Freedom of movement defused our demographic time bomb, but Brexit armed and exploded it

The growing labour and skill shortages across the economy of the United Kingdom are fundamentally down to the explosion of the UK’s demographic time bomb. The UK has an ageing population with an ageing, shrinking, domestic workforce with, just as importantly, an ageing, shrinking, domestic business-owning class.

More people are retiring from the UK labour market at one end than are entering it at the other. Freedom of movement largely defused the UK’s demographic time bomb. Boris Johnson’s hard Brexit, freely endorsed by Keir Starmer’s Labour, armed the bomb and it has now exploded.

Over a decade ago, civil servants as lowly as executive officers in the Department for Work and Pensions (DWP), like myself, were briefing Jobcentre colleagues and external partners across the country about the consequences for the UK labour market of the bomb going off. We spoke in Birmingham and Solihull of matters like recruitment, retention, returners and (mid-life) career switchers in the context of an ageing workforce.

We had a particular interest in encouraging men to consider a career in childcare, at a time when only two per cent of employees in that sector were male. We contrasted that figure with the eight per cent of heavy goods vehicles (HGV) drivers who were female. As an aside, one of the chaps working in childcare in Birmingham had lost his job at Rover in 2005, and he was much happier in his new career than he had ever been in any previous job in his life. When he had left school, men from his class background were expected to go to work in a factory and, in his case, get a job on the track at a car plant.

Just over 12 years ago, as a DWP official, I sat in a meeting at the Queen Elizabeth Hospital in Birmingham with colleagues and National Health Service (NHS) human resources staff. We were told by one of the NHS staff present that nationally they had estimated they would need to recruit one in two of all school leavers at age 16 just to maintain their head count. Today, we have 100,000 unfilled vacancies in the NHS.

I am inclined to snigger when a Johnson or a Starmer talks about not just filling those vacancies, but expanding the total number of staff employed in health and social care in the UK. You cannot train up, say, a UK-based HGV driver workforce in the longer term (in competition, by the way, with every other sector of UK economy facing growing labour and skill shortages) when the people you want to train up in UK were not born in this country 20, 30 or 40 years ago.

It’s not the only solution, but the most significant answer to the UK’s demographic problem, in the short, medium and long term, was and remains, foreign-born labour to substitute for the native-born workers who were never born. Alternatively, the population of the UK will have to accept a poorer standard of living for the foreseeable future.

Unsurprisingly, this was an aspect of Brexit that the Leave Campaign avoided mentioning during their campaign in 2016. Instead, we were promised all the benefits of the single market, even when we were out of the club

Freedom of movement in a labour market made up of 32 states (now 31, with us outside), worked to mitigate the effects of the UK’s demographic time bomb – effectively, it defused it. That explains why ending freedom of movement is largely responsible for creating the labour and skill shortages which the UK economy now faces.

There was a straw in the wind as to what might happen.

According to Markit monthly industry surveys as far back as mid 2017, even with migrants in the mix (cue groan at niche pun), the demand for labour in UK construction was exceeding its supply.  This shortage was forcing employers to raise pay, terms and conditions as they competed for scarce labour and skills. Yet, in 2021, Starmer and Johnson talk about building back better or similar.

From where will they recruit sufficient bricklayers, electricians, plumbers, roofers, labourers, carpenters, plasterers, surveyors, architects – and HGV drivers –  to try to make their visions a reality? The labour market problem is decades old. The key policy solution was migration and, courtesy of the single market, we had a relatively hassle-free process of moving between countries for work and to set up or take over existing businesses.

The negative consequences of a hard Brexit and, specifically, the end of freedom of movement on business formation and ownership in the UK has yet to really surface in the debate. Some businesses are seeing a downturn in sales into the EU as the volume of paperwork that is a consequence of being outside the single market diverts time and focus away from the business of making money. Other companies may well close, because a business model designed for being in the single market and customs union is no longer viable in the new reality.

And, courtesy of the demographic time bomb, some businesses will cease trading, because their ageing and/or infirm owners cannot be asked to bother with dealing with all the new forms etc, particularly after twice having had to cope with the stress of preparing for threatened no deal Brexits and coping with Covid.

It is a fairly standard storyline in Endeavour or Midsomer Murders: the older generation bemoaning that their offspring are not interested in taking over the family business. In 2021, it is not unusual to find that those offspring were simply never born. And in 2021, there are also fewer migrants to whom one might sell one’s firm than was the case a few years ago.

Freedom of movement provided migrants who were able to buy businesses from UK company owners, retiring from business for one reason or another. Migrants also set up new businesses in the UK. How many migrants who set up new enterprises or bought existing ones in the UK, courtesy of freedom of movement, will now remain in the UK and, if they decide to leave to whom will they sell their businesses? Some businesses are taking on new staff to handle the paperwork now required for them to continue exporting to customers in the single market. As many of those jobs have been created just to try and maintain sales, not increase them, they eat into the bottom line, reducing a company’s profits.

The key stakeholders back in the 2000s knew that migration was the most significant answer to the demographic time bomb and still do. However, I detect a degree of panic, even a few displays of cognitive dissonance, amongst some informed people as to the consequences of admitting where things are headed whilst Priti Patel remains Home Secretary. Her unique selling point in any future Tory leadership race in which she may choose to take part will be her stance on (im)migration.

The obvious and only major practical policy solution has to be a replication of freedom of movement and, in particular, the ability to put down roots in the UK so as to live and work here:  not just to be treated as unwelcome, but necessary guest workers, brought in as and when, with Cinderella-style work visas.

The approach the Government is adopting towards issuing emergency three-month visas will only make working in the UK attractive to those who are desperate for work and not especially competent. They may be unaware of the toxic environment that has been created in the UK since 2016, not just for migrants and immigrants, but Black, Asian and Minority Ethnic people born and brought up here, too.

Beggars, of course, cannot be choosers so recruitment standards may have to drop, if all the visas the Government is planning to make available are to be used by employers between now and midnight on 24th December.

Patel will not tolerate any resurrection of freedom of movement. Neither will Labour, according to Rachel Reeves. Incidentally, Reeves’ policy of buy, make and sell more in Britain (to boost British exports!) might, if enacted, drive a further wedge between the UK and the EU, as well as antagonise the USA and most other trading nations around the world. When will the dictatorship of the dwindling number of hardcore Leave voting, Britain First (really England First) fanatics end, given it has to date, survived two General Elections since 2016?

When will Conservative and Labour politicians speak truth unto what now amounts, in 2021, to a minority of the electorate?

This article first appeared as ‘The ramblings of a former DWP civil servant.