” that the UK could win control over EU migration while remaining inside the single market.
In truth, Mr Davis was merely stating the obvious given the declared position of the remaining 27 EU member states: namely that Britain cannot remain in the single market if we don’t accept the free movement of EU workers.
That was the position when Mr Cameron negotiated has failed deal in February, and it is the position now.
“The only hope for Britain is that Europe changes its mind and prove that Boris Johnson was right all along”
For MPs still hoping that Britain can remain as close as possible to the EU after Brexit, Mr Davis’s remarks pointed alarmingly towards a so-called ‘hard’ Brexit, where Britain concludes a free-trade deal in the mould of Korea or Canada, perhaps with a few baubles added on.
Mrs May, by contrast, has been deliberately less clear-cut. She has talked about voters wanting “an element” of control, while also seeking trade arrangements that include some form of preferential access to the Single Market.
For Brexiters that deepened fears that Mrs May is going soft on Brexit, and plumping for a “Brexit-lite”.
No-one knows Mrs May’s mind but a close look at the options on the table reveals that Britain (as Mr Davis said) is almost certainly heading for a hard Brexit.
Option 1: ‘You need a job to come to Britain…’
This slogan makes good tabloid headlines, but as experts have been quick to point out, demanding that all EU citizens have jobs before they come to the UK is very unlikely to bring down the numbers of EU workers entering Britain.
The combination of internet-based job agencies, visa-free travel and low-cost airlines mean that both businesses and workers would find it easy to circumvent such a restriction by simply offering certified work to those that wanted it.
That might add a layer of bureaucracy but it would not materially reduce the flow of EU workers who could arrive with a pre-arranged job, collect their National Insurance number and start work.
So, as Jonathan Portes, the immigration and labour specialist at the National Institute of Economic and Social Research (NIESR), has noted, this idea would only work if Mrs May was not serious about bringing down immigration numbers and desperate to do a face-saving deal with the EU.
May: No Norway model for Brexit but our own British one May: No Norway model for Brexit but our own British one Play! 01:39
“I put this in the ‘clever wheeze’ category,” he says, “in which Britain says to the EU ‘it’s just a minor tweak’ that does not attack the fundamental principle of Free Movement (of labour) while at the same time sounding good for pro-Brexit crowd back home.”
In short, it’s a cunning plan that would fall apart as soon as the migration statistics were published.
So while Remainers may dream this is the way to a ‘soft’ Brexit, it can be ruled out because while Mrs May hasn’t been clear on any of the details so far, she is clear that voters want “control” over migration.
No-one knows exactly what that means, but it is noteworthy that Mrs May has kept the government’s nominal target of reducing net migration to “tens of thousands”. This scheme certainly wouldn’t do that.
Option 2: Caps and quotas
A stricter version of the above idea – and, some say a more realistic version of a ‘soft Brexit’ – would be to ask the other 27 EU member states to agree to some form of cap on EU migration in return for limited (but still substantial) access to the Single Market.
The cap, says Sunder Katwala, the director of British Future, a think-tank that studies migration and identity issues, could take the form of an emergency break whenever the UK can show excessive pressure from migration, a minimum salary for EU worker jobs or a fixed annual quota for EU workers.
Whatever method you chose, it would put a hard ceiling on the numbers.
David Davis was slapped down by Theresa May over his Brexit negotiations remarks this week Credit: AFP
Unfortunately – as David Davis pointed out – the Europeans show no sign of agreeing to what is often referred to the kind of ‘cake-and-eat-it’ deal. David Cameron asked for a four-year emergency break last February but was roundly rebuffed by Berlin and Brussels.
Switzerland is making a similar case to the EU at the moment and getting nowhere.
The only hope for Britain – and this is why perhaps Mrs May slapped down Mr Davis for talking out of school – is that Europe changes its mind and prove that Boris Johnson was right all along: that Britain needed to vote ‘no’ in order to get a better ‘yes’ from Brussels.
May: Points-based migration system won’t give us control May: Points-based migration system won’t give us control Play! 01:15
Even optimists concede this is a long shot but, posits Mr Katwala, the UK and Mrs May could yet play for time and pray that after the 2017 elections in France and Germany the political landscape looks sufficiently different that the EU strikes a deal.
Even so, there would need to be dramatic changes for the EU to agree to something that it ruled out only six months ago. Then David Cameron asked for a better deal for Britain, and was told ‘no’. The best he could obtain was a deal to limit benefit payments to EU workers, and that plainly did not convince the electorate.
