Examination of Witness (Questions 141-183)
PROFESSOR DAVID
METCALF
7 SEPTEMBER 2010
Q141 Chair: Could I call the Committee
to order and welcome Professor David Metcalf to the dais? Could
I refer all those present to the Register of Members' Financial
Interests, where the interests of Members of this Committee are
registered? Could I declare a particular interest? My wife is
an immigration solicitor and a part-time judge. Professor Metcalf,
the Committee is in the middle of its inquiry into the immigration
cap and clearly the Migration Advisory Committee, commonly known
as the MAC, is extremely relevant as far as the Government is
concerned in respect of these matters. Do you think that it's
something of a failure of the MAC that the Government has had
to suggest a temporary cap? If you look at the reasons why the
Migration Advisory Committee was set up, it was to advise the
Government on numbers, shortages and skill shortages. Had that
been working, perhaps the new Government wouldn't have needed
to have had the cap that it has imposed.
Professor Metcalf:
No, I don't think that at all, Chair, if I may say. First of all,
the Government sets our agenda. We don't go off and decide what
it is that we would wish to investigate. It's agreed across Government
and then we are asked to investigate particular things further.
The only areas that we've ever worked on have been to do with
the area of work, and the fraction of people coming in, if you
use the International Passenger Survey figures, for example, accounted
for by work has substantially fallen. I mean, the numbers in the
International Passenger Survey in the work routes have fallen
from about 110,000 in 2004 down to about 55,000 presently; that
is to say the main people, not the dependants. So, no, I don't
think it's in any sense a failure of the MAC, if I may say. No.
Q142 Chair: So why do
you think they bought it in then?
Professor Metcalf: Why did they
bring the limit in? Well, the election and prior to that showed
a general concern with levels of immigration and it is the case
that net immigration has risen. In 1994-95 it was indeed in tens
of thousands but net, as we know from last week, went up to 196,000
in 2009. So it seems to me legitimate that the numbers should
be looked at and the public concern taken into account. However,
one has to recognise that the levers under control are, of course,
the non-EU immigration. The way that I've often said this in terms
of the main work that the Migration Advisory Committee has been
doing, including the present investigation, is one thinks of it
as a 3 x 3 matrix. You've got three routes in; you've got work,
study and family. You've got three groups: British, EU, non-EU.
So you've got nine cells and we're only dealing with one of those
cells.
Q143 Chair: Yes. But the temporary
cap has a number. The permanent cap, as yet, has no number and
you've been asked to advise the Government on what you describe
as "achievable but nonetheless challenging" as far as
your work is concerned.
Professor Metcalf: That was in
the consultation document, I think. Yes.
Q144 Chair: Right. Have you been
asked to recommend a certain number for the permanent cap or just
give advice generally? Will you actually be saying to Damian Green,
"I think it should be 50,000 or less"?
Professor Metcalf: Yes. I don't
mean to be convoluted but the way of trying to address that question
is somewhat complicated. First, we've only been asked to do a
number for the first year of operation but you can't do that without
in fact thinking, where do you start from, where do you want to
end up in 2014 and what is your trajectory? So we will be discussing
all of that but we will be coming up with a number for 2011-12.
It is just possible we may offer two options. I'm happy to elaborate
on why that would be but it may be that some extra thought is
required before we do that. But I would emphasise, as always,
we're only making the recommendation and it's up to the Government
whether they accept it or not.
Chair: We will come back to a number
of aspects of that. Mr Huppert?
Q145 Dr Huppert: Thank you, Chair.
I found your description of that nine-way grid quite interesting
and the description of the numbers. Firstly, you are presumably
aware that, according to the Office for National Statistics and
the IPS data, for non-EU economic migrants, for the last year
where they have data, there was net emigration. I think the figures
that they gave to me in a written question on 28 June were 66,000
in and 74,000 out. Do you think it makes sense to be talking about
a cap on those coming in or looking at the net flow?
Professor Metcalf: The net flow
is quite difficult because, of course, you get people coming in
as students and going out as work. It's somewhat challenging to
marry those numbers up, in fact, to get the net figure. On the
assumption that the Coalition Government agreement is to go for
the tens of thousands, then work has to play its part in this.
But I would have to emphasise that so has students and, I guess,
so has family as well, because if students and family don't take
their proportionate share, then work, which is itself the smallest
of the three fractions, will have to take a more than proportionate
share. So I do think that it's absolutely right to look at work,
but I couldn't emphasise too strongly that the student route and
the family route will have to take their share, although I would
emphasise it doesn't have to be only working on the inflow. You
can also be working on the outflow to get the net down.
