Posts Tagged ‘Economy and Society’

No Recourse to Public Funds: More than a quick fix needed for immigration rules

The Prime Minister recently appeared surprised to hear that most non-EEA migrants with temporary leave to remain in the UK are not eligible to claim benefits, and hinted at a review in the light of COVID-19. Alan Manning argues the system needs long-term reform, not just a quick fix during the pandemic.

At the recent Commons’ Liaison Committee meeting, Boris Johnson seemed unaware that most non-EEA migrants with only temporary leave to remain are subject to ‘no recourse to public funds’ – NRPF in the jargon. Ordinarily, these migrants are not eligible to claim welfare benefits so are totally dependent on work for income. But these are not ordinary times and, through no fault of their own, work may have disappeared and destitution looms. The case for some temporary changes to NRPF are overwhelming. But there also questions about NRPF conditions in more normal times.

As a Home Office factsheet points out, most comparable countries – including countries like Canada that have a relatively open migration regime – have some form of NRPF condition for migrants on time-limited visas. The reason for this is that most people feel a sense of responsibility to provide a minimum level of income to those who are permanent members of their society but less responsibility to members of other societies. We might argue that we should spend more on international aid but relatively few argue we should provide UK-level benefits to everyone in the world. And ‘temporary’ migrants occupy an intermediate position: here for the moment but perhaps not for the long term.

For the vast majority of those on Tier 2 work visas subject to minimum salary levels, NRPF conditions probably matter little because salaries are sufficiently high. Those on the Tier 5 Youth Mobility Visa are only here for two years maximum and have no right to bring dependents, and it is probably reasonable that they support themselves financially. Similarly for those on study visas who are probably paying at least £10k in fees and have limited rights to bring dependents. It is for those on family visas where there are a number of concerns.

First, the idea that many of these ‘temporary’ migrants are really temporary may well be something of a fiction. Some are better described as ‘temporarily temporary’ as there is a high probability that they will become permanent members of UK society. The latest Migrant Journey Statistics report finds that 86% of migrants granted family visas in 2014 had valid leave or settlement at the end of 2019, compared to 24% of those who came with work visas and 17% who came with study visas.

This leads on to the second problem with the current system: some migrants may be spending very long periods of time subject to NRPF. Changes to the immigration rules in recent years have lengthened the time to settlement for many migrants on the family route. There are two routes to settlement via a family claim (as a partner or a parent) – a five-year and a ten-year route. The former is for those who meet all the language and financial requirements which include a minimum income level of £18,600 (higher if there are children). The government argues this restriction on the right of British citizens to marry who they want and to live in the UK is justified by a public interest in the level of taxes. It is probably the case that, on average, those coming on the family route receive more in benefits and public services in the long-run than they pay in taxes but this is a human rights migration path not an economic one.

The ten-year route is for those who do not meet the requirements for the five-year route but have a legal claim to remain the UK. On both routes the visa has to be renewed every two and a half years with associated fees payable. It seems likely that the numbers on the ten-year route have been rising but it is hard to be sure because detailed figures of the stock of people on different types of visas is often not published. Of those given settlement in 2019 (when any NRPF condition would be removed) who initially came on family visas, one-third of those getting settlement have been in the UK more than five years. The fraction taking longer than five years is likely to rise in the future as the ten-year route becomes more common. For example, the number of extensions of the right to stay in the UK for those on family visas rose from 22,000 in 2010 to over 115,000 in 2019, suggesting there are now more family migrants in the UK requiring extensions.

We don’t have statistics on the living standards of these long-term temporary migrants but it is likely that they are low. A family migrant may be on the ten-year route because they don’t meet the necessary language or financial requirements in which case their earning capacity in the UK is likely to be limited; some of them may well be amongst the poorest members of our society. There are provisions to remove NRPF if it would cause destitution but the take-up of those entitled may be low. If people are entitled to help, the system should help them to claim it; it is doubtful the current procedures pass that test even if they have been made more user-friendly recently.

