Immigration Cap - Home Affairs Committee Contents


Conclusions and recommendations


Immigration figures

1.  There is no single source of migration data in the UK. Until exit checks are implemented in the form of e-Borders, it is not possible to count individuals out of the country, and so figures on the inflow and outflow of migrants cannot be matched. Migration is currently measured in several different ways, which are not directly comparable one to another. This can obscure and complicate the public policy debate on immigration, a difficulty which was highlighted by the use of varying sets of figures by different witnesses, and exemplified by the fact that the Government itself is using one set of data for its immigration target (net long-term immigration) but is acting on another set (entry clearance visas issued) to implement a cap. We urge the Government to implement exit checks as soon as possible to ensure that immigrants leaving the country can be matched with those entering it. (Paragraph 12)

2.  The figure of 'hundreds of thousands' of immigrants cited by the Government in respect of its immigration policy objective (see paragraph 1) comes from Long-Term International Migration data and relates to the net number of immigrants entering the UK for a year or longer (immigrants minus emigrants), and includes British and EEA citizens. The latest data show that 196,000 net immigrants entered the UK in 2009. Net long-term migration peaked in 2004 at 245,000 and continued at an annual rate of about 200,000 in the five years to 2009. Data from the International Passenger Survey show that non-EEA citizens consistently make up the majority of net immigrants, but that the overall rise in 2009 was accounted for by a decrease in the number of British citizens emigrating. (Paragraph 13)

3.  in 2008, according to the International Passenger Survey, non-EEA migrants accounted for 52% of all gross long-term immigrants (British, EEA and non-EEA citizens). However, non-EEA immigrants giving 'having a definite job' or 'looking for work' as their reason for immigration accounted for only 12% of all gross long-term immigrants. Amongst non-EEA migrants, economic migration accounted for 24% of those entering the UK in 2008, whereas formal study was the biggest single reason for immigration amongst this group (45%). (Paragraph 16)

4.  International Passenger Survey data (see table 2) shows that in 2008, some 45% (126,000) of all non-EEA long-term immigrants to the UK stated on their arrival that they had come to study; and some 22% (61,000) similarly stated that they came to accompany or join a family member. (Paragraph 19)

Whom will the cap affect?

5.  The net immigration figure—which the Government intends to reduce to 'tens of thousands'—is affected by inflows and outflows of British, EEA and non-EEA citizens. In 2008, British citizens accounted for 15% of gross long-term immigrants, EEA citizens for 33% and non-EEA citizens for 52%. Under EU law the Government cannot limit numbers of British or EEA citizens entering the UK, and consequently can only influence the numbers of non-EEA migrants entering and leaving the country, whilst expecting that natural patterns of British and EEA migration will stabilise over the long term as we have seen with patterns of migration from and back to Spain and Portugal when they joined the EU,[164] and as we are now observing with the A8.[165] The Minister further stated that the impact of any future EU enlargement would be mitigated by transitional arrangements.[166] We recommend that the Government commissions a programme of research better to understand the likely path of British and EEA migration. (Paragraph 27)

6.  As the Government pursues its aim to reduce overall immigration to the UK, it is important that it does not underestimate the impact of immigration routes which it cannot control. We urge the Government not to treat the routes it can control too stringently in order to compensate for the routes it cannot control. (Paragraph 28)

7.  It is possible the Government will need to act to increase the outflow of non-EEA citizens as well as the inflow, probably through policy changes to break the link between certain immigration routes and settlement. However, we note Professor Metcalf's comments that any changes to length of stay, to influence the outflow, would not take effect until 2013-14, and so for the Government to make an immediate impact the inflow is key. (Paragraph 29)

8.  Two different, albeit imperfect, measures of immigration suggest that non-EEA economic immigrants account for less than 20% of overall gross immigration. International Passenger Survey data show that they accounted for 12% of gross long-term immigrants in 2008, and in 2009 the number of visas issued to Tier 1 and 2 immigrants and their dependants under the Points Based System accounted for 17% of the gross long-term immigration total. If Tiers 1 and 2 were to be suspended altogether, this would reduce gross immigration by 17%; and if the cap were implemented at the 5% reduction rate introduced in the temporary cap, the reduction in overall gross immigration would amount to 0.9%. (Paragraph 30)

9.  It is therefore clear from the figures that the proposed cap—unless it is set close to 100%—will have little significant impact on overall immigration levels. Our witnesses, including the Minister himself, acknowledged that the current measures were only a first step in achieving the reduction in overall immigration sought by the Government, and that other immigration routes would also need to be examined. (Paragraph 31)

Impact on business and services

10.  There does not seem to be strong argument in favour of merging the resident labour market and shortage occupation list routes under Tier 2. They serve separate and distinct purposes, the former being a tool to fill specific or regional shortages, the latter a mechanism for recruiting skills in national shortage. (Paragraph 56)

11.  The proposed cap on Tiers 1 and 2 will by definition only affect skilled workers. Tier 1 consists of very highly skilled individuals, likely to make a significant contribution not only to the UK's skills, but also directly to its economy through tax and income spending; and Tier 2 is driven by the business requirements of employers across a range of private and public sector skills shortages. Both private sector businesses and public sector services made compelling arguments—many of which have been well-rehearsed in public debate—about the negative impact a cap on Tiers 1 and 2 will have on their ability to operate, leaving vacancies unfilled unless it is properly designed with business needs in mind. However, we also agree with the evidence given by many employers, that the country should be better training the skilled people we need to reduce the need for immigration in the future, and we believe there is an important role for Government in providing a strategy to ensure that occurs. We note the concerns, expressed to us by eight Nobel prize-winners in science, about the potentially negative effect of the cap on the UK's position of international excellence in science and engineering. We consider it totally illogical that professional sportspeople should be exempted from the cap but elite international scientists are not. (Paragraph 64)