Q146 Dr Huppert: But will you be
looking at the outflow figures as well, because they ought to
be related to what you would want as an inflow?
Professor Metcalf: Yes, we are.
I was thinking I would say something a little bit later in some
detail about that but I'd be happy to deal with it now.
Chair: You can if you do so briefly.
Professor Metcalf: You can operate
on the outflow of work to get the numbers down as well as operating
on the inflow. The difficulty with operating on the outflow in
the short term is that probably many of the people who are here
have what sometimes they refer to as legitimate expectations of
being able, for example, to extend or to settle—because
the way that you work on the outflow is influencing the duration
of the stay. That would be things like weakening the link between
work and settlement; possibly on the post-study work route making
that more selective, for example. Frankly, I don't think that
it's likely that these policies would kick in, even if you were
to introduce them now, until 2013-14. So I think in the initial
period—this year, for our recommendations the following
year—we're going to have to be making recommendations dealing
with the inflow of work but while simultaneously addressing a
number of considerations that the Government may want to think
about to address the problem in the longer term.
Chair: Thank you. Mary Macleod?
Q147 Mary Macleod: Yes, thank you,
Chairman. Professor Metcalf, I just wanted to touch on the tier
2 numbers. The Government is consulting on merging the current
resident labour market test route with the shorter occupation
route for those occupations that, of course, are in short supply.
Can you give us a feel for what you think is the most important
route in terms of the numbers of migrants involved?
Professor Metcalf: Yes. Within
tier 2 those two—the resident labour market test route and
the shortage route—are the small fry compared with the intra-company
transfers. So if we take out-of-country numbers, visas issued,
and exclude dependants we're talking a total of about 9,000 in
2009 of which two-thirds is the resident labour market test and
one-third is the shortage route. So the numbers coming in through
these routes are quite small. I think that the shortage route
is, in a sense, a very important one and we have done quite a
lot of work on defining the shortage occupation list, which is
now much smaller than it was when we started two and a half years
ago. But that provides a good safety valve, particularly in a
time of limits. So I think that one wouldn't want to lose the
shortage occupation route. The resident labour market test route
is really a very important one, particularly as it happens for
health and education where there's no national shortage but maybe
there's a shortage of teachers in London, health care workers
or nurses in a particular area. That provides an important route.
So, for what it's worth, speaking personally and also on behalf
of the Committee, we don't think that the potential proposal to
merge those two routes is something we would be in favour of.
Indeed I'll say it the other way round; we're not in favour of
it.
Q148 Mary Macleod: And what's the
process in terms of defining what those limits should be?
Professor Metcalf: We are going
through the consultation process and through our own modelling,
a long mechanism to go from the International Passenger Survey
numbers to the visa numbers, and then partly through the consultations
to see whether any reduction should mainly fall on tier 1 or on
tier 2. And then when we get to the overall reduction we will
make suggestions concerning the shortage route, the resident labour
market test route and the intra-company transfer route. But it's
the nature of these things that the intra-company transfer route
will have to take the lion's share of this because the other two
are absolutely rather small.
Chair: David Winnick?
Q149 Mr Winnick: Professor Metcalf,
you are a well-known and distinguished figure in the academic
world. Can I ask you what experience you have on immigration?
You were appointed to this Advisory Committee as chair. Do you
have any day-to-day knowledge of immigration or any reasons why,
as far as you know, you were chosen apart from your distinguished
academic self?
Professor Metcalf: My grandfather
was an immigrant, but thank you for your kind initial remarks.
No. I think that when the Committee was appointed it was an economics-based
committee and they were very keen to have a labour economist,
somebody who knew about the labour market, to be the chair of
it, and certainly in the first couple of iterations when we were
mainly dealing with the shortage occupation list, this was important.
To the extent that your question is, very reasonably, "Well,
now we have been asked to range a bit wider than just the economic
material into the social and public services", I'm not personally
an expert in that. We have some people on the Committee on that,
but I can talk in detail about the consultations on that if you
would like.
Q150 Mr Winnick: You see, I ask that
question in all seriousness because, as you will know, in the
election in May immigration was a very hot potato, not going into
the pros and cons. Certain elements exploited it, particularly
one notorious political organisation which didn't make any headway
fortunately, far from it. But people may well ask in the country,
who feel the impact of immigration, whether those like yourself
and your colleagues understand what is happening on the ground.
How would you respond to that?