The third area of concern is that there may well be many children, including many British-born and future British citizens in these low-income households. Poverty is bad but child poverty is worse. When it affects those who are very likely to become British citizens the long-term, damage done by child poverty affects us all. NRPF may be a bad investment even on long-term financial terms which is the usual justification for the restrictions. Again, we don’t know the scale of the problem – research by the Children’s Society suggests there may be tens of thousands of children affected.

During this evidence to the Commons’ Liaison Committee, the Prime Minister said “I will find out how many there are in that position and we will see what we can do to help them”.  I hope he is true to his word, looking not just at the immediate problems but the longer-term issues.

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About the Author

Alan Manning is Professor of Economics at the LSE and an Associate at LSE’s Centre for Economic Performance.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: by Al Soot on Unsplash.

Abolishing the NHS surcharge for health and care workers is not as generous as it sounds – a pay rise is needed

The government was recently been forced to re-think its plans to continue charging workers in health and social care for using the NHS. But how many pay the surcharge and how much would it cost to abolish it? In answering these questions, Alan Manning explains why the gesture is not as as generous as many might think; more needs to be done to address the poor pay and conditions in this sector.

Currently, most migrants from outside the EEA who are on a visa of six months or more have to pay the Immigration Health Surcharge, which starts at £400p.a. though an increase to £624 is planned for October. This includes workers in the NHS and social care on whose work we have all depended in the pandemic.

Understandably, levying this charge on these workers at this time seemed to many a lack of generosity of spirit. The government, after some delay, has eventually decided to exempt workers in NHS and social care, seemingly permanently. But how generous is this gesture depends on how many migrants in these sectors are actually paying this charge. It is hard even for the government to answer this question because many of the relevant migrant workers are not on work visas, so the Home Office would not know what work they are doing. But here are some rough estimates:

Table 1 shows the fraction of UK-born, EEA-born, and non-EEA-born migrants in the sectors of ‘Human Health Activities’ (including but quite a lot wider than the NHS) and ‘Residential Care Activities’.

These figures come from the Labour Force Survey are a bit different from some other sources.  The migrant shares are much higher in some parts of the UK, notably London. EEA migrants do not pay the surcharge (but new arrivals will do so in the future under the government’s plans). Not all non-EEA migrants do either – it is only those on visas, essentially those who do not have permanent leave to remain in the UK. Those who have become UK citizens do not have to pay.  In health, 63% of non-EEA migrants report being a UK citizen; in care it is 46%.

Even among non-EEA migrants who are not British citizens, those with settlement do not pay. It is harder to estimate this proportion but one indication is length of time in the UK. For non-EEA migrants who are not UK citizens, the distribution of time in the UK is reported as:

Half of this group have been in the UK more than ten years when other data sources suggest most migrants will have settlement (though there are always exceptions). In fact, many of those coming under the family or work route (common in these sectors) will have settlement after five years. It seems likely that no more than half of the non-EEA migrants who are not UK citizens have to pay the charge.

These estimates imply that in health, only 2.1% of workers are paying the surcharge, 12% of migrant workers in the sector. In total, this is 50,000 workers though this includes many who are not in the NHS. Assuming each worker has an average of one dependent who also have to pay the charge (a high estimate I suspect) the total amount it will cost to waive the charge in the health sector would be about £41m annually. For the care sector, the estimates imply that 3.8% of workers are paying the surcharge, 18% of migrant workers in the sector. This amounts to about 39,000 workers paying £31m in the charge.

So, the total cost is estimated to be at most £70m annually and I again suspect this is an over-estimate. A nice gesture, and important for those who currently pay the charge, but perhaps not as generous as many might think.

When Boris Johnson says the charge has raised £900m, he may be summing over many years and including everyone who pays the charge, most of whom are probably students. To exempt health and care workers would cost very much less.