Indeed, this time around the UK will not even have the leverage of threatening to leave – since we’ll have already notified the EU of that intention. The overwhelmingly likelihood, therefore, is that British demands for a major concession on Free Movement while retaining access to the Single Market will be met with the same answer as in February: “No”.
Option 3: Work permits
All of which is why migration experts like Madeleine Sumption, director of The Migration Observatory at Oxford University, see the political realities moving Britain inexorably towards introducing a work-permit system for EU workers.
In practice, this means EU citizens would be free to come to Britain for holidays and business on visa-free arrangements, but when it came to seeking work, they would need to apply for a permit just like non-EU nationals currently do.
At present Britain accepts 20,700 non-EU migrants every year who must have graduate-level jobs earning over £30,000 a year, with applicants prioritised according to set criteria that favour those on higher salaries, with high levels of education and or working in designated ‘shortage’ occupations.
In practice this would have much the same selective impact that many Brexiters really mean when they talk about instituting a ‘points based system’. Mrs May has ruled this out because – without hard quotas – a PBS doesn’t necessarily cut numbers if enough applicants meet the criteria.
Britain would have to decide how big a quota to give to EU nationals and whether they would get any preferential access, or whether to treat all applicants, from all countries the same.
Britain might want to barter some market access in return for, say, separate quota for EU nationals, perhaps with less restrictive requirements, or perhaps set two EU quotas – one for skilled and one for unskilled labour – with seasonal workers being treated in a separate category altogether.
How large the EU quota was – net EU migration is currently running at 180,000 a year – could be set by an independent statutory body, perhaps the Migration Advisory Committee, that would help weigh the needs of employers against the political imperative to get overall numbers down.
These might be in part eased by government demonstrating it was making more strenuous efforts to train British workers for British jobs, says Mr Katwala. “You wouldn’t turn away skills you need now, but to win public consent you need to show that you are working to get yourself out of that position of need to recruit from abroad.”
But whatever quota or schemes Britain agrees, it will surely fall very far short of the current levels of EU migration if Mrs May is to meet her political commitment to put a significant dent in migration to Britain.
The EU will reciprocate accordingly – which means a hard a Brexit.
Which brings us back to the beginning…
So given all the constraints outlined above on migration, “the best deal possible” which Mrs May has promised to seek for British trade in goods and services may not amount to very much.
Under those circumstances, senior officials in Whitehall privately expect the City to lose its so-called “passporting” rights and its euro clearing facilities, while British-based companies will almost certainly have to adapt to a more complex and burdensome regime of customs clearing and regulatory certifications.
Given the silence from No.10 on the question of EU budget contributions, there is some hope in the British bureaucracy that British offers of cash might secure some access to the single market, or at least softer transitional arrangements as the UK moves from ‘in’ to ‘out’.
On the other big Brexiter bugbear – reclaiming the sovereignty of the British parliament – the prime minister has also been notably silent.
“Whatever quota or schemes Britain agrees, it will surely fall very far short of the current levels of EU migration”
However, as Home Secretary she was highly pragmatic when it came to trading British sovereignty for security in joining groups like EuroPol and EuroJust, much to the fury of Bill Cash and other Brexit lions. That points, perhaps, to some flexibility on regulation.
But while Mrs May has been sphinx-like on almost every other aspect of Brexit, on immigration she has been, relatively speaking, very clear.
The reality, say those close to the process, is that Mrs May is much more interested (and personally secure) on the politics of immigration than she is on the minutiae of the economy, which might explain why Philip Hammond, having made expansive promises to the City shortly after taking office, is now quietly having to rein in expectations.
It is worth remembering that in her six years as Home Secretary Mrs May’s efforts to curb migration were routinely trumped by economic concerns from the treasury – now she is in charge, is it likely that Mrs May will let the Treasury stand in her way again? The smart money says not.
David Davis will be proved correct. All the signs are that the need to cut immigration will drive Mrs May’s Brexit calculations, and that points in only one direction – a hard Brexit.
EU immigration to the UK
Just over three million EU-born people currently live in the UK, approximately 1.9 million of whom are employed here.
Over the last five years the rate of immigration from the EU has increased by 51 per cent, while non-EU immigration has fallen eight per cent.
The Migration Observatory figures put this rise down to the introduction of Bulgaria and Romania to the EU. Still, however, the annual number of non-EU immigrants is just higher than those from the EU.
The number of people immigrating from the EU nearly equalled the number from outside the EU in 2015
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