Professor Metcalf: Yes, I think
that we do. I mean I don't live on a council estate in Green Lanes
in Haringey, which would probably give me a better feel, in a
sense, for the underlying life led by many immigrants and any
tensions in the community. But in terms of knowing some of the
literature on issues like the role of immigrants in the public
services, health and education or the role in terms of housing,
I know that we've undertaken a huge consultation exercise with
the relevant Government Departments, the various local authorities
and the academic authorities on all of this. But, no, I suppose
that in answer to your question, I live a privileged quasi-academic
life and I don't know, on the ground, the particular way in which
immigrants live. But I go around with my eyes open.
Q151 Mr Winnick: Thank you, Professor
Metcalf. I think that is a very satisfactory answer. You're consulting,
apparently, on the impact of limiting new immigration and placing
restrictions on existing migrants, whether they should be able
to stay longer or switch their particular category within the
points system. That is taking place now, is it?
Professor Metcalf: The consultation
has just finished and we will be reporting to Government by the
end of this month. The point about the particular issue that you
raise there is for me to re-emphasise that one can achieve the
limit, the tens of thousands, over the lifetime of a parliament
by working on the outflow as well as working on the inflow. That's
the key point of that feature of the consultation.
Q152 Mr Winnick: And you're reporting
accordingly to the Home Secretary?
Professor Metcalf: Yes.
Chair: Thank you, Mr Winnick. Lorraine
Fullbrook?
Q153 Lorraine Fullbrook: Thank you,
Chairman. Professor Metcalf, I'd like to explore a bit about the
dependants of migrants; particularly on tier 1, the highly-skilled
migrants, and tier 2, skilled workers with a job offer. How many
visas go to actual workers of tier 1 and tier 2 and how many actual
visas go to their dependants?
Professor Metcalf: The ratio is
of the order of 10:9 and 50,000 visas go to the main people.
Lorraine Fullbrook: Tier 1 or tier 2?
Professor Metcalf: Which is split
two-thirds tier 2, one-third tier 1.
Q154 Lorraine Fullbrook: And that
50,000 does not include dependants?
Professor Metcalf: Correct.
Q155 Lorraine Fullbrook: Do we have
any figures on the dependants for the tier 1 and tier 2 split?
Professor Metcalf: No, we don't.
They're aggregated. If I may, Chair?
Chair: Yes, of course.
Professor Metcalf: They were just
recently published. I mean we can get you these figures. However,
in rough and ready terms the ratio is of the order of five main
people, four dependants, and it doesn't vary all that much between
them. It's slightly higher for tier 2 than it is for tier 1.
Q156 Lorraine Fullbrook: And do you
think this balance is currently sustainable, given the policies
that the Government wants to introduce?
Professor Metcalf: Now, that's
a really good question. We've agonised about this issue because
by definition in a cap world a dependant displaces a worker and,
therefore, it raises very delicate issues. I don't think that
one wants to be saying to people, "Well, you can't bring
dependants". Indeed it would almost certainly be not lawful
to say something like that but you have put your finger on something
which raises a difficult issue.
Q157 Chair: That is a different issue.
What is the answer to Ms Fullbrook's question? Is a dependant
going to displace another person who would be eligible under the
cap?
Professor Metcalf: Yes.
Chairman: They will?
Professor Metcalf: They can't
not do. Let's start it off. The dependants are in the International
Passenger Survey figures.
Chair: Yes.
Professor Metcalf: Okay. So to
reach the tens of thousands from the hundreds of thousands, you've
got to be thinking about dependants. You cannot leave them out
of the equation. Now, when you do your cap, you can do it on the
main people and assume that the ratio will be five main and four
dependants, or you can do in total and include the dependants.
Chair: But the current temporary cap,
just to help this Committee, we're talking about a temporary cap
of 24,000.
Professor Metcalf: That's excluding
dependants.
Chair: Excluding dependants. But on the
permanent cap you need to address the issue of dependants, as
Ms Fullbrook has said.
Professor Metcalf: If I may, Chair,
you can do this in two ways. In a sense it's a matter of arithmetic.
If you have 20,000 main people and 18,000 dependants, you can
operate the cap 20,000 main or 38,000 in total.
Q158 Chair: Just to advise the Committee,
how many dependants are people able to bring in? Their spouses,
clearly.
Professor Metcalf: Spouses and
children. It counts under this, yes; under tier 1 and tier 2.
Chair: Yes. Spouses and children under
which age?
Professor Metcalf: Sorry, I don't
know the details of that.
Q159 Chair: So does your research
show you for each person who has a permit to come here, who qualifies
under the points-based system, how many dependants each person
brings in?
Professor Metcalf: That's what
I said. The ratio is of the order of five main to four dependants.
Chair: Right. Ms Fullbrook, did you have
something else?
Lorraine Fullbrook: I'm fine.
