Business

Philip Hammond calls for more liberal immigration regime post-Brexit


Philip Hammond took a swipe at Theresa May’s drive for a clampdown on European immigration on Thursday, raising the prospect of a special deal for EU citizens that could give the UK a Norway-style relationship with the bloc.

The chancellor’s comments to British business leaders on the sidelines of the World Economic Forum held out an olive branch to those in his party, such as Nick Boles and Nicky Morgan, who want an extremely close economic relationship with the EU.

Mr Hammond acknowledged that a recent government paper on immigration proposed the same rules for migrants from EU and non-EU countries, but added “it does not rule out the possibility that future trade deals, including with the EU, might have provisions in this area”.

He put EU immigration in the context of maintaining “a close trading partnership” with the bloc, holding out the possibility that a future deal might trade improved access to European markets in return for special treatment for workers from the bloc.

By contrast, the prime minister has always said she favours an immigration system, “where it is workers’ skills that matter, not which country they come from”. She has rejected a Norway-style model for Brexit, which would allow the continued free movement of EU labour.

Mr Hammond also highlighted his different approach from Mrs May by appealing to business leaders to be vocal about their needs.

“I urge you, collectively, seize the opportunity to engage with this consultation and to bring forward constructive, consistent and evidence-based proposals . . . that responds to public concerns on immigration, but also protects our economy and our businesses,” the chancellor said.

On intermediate skills — defined in the Home Office as people earning below £30,000 a year — he said that he wanted to hear “creative” comments from business and not just a demand to have the threshold lowered.

Some in the Treasury are concerned that a salary threshold of £30,000 is too high for a liberal visa regime.

A technical annex to the government’s immigration white paper estimated that a threshold at that level would result in an 80 per cent fall in EU immigration from current levels, something which Treasury analysis suggests would have significant costs to the UK economy and tax revenues.

But Mr Hammond stood relatively firm on low-skilled immigration. “Let us be frank. We also need to have a discussion on how to wean the economy off cheap low-skilled labour,” he said.

Trade experts said that Britain would probably have to offer other countries outside the EU concessions on migration as part of trade deals. India wants a more flexible visa system as part of an eventual trade accord with Britain. But few agreements are likely to be as close as any deal the UK signs with the EU.

Professor Jonathan Portes of King’s College London said that a shift by the UK government on migration for EU citizens could offer a twofold benefit for business: “The more you can put something close to free movement on the table, the more access for services you can ask for, so this is potentially a double win for business.”



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