UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 217-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

HOME AFFAIRS COMMITTEE

Managing Migration: Points-Based System

Tuesday 3 February 2009

MR JOHN CRIDLAND

MR ALASTAIR HENDERSON and MS MANDY THORN

MR PAUL TEMPLE and MR JAMES DAVIES

Evidence heard in Public Questions 1 - 115

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Home Affairs Committee

on Tuesday 3 February 2009

Members present

Keith Vaz, in the Chair

Tom Brake

Ms Karen Buck

Mr James Clappison

Mrs Ann Cryer

David T C Davies

Mrs Janet Dean

Patrick Mercer

Gwyn Prosser

Bob Russell

Martin Salter

Mr David Winnick

________________

Memorandum submitted by Confederation of British Industry

Examination of Witness

Witness: Mr John Cridland, Deputy Director-General, Confederation of British Industry, gave evidence.

Q1 Chairman: Can I bring the Committee to order and refer all those present to the Register of Members' Interests where the interests of Members are noted. Originally this session was publicised to include a session with the Mayor of London at 12 o'clock in our other inquiry on the Policing of Home Office Leaks, but the Committee felt that in view of the current situation outside, i.e. the snow situation, we would excuse the Mayor this week because we felt that he had other things to do, but he will be giving evidence next week with Mr Bob Quick. Mr Cridland, thank you very much for coming in, braving the snow to be here; we are very grateful.

Mr Cridland: You are welcome.

Q2 Chairman: I want to begin by asking you about the situation concerning Lindsey and the CBI's view in view of the inquiry that we are undertaking into the points-based system. Do you agree with the Prime Minister's statement that there should be British jobs for British workers?

Mr Cridland: We have a keen concern with ensuring that British workers have full access to the labour market. We are heavily involved, working with Government on improving the welfare system reforms such that more people who are either unemployed or on incapacity benefit are able to re-enter the labour market. We recognise that at a time of mounting unemployment it is vital that British workers have full opportunity to take advantage of jobs that may be available.

Q3 Chairman: What is the CBI's current view on the situation outside that refinery?

Mr Cridland: We have seen no evidence that there has been any discrimination against British workers in relation to the Lindsey plant. Whilst we fully understand and have every sympathy for the concerns of our fellow citizens who feel strongly about this matter in relation to the activities of the company so far as we are aware they are operating lawfully, and it is clear that European Union labour under the European Treaty can move around the European Union and, as far as we are aware, there is nothing that has happened here which would be contrary to the Posting of Workers Directive. Trade unions have a particular campaign to seek amendments to the Posting of Workers Directive; that is not something that the CBI believes is necessary notwithstanding recent European Court judgments like the Viking and Laval judgments. What those judgments indicate is that there has to be protection for workers from other Member States in the Member State concerned as there is in British law - full employment rights, the minimum wage, health and safety, working time - but as to whether collective bargaining agreements apply, that depends on how the law has been implemented by the particular Member State, and that was the heart of the issue in relation to Viking and Laval. There is, therefore, a particular technical issue about the Posting of Workers Directive that we are not persuaded needs amendment, but beyond that it is important that people understand that all workers in the European Union, unless there are transitional arrangements as with some East European States, have the right to work here if there are jobs to be done, but clearly we would look with great concern if there was any evidence of discrimination. We have not seen any.

Q4 Chairman: If the Germans said "German jobs for German workers" you would be very worried about that, considering there is free movement of labour across the whole of the EU.

Mr Cridland: We accept and understand that at a time of mounting unemployment public attitudes change and become very concerned. It is important that the CBI, just like the Government, is sensitive to the concerns of the public but we will remind the public that we are part of the European Union and we have to and would wish to operate within the free market of labour that the European Union Treaty provides for.

Q5 Chairman: In the context of the points-based system, do you favour the points-based system?

Mr Cridland: Yes, we are strong supporters of the points-based system. We think the points-based system has the merit of flexibility; it will provide an arrangement whereby the needs for skilled labour that cannot be sourced through the UK workforce or through EU labour can be addressed on a regular basis and I would expect that the next time the skilled list is put forward the Committee concerned would have a different view, given the different state of the labour market, from when it last put the list forward. That is the flexibility I am referring to. We also believe that the points-based system enables a balance to be struck between the needs of the economy, which I speak for, and the social implications of migration which are not the CBI's competence or direct concern but which we fully accept are a legitimate part of the debate on migration, and that too can be addressed.

Q6 Chairman: But you do not fear that the same kind of sentiments will be expressed by trade unions because of the points-based system when they see people coming from outside the EU, people who have no right to work here under the points-based system, to do jobs which they believe should be done by British workers.

Mr Cridland: That depends on the conviction that the system carries. Our support for the points-based system is based on the belief that an expert committee will make judgments on the particular skill needs of the economy, at a moment in time, on the evidence which is put to it. If that committee works well, as it has done to date, then that should carry conviction with all stakeholders.

Q7 Mr Winnick: No one is suggesting, Mr Cridland, as far as I understand it that the companies have acted in any way illegally and, as you have just pointed out, the EU law is quite clear, but do you accept the very strong feelings which exist amongst many people, certainly amongst those who have taken industrial action - unofficially as the case may be - and that the same feelings are shared by a larger number of people that British workers are being discriminated against?

Mr Cridland: I accept that there is that feeling. I would then suggest to my fellow citizens that we need to make sure it is evidence-based. I have not seen the evidence of that discrimination but I accept that that is the belief that some people have and it is a legitimate concern for them to express legally.

Q8 Mr Winnick: The apologists for the present state of affairs say British workers can go abroad; the EU applies its rules so if foreign workers are in the UK British workers that are in need of a job can just go abroad and find work within the EU. What use is that to a person with family responsibilities, a mortgage and all the rest of it who finds himself or herself (as the case may be) redundant? Are they suddenly to go to France or Germany, pack up with their family or go on their own? What use is that sort of arrangement to them?

Mr Cridland: There are British workers, British citizens, who have been able to take advantage of the opportunities of a free market of labour across the European Union but as you rightly say that will only be for a certain proportion, and there are many people, because of family responsibilities or their particular skills who will not be able to do that. The CBI has never overstated that argument and clearly we have many policy priorities in the UK that relate to the migration debate - the levels of literacy and numeracy and employability skills in our indigenous workforce, the need to improve the working of the benefits system to provide more help and opportunities to bridge back from unemployment and incapacity, back into work. These are urgent priorities for government to address to give more British citizens the ability to take advantage of the jobs which are available, and it is particularly important in a year when unemployment is going to rise markedly that those systems work well so that British workers have the best possible launch pad back into the workforce.

Q9 Mr Winnick: It may well that unscrupulous elements - and it would not be too difficult to name them - are exploiting the feelings which exist but that does not alter the fact that, as I have said, genuine strong feelings have echoed the views put forward by unions that have always been at the forefront of the fight against racism, who nevertheless feel that some change in the EU law is necessary, particularly in view of what is happening at the moment as far as employment is concerned. You have told the Chairman that you are not in favour of there being such a change.

Mr Cridland: If I may say, I think there are two debates which are happening at the same time. For those of our fellow citizens who feel very strongly about this issue they are actually questioning whether the freedom of movement of labour in the European Union is appropriate at a time of recession. Their primary concern is that jobs are being filled by citizens from other EU Member States rather than British citizens. The trade union campaign, which is a long-running campaign, is more specifically about the technical rulings of the Posting of Workers Directive and my belief is that trade unions are most concerned about whether collective agreements that they may have negotiated for British workers apply to those workers who come in through a contract under the Posting of Workers Directive. I do not think that most of the people at Lindsey will be fully aware of or even fully concerned about the detail of the Posting of Workers Directive; the two overlap but they are actually separate points.

Q10 Mr Winnick: Mr Cridland, I am just wondering, with due respect - and obviously you are putting the employers' view - whether there is a degree of complacency in the views that you and your organisation are putting forward, which are at odds with the feelings of people who are losing their jobs, who are desperate to find employment again to be able to maintain their families. Are you willing to discuss with the trade unions, with Unite and other such unions, the possibility of some change which could lead to the Government, if it so wishes, making representations within the EU to give a fairer deal to British workers?