Q160 Chair: The other issue, of course,
is whether dependants can work or not. We've had, over the last
few years, the almost ridiculous situation where a student can
only work a certain number of hours but a dependant can work full-time.
Do you have any plans to make any recommendations about that?
Professor Metcalf: Well, we did
investigate dependants in one of our reports last year. We were
persuaded by the evidence that the status quo should hold and
that dependants should come in together with the main points-based
person and that the dependants should have no restrictions on
work.
Q161 Chair: But isn't that a little
daft, that the student can only work for 22 hours but the spouse
can work full-time?
Professor Metcalf: Well, if you're
a student you're supposed to be studying and so the 20 hours restriction
seems quite reasonable. If I may say, when we made our report
previously, of course, we weren't in a world with limits. If you're
in a world with limits it raises the very important issue that
has been raised here about whether the dependant displaces. It
may very well be, for example, and something one might want to
think about—having suggestions on the points-based system—that
perhaps somebody coming with a better qualified dependant would
get more points.
Chair: Julian Huppert.
Q162 Dr Huppert: Thank you. There
are a lot of very interesting things. I'd love to know exactly
what you're going to be recommending but assuming that you can't
tell us that quite now, can I at least ask if you have looked
at all the responses that you've had from the consultation?
Professor Metcalf: Some of them
but a lot came in in the last two or three days.
Dr Huppert: I'm sure. We have also had
a number of witnesses, people who have sent in written comments,
and I've certainly had a lot of contact from companies and individuals
in my constituency. The tenor of the comments so far—this
is broadly summarising—is people having a lot of concerns
about the cap, and certainly companies in my constituency expressing
great concerns about both the short-term and the long-term one,
particularly companies that are internationally facing, academic
institutions and so forth. Would that be a fair summary of the
responses that you've had to your consultation or are you getting
a different picture from the people who write to you from the
people who contact us?
Professor Metcalf: I thought your
choice of words was very gracious. We've met, between us on the
Committee and the Secretariat, over 1,000 companies and various
stakeholders. The companies, by and large, are rather hostile
to the idea of a cap, which, of course, raises interesting questions
on the balance of any restriction between tier 1 and tier 2. I
don't know about the things that have come in just recently. We
have not had a single piece of evidence really suggesting that
tier 1 somehow should be protected—the people coming in
without a job offer. In a sense it's not surprising because, of
course, it's the Chinese nuclear physicist—she's coming
in, as it were, from China, so you're not going to get lobbied
in that way. But it does suggest that, in a sense, the employer-led
tier 2 is the one probably that requires the greatest protection.
To elaborate a little bit on the same concerns as you have had,
obviously the Department of Health and Department for Education
are concerned about the resident labour market test route, but
the main thing is on the intra-company transfers. Banks and consultancy
companies often say, "We've got zero net immigration so why
should it affect us?" I was at the Japanese Embassy last
week; the companies there were very hostile, "We provide
huge foreign direct investment. Are you saying that it may be
difficult for us to get our people in?" What a couple of
people have pointed out is that we've got 353 occupations—you
know, the way that the occupations are classified—and one
of those occupations, which is software engineer, accounts for
half of all the intra-company transfers. You may want to pursue
this with the next people who are up, but this is something we
shall be pursuing in our report.
Q163 Dr Huppert: But does this not
run the risk of putting you in a very difficult position? It seems
to me that you're saying that there is a drive from aspects of
Government to say the numbers should be low and a very strong
public drive to say that's not how it should be driven. How will
you balance the difference between the public consultation and
the Government steer to take account of the fact that there's
little point in having public consultations if one doesn't pay
a lot of attention to them?
Professor Metcalf: That's a really
good point. I mean we shall do as we, in a sense, always try to
do, which is to be both transparent and independent. But, of course,
the question we have been posed by the Home Secretary, a cross-Government
question as it were, is, "Tell us the contribution that work
routes should make to getting immigration down to tens of thousands".
But we shall reflect in the report that the general tenor of the
evidence to us was not in favour of the caps, particularly on
tier 2. We shall reflect that. We are tasked with a very specific
thing, which is to say what the non-EU work routes can do as a
contribution. We've got to go ahead and do that, but we shall
report the tenor of the evidence that we have from the stakeholders.
Chair: Thank you. Alun Michael? The impact
of the cap on sectors.
Q164 Alun Michael: Thank you. What
is the evidence of the impact of the cap on specific sectors of
the economy?
