6 Level of the cap
73. The Migration Advisory Committee has been asked
to recommend the level at which the limit should be set for the
first year of operation of the permanent cap, 2011-12 only. The
Minister confirmed that "the annual limit will be changed,
as it is in America or Australia".[104]
The Government has asked the Migration Advisory Committee to take
into account "the overall policy objective of reducing net
migration to the tens of thousands over the lifetime of this Parliament"
and "the balance between the economic, social and public
service impacts of migration".[105]
The Migration Advisory Committee consultation noted that:
If the Government wishes to be able to report
that the official measure of net migration is within the "tens
of thousands" range by the end of the Parliament, that will
need to be demonstrated by reference to figures available at that
point. Under current reporting schedules, LTIM [long-term international
migration] data available at the end of the current Parliament
in May 2015 will refer to the calendar year 2013. This may have
consequences for our consideration of the objectives and trajectories
for net migration and annual flows through the [Points Based System].[106]
We wrote to the Immigration Minister to clarify whether
it was his understanding that the Government's aim in practice
was to bring the level of net immigration down to the tens of
thousands within three years (2011-13).[107]
The Minister replied "that is not the Government's objective".[108]
74. The criteria used by the Migration Advisory
Committee in reaching a recommended limit will be:
- Economic impacts including
those on GDP per head, productivity growth, accumulation of human
capital, inflation and such labour market impacts as employment,
unemployment and earnings:
- Public service impacts on both the supply of
public services (through the labour of and taxes paid by migrants)
and the demand for them (through migrant use);
- Social impacts including congestion, crime, the
housing market and social cohesion; and
- The time, cost and policy implications of accelerating
any required up-skilling of UK workers to replace migrants, and
the feasibility of other alternatives to migrant labour, including
paying higher wages to some workers, increased mechanisation and
the use of new technology.[109]
75. Professor Metcalf explained that, whilst the
Migration Advisory Committee had been asked to "suggest a
given reduction in the numbers coming in under Tier 1 and Tier
2", it did not know "at this stage how the UKBA will
decide to allocate the remaining visas and therefore where the
reduction falls".[110]
The UK Border Agency was consulting in parallel about whether
groups such as dependants and intra-company transfers should be
included in the cap. Professor Metcalf said there was not a good
way to assess the impact on different sectors of the economy and
different regions until the cap was in place and its impact could
be assessed. The Government will be reviewing the cap from year
to year to evaluate its effects on sectors and regions and make
necessary adjustments.
76. Since its consultation was still underway
during our inquiry, the Migration Advisory Committee was unable
to indicate the level at which the permanent cap on non-EEA economic
migration might be set, and consequently we were not able to examine
the implications of specific numbers. We did, however, receive
representations concerning the effects caused by the temporary
cap—set at a 5% reduction to Tiers 1 and 2 on the previous
year—and discuss these by way of illustration.
77. If the Government is to be judged on its success
or otherwise in reducing net immigration to within the 'tens of
thousands' within this Parliament, given the current basis of
compilation the figures on which it will be assessed in May 2015
will be an extrapolation from data available for the calendar
year 2013. We recommend that the Government make explicit the
basis on which it will calculate this extrapolation.
78. Giving evidence in July, the Minister was of
the view that "the temporary cap will not have very much
effect. We have deliberately set it so that it will not cause
any damage".[111]
However, witnesses told us that the way in which the level of
the temporary cap had been determined had caused difficulties
for some businesses, and hampered fledgling business growth. Although
the actual limit set was only a little below the previous year's
total (a 5% reduction), it had been set by comparison with a period
of recession and "during the summer months when recruitment
is often at a low".[112]
The Law Society was critical that "the interim limits have
caused chaos for City legal businesses. The interim limits were
set just below immigration usage levels during the recession.
Businesses now seeking to regenerate are unable to recruit the
staff they need to compete for international work".[113]
79. Ms Barrett-Brown of the Immigration Law Practitioners'
Association told us that 50% of small sponsors of Tier 2 visas
had been given a zero allocation under the interim cap, and "those
employers who use quite a number of certificates of sponsorship
have had a 5% to 50% reduction".[114]
She added:
From 19 July my firm [was] inundated with panicked
phone calls from sponsors who had suddenly received letters saying
that they were having their entire allocation withdrawn.[115]
However, Tata stated that the temporary cap had not
had a negative effect on its business,[116]
whilst the Chartered Institute for Personnel and Development stated
that the temporary cap had had an impact on only "a small
minority" of its members.[117]
In both cases this was because intra-company transfers were excluded
from the temporary cap.
80. The 5% reduction imposed under the temporary
cap seems to have had an unpredictable effect across various sectors,
hitting small businesses particularly hard. Our witnesses argued
that the limit had been based on a figure taken during the previous
year's recession, and had been applied with little notice. We
caution that these difficulties should be mitigated in setting
the level of the permanent cap, and the limits should be calculated
on the basis of a considered assessment of need as well as prior
use of certificates of sponsorship.
81. The Migration Advisory Committee has been
asked to propose the numerical limit for the permanent cap before
the Government has determined which groups will be included in
the cap and how limits will be applied to different sectors of
the economy. This has reduced the Migration Advisory Committee's
ability to predict the effects of the cuts on different economic
sectors and geographical regions, although Professor Metcalf stated
that it would still be able to note in its report what some of
the potential consequences would be for different sectors and
regions. He also noted that the Migration Advisory Committee would
review the cap and its effects each year to improve its operation.[118]
It is important that the Migration Advisory Committee provides
different options for what may emerge from the UK Border Agency
consultation so that the Government can tailor the figures of
the final design of the permanent cap. We await the publication
of the results of both consultations, and urge the Government
to ensure that the limit is delivered in a joined-up way.
104 Q 46 Back
105
Consultation by the Migration Advisory Committee on the level
of an annual limit on economic migration to the UK, July 2010,
para 1.3 Back
106
Ibid., para 3.15 Back
107
Ev 74 Back
108
Ev 75 Back
109
Consultation by the Migration Advisory Committee on the level
of an annual limit on economic migration to the UK, July 2010,
paras 3.2-3.4 Back
110
Q 168 Back
111
Q 45 Back
112
Ev 52 Back
113
Ev w43 Back
114
Q 202 and Q 208 Back
115
Q 203 Back
116
Q 184 Back
117
Ev w23, para 8 Back
118
Qq 164-172 Back
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