Mr Cridland: As I have mentioned, we are very sensitive to the concerns of the public. I think we are sensitive to the reputation of business which, in a sense, stands above and beyond compliance with the law, and I am sure the companies concerned will be thinking deeply about their corporate social responsibilities at this time. We will always talk to trade unions or other stakeholder groups about their concerns.

Q11 Mr Winnick: Have you discussed it with Unite?

Mr Cridland: No, our principal interlocutor usually is the Trade Union Congress and we have had discussions in the past with the Trade Union Congress on these matters and, indeed, because of the concern in the European Union following the Viking and Laval cases the European Commission asked the CBIs of Europe and the TUCs of Europe to meet together to discuss at European level whether any amendments were required to the Posting of Workers Directive. Whilst our position going into those talks is that the unions believe there should be and the employers, like Her Majesty's Government and indeed the Commission, are not currently persuaded that there needs to be, we are having those discussions.

Chairman: Thank you; we need to move on. Mr Mercer.

Q12 Patrick Mercer: Mr Cridland, you will be aware that one of the first disputes was at the Staythorpe Power Station inside my constituency. There are subtle differences between those; is your position any different on the Staythorpe issue as opposed to the Lindsey one?

Mr Cridland: I am not sufficiently familiar with the detail of the case to which you refer to answer that question directly, I am afraid, but I can write to you if it would be helpful.

Q13 Patrick Mercer: I would be very grateful; thank you. Moving on from there, what skills required by your members cannot be found in the United Kingdom or the European Economic Area labour market?

Mr Cridland: They are chiefly tier 2 skills, higher skills. They are employers with particular needs for research scientists, for IT specialists, for particular managerial skills who would be sourcing labour in a global market, principally of a professional and technical nature. Our survey work has demonstrated repeatedly that for most CBI members that is the main priority outside of the EU and their main request under the points-based system.

Q14 David Davies: Mr Cridland, the CBI in various reports over the last few years has said that people migrating into Britain is a good thing because - and they have explicitly said this - it has held down labour costs, in other words it has kept down wages. Do you now feel any sense of responsibility for the strikes that are breaking out across the UK because British people are so angry that they are no longer able to get jobs as a result of the migration which you champion, and when they can get jobs their wages are low as a result of the policies which you champion?

Mr Cridland: When we talk about the fact that the benefit of migration is that it has kept the labour market in balance and held wages at a sensible level we are avoiding the worst effects of wage inflation. Most economic booms in the past in Britain have been spoiled in part because of wage inflation spirals as the labour market has got too tight and although now, sadly, we are in a recession for a prolonged period labour market economists were surprised that wage inflation did not happen in the UK in the most recent boom, and I think that was because of migrant labour and the flexibility of the labour market. Clearly we must avoid exploitation. I spent ten years as a member of the Low Pay Commission, originally designing and then implementing and uprating the minimum wage, and one of the things that happened during the course of my ten years is that the availability of migrant labour changed the landscape for the minimum wage and the policing of the minimum wage. I do not think most migrant workers are exploited; for the reasons I said earlier many, many migrant workers from both inside the EU and outside are predominantly skilled, but there is a proportion who risk exploitation and the CBI has always fully supported the full use of enforcement powers to help any vulnerable worker, whether they are migrant or not, and when we have seen examples of migrant workers not receiving the national minimum wage we have come down on that very strongly.

Q15 David Davies: Absolutely, although the enforcement is patchy, I accept that. Paraphrasing the first part of what you have just said, which is what interests me, you have championed immigration in order to keep wage levels at what you say now is a sensible level - in fact in some of your reports it is more explicit, and I have seen them. It has kept wages down; we all accept that mass migration has kept down the wages of the people in this country. But now, as you have just gone on to say, we have a recession, people are losing their jobs and we have a problem, have we not, and it is a problem that your policy has caused because we cannot simply throw out everyone who has come here over the last few years so we are going to have large numbers of unemployed people, many of whom are going to be British nationals. I am not normally a champion of the trade unions, but they have a point, have they not?

Mr Cridland: I have already twice said that I respect the views of people who are currently very concerned and I have every sympathy and sensitivity for them, and I think the business community will be very careful in the language it uses to comment on these matters. I would also suggest, however, that the labour market will correct itself with the very sharp downturn in employment opportunities.

Q16 David Davies: Wages will have to go down even further, will they not?

Mr Cridland: What I meant, with respect, is we already know that quite a lot of workers who came here from Poland and other of the A8 States are returning to their home countries because of declining employment opportunities here. We know that when employers are faced with a sharp contraction in demand their first response to that has been to reduce their dependency on agency labour, where there may be a lot of migrant workers, in order to protect the core workforce, and I would expect when we next have a report from the migration committee on the needs for skilled labour they will not see the same need for non-EU labour in the same numbers because of the need to provide as many employment opportunities as possible for the unemployed, and employers will not be able to make the same case that they need the points-based system in the same volumes. All I am suggesting is that the market will correct itself, but what we cannot avoid is a significant increase in unemployment which is a sad but inevitable consequence of recession.

Chairman: Thank you Mr Davies. Mr Russell has a very quick supplementary.

Q17 Bob Russell: Very briefly, is there not a world of difference between the free movement of labour by individuals within the European Union and what we are witnessing here with the import of an entire workforce, even down to accommodation being provided on a ship? Is that not the real issue, the import en bloc of labour rather than individuals? Added to that of course is the fact that the incomes those people are getting are not being spent in the local economy.

Mr Cridland: Clearly that raises public concern; I like everybody else have seen the pictures of the hotel ship and in a sense it raises the concerns you are pointing to. Employers have two responsibilities: they have a responsibility to obey the law and we will see whether there is any evidence of discrimination; I think no evidence has been seen thus far. They also have a responsibility to their stakeholders in the community. I cannot speak for the companies concerned, all I would say is businesses do take their reputation very seriously and if they are hearing concerns from the public I am sure they will wish to address that.

Chairman: Thank you Mr Russell. Mr Salter has again a very quick supplementary.

Q18 Martin Salter: Just to put the issue in some kind of balance and context could you remind us of the figures for the number of British nationals working in the EU and the number of EU nationals working in Britain?

Mr Cridland: I do not have those figures.

Q19 Chairman: I think it is 1.5 million British citizens who work in the EU and 300,000 British companies - if I may give evidence on your behalf.

Mr Cridland: That is very kind.

Q20 Mr Clappison: I want to ask about the UK Border Agency but before I do can I just ask you about the points-based system. You have been talking mainly about the movement of workers inside the EU.

Mr Cridland: Yes.

Q21 Mr Clappison: But of course we must remind ourselves the points-based system controls workers coming from outside the EU over whom the Government has complete discretion who it admits into this country under EU and international law.

Mr Cridland: Yes.

Q22 Mr Clappison: You have very fairly said that it is not for your members to judge the wider social; and environmental implications of economic migration and I think you would concede that you have an economic interest in migration. You have just said in answer to a question that you hope the points-based system in future will take account of the present economic circumstances, but do you not think that members of the public might just find it strange that here we are, well into a recession now - the figures are all showing a recession - with the employment of UK workers going down and yet at the same time, on the most recent figures, the number of foreign workers, non-UK citizens, in employment in the UK is going up. In particular, most of that increase is accounted for by workers from outside the EU; can you understand the concern which members of the public will feel about that strange disjunction?

Mr Cridland: Yes, I can understand that concern. Part of the answer to it is the level of skill shortage within the UK. I do not think employers sit there thinking how can I make a case to employ somebody from outside not only of the UK but all of the European Union, can I make a case simply because I have a preference for employing people from Asia, the Americas or Africa? They only do that if they have needs for labour that cannot be sourced either from the UK or within the EU, which is quite a stretch. The fact that there is such a need for non-EU labour, principally in the skilled area, tier 2, is an indication of the level of skill shortage that British business is facing.