Professor Metcalf: We don't know
that yet because we haven't had the cap, but if one were to speculate,
say, for example, that in recommending numbers to get to the tens
of thousands and, therefore limiting, we make some suggestions
about making the tier 2 more selective, which we'd be minded to
do—the selectivity is an important point—this could
raise very difficult issues for the Department of Health and the
Department for Education because it could very well be that some
teachers and some nurses would then find it difficult to meet
the points criteria. So that would be one area by sector.
Q165 Alun Michael: But, forgive me,
that isn't evidence of an impact on sectors. In order to inform
the Government, isn't the Government going to need to know which
sectors are going to be most vulnerable and, therefore, the economic
impact on different sectors is quite a crucial issue?
Professor Metcalf: Absolutely.
What I'm saying is as we haven't yet had the cap—it's only
been operating for a little time and the permanent one hasn't
come in—it's difficult to adduce the evidence at this stage.
I was just speculating that that would be one area. But the other
area, pursuing my point about intra-company transfers, is it would
be very difficult to introduce the limit on the work without somewhat
reducing the numbers of the intra-company transfers and that implies
a reduction in terms of the workers coming in to do IT, who are
60% of the intra-company transfers.
Q166 Alun Michael: I understand that.
The second issue about the way the impact falls is that of geographical
areas. Do you have any evidence on whether the impact of a cap
is going to be greater and concentrated in particular areas of
the country? Have you looked at that?
Professor Metcalf: Again, because
we haven't had the cap, that can't be done automatically, but
it's quite clear that it would fall disproportionately on London
and the south-east because this is where the main group of people
who are coming in under tier 1 and tier 2 are located.
Q167 Alun Michael: But isn't there
an issue and doesn't your advice have to reflect the fact that
there are one of two things that can happen: either the Government
will have rules that make distinctions about different sectors
of the economy or the impact on different parts of the country,
or there is nothing and you merely describe the events afterwards?
As I understand it, your advice has to be about what should happen
and what the implications of different decisions should be, rather
than just waiting until after the event and saying, "Oh,
that's a surprise. That's what actually happened".
Professor Metcalf: You raise a
very important issue. We have not been tasked to do it in quite
the way that you say. All we've been tasked to do is to come up
with essentially a number, possibly a range, in terms of the way
in which the work can contribute to the overall reduction, which,
in turn, contributes to getting down to the tens of thousands.
But we will be pointing out in our report what some of the potential
consequences are and it's clear that if, for example, the Japanese
manufacturing companies were hit, or other manufacturing companies,
or the finance sector was very badly hit, this could have quite
substantial adverse effects for foreign direct investment.
Alun Michael: But you're not able to
predict where those detrimental impacts might fall?
Professor Metcalf: No. This is
a separate consultation altogether by UKBA. We're not deciding
how the visas will be allocated, but we will be making recommendations,
if you're in a capped world, about the points-based system becoming
more selective than it was previously.
Chair: Lorraine Fullbrook has a supplementary.
Q168 Lorraine Fullbrook: Thank you,
Chairman. Professor Metcalf, I'd just like some clarification
of what you've answered to Mr Michael. Are you saying that you
do not have any data that can tell you the number of migrant workers
in certain sectors of industry in the UK and within regions of
the UK to extrapolate your figures?
Professor Metcalf: No. We have
but we don't know where the limits will fall yet, do we?
Lorraine Fullbrook: But in terms of making
your recommendations to the Home Secretary, you must be able to
get that data from other departments and other statistics that
are available.
Professor Metcalf: No, no. We
have, for example, the number of people who would come in to work
in the health sector, say as theatre nurses, in the shortage route.
We have the number of chefs that would come in. We have all of
that, but say that we suggest a given reduction in the numbers
coming in under tier 1 and tier 2, the main ones, we don't know
at this stage how the Home Office, UKBA, will decide to allocate
the remaining visas and, therefore, where the reduction falls.
So I can't predict at this stage where. What we can do is say
that if you raise the earnings thresholds hand-in-hand with the
limits, which might be quite a sensible policy, this could have
an adverse effect, for example, on health or education, or indeed
chefs. Say that you limit it by sector, which is another way that
you might want to do it, this would have almost certainly an adverse
effect on the intra-company transfers coming in for software engineering.
So we will certainly say that sort of thing, but until we know
where the reduction falls, which is not a matter for the MAC,
we can't.
Q169 Lorraine Fullbrook: But surely
if you are making recommendations on this policy to the Home Secretary—I
am not sure if I have understood you—are you saying you
are not able to make recommendations based on where migrants work,
in which sectors and in which regions? That is what I'm taking
out of this.
Chair: What is the answer, Professor?
Professor Metcalf: That is certainly
not what—
Chair: You have not been given the information?
Professor Metcalf: No.