There is a flip side to this coin, however. It costs little because fewer workers in these sectors than many think are paying the charge, even among migrant workers. For those that do pay it, waiving it or abolishing it is an important gesture but perhaps we need to do more to thank workers in these sectors, both migrants and the UK-born.

My suggestion would be to make a start by immediately raising the pay of care assistants. Some supermarkets have already paid bonuses to their staff and the Welsh Government has promised a one-off £500 bonus for care workers. The UK Government has spent plenty of money on other things. But it should be a permanent rise in salary, not just a one-off bonus. That may necessitate resolving the problems of financing the sector, but everyone knows this needs to be done. The poor pay and conditions in this sector were a national scandal before the pandemic and the primary cause of the high level of vacancies. Raising the pay of care assistants would not just be an appropriate gesture of thanks for the present but a good investment for the future.

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About Author

Alan Manning is Professor of Economics at the LSE and an Associate at LSE’s Centre for Economic Performance.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: by Stephanie Martin on Unsplash.

COVID-19 and the Welsh economy: an extraordinary challenge, but also an opportunity

Craig Johnson summarises some of the economic challenges facing Wales in the wake of the coronavirus pandemic. He writes that alongside these difficulties, there are also opportunities to make positive changes in order to bolster economic recovery and resilience.

The COVID-19 pandemic is having a profound impact on the Welsh economy. It is an unprecedented shock to a Welsh economy already weakened by retrenchment and austerity in the public sector following the 2008 financial crisis, in addition to the challenges posed by Brexit. The pandemic adds to these challenges and exposes existing vulnerabilities. Nonetheless, it also provides an opportunity to think about the role of state and society.

The first challenge is the length of time the recovery will take, and the resultant short- and medium-term contraction of the economy. The Welsh Government’s lockdown exit strategy, like the other UK nations, prioritises restoring economic activity and public services. But the recovery will take time and the economy will contract in the meantime. The key test will be how economic activity is restored, and the action taken now will define the future.

A second challenge is the unequal effects of the crisis, both within and between UK nations: the coronavirus will not be a great leveller. Wales has specific characteristics that set it apart from the rest of the UK. Whilst some of these mitigate against any expected downturn (e.g. a greater proportion of workers are employed in the public sector in Wales), others present distinct challenges. Wales has a higher proportion of workers on low pay and working in shut-down sectors like retail and hospitality.

A third challenge is that Wales’s economic fate is not entirely in its own hands. The tax base has dramatically reduced as a result of the lockdown, which will reduce the Welsh Government’s budget, and a crisis of this magnitude requires key, state-led economic interventions. State intervention – through job retention schemes as well as tax and welfare support – is crucial but responsibility for it largely rests with the UK Parliament. The Senedd and Welsh Government have neither the powers nor the borrowing capacity to act alone.

So, the challenges being faced are huge. Yet evidence also points to a number of key interventions that can be taken to sustain and support economic activity in the medium and longer term.

Both the Welsh and UK Governments will need to find ways to continually support people who have been made particularly vulnerable by the pandemic. As well as addressing vulnerabilities, the longstanding economic priorities of skills and infrastructure remain as important as ever. And it is clear that some businesses and sectors will recover in different ways to others.

Some businesses, such as some retail outlets, will require support while they gradually return to something resembling normal economic activity. Other businesses, such as those in the hospitality sector, will require more sustained support as a return to normal will take longer, and employees’ labour and skills cannot be withheld for that long. A small but important third group of Welsh businesses may need tailored support, such as those in rural tourist areas, which do not have an obvious alternative source of income and activity while the pandemic is being tackled.

This asks a lot of government and its capacity to effectively support the economy. Mariana Mazzucato argues that COVID-19 ‘requires a rethink of what governments are for: rather than simply fixing market failures when they arise, they should move towards actively shaping and creating markets that deliver sustainable and inclusive growth’. This would require the state to proactively drive growth, with a more explicit focus on specific sectors and places.

