Immigration Cap - Home Affairs Committee Contents

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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