Chair: You don't know how it's going
to work. Is it going to be an auction? You don't know how many
in each sector? You have no idea, do you?
Professor Metcalf: No, that is
correct, but what we have been asked—
Chair: Is that is correct? You have no
idea how the system is going to work?
Professor Metcalf: Yes.
Chair: So, Ms Fullbrook's question to
you is: if you don't know how the system is going to work and
the UKBA is still consulting and we already have a temporary cap
on, how can you make valid recommendations and representations
to the Government? That is her question.
Professor Metcalf: No, I understand
her question, but in a sense you have to come at it in a different
way.
Q170 Lorraine Fullbrook: You see,
I think you're coming at it from the back end first. You're talking
about the numbers; it depends on the numbers in which tiers. I
suggest it doesn't because you have to start from a basis of where
the migrant workers are working, in which industries and in which
regions. Then it is up to the Government to decide on that information
where the splits are going to be. So that is why I suggest you're
coming at it from the back end first.
Professor Metcalf: In a sense,
that is going back to picking winners. So what you're saying is
that you protect particular regions and protect particular sectors.
Lorraine Fullbrook: But I don't understand
how you can make recommendations without knowing this basic information
first.
Professor Metcalf: I repeat: we
do know where the people work, but what we have to come up with
is recommendations based on the numbers required of the work route
to get it in four years down to tens of thousands. There is a
very delicate issue—I approached it in one way, you're approaching
it in another—which is, who are the people who are valuable?
One way of thinking who is valuable is to do it by earnings—
Chair: No, that is what this tells you;
this is your role. But you cannot do that, as Ms Fullbrook has
said, until you know the mechanism by which this is to be done.
So before you can continue with your work you need to have it,
is that right? Is that what you would like? Would that be helpful
to you?
Professor Metcalf: Absolutely,
but I am assuming that this is an iterative process. We have only
been asked to do the first year.
Lorraine Fullbrook: But the premise still
stands whether you are doing one year or 10 years.
Professor Metcalf: It does, but
then once we've seen how the first year works, including of course
students and families, we will come back to it and, for example,
had the Japanese companies in manufacturing been hit rather badly,
through the UKBA allocation process, we would wish then to feed
that in to the next iteration of this.
Chair: A quick question from Mr Reckless.
Do you have a question?
Q171 Mark Reckless: Yes. The points-based
system: is there not a distinction between having that as a qualifier
and having it as the decider? I think that within tier 1 there
is some suggestion of auctioning a certain category of permits,
but why can't you just use the points system as a qualifier, including
intra-company transfers, and then if someone clears that then
they are eligible, but whether they are allowed to come depends
on what price clears the pool—that is, these companies,
rather than preventing them bringing in person A or person B,
have to pay rather more if they're particularly keen to bring
this person?
Professor Metcalf: One allocation
mechanism, either in whole or in part, is indeed an auction, but
my understanding is that there are various Treasury rules about
the way in which you can do this, not necessarily in the long
term, which don't immediately lend themselves to this. So therefore,
instead of having a money auction, you can in a sense go about
it in the way you have just suggested, which is to auction by
points. In a sense, that is the tier 1 suggestion, the so-called
pool and cap: be very selective and take within, say, a three
month period the best people, that is, the people with the most
points under tier 1.
Chair: We will come on to the role of
the points basis. A very, very brief question Mr Michael.
Q172 Alun Michael: Yes. I think it
would be problematic if we have misunderstood what you said, but
in answer to the questions by myself and Lorraine Fullbrook, as
I understand it, you are not looking at the current patterns of
arrival by sector or by geography and therefore you will not be
able to say to the Government, "If you undertake the cap
in its detail in this particular way, this is the impact that
it would have on this sector or this part of the country".
And surely that is at the heart of your role in advising how the
Government should pursue the cap that it wishes to introduce,
isn't it?
Chair: If you would give a brief answer
Mr Michael's brief question we would be grateful.
Professor Metcalf: Not by geography,
but we will have quite a lot to say about the impact by sector.
Chair: Thank you. Nicola Blackwood.
Q173 Nicola Blackwood: Thank you.
You have mentioned the fact that it is very difficult to assess
the impact because we haven't had a cap yet, putting aside that
is what you are advising the Government on. Surely we can look
at other jurisdictions where they have already introduced numerical
caps and assess the impact that way. So what work have you undertaken
in that route?