Adopting a version of this approach is reliant on a number of considerations. Does the Welsh Government have capacity to play such a proactive role in the Welsh economy? Do other institutions like local government have the capacity to do so? If not, how can this be created? My colleagues have already shown the debate needs to be had about local government resilience and sustainability in Wales. It also raises questions about the role of other actors, such as universities, anchor institutions, the third sector and businesses themselves. An advisory group set up by the Welsh Government is likely to be considering many of these issues.

The pandemic has also reminded us of the fundamental importance of the state. Jonathan Portes argues that it was not the 2008 financial crisis itself that reduced life expectancy and economic wellbeing for the poorest in Britain, but the underfunding of the state and welfare system that underpinned the UK Government’s austerity response in the aftermath. There is an interdependence between investment in public services and welfare, and a dynamic economy. Supporting those made vulnerable by the virus and its impacts will provide crucial employment and wealth creation opportunities, and in turn finance public services for the benefit of future generations.

These challenges are multifaceted and require a systematic and agile government response. There will be trade-offs and impossible decisions for governments to take too, and with that should come as much clarity, transparency, and scrutiny as possible. But while this is a challenge not seen in our lifetime, the evidence suggests that the pandemic also offers a key window of opportunity, and that there are responses which, if adopted, could support a more sustainable and resilient Welsh economy in the future.

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About the Author

Craig Johnson is a Research Associate with the Wales Centre for Public Policy.

 

 

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: by Марьян Блан | @marjanblan on Unsplash.

 

The economic recovery from COVID-19 should focus on people and their skills, not just technology

Heather Rolfe argues that, while investment in technology is undoubtedly needed as part of the UK’s recovery strategy, the pandemic has highlighted our reliance on people and their skills. The government should therefore also be focusing on how to get people back into better and more sustainable work.

The coming months and years are going to be among the most challenging in our lifetime for our economy, our society, and many of us individually. Problems of unemployment, low productivity, declining competitiveness and low innovation will be hard to resolve; harm will be inflicted on people’s working and personal lives. The post-coronavirus labour market is going to be very different to the one we left behind in March.

In earlier times where a route to economic recovery has needed to be mapped, politicians have called for technology-led solutions to accelerate innovation, production, markets and consumption. Take, for example David Cameron’s 2010 ‘Blueprint for technology’. Investment in technology is of course essential, not least since the current crisis highlights the importance of science and technology in combating future pandemics.

But what the crisis has shown most clearly is how much we rely on human skills. Previously ‘unskilled’ and undervalued workers in care homes, food factories or refuse collection have been elevated to ‘key worker’ status; we applaud the dedication and skills of NHS workers every Thursday evening. The government has been forced to extend the visas of migrant health workers, but is pressing ahead with more restrictive immigration policy.

We’ve all become more dependent on the skills of others: in our work on colleagues to keep us focused, motivated and productive; in our communities to stop the spread of the virus and to look out for the vulnerable; and on our family and friends for so much more than we would have expected. We’ve learned just how much we depend on, and learn from, others to get things done. We’ve learned that other people bring out the best in us.

As we come out of the crisis, we need a recovery strategy focused on getting people back to work, into jobs that are skilled and sustainable, in sectors we want to grow. This needs to include changes to the benefits system, to local economic planning. It also needs changes to our immigration policy which looks set to hinder recovery. It needs coordinated policies and action at national and local levels. And most of all, it needs to focus on people and skills.

Our benefits system needs an overhaul

Unemployment rose by 856,500 in the first month of the coronavirus lockdown and 7.5 million workers are currently furloughed. There’s no doubt that once the Job Retention Scheme ends, many furloughed workers will lose their jobs as businesses fail to recover. Unemployment is likely to reach levels not seen in the UK for decades and, as the Resolution Foundation points out, young people are likely to be disproportionately impacted.

As Jonathan Portes and Tony Wilson have proposed, a recovery strategy, involving Jobcentre Plus, should help workers to move from declining into expanding and viable sectors. They also propose careful tailoring of the Job Retention Scheme and high-quality support from jobcentre advisers to ease this transition. For this to work, the low-grade box-ticking ‘employment skills’ courses where participants repeatedly write CVs, need replacing by real training courses, leading to technical skills and designed and delivered in partnership with local colleges and employers.