Q23 Mr Clappison: The counter-argument to that - and that is an argument which has been made over a long period of time I think you would have to concede - is that allowing people to come to this country from outside the EU to fill those alleged skill shortages, provides no incentive at all for employers to provide training in this country. We do not have that much time this morning, but you gave your evidence to the House of Lords Economic Affairs Committee looking at the economic impact of migration. They considered your arguments and they came to the conclusion "Although the evidence is limited, there is a clear danger that immigration has some adverse impact on training opportunities and apprenticeships offered to British workers ... If immigration has adverse impacts on training, apprenticeships and domestic skill development the twin track approach advocated by many employers - immigration to fill shortages in the short run, and skill development of British workers to fill shortages in the long run - will not work." They dismissed your argument; do you have any reflections on that?

Mr Cridland: If I may, one of the non-executive functions I perform is that I am the Vice Chairman of the National Learning and Skills Council where we oversee a public budget of some £11 billion alongside private sector spending of something like £39 billion to raise the skill levels of post-16 education and training in the workforce. There is plenty of evidence that employers take their responsibilities seriously. The companies that come to me, if I may suggest it, with concerns about the points-based system, its effectiveness and the need for it are more often than not multinational companies, globalised companies, with high value added activities in the United Kingdom - the pharma sector, the engineering sector, where it is very obvious that the availability of particular skilled staff under the old work permit scheme and the new points-based system keeps that high value added R&D activity in the UK. Those are credible pedigree businesses.

Q24 Mr Clappison: I am sure you have done your best and that you perform very important work on the Learning and Skills Council but the fact remains that we have this list of skills which allegedly cannot be filled from people inside this country which has been there for some time and even now in recession we have large numbers of people coming from outside the EU. As I say, your members have got an economic interest in this but the House of Lords when they looked into this dismissed the skills argument and they also said that although your members may be the winners from this and the present generation of migrants may be the winners from this, there will be losers as well which include those employed in low-paid jobs and those directly competing with new immigrant workers which include some ethnic minorities and a significant share of immigrants already working in the UK.

Mr Cridland: The CBI has actively supported managed migration; we certainly have never argued for open migration. The fact is that the CBI favoured restrictions on the access of the A2 States and still favours restrictions on their access; the fact is that we have been such strong supporters of the points-based system which actually presents a far greater hurdle for employers if they were wishing to play the system; the fact is that we even initially gave a positive reaction to the Home Secretary's interview recently in a Sunday newspaper where she said that as a result of mounting unemployment extra requirements should be put on employers to advertise jobs for British workers. These are all indications of our position.

Q25 Mr Clappison: I will ask about the UK Border Agency but you will recollect that your members and certainly the Government proposed relaxing the resident labour market test and it was only after pressure from other people that the resident labour market test was kept in its present form, but we will pass over that. Can I ask you if the UK Border Agency has made any difference to your concerns?

Mr Cridland: We have a very positive relationship with the UK Border Agency. They are, in my judgment, making good progress now in improving their efficiency but initially in relation to the points-based system we did not feel that the guidance and advice or support that we had been promised by the Home Office was available. Employers do feel frustrated that they have spent considerable money re-tooling their HR systems for the points-based system, they have taken on new legal responsibilities not to employ illegal workers but for a long while they did not have the service level from the UK Border Agency that they felt they were entitled to. That has created some real tensions over the summer and in the run-up to the end of November, but I should balance that if I may by saying that ministers and the UK Border Agency officials have responded with great urgency to our concerns on that matter and the efficiency of their service to employers is getting better by the week.

Q26 Mr Clappison: Do you have any remaining concerns about the operation of the Border Agency?

Mr Cridland: We still think that they have a responsibility to provide better advice, particularly on their telephone helpline. We look forward to the point where the telephone helpline is staffed by people who are able to use their discretion in giving advice rather than a tendency to read out the literal wording of regulations, which is not always helpful to somebody who has bothered to phone them, and we hope that as we move to the next roll-out of the points-based system, tier 4, the guidance will be available in appropriate time. Tier 4 is of most interest actually to the universities who are in the CBI's membership. We have more than 60 universities in membership and those universities are saying what employers were saying in the run-up to tier 2: why is the guidance not out and available in the run-up to the next deadline? These are issues that the UK Border Agency and the Home Office need to address but I would stress that the position is much improved than if you had called me to give evidence before the summer or in the early autumn.

Q27 Chairman: Before we leave the EU do you support the Government's continued restrictions on Romanians' and Bulgarians' right to work in this country?

Mr Cridland: We do.

Q28 Chairman: What you are telling this Committee is that as far as the enlargement countries, the new Member States of the EU are concerned - if we can call them that any more - there are many citizens who are returning to their countries of origin. Do you have any figures on that?

Mr Cridland: No, I am afraid, again, figures are not strong in this debate, we are relying on anecdotal evidence, but we spend a lot of time talking to our member companies who are telling us that that is happening.

Q29 Chairman: Has the number of registrations increased or declined - do you have that information?

Mr Cridland: I do not have that information to hand.

Chairman: Mr Clappison has a burning question.

Q30 Mr Clappison: Have you seen the latest Labour Force Survey figures on this subject?

Mr Cridland: On this particular subject?

Q31 Mr Clappison: Yes, on the A8 Members.

Mr Cridland: No.

Q32 Mr Clappison: That shows that in the third quarter of last year (2008) actually the number plateaued; it is not going up but it is certainly not going down.

Mr Cridland: That was the third quarter.

Mr Clappison: Yes, I believe it was third quarter 2007 to third quarter 2008 which are the most recent figures we have got.

Chairman: Thank you, Mr Clappison; we will obtain those figures. David Davies is going to ask about sponsorship under tier 2.

Q33 David Davies: How many companies have registered under that scheme for sponsorship under tier2?

Mr Cridland: I will find the number if you give me a second; it is in my notes.

Q34 David Davies: Is it a large number?

Mr Cridland: I think from memory, but I will check this, it was about 1000.

Q35 David Davies: Do you know if many are suffering from a backlog in processing those applications?

Mr Cridland: Yes, there has been a backlog in processing those applications but that backlog is now reducing significantly.

Q36 David Davies: Moving on, what checks are made by the Government or anyone else to ensure that people who come to this country under the tier 2 scheme actually take on skilled work and do not simply slip into the labour market and do other unskilled jobs?

Mr Cridland: My member companies say that they feel the checks are effective; they are more inclined to say that they have had inspectors visit them and be a bit heavy-handed, so we are not seeing any evidence that there is a light touch or an absence in those checks.

Q37 David Davies: Is everyone inspected?

Mr Cridland: CBI members would tend to be inspected. I fully accept that I am speaking for a membership, given they have chosen to join the CBI, that might reflect those more inclined to be compliant with the role; I accept that.

Q38 Mrs Dean: What kind of difficulties have your members had with achieving "A" sponsorship ratings and has the UK Border Agency listened to you and been more pragmatic about processing sponsor applications?

Mr Cridland: I have already touched on the backlog, and that was a serious concern which is now being alleviated rapidly. I could say with some satisfaction that I think the Border Agency has taken a flexible approach to the application of their ABC categorisation and informally they have said to companies, "You have not yet done enough to receive a category A but if you take the following steps we will look at it again." Companies have found this very helpful. Again, it is part of the reputation of business; most of the companies that have bothered to apply for sponsorship want to get it right, and that is a good example of the Agency and employers working in partnership to make sure that the threshold is met on a constructive basis rather than a punishment basis.

Q39 Mrs Cryer: Mr Cridland, just to delve a little bit further into what Mrs Dean has already asked you, where businesses have been refused a sponsor licence does the refusal notice from the Border Agency explain why they have been refused and is it also helpful as to what they must do to improve their situation?

Mr Cridland: We have found, our members have been telling us, that this has happened informally, so I would not make claims for the actual notice but there has usually been a conversation whereby that information has been put forward such that the employer could do whatever they have not done first time round.

Q40 Mrs Cryer: The actual refusal notice then does not set out clearly the reasons for refusal so usually your members have to go back to the Border Agency to find out?

Mr Cridland: Forgive me, I am not aware specifically whether it does or whether it does not, but it has not become a problem because there has been an effective dialogue we have found.

Q41 Chairman: Are your members not concerned that there is no right of appeal? This is an administrative decision taken by officials sitting in the UKBA and there is no right of appeal.

