Politics: a divergence of interest

By Richard North - June 30, 2021

You would have thought by now that it was fairly well recognised that immigration as a means of resolving labour shortages is at best a short-term fix, with the potential to cause more problems than it solves.

The classic example was bringing the Kashmiris, where industry took the short-term advantage, without solving long-term structural problems, socialising the on-costs which the nation and local communities have to bear, while creating social tensions which, if anything, are increasing.

And yet, here we go again, with the Confederation of British Industry (CBI) calling for the government to relax post-Brexit immigration rules to help companies struggling with staff shortages to hire more workers from overseas. Failure to act, it says. will put the UK’s economic recovery from Covid crisis at risk.

In partial recognition of fact that immigration isn’t the magic bullet, though, the CBI is at least saying that employers need to invest in the skills of the domestic workforce, and should take a chance on jobseekers who might otherwise be overlooked.

However, it adds, the government urgently needs to look again at its post-Brexit immigration policy “to prevent chronic skills shortages” from undermining the UK’s economic recovery from Covid-19.

The organisation calls in aid the pressure it says which is mounting on hauliers, hospitality venues and the food and drink industry, citing logistics organisations which have warned that chilled food will struggle to reach some shops this summer because of a lack of drivers and production workers.

But what does not come over from the legacy media coverage is that this “initiative” is very much the brainchild of CBI president and one-time Tory donor, Lord Bilimoria, with the details culled from his speech to the Recruitment and Employment Confederation’s (REC) Annual Conference.

There, he complains of a “perfect storm” of factors coalescing, where many workers from overseas have left the UK during the pandemic, only for the UK’s immigration system is also a barrier to hiring people from overseas to replace those who may have left. Skirting quickly over the things employers can do themselves to tackle staff shortages, he then tells us of the two big things the government can do straight away, “with no regrets”.

The first, he says, is for the government immediately to update the “Shortage Occupation List”, adding certain roles to that list, for instance butchers, bricklayers and welders, enabling businesses to hire from overseas, including workers for jobs that aren’t highly skilled, but have good salaries.

His second “big idea” seems to be eminently sensible. Bilimoria wants government to align immigration and skills policies and enlist two government schemes, the “Lifetime Skills Guarantee” and the “National Skills Fund” to help people gain the skills for those jobs on the shortage occupations list.

He also wants to build on the industry-funded apprenticeship levy. This, he would like to see transformed into a “Lifelong Learning” levy which would help companies fund the training they need – like short-courses, and product training – with a system that works for the modern economy.

Call me cynical, but we have seen various iterations of industry-funded training schemes since the Second World War and, for a variety of complex but understandable reasons, they simply haven’t worked. They are unlikely to do so now.

As for government support for training – such that it is – this is already on its way, set out in the white paper published last January. That, for better or worse, is all we are going to get and the mixed reviews point to systemic problems which are going to make delivery difficult and uncertain.

But, with that already in the bag, so to speak, the only new initiative of substance that Bilimoria is proposing is the relaxation of immigration controls. The training is already “priced in”. On that basis, his call to foster skills in the domestic workforce looks more like cover for the real agenda – increased immigration.

Certainly, in the real world, the two policy arms – ostensibly complementary – are mutually incompatible. As long as employers are able to resort to bringing in cheap labour from overseas, already trained to the required level, industry has no incentive to invest in costly training schemes for domestic workers.

On the other hand, overseas workers – who tend to be more prepared to tolerate poor working conditions and for lower wages – undermine the employment market by making it less attractive for local workers to train or apply for the jobs which are available to them.

Perversely, therefore, the very fact that a job is on the “shortage occupations list” will deter both domestic training and domestic applicants. The only way to drive domestic recruitment is to allow shortages to drive up wages, force improvement in working conditions and incentivise investment in training.

Since this dynamic is hardly rocket science, it is worth asking why the CBI should be promoting a two-track solution to the skills crisis which is so obviously set to fail. And here it is worth looking in a little detail at its promoter, Lord Bilimoria.

The noble lord, as he is now, is a British Indian born of a wealthy family in Hyderabad, India. Schooled initially in India, he moved to London to qualify as a chartered accountant and then read law at Cambridge University, graduating in 1988.

His great claim to fame though is as co-founder of Cobra Beer, produced in Bangalore, India, by Mysore Breweries and imported into the UK. From a standing start in 1989, by 2007 his beer was being sold in over 45 countries, with an annual revenue of £30 million.

modest donation to the Conservative Party (that we know of), obviously did not harm his career for, after an award of a CBE in the Birthday Honours in 2004, he was appointed a life peer in June 2006.

In 2009, however, his Cobra Beer enterprise was forced into administration, but not before Bilimoria had negotiated what is known as a “pre-pack deal”, which enabled him to go into business with the US-based Molson Coors Company. This delivered him a multi-million annual dividend income, but left his 340 shareholders with losses of £71 million.

Although Bilimoria pledged to repay his debts, by 2019, when he was being groomed to take over the presidency of the CBI, The Timesreported that families who had ploughed their savings into his business were still waiting for their money back.

The situation had not dramatically improved by January 2021, when some creditors were still waiting to be reimbursed, with one saying that he had been “burnt alive” while the peer rose from the “ashes like a phoenix”.

Although Bilimoria said in 2019 that he was doing his “utmost” to pay back creditors and would do so for “as long as it takes”, The Times reported that creditors with insurance policies had been excluded, even though such policies typically pay out only a percentage of claims, leaving many out of pocket.

This is the calibre of the man that the CBI now deems fit to represent it on matters such employment, training and immigration. And, in the latter area, Bilimoria has form which pre-dates his CBI presidency.

In February 2014, he spoke in the debate on the Immigration Bill, complaining about the government’s “madcap immigration cap policy” which targeting bringing down the immigration level “to the tens of thousands”. This, he declared, “is shooting ourselves in the foot”.

The irony of an immigrant, speaking in the House of Lords, criticising the government for seeking to limit immigration, should not pass us by, but Bilimoria also wanted to see a continuation of post-study work permits for non-EU students, despite the wholesale abuses in the system.

Finishing off with a peroration about “the amazing contribution that immigrants have given to this country”, he declared that: “We would not be where we are without the contribution of immigration” – a sentiment that might have brought wry smiles to the lips of his creditors.

In his statement, however, Bilimoria displayed an inherent bias in favour of immigration, one that he has consistently displayed over a long period.

This is no bad thing in itself, but it frames him as an advocate for increased immigration. It removes any claim he might have to be speaking objectively, when it comes to the optimal policy to address labour shortages.

And, as a man whose financial history shows up a certain gap between word and deed, one is entitled to treat his pronouncements with more than a little scepticism.

As to the CBI, this intervention in the immigration debate is more self-serving than it is helpful. The “captains of industry”, as always, are looking after their own interests. And, as we have seen so often before, their interest and the interests of the nation are not always the same.