Provision might include employment support with the guarantee of a job or training, as in the Future Jobs Fund wound up in 2012. A revised scheme could create jobs and training places in sectors important to recovery and progress, and tailored to local needs. As a first and immediate step, the Flexible Support Fund, which gives advisers discretion to give jobseekers financial support for training, could be rebooted: the current maximum payment of £150 needs to be raised to train people with skills for new jobs, in new sectors.

But revisions aren’t enough. Jobcentre Plus and the support provided to unemployed people need an overhaul. Worksearch and signing on requirements have been suspended during the pandemic. While some will prefer a more hands-off approach, this leaves many without much needed help in finding work at a very challenging time. When lockdown ends, the network of jobcentres, reduced substantially in recent years, will be hard pressed to help the hundreds of thousands of new jobseekers. Real support needs to be put in place. It needs to be based on a new approach, one that puts trust in jobseekers, rather than using conditionality and sanctioning to police and to punish.

Employment support services need to be made accessible to all 

The emphasis of our welfare system on benefits and enforcement needs replacing with a support and counselling ethos. It should aim to help people into good-quality and sustainable work. As we come out of the crisis, many will need to acquire new skills; others will have reflected on their working lives and be looking for a change. A survey conducted in March found more than one in four workers believe their job lacks meaning and that most people want a job that feels purposeful. Job loss and distance from work will have exacerbated these feelings.

To help people move into jobs which use their skills, abilities, and interests, a programme along the lines of Career Learning Pilots needs to be rolled out quickly. Help should be offered to people of all ages and include tailored guidance, rather than leaflets and web pages. Particular efforts must be made to reach migrants who are more likely than others to be in jobs which under-utilise their skills. This new provision should be located in accessible venues such as libraries and shopping centres, once open. Careers guidance needs to shake off its associations with school. It needs to repurpose itself as a service we should all use at points in our lives.

We need local solutions

The impact of the virus and lockdown has been very different across industries and parts of the UK. Hotels, restaurants, entertainment, tourism, retail and transport are among the long list of sectors hit hard by lost trade. Furloughing has been much higher in the North East of England and lower in London, Scotland, and North West England. At the same time, workers in London and the South East have been more likely to have lost their jobs. These variations highlight the need for recovery strategies which take account of local needs.

In 2018, Skills Advisory Panels were set up across the UK, consisting of Local Enterprise Partnerships, chambers of commerce, employer bodies, councils and devolved governments. These should play a leading role in identifying sectors for investment and support. The Learning and Work Institute suggests job creation might be targeted at sectors hit hard by the pandemic or where growth is desirable, for example charities, local authorities, and low-carbon industries. National and local bodies need to work together to identify priority sectors for renewal and growth.

And employers are, of course, key to the success of any measure aimed at getting people back to work and into jobs where they will be productive, effective, and fulfilled. In the short-term, they can use the furlough scheme for training and development. It’s not enough to expect employees to go online; training needs to be structured, assessed and new skills put into practice or ready to do so once the lockdown is lifted.

The coronavirus crisis has put the spotlight on skills

Technology has often been posed as the solution in economically and socially challenging times. Yet COVID-19 has highlighted the importance of skills. Over decades, policies and interventions have been half-hearted, under-funded, and ineffective. But now, with millions facing unemployment, we need to find ways of getting people back into work – into better, more fulfilling, and sustainable work. Technology must, of course, be part of recovery but it isn’t the solution. It is people, their skills and abilities who will rebuild our damaged economy.

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About the Author

Heather Rolfe (@Heather_Rolfe)is Director of Research at Demos. She previously lead Employment and Social Policy Research at NIESR. Her particular areas of interest include migration, inclusion and integration.

 

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science. Featured image credit: Pixabay (Public Domain).

 

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