Mr Cridland: That was a concern we had when the regulations were originally put forward.

Q42 Chairman: Do you still have that concern?

Mr Cridland: We still have that concern.

Q43 Chairman: Because this Committee, obviously, is in a position to make recommendations on this matter. Do you think it should be there as a protection?

Mr Cridland: It is a matter of natural justice that any process of this kind should have the ability to appeal.

Q44 Chairman: When they are turned down, what do they do? Do they just go and see their Members of Parliament and their Members of Parliament go and write to the ministers, or is there some other method they have found?

Mr Cridland: Increasingly, Chairman, they are in dialogue with the Border Agency and they will go away and recast their system, but clearly there is considerable opportunity cost there which we should seek to avoid.

Q45 Chairman: You would like to see it provide for appeal.

Mr Cridland: We would.

Q46 Gwyn Prosser: Mr Cridland, I want to ask you about intra-company transfers. Your organisation has raised concerns about some of the barriers to this process. Firstly, what have you got to say about the £800 bank balance requirement?

Mr Cridland: This is another area where progress is being made rapidly, and my understanding is that the issues we raised in our written evidence to you have now been addressed by the UK Border Agency. We felt it was inappropriate in a matter like intra-company transfers that money needed to sit in a bank account. What has now been allowed to the best of my knowledge is that the sponsor company sends a clear letter of undertaking and that that letter of undertaking is sufficient, both in relation to the individual and any dependants.

Q47 Gwyn Prosser: The other barrier you have mentioned in evidence is the requirement to work for six months in the company before transfers can take place. Is there any progress on that?

Mr Cridland: I think that is still there and, clearly, we are sensitive to the fact that we may reflect the concerns of the compliant, the great majority who operate within the rules but we do accept that the UK Border Agency has to have some requirements to avoid scams, so we can see both sides of this argument but that remains as it was.

Q48 Chairman: When this Committee went to Mumbai, Agra and Delhi last year we were very concerned that companies that invest in the United Kingdom such as, for example, Tata - and there are many, many others - had a concern that there was not enough information available at posts about the way in which the points-based system operated. Do you have any anecdotal evidence to help us as to whether or not this has been addressed?

Mr Cridland: I still think there is a need to provide better guidance and advice at post. We still receive anecdotal evidence that many people on the ground cannot go beyond what is on a website or in a guidance leaflet but they are not sufficiently clear as to the origin and purpose of the scheme to be able to extrapolate beyond it, which is often what an employer needs to talk about when they are speculating as to what might happen if they made an application.

Q49 Chairman: I do not want to reopen the earlier discussion but do you think we need to explain to the public and trade unions much more what an intra-company transfer is, because there is going to be a lot of people saying why are they bringing workers in under the points-based system and this is going to affect the number of British jobs that remain. Do you think more explanation needs to be made about this?

Mr Cridland: Yes, it is absolutely vital. Intra-company transfers are meant to relate to situations where a company has a particular project under way and I think again of the R&D example I described earlier where it is essential for that project for people to be able to come from another part of the company somewhere else in the globe. That seems to me a quite legitimate corporate desire and a legitimate part of globalisation and something that helps to keep high value added activity within the UK. You may recall that last year when the points-based system was being put together there was significant concern from some of our best car companies about the level of language requirements making it impossible to bring design engineers into Britain for short periods because they could not meet the language requirement, when there was no suggestion they would be here other than for a short development project. We have to be flexible on these issues - that is what the intra-company transfer scheme is there to achieve, and it is not a soft touch scheme. The employer has to demonstrate the necessity, they have to provide the undertakings and it is for a fixed period.

Chairman: You mention the language test: we have just written as a Committee to the Immigration Minister concerning his exemption for football players under the points-based system.

Bob Russell: That is for foreign footballers, not English footballers.

Q50 Chairman: For those who come from abroad. Do you think that should be extended to other professions? Why do you think footballers have been singled out for special treatment?

Mr Cridland: I am pleased to say the CBI does not represent any football clubs so I would not claim competence on that particular question.

Q51 Chairman: Would you like to see it extended to others, not just footballers?

Mr Cridland: I think as a result of the very constructive discussions that we had with the Home Office on the issues I have raised we now consider those matters have been satisfactorily resolved.

Chairman: Thank you, Mr Cridland. A final question from Mr Salter.

Q52 Martin Salter: Chairman, you may have been in Mumbai but the rest of us were in Delhi. When we were in Delhi, Mr Cridland, we met NASSCOM, the National Association of Software and Service Companies, which of course includes the major Indian corporation and a big British employer, the Tata Corporation itself. Two questions in response to what we heard from them. They confirmed to us that they were very concerned at any notion of a blanket cap on the movement of labour, just an artificial figure imposed at the start of the year would affect their ability to conduct their business effectively, to move around labour - in particular specialist labour - in the way that the business requires and could in the final analysis lead to some disinvestment in Britain, which could have a long term impact on jobs and the health of our economy. Do you share those concerns; is that why you favour the points-based system, where the system will lead us?

Mr Cridland: The two are not mutually exclusive. We believe that the points-based system is the right building block for dealing with the needs as they exist for migrant labour outside of the EU. Whether there should be a cap on the overall numbers, frankly, is entirely a political matter and the CBI will not take a view on that issue. We think it is a perfectly legitimate issue for political parties, for Parliament to debate, but what we will continue to argue is that the points-based system is a necessary way of ensuring that where the skill needs of companies cannot be met from the EU or from the indigenous British workforce that there is an ability, on an evidence base, to bring additional workers into the country for that purpose, but there is no desire in the CBI membership to take a view on quotas per se.

Q53 Martin Salter: Thank you, that is helpful. The second issue that NASSCOM raised with us was the issue about increased compliance responsibility for employers. Are you satisfied that your members can meet the conditions that are laid down or do you feel that they are too onerous?

Mr Cridland: They are certainly onerous and when I visit companies it is now spontaneously from chief executives coming up, "Can't the CBI do something about these burdens?" They are very noticeable, so the conditions need to be legitimate and proportionate, but we are supporters of a managed migration system and it is clear that in previous years that system was not satisfactorily managed so you would expect employers to be concerned about administrative burdens. As a movement, as an organisation, when we have debated our policy on this we have accepted that we needed to step up to the plate and share the responsibilities to make sure the system is managed. All we ask in return is if there are now those administrative burdens on employers that the service level from the public sector, from the Border Agency in terms of guidance sent out at the appropriate time, guidance right first time, helplines staffed by people who can answer questions, here and in international posts, has to be right. Initially we felt we were honouring our side of the managed migration debate without receiving the service agreement that we needed, but I would end by saying there has been rapid and considerable progress in meeting our concerns.

Martin Salter: Thank you very much.

Chairman: Mr Cridland, thank you very much for coming in today of all days; we are extremely grateful for the precise way in which you have given your evidence. We may come back to you again for some written evidence before we conclude our inquiry. Could I invite Alastair Henderson and Mandy Thorn to come forward?

Witnesses: Mr Alastair Henderson, Joint Director, NHS Employers, and Ms Mandy Thorn, Vice Chairman, National Care Association, gave evidence.

Q54 Chairman: Thank you also for coming today to give evidence on the occasion when the journey in was more difficult than it normally would be. Could I begin by asking you, Mr Henderson, a question about the role of medical consultants being included in the shortage occupation lists? Are hospitals and NHS trusts satisfied that the shortage occupation list meets their criteria and meets their requirements for recruitment of specialist medical consultants?

Mr Henderson: Employers are broadly satisfied with that. We have been improving and getting a much more robust system for inputting into what the shortage list is. Our organisation has been working very closely this time round with the current review that is going on with the workforce review team to provide statistical evidence and skills for health as the sector set of skills council. We are broadly satisfied therefore. In medicine in the health service there has always been quite a high percentage of doctors from non-EEA countries.

Q55 Chairman: Could you tell us some figures as to how many are involved?

Mr Henderson: In terms of hospital doctors it is around 31%, 27,000-28,000.

Q56 Chairman: Could you slow down a little?