Professor Metcalf: We have certainly
looked at some of the different jurisdictions. You know from the
UKBA consultation they are minded to introduce the New Zealand
approach for tier 1, which is this very selective approach. I
think the most informative recent jurisdiction that we can get
quite a lot from is Australia. What Australia has done is it has
essentially changed the focus that it had for 20 years away from
a supply side-based system, where basically people didn't have
to have a job offer and just came to an employer, but by far the
greater area being employer sponsored migrants. That I think is
quite interesting for us in the context of the tier 1 and the
tier 2 because that is the same message that we are getting from
all of the consultation—that we should be protecting relatively
the tier 2 people, the employer led, from the tier 1. The other
major change that Australia has made is in terms of students and
it may very well have lessons, as and when the Government reviews
our student route, for the so-called post-study work route, which
presently is among the most generous particular route in the whole
world.
Q174 Nicola Blackwood: As an MP for
a constituency with two internationally renowned universities
in it, I have received a lot of representations on the potential
impact that addressing student numbers would have on university
funding and other aspects. So are you at this point in favour
of a cap on tier 4 or not?
Professor Metcalf: We haven't
been asked to look at this and I haven't looked at it in detail.
What I would say is—
Q175 Chair: Then what is your personal
view?
Professor Metcalf: I am just about
to give it. What I would say is that, certainly working at another
distinguished university, there is more than one way of skinning
a cat and you can work on the outflow as well as the inflow. I
choose my words carefully: it is not self-evident to me that the
post-study work visa should be available for all 600-odd institutions
which award degrees.
Q176 Chair: If that is the case if
you want people to work after they have finished their degrees,
people will just not come and study here surely? Isn't that the
impact of what you are suggesting?
Professor Metcalf: No, that is
possible; it makes it less attractive. But I go back to my main
point, which is: to the extent of what we have been tasked to
do with work but what the Government says it wishes to do, which
is to get down to the tens of thousands, you simply can't do that
unless you also look at the student route. It is impossible. If
you close down tiers 1 and 2, you still wouldn't get to the tens
of thousands.
Chair: That is very interesting and,
because this is the "University Challenge" section,
I have to ask Mr Huppert to speak on behalf of Cambridge.
Q177 Dr Huppert: Thank you. I am
going to have to vote three well renowned universities, just to
cap that. There is real sensitivity about the issue of students
in my area as well. But doesn't this say that there is a fundamental
problem with trying to set anything up based on a cap on numbers
coming in? You have an issue that there are a lot of students—it
is one of Britain's largest export markets—and a lot of
them come and then go. But if you have any concerns it ought to
be about the steady state and what we don't get much analysis
on is in versus out: people coming in as an export and then leaving
again is very different from people coming in and not leaving.
Now I know there are technical issues but will you be highlighting
that issue of net flow rather than just numbers coming in?
Professor Metcalf: Absolutely,
yes, we will be. As you know, there is the material published
yesterday—I have only been given it today—about immigrant
journeys and interestingly, as it were, although it was reported
one-fifth of students are still here after five years, it is only
one-fifth; four-fifths have gone, which is a much higher fraction
than is the case with work and is the case with family. So working
on the outflow is very important indeed and, yes, we will be highlighting
this. But I repeat that, even if the Government were to make changes
in the policy fairly quickly, I don't think that will kick in
until, say, two or three years' time and therefore, initially,
what one has to work on is the inflow.
Chair: Thank you. We have to move on
because time is getting short. Could I ask for brief questions
and brief responses? Mark.
Q178 Mark Reckless: You mentioned
with the dependants issue the possibility of giving greater points
where dependants had skills, which implies that within the cap
we want as skilled people as possible to come in. In addition,
couldn't you consider perhaps giving points for not having dependants?
Would that be a way of expanding the points there?
Professor Metcalf: We've discussed
various policy options in private. Obviously one would need to
take advice. I think that probably would not find favour with
the lawyers.
Mark Reckless: Yes.
Chair: The lawyers?
Professor Metcalf: Yes.
Chair: Good. On that subject, Mr Reckless.
Q179 Mark Reckless: So who has the
higher skills for dependants would legally be allowed, do you
think?
Professor Metcalf: No, we did
discuss in a previous report that possibility. I mean before,
we weren't in a cap situation and so we said previously that we
should be relaxed about the dependants. We're now in a limits
model, and therefore the dependants loom large and that is why
thinking about extra points for qualified dependants is one possibility.
Q180 Mr Burley: The debate around
immigration often focuses on the quantitative measures and what
is the net, and people coming in and people coming out, although
this morning it has moved away from that, which I'm pleased about.
But for me there is a qualitative side of it and, as you intimated
this morning, if you have students coming in but you have workers
leaving, if you have kind of low skilled and dependants coming
in but you have retired well-off independent people leaving, is
there a net qualitative loss going on in this country, and have
you made any assessment of the effects of what might be called
a "brain drain" or that kind of change in a qualitative
sense rather than just the numbers?