Mr Henderson: It is around 28,000 hospital doctors which is 31% of the totality of hospital doctors are non-EEA qualified. It ranges quite a lot: the consultants themselves are lower, that is around 22%, but you get the group of staff and associate specialist doctors, which are those doctors who are not in training and not consultants, where it is much higher, it is actually over 60% of those are non-EEA qualified. With GPs the figure is a lot lower.

Q57 Chairman: You are going very fast. The 60% figure relates to what?

Mr Henderson: The 60% relates to staff and associate specialist doctors which are those groups of doctors who are not consultants and are not also doctors formally in training.

Q58 Chairman: And GPs?

Mr Henderson: GPs is considerably lower; that is 16.5%.

Q59 Chairman: So a third of all the NHS consultants at the moment ---

Mr Henderson: No, just under a third of all NHS hospital doctors are non-EEA qualified. For consultants themselves it is slightly lower, that is 22%.

Q60 Chairman: Why is there such a shortage in the resident labour market?

Mr Henderson: There has been a considerable increase in the number of doctors in training and medical school places but historically, since the NHS began, we have relied on overseas-trained doctors in the NHS, that has been a traditional part of the health service since it began.

Q61 Ms Buck: I want to follow that point up specifically and ask about trend analysis because it is clearly a dramatic figure, but if it is broadly the same as it was ten years ago or 20 years ago then obviously it has different implications for the area we are studying. I wonder if you are able to answer that now or would perhaps tell the Committee at another stage.

Mr Henderson: Certainly there are the figures. It has not changed hugely, one way or the other, over recent years, it is still around that figure. There will be changes; part of the Government's changes last year which did restrict the access of non-EEA doctors into training places will make a difference and the group that was very high, the staff and associate specialist doctors, you would probably find that the profile there of those non-EEA doctors are probably those nearer retirement. There was a large group of doctors that came in, particularly from the Indian subcontinent, that makes up those numbers so with both the increase in medical school places - and that has been very substantial over the last ten years - and that aging demographic of that population, over time you will see that change.

Q62 Ms Buck: That leads to my next question. I know it was for fundamentally different reasons but I was one of those MPs in Inner London that really got a lot of grief two years ago with the crisis over the postgraduate medical training access. I just wondered if you could tell us a little bit more about the restriction on access, whether you welcome it and what will be the impact? Will it have a positive impact in terms of meeting the needs for UK-trained doctors going through the system and are there any disadvantages?

Mr Henderson: As you know there was a consultation about whether access to the formal training grades by doctors in training should be restricted. There were some quite mixed views actually from NHS organisations and there clearly was a recognition of the sense for the service to ensure that UK graduates were getting employment and then the wider economic requirements of that for the investment that has been put into their training. Equally, there was a concern from some employers to ensure that they did have the widest possible field to ensure that they were getting the highest quality standards. I would say it was fairly evenly balanced but the majority did favour the restriction of that access. In the noise that there was in the system a couple of years ago there is sometimes possibly a difference and the statement that UK doctors cannot get jobs is sometimes more accurately that UK graduates cannot get jobs in the specialties and the places they want. As a London MP that was a strong issue there, but being able not to get a job in surgery at Guy's is not the same as there not being medical posts available.

Q63 Chairman: There is no prospect then of a whole lot of medical students going outside their hospital saying "British jobs for British workers".

Mr Henderson: Absolutely not. I did think that the group during the MTAS discussions, "Mothers for Doctors" struck me as one of the most powerful and effective lobby groups that I have come across for a long time, but certainly that restriction and what that meant was that there were hospitals in other parts of the country that actually really welcomed some of the changes and have found it a lot easier to fill posts where they were having difficulty, so in that way that has been popular, but there do still remain some particular specialties where there are difficulties and that is partly also about the choices that doctors, graduates and medical students make - there are still some specialties that are a lot less attractive.

Q64 Ms Buck: Following on from that, does the restriction mean that there is a risk that you will end up with less popular posts remaining unfilled because there is not a call to train for them, or is that not possible?

Mr Henderson: In some ways it is perhaps the opposite. One of the purposes of the new training arrangements was that people did not mill around in what was called the SHO, the senior house officer grade, it did give an opportunity for people, if they did not get a job in the London teaching hospital they wanted first time round they could keep hanging around until they did or eventually gave up. Now that is not so much an option, if people cannot do that they do have to make other choices about other specialties so in some ways we ought to be able to move people into the less attractive specialties, which I think is a benefit.

Q65 Tom Brake: Just following on that point are there any particular specialisms that the international medical graduates used to go into where now we may have more difficulties actually ensuring that those places are fully filled?

Mr Henderson: I do not know of any particular evidence of a tailing-off of the interests of international medical graduates in particular areas. For example, psychiatry has been an area that has been quite hard to fill from UK graduates but I do not think there is any particular tailing-off of the interest from non-EEA graduates because they will clearly see where the vacancies are and will apply if they are qualified there.

Q66 David Davies: I just wonder if you can help me understand this. Either we are not training enough British people to become doctors and are filling the service with people from inside and outside the European Union, or we are training about the right amount but the people from outside the European Union are creating a surplus which means some British people are not able to get jobs. Which of those two scenarios is correct?

Mr Henderson: It is more the former.

Q67 David Davies: We do not train enough people.

Mr Henderson: We have not been self-sufficient in the training of doctors to meet the demand but we have decided to rely on bringing people in - and there are real advantages both to the service and to the doctors themselves of bringing people in.

Q68 David Davies: We have been doing that since the NHS was created roughly.

Mr Henderson: Yes.

Q69 David Davies: What checks do we make? If somebody turns up here from a Third World country, from somewhere in Africa, presents themselves as a doctor, what checks do we make to ensure that their qualifications are as credible as those of somebody who spent six years training in the United Kingdom?

Mr Henderson: That is the responsibility of the GMC, the General Medical Council. Nobody can practice as a doctor in this country unless they are on the GMC register - it is the same with nursing with the Nursing and Midwifery Council.

Q70 David Davies: Do they have to do any tests to ensure that they are up to scratch when they come here or are their qualifications sufficient?

Mr Henderson: The GMC has a very rigorous process of testing for qualifications; there are various tests and there are language tests as well - the PLAB is the language test that doctors have to take.

Q71 David Davies: They do not simply say "Okay, you are from a country where there may be problems with corruption; we are quite happy to accept that you have done that six years, that your degree is as good as a British degree", they say "You will have to undertake some written tests to ensure that you actually know what you are doing", because there have been cases, have there not? There was one, funnily enough, from America - which you would not necessarily expect - where a doctor was not a doctor and yet his qualifications had been taken at face value by the GMC, nobody had bothered to carry out any checks as to whether he had been in the university or not; does this happen now every single time? Do we check?

Mr Henderson: Broadly the service has confidence that the GMC has good tests.

Q72 Mrs Dean: You talked about the percentages of non-EEA trained doctors; do you have the figures for the overall numbers of doctors now compared to, say, ten years ago?

Mr Henderson: Yes, indeed. Now the number of overall hospital doctors is around 91,000 hospital doctors and about 33,000 GPs. We have the figures for the last ten years and there has been quite a considerable increase; I can certainly send you those and what those were over the previous ten years but there has been a steady increase of doctors.

Q73 Mrs Dean: There has been a steady increase in the number of doctors being trained.

Mr Henderson: Yes. There have been very substantially higher numbers coming out of medical school and through training, so the numbers of UK-trained doctors has grown very considerably.

Chairman: Mr Winnick has another quick supplementary.

Q74 Mr Winnick: Just to confirm the position in answer to a previous question, does not all the evidence indicate that doctors who come in from the Indian subcontinent and the rest and have to reach the standards of the BMA provide no less an excellent service than British-born GPs?

Mr Henderson: Absolutely.

Q75 Mr Winnick: There is no doubt about that.

Mr Henderson: There is no doubt about that, no.

Q76 Patrick Mercer: Mr Henderson, tier 1 of the points-based system awards points for age on a sliding scale up to a maximum age of 31 years old. Given that doctors' training typically lasts seven years are you concerned that this is going to discriminate against doctors?

Mr Henderson: I know this is an issue that the BMA has raised and I can understand that. It strikes me though that certainly for doctors coming in there are likely to be other factors in terms of earnings that may well give them compensatory points there, and certainly of course there are other doctors who can come in on tier 2 for specific posts where, without a doubt, they will get the required number of points.

Chairman: We are now on to nurses and Karen Buck will lead on that point.

Q77 Ms Buck: In a way it is rehearsing some of the same arguments in respect of nurses although obviously the context is different. As a member of a health authority in the Eighties and Nineties we used to spend a long time in London negotiating an ability to recruit from outside the EU to fill shortages and of course even now, particularly in the cities, we have a large number of agency staff and there are often difficulties in recruitment. Could you tell us what the current situation is in respect of the number of nurses working in the NHS and outside the EU and what you think might be the impact for the NHS of the points-based migration system?

Mr Henderson: Certainly. It is slightly difficult to be as precise in terms of nurses working in the NHS. The figures we tend to use come from the Nursing and Midwifery Council which is, again, who they register with as coming from outside the UK, so obviously a number of those will be working in nursing homes and the residential sector, i.e. non-NHS but it is still a reasonable proxy. There has been a fairly significant decline in the number of nurses outside the EEA that the Nursing and Midwifery Council has registered. In 2004 they registered 14,000 which was roughly the same number as UK registrants, so there was a fairly even level; last year they registered 4,800 which was only a third of the number of UK people they were registering.

Q78 Ms Buck: Why do you think that happened?

Mr Henderson: From an NHS perspective, as you rightly say, a few years ago there was some really quite vigorous international recruitment. At the same time, whilst medical numbers have gone up, nursing numbers have gone up a lot faster in the NHS and the NHS has increased the number of qualified nurses that it has very significantly. I think there was a particular need for the international recruitment whilst the demand was there but the new nurses were not coming through; now that has evened off and certainly there is a lot less international recruitment, though there are a few signs in some areas now of renewed interest.

Chairman: Thank you.

Q79 Martin Slater: Is there any queasiness at all in the National Health Service that one possible side effect of people working in the NHS is that we could be accused of stripping out trained medical staff from developing countries who need them every bit as much as we do, and in some cases more?

Mr Henderson: Yes, I think there is. I think that the NHS has probably led the way. We have had an ethical recruitment code and policy. You cannot stop any individual applying, but we do not actively recruit or use agencies to recruit from a number of countries, particularly sub-Saharan Africa, where that is an issue. There are some countries that do actively over train nurses - the Philippines - very specifically for export. But the NHS led the way with its international recruitment policy. Yes, there is that realisation. You cannot stop an individual doing that.

Q80 Martin Slater: Can I move on to the specifics of the points-based scheme. There is, of course, this sliding scale of salaries, with tier 2 starting at £17,000. Is there not an issue about the average salary for an NHS nurse working in the UK? Would it be enough to qualify under the tier 2 system?

Mr Henderson: Yes, it would. The basic pay for a qualified nurse now begins at £20,225. If you are in London you will get an additional £4,000. Even nurses not attracting any London weighting will be above £20,000. If you have the London weighting, you will be above £24,000, which attaches the top points.

Martin Slater: Thank you very much.

Q81 Mr Clappison: You have just been talking to Mr Salter about the recruitment of nurses and doctors from developing countries. I think you accepted in response to Mr Salter that it is a very serious matter for a developing country to lose a nurse or a doctor .

Mr Henderson: Absolutely.

Q82 Mr Clappison: It has a far more serious economic reversion effect than the recruitment does in this country. I pay tribute to the work which these doctors and nurses do in this country but their loss is very serious. Members of the Committee went to Ghana a couple of years ago and had the opportunity to hear about this. You have said that the NHS is leading the way, as you put it, on this since the Code of Practice was issued in 2004 and the others signed up to it, but nurses and doctors, particularly nurses, are still being recruited from developing countries, including sub-Saharan Africa, are they not?

Mr Henderson: There are certainly nurses coming from there. Our code tries to ensure there is no active recruitment. An individual who chooses to apply and gets a job maybe outside of the NHS sector, who applies on an individual basis perhaps to a nursing home - and quite a number of people will come in through that route - will get a job there and from there will apply legitimately for a job in an NHS organisation. On those bases it would be entirely wrong to discriminate against those individuals, but I do not know of organisations that are actively recruiting people from there.

Q83 Mr Clappison: This is, if I might suggest, a rather roundabout argument on your part. The important point is the effect on the country concerned. Can I draw your attention to the case of Zimbabwe. Last year, 2008, 1,000 nurses were recruited from Zimbabwe, and 1,000 the year before, and since 1999, this country, according to the figures I have, has given work permit approvals to nurses from Zimbabwe to the sum total of over 15,000 - 17,000 if you take into account the last two years. 17,000 nurses have come from Zimbabwe to this country. According to the World Health Organisation there only are about 9,000 nurses left in Zimbabwe. The Code is not working, is it? Is it not time that we had a system which did work and stopped people coming from a country which is desperately poor and in need of medical help?

Mr Henderson: With due respect, they may be issues, but they are issues that are wider than those that will be decided by NHS employing organisations issues who also have to follow employment law. Where people who have applied as individuals or who are currently working in the nursing home sector or elsewhere have applied, they have to be properly considered. There may be arguments which strike me as wider political arguments of whether there are policy decisions not to allow entry to nurses. That is not the issue for the individual organisation.

Q84 Mr Clappison: Some of these nurses are coming to work for the NHS, and 1,000 nurses - in 11 months in 2008 - is a big difference to a country like Zimbabwe. You have said in response to earlier questions that we were recruiting from poorer countries or less economically developed countries because of the lack of training in this country. These very poor countries such as Zimbabwe are paying the price, are they not, for the economic failure to train sufficient numbers of nurses in this country?

Mr Henderson: An NHS organisation which receives a number of applications for a nursing post which includes an application from a Zimbabwe national who may be working for a nursing home at the moment, is not allowed to - and nor should it - discriminate against them.

Q85 Mr Clappison: I am suggesting to you that the point of the Code of Ethics which you have referred to, which was signed up to by the Department of Health, was to protect developing countries - just those such as Zimbabwe, which is in the direst of need. As a country we are spending money on overseas aid and sending help to those countries, yet, as a recruiter, we are recruiting skilled health professionals and doing probably an immense amount of damage to their infrastructure and to the health care which is desperately needed in those countries. We are facing both ways at once, are we not?

Mr Henderson: I fully recognise and understand the issues that you are raising. I think there are also wider issues about what the Government will be doing about the support to the health systems in those countries. Equally, at the moment NHS organisations also have to follow the law in terms of recruitment. If there is a policy decision around not admitting people, I think that is a decision for government. NHS organisations are not seeking recruits from Zimbabwe and sub-Saharan Africa. If people apply, for various reasons they have to be treated fairly alongside others.

Q86 Mrs Dean: Are there cases where private agencies are recruiting from these countries and offering the services of those nurses to our National Health Service? In other words are our NHS institutions using agency nurses who have come directly through these private agencies?

Mr Henderson: That had been or has been an issue. This code has ensured that any agency where that has been found - and we have examples of that - have been taken off the code and thus will not continue to be used by NHS organisations. The agencies who sign up to the code also are signing up not to recruit in that way. We have had some, and we have a system where people are then struck off, there is an appeal, it is investigated, and there are examples where people have been then struck off and thus are no longer used by NHS organisations. That does not mean that those agencies might not be bringing them in for employers outside the NHS. Obviously our code has no responsibility over those agencies. That does tend to be one of the major sources. It is a secondary route in rather than a direct route in.

Q87 Mrs Cryer: What proportion of those working in the UK care industry comes from outside the European Economic Area? What will be the effect on the industry if these carers are no longer able to work in the UK?

Ms Thorn: There are various figures. One of the problems we have is getting proper, clear information, clear statistics. Skills for Care estimate that 12% of the social care English workforce - so we are talking about non professionals, not nurses - is from outside of the EEA countries. To take your second point, if that source of workers is stopped, if we are not able to recruit to backfill those workers, that will have a huge impact on the social care sector at a time when we are desperately needing more people. It is estimated by the Commission for Social Care Inspection that we are going to need to see the workforce increasing by 50‑80% between now and 2025.