Professor Metcalf: That's a very
interesting question indeed. Implicitly, yes. I don't think we
have ever done this explicitly but implicitly, yes. Essentially,
the points-based system as it operates is raising the human capital
of the British labour market because, by definition, the people
coming in under tier 1 and tier 2 have to be skilled. That means
at least to NVQ 3 level and two A levels and above. There may
be issues about dependants, but that will tend to raise the skill
level and, by and large, the evidence is those people also contribute
favourably to the public finances as well. So the points-based
system, as it has operated thus far, has been important in raising
the human capital. Of course there is always a tension here: if
you permit the employers always to bring the immigrants in without
any limit, then they have less incentive to upskill the British
workforce. So there is something of a tension there.
Q181 Mr Burley: You will know that
the driver behind the cap that was proposed during the election
campaign is largely around the pressure on public services and
the ability of this country to sustain a certain number of people.
Could you give us an idea on how the assessment of what the public
services in a particular area can take will be made, because it
is not clear to me how they decide how many extra patients that
the dentist can take or the hospital could serve and so on, and
the housing as well.
Professor Metcalf: Yes, given
the very limited time we've had to do the work, we haven't been
able to do full justice to this and I'm hoping that it's something
that we'll be able to return to. But in a sense, if you take the
public services, which will be health and education, and then
you take the social, which would be, say, housing, crime and maybe
congestion, one has to remember that on the public services the
immigrants are important suppliers through being nurses and teachers.
The evidence we are getting—in a sense it's not surprising—is
what is absolutely crucial here is geographic mismatch. You get
a surge of people in Slough, or wherever it might be, and then
we as a country get the benefits from this immigration over time
and in a sense the Treasury collects the money, but the local
authority is left to try and deal with the social side. This is
based on the evidence we're getting. It isn't very surprising,
but that seems to be the main evidence on this. There is particular
evidence on housing.
Chair: If you could write to us with
that evidence that would be helpful.
Professor Metcalf: Yes, can I
just say one sentence?
Chair: Yes.
Professor Metcalf: The issue for
us is that you have quite strong evidence for immigration as a
whole. There is no evidence for just tiers 1 and 2.
Chair: Thank you. Bridget Phillipson.
Q182 Bridget Phillipson: Thank you,
Chair. The Government wants to be judged on its success in reducing
the numbers of net migration down to the tens of thousands. For
that to happen by the end of the Parliament, as they intend, the
figures that that will be judged on will be the figures published
in 2013. That will be very swift reduction, particularly in terms
of tier 1 and tier 2. What do you think the economic impact would
be of that, particularly in terms of the speed and the extent
that will be necessary to see that kind of reduction?
Professor Metcalf: That is what
a lot of our report will be about. Yes, you are right. It depends
what number you start off with and it also depends what number
you want to end up with because you can't aim for 99 because then
you have a 50% chance you'll go above 100,000. So you're absolutely
right that the annual reduction implied in the International Passenger
Survey numbers is quite substantial, between 30,000 and 40,000
a year, and then you have to translate that into visas. So it
will be substantial. We are still consulting on this and there
is a very helpful cross-Government group of economists who have
been feeding in information to us. The macro consequences are
probably not large. It will affect GDP but it might be GDP per
head that counts—how well off we are—and the best
evidence is that that's hardly effective at all. It would affect
GDP, and therefore that might have an effect on the public finances,
and that raises a difficult and important issue. I don't think
it would be relevant for inflation; the tiers 1 and 2 are small
beer in terms of the way that the labour market would operate
in the macro sense. I worry more that any reduction could have
an impact in a micro sense. Talking at the Japanese embassy last
week—
Chair: Sorry, but can we conclude on
this?
Professor Metcalf: Fine. I think
that there would be an effect in foreign direct investment productivity
and so on, and this is an area that we're going to report on.
Q183 Bridget Phillipson: So you think
there would be longer term consequences, in terms of the economic
outlook for the country, rather than in the short term? It might
not be felt, but longer term perhaps it may be?
Professor Metcalf: In the longer
term it would be possible to upskill our own people and that can
in due course provide a substitute for immigration.
Chair: Thank you, Professor. If there
are other issues obviously we will write to you about them. There
are some concerns that we have heard of today, so we would be
grateful if you could respond in writing.
Professor Metcalf: Yes.
Chair: Thank you so much.
Professor Metcalf: Thank you.
Chair: Could I call to the dais, please,
Keith Sharp, Som Mittal and Hilton Dawson?
| 