Q88 Mrs Cryer: Am I right in assuming that many care homes, residential homes, pay not the nurses but the carers the minimum wage, and if they were to pay more than the minimum wage they would find it easier to recruit? In my own constituency I have evidence to show that some of the better homes, which are very, very good, do pay more than that, whereas those at the cheaper end of the market are sticking to very low rates, the minimum wage, and thus getting workers who have very little English - which is very, very difficult for elderly people and even more difficult for those elderly people with Alzheimer's.

Ms Thorn: I cannot help but agree with you, but perhaps I can explain why I say I am agreeing with you. About 70% of the fee that is obtained by a care home is spent on wages. Therefore it follows that those care homes that are able to attract high fee levels are then able to pay their staff more appropriate wages. One of the biggest problems that we have in the social care sector is the continual under-funding of care, particularly care for older people, by successive governments. Unfortunately, the gap between what particularly the local authorities can pay for publicly-funded uses of our services and what it is costing to provide the care, means that those providers who for various reasons concentrate on providing services to the publicly-funded people are unable to pay the sort of wages that would mean they could attract a greater choice of workers. The National Care Association is very concerned about English skills for workers. It is one of the reasons why we have been actively working on the skills and on the tier 2 and on the potential impact on our sector. You need to be able to communicate with people. As you quite rightly say, English skills for the majority of workers are essential. You need to be able to provide good quality of care, communicate with the people you are providing services for.

Q89 Mr Winnick: In the changing employment situation in the UK how far is the position likely to change regarding the recruitment of people in the UK?

Ms Thorn: At the moment, sir, we are seeing an increase in the number of unfilled vacancies. The three month moving average of notified vacancies for SOP code 6115, the care assistants' SOP code, almost doubled between December 2006 and December 2008. The number of unfilled vacancies is also increasing. We are in a slightly different position from the NHS. We are seeing not just a skills shortage but a shortage of the supply of labour that is prepared to do what is an extremely difficult job. The resident labour market is being tested the whole time by the social care sector. Our vacancies tend to be advertised through job centres, they tend to be advertised through local press. We have various pieces of evidence - and some of that has been submitted to the Migration Advisory Committee - of the problems that social care providers have with using people from the resident labour market not prepared to work what has to be shift work. It is a service that has to be delivered seven days a week, 24 hours a day. People are not prepared or not able to do the very personal intimate care that is needed, and that is particularly where wages are lower than we would like to pay.

Q90 Chairman: In respect of the Shortage Occupation List and other issues, we are going to have to write to you. We have just been informed that the Mayor of London is coming to give evidence on another inquiry and therefore we are going to have to curtail part of this session. We will write to you about a number of other aspects of this, if that is okay. It would be very helpful if you would be kind enough as to let us have some of those statistics in writing. That would be of great assistance to us. Thank you very much.

Memorandum submitted by National Farmers' Union (NFU)
and HOPS Labour Solutions

Examination of Witnesses

Witnesses: Mr Paul Temple, Vice President, National Farmers' Union (NFU) and Mr James Davies, General Manager, HOPS Labour Solutions, gave evidence.

Q91 Chairman: Good morning. Thank you very much for coming in to give your evidence. You now have a flavour of the kinds of things we are interested in and concerned with today. Perhaps I could start with the issue of seasonal workers in the agriculture and horticulture sectors. What is the current shortfall of workers in these areas?

Mr Davies: We are currently looking at about a 5,000 shortfall. We have had an increase in our Seasonal Agricultural Workers Scheme quota for this year of 5,000, but we feel that has only gone part of the way. It should be noted that is very helpful, and we do operate with a constant shortage with our clients whom we provide labour to.

Mr Temple: The NFU would point out that that is what the stark statistics point out, that there has been the request for this number of workers and there has been that shortfall. We are pleased to see the extent of the SAWS of 5,000, but as I travel around meeting farmers and growers around the country, the one thing that is pressing on their minds is the constant problem of filling jobs, especially in the seasonal labour market.

Q92 Chairman: Were you disappointed when the Government announced that it would not be raising the restrictions for the Romanian and Bulgarian workers?

Mr Temple: No. I think it is good that they kept them in place because, as soon as candidates have access to other industries, they tend to apply for them, as has resident, home labour and as have the A8 nationals from countries closer to us. In the short term, no. In the long term, we need to re-establish our contacts with third country nationals with countries such as Russia and the Ukraine because, although we were recruiting there until 2007, we have been shut down for a year and those contacts are going.

Q93 Chairman: Since we have put this to all the other witnesses, would you like to comment on the phrase "British jobs for British workers"? Does it apply to your particular centre, because clearly you seem to be very short of them?

Mr Davies: If they want jobs, they can have them.

Mr Temple: It is interesting that this phrase has been dragged up and put out, and it opens up a really useful debate, particularly from our particular area. We have been concerned at the shortfall for not just one or two years but several years. It does give us an opportunity in the current economic backdrop to look at how we can promote the opportunities within farming and horticulture but we have to be aware of the nature of the work that is involved - and I am thinking of what James said. Those job opportunities are there and people do not choose to take them, even in areas of high unemployment.

Chairman: Mr Salter would like to explore this further.

Q94 Martin Slater: Surely if you paid them a bit better you would have no trouble in attracting British nationals to do these jobs.

Mr Davies: Most of our clients are paying quite well above the minimum wage - as, indeed, legislation demands we have to because we are governed by the Agricultural Wages Board. There are overtime rates, holiday pay is higher

Q95 Martin Slater: Could you give us an indication of the Agricultural Wages Board rates?

Mr Davies: If you take the grade 1 rate, which is for a standard worker who is constantly supervised, for 39 hours he is on £5.74, which albeit only one pence above the minimum wage ----

Q96 Martin Slater: It is hardly well above the minimum wage. Can you justify the expression "well above the minimum wage"?

Mr Davies: But then we step into overtime - on farms people tend to do an element of overtime - which is time and a half for anything over eight hours per day or 39 hours per week.

Q97 Martin Slater: Could you justify for me your evidence that you have just given, that they are paid well above the minimum wage? How do you define well above? At the moment it is one pence. Can you get it up a bit?

Mr Davies: Most seasonal workers are employed on a piece-rate work system, where they are paid for the amount of work: the kilos they pick, the metres they plant. That has to be linked to the legislative rates, so at least they are being paid that as a minimum. The vast majority would earn 10-20% over those rates. Indeed, on some farms they are earning as much as £7.50 in a standard hour of work.

Q98 Bob Russell: Is it not the truth there that you are being screwed by the supermarkets?

Mr Davies: There is an element of that, yes. I heard the lady before speaking about care homes. Ultimately, wages in soft fruit makes up some 45% of the cost of growing the crop. Unless you are getting more from the crop - and Paul might be able to say something here, but I think that strawberries are now worth about the same as they were towards the end of the 1990s, whereas the minimum wage has nearly doubled.

Mr Temple: That is a particularly relevant point. We are in a competitive market-place. We are challenging agriculture to be increasingly in a competitive market-place. If we do not solve this particular issue and we do not overcome the problems of labour, it starts off with issues like not being able to pick at the frequency, not to establish the quality that is required and deliver to the price that is expected, and then it leads into a simple question by these growers: Do I grow this crop? Do I produce this livestock? For some of them now they are faced with the decision of not doing this. This is entirely at a point when food production and food security is important.

Q99 Bob Russell: Last year some producers decided that the best thing was not to pick the crop.

Mr Temple: That is a real and genuine concern. When that happens, if a grower cannot see a return, the following year he will make the decision of whether he grows that crop or not.

Bob Russell: It is short-termism at its worse, Chairman.

Chairman: Indeed, Mr Russell.

Q100 Patrick Mercer: Mr Davies, how has the falling value of the pound affected your sector's ability to recruit?

Mr Davies: It has impacted on us greatly. Candidates that we were managing to find in countries such as Poland and Slovakia are now looking to go into Germany or into Spain. If they want to pick fruit then they can go to Spain and earn €5 an hour, which is not a massive difference from the £6 or £7 we are paying here. Very recently Spain, Greece and Hungary have lifted their work restrictions on Romanians and Bulgarians, and Denmark is due to do it in May. Spain has very strong links with Romania so a lot are there. Although we are recruiting quite steadily in Romania, we expect this to have a very big impact on capacity.

Q101 Tom Brake: Is there any evidence that the economic downturn might mean, for instance, that Polish workers, who used to work in your industry but took jobs elsewhere, might be coming back into your industry and helping the position you are in.

Mr Davies: I have heard anecdotally that that is happening, yes. I will use an example of one specific farm, if I may. They have a total requirement of 350 people through their calendar year. I will touch on the British nationals: of those, six people are British, and they have just had eight people return to them having lost their jobs in other sectors. Although that has meant that we have moved their SAWS allocation of people to help plug the hole later in the year, it is really only filling a hole that (a) is there and (b) is growing because the Polish people who we would have newly recruited are much tougher to find to come into the country.

Q102 Ms Buck: With unemployment in the UK, what is your analysis of why you cannot recruit to your jobs?

Mr Davies: The temporary nature of the work. If we look at a lot of the people who have recently become employed, they are in the wrong place and they have the wrong skills. They are coming out of the finance sector.

Q103 Ms Buck: I was wondering what the skill analysis was for picking fruit.

Mr Temple: As somebody who is a vegetable grower, we have employed people for seasonal work and, as the years have progressed, because there have been other job opportunities, possibly higher expectations of what they should be doing work-wise, the nature of this work has not been something that people have considered for whatever reason. We were particularly grateful for migrant workers to fill a gap where we literally could not find people to man the equipment, and the quality of staff that we got improved what we were able to do. In today's recessionary backdrop, it offers a new opportunity, possibly through the new skills training or the land-based diplomas that have been put through schools, to put in front of students and younger people what happens in horticulture and agriculture and the opportunities for skilled, unskilled, semiskilled workers in the future. But that will not bear fruit for several years to come.

Q104 Chairman: The evidence we received this morning from Mr Cridland is that workers have returned to Poland and Hungary and other countries. Are you telling us that this is now reversing and that some are coming back?

Mr Davies: No. I think, generally, that trend is correct. They are going home or they are going to other euro countries. We are finding that a very small element of people here who maybe had moved into the construction industry, have lost their jobs there and are now looking to move back into farms. However, that is quite small.

Q105 Mrs Cryer: Mr Temple, next year, at the end of 2010, the Government is hoping to end the Seasonal Agricultural Workers Scheme. Do you believe that tier 3 of the points-based system, which is aimed at the low skilled labour, will be up and running in time to take over from the Seasonal Agricultural Workers Scheme?

Mr Temple: We have real concerns that once SAWS ends we do not have something suitable in place to cover it. One of the things that strikes us is that the kind of labour we require is, for large part, seasonal labour. The tier 5 element is something that offers an attraction, because you find people who are skilled, hardworking, willing to come and quickly want to return back, and that fits the profile of worker more, in some cases, than maybe tier 3.

Q106 Mrs Cryer: Are you pressing to carry on using the seasonal worker scheme if either tier 3 or tier 5 is not ready?

Mr Temple: Yes. We would certainly want that to continue unless there was something that we felt was suitable in place. I think it is important, when changes are made, that the proper impact of any changes is understood before they are applied. Following the EU Directives that are going through could be a useful way of seeing the future progression.

Q107 Mrs Dean: Mr Temple, how much low-skilled labour under tier 3 would the agriculture and horticulture industries need to recruit? With perhaps less employment opportunities for students in other areas or other occupations, do you think there is an opening for more students to come back to fruit picking, which they used to do in years gone by?

Mr Temple: In terms of the numbers, as has been mentioned the number of 5,000 was mentioned as a shortfall. We have our own survey and we are more than willing to pass details of our own survey forward, because it identifies what our own members are finding on the ground. I think that is very important. We are concerned with students coming in if they are required to have £1,600 of savings before they can enter the country ----

Q108 Mrs Dean: I meant UK students.

Mr Temple: No, this would be migrant students. That might be an obstacle to students coming in.

Q109 Mrs Dean: Would there be an opportunity for our UK students?

Mr Temple: The opportunity for UK students has been there every year. It is a case of: Are people taking these jobs up? That is a real challenge. That is why we have the migrant workforce that we have, because students, for whatever reason, have not been attracted to it. To draw attention to the working environment, the working environment is obviously a harder one. It is manual labour in many circumstances. It can be outdoors, but increasingly it is poly-tunnels. Most employers now fully understand the need to protect and enhance the working conditions, and certainly not to put the workers at risk. It is not the working in the conditions that many people have in their mind. I think that is a real obstacle for us to communicate, that the working conditions are not quite as difficult, but it also shows the problems we have. Agriculture and horticulture is a unique area of work and people can quite easily move from outdoor work to indoor work, but you tend to find that people do not quickly migrate back the other way.

Q110 Gwyn Prosser: Mr Davies, I would like to ask you about tier 2 issues. How confident are your members that under tier 2 you will be able to attract sufficient recruits to meet your needs?

Mr Davies: We are an agency that provides predominantly low-skilled labour: the pickers, the packers, the bottom end of the job spectrum. We do not work directly with tier 2. However, I have spoken to people who have managed to make it work for dairy jobs, the jobs where salaries are up in the high £20,000/ early £30,000 sort of bracket, and they are finding it to work. However, I have no experience of using it myself.

Q111 Gwyn Prosser: Do your colleagues have any view over the way points are allocated for tier 2? Could it be improved or reformed to make it better for the industry?

Mr Davies: I do not know.

Q112 Mr Clappison: On tier 2, we have been talking about seasonal workers, workers who come here for a season, for a temporary time, but also there have been migrant workers coming in to fill positions on a more permanent basis from the European Union and from elsewhere - as, for example, stockmen looking after stock: pigs, cattle, milking herds and so forth. Do you have any evidence as to how many of those jobs are being filled from outside the UK by non UK workers?

Mr Temple: No, we have no specific experience. All I can give you is the anecdotal evidence as I travel around. It is a changing situation. It varies from part to part of the country. In Northumberland, for example, they still have, reasonably few problems finding local stockmen to work on their farms. If you go down to the South East of the country, they have tremendous problems. However, that could rapidly change. I was talking to a dairy farmer in the West Riding. Three years ago he put an advert in for a dairy worker and got nobody; he put in an advert recently and had 21 people applying for that job. That shows that there is a growing awareness that maybe agriculture is something for people to consider. It brings us back into that tier 2, and qualifications: Have we got the people qualified and capable of doing that?

Q113 Mr Clappison: I am not talking about tier 2. I am not just talking about the new people, coming mainly from the Eastern European countries to work here, but about people from outside the EU to do these jobs as well. Is that right, if we are talking about tier 2 jobs? People can come anyway from within the EU, so there is no point in talking about the points-based system.

Mr Temple: These people, in my experience, especially in that tier 2 period, are EU workers.

Q114 Mr Clappison: What seems strange to me - and I declare an interest as someone who comes from a farming background, who still has a small interest in this - is that years ago the agriculture sector was much larger than it is today. There were far more people working on the land, I suspect in more difficult conditions, and without the benefit of machinery, yet nearly all those jobs were occupied by UK citizens.

Mr Temple: Yes.

Q115 Mr Clappison: Why is it that now, today, we need to have so many people coming from outside the UK?

Mr Temple: Quite simply it is the economic situation. The work rates and employment rates that go into agriculture are out of sync with many other industries, or have been in the past. You do need to have a reasonable degree of skill in certain categories of work. Now these workers are readily in demand in other sectors. The building sector overt the last five years has taken an enormous number of agricultural workers away from agricultural work, because quite simply they can work a fewer number of hours for more money. That was up until this particular period of recession. We might see a change.

Chairman: Thank you very much for coming to give evidence to us today. That was extremely helpful. We will write to you about a couple of other points which we will be discussing on the operation of the points-based system. If you have any information that you wish to send us, please do so.