12.  Despite agreement that a cap set too low would have an adverse impact on businesses—both international companies such as Tata Consultancy Services, and the UK companies which utilised their services—it remains unclear what the extent of that impact would be. Several witnesses told us that companies might seek to establish headquarters elsewhere, but others were well-established in the UK and unlikely to leave. The level of the cap will be key in determining the effect it will have on this kind of business decision. It is hard to assess whether disruption would be of sufficient magnitude to force businesses to relocate overseas—they may not be in a position themselves to answer this question before the details of a cap are set out. (Paragraph 65)

13.  Although we note the Minister's evidence about wider social and public policy concerns, the evidence we received from businesses alerted us to the possible negative impacts the non-EEA economic migrant cap could have on business investment in the UK, and on tax revenues from high-earning immigrants. We emphasise that the Government must closely study the recruitment needs of businesses when determining the level at which the cap is set, as it has promised to do. This will be relevant to the UK's economic recovery, especially if, as has been said by the Office for Budget Responsibility, one-third of the economic growth needed in the next year must come from business investment. However, we were told that the macroeconomic effects may be small. We are pleased that the Government is planning not only to protect the migrant route for investors and entrepreneurs, but also to encourage high net worth individuals to come to the UK to drive economic growth. (Paragraph 66)

14.  The Government must decide whether or not to exclude intra-company transfers from the cap. Whilst it is meant to be a temporary immigration route, migrants on intra-company transfers can remain for up to five years, and we heard that a third stay in the country permanently, having transferred to another visa route. There is significant pressure from some businesses not to cap the route. However, to make any significant reduction in non-EEA economic immigration, a cap would have to include intra-company transfers, which in 2009 accounted for 60% of all Tier 2 visas and 40% of Tier 1 and 2 combined. We recommend that intra-company transfers under 2 years' duration should be excluded from the cap. (Paragraph 67)

Dependants

15.  Under Tiers 1 and 2 there have been approximately the same number of main applicants and dependants, a ratio of 5:4. The immigration figures cited by the Government include dependants, indicating that, if it is to meet its target of reducing immigration to 'tens of thousands', dependants will have to be accounted for in some form. As Professor Metcalf set out, a cap could either be applied to main applicants— with the assumption that there will be approximately the same number again of dependants—or to the combined total of main applicants and dependants. (Paragraph 71)

16.  The evidence we received argued against applying the cap directly to dependants, since a dependant might displace a main applicant whose skills were needed, and we are pleased that the Government has stated it has no plans to change the policy towards dependants. We therefore recommend that Tier 1 and 2 limits should apply to main applicants only, and we recognise that the cap will consequently only represent half of the total number of immigrants being issued with visas. The Government must make explicit the way in which dependants will be counted in contributing to the overall reduction in immigrants, and make its policy clear to the public. (Paragraph 72)

Level of the cap

17.  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. (Paragraph 76)

18.  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. (Paragraph 77)

19.  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. (Paragraph 80)

20.  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. 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. (Paragraph 81)

Students

21.  It is quite clear that, to achieve the reductions it is seeking, the Government will have to make significant changes to student immigration routes. As the Government is currently reviewing student visas it has not yet made any detailed proposals to effect such changes. We intend to return to this issue once the Government brings forward firm proposals for action. In the meantime, however, we underline the continuing importance of international students to UK educational institutions and the UK economy, and echo the conclusions drawn by our predecessor Committee, which said that efforts would be far better directed towards tackling bogus colleges and those who overstay their visas in order to seek employment, than penalising legitimate students. We also warn against constraining the activities of teaching in both the public sector and private sector, which are highly regarded internationally and make a significant contribution to the British economy. (Paragraph 87)

Administering the cap

22.  We support the administration of the cap through the structure of the existing Points Based System. This would allow limits to be applied flexibly—as the Business Secretary has called for—and thus bear some relation to industry demand and sectors where shortages are. Given that there is no right of appeal under the Points Based System, it is also important that decision-making should be as open and transparent as possible. Currently, a visa is issued when an immigrant meets specific, objective criteria, which are publicly available, and applicants can check their eligibility against an online calculator. We caution that, in determining how the cap will be administered, care must be taken not to lose this transparency. (Paragraph 90)

23.  We received mixed views on the merits of allocating Tier 1 visas under a pooling system. Several argued that it would be overly bureaucratic and uncertain for highly skilled immigrants who could be held in the pool for up to six months, only to be told that their qualification had expired. There does not seem any reason why, rather than a pooling or other new system, the Tier 1 cap should not be administered simply by raising the points requirements to a sufficient level to match the desired quota. This would allow a limit to be applied whilst ensuring that the most highly skilled were not turned away, nor kept waiting for months on end with no guarantee of a visa at the end. (Paragraph 102)

24.  Tier 2 is more complex, since the particular skills and individuals required by companies should be the key determinant of whether a candidate is successful under this route. It is vital that the Government finalises plans for Tier 2 in very close consultation with business and service leaders, to take full account of those needs. We do not consider an auction workable with regard to Tier 2, since it would almost certainly have a disproportionate impact on the skills recruitment to the public sector and small businesses, neither of which could afford to bid large sums. A first come, first served system for Tier 2—the Government's preferred option—met with multiple objections, including that there would be a high volume of precautionary applications and that releasing visas only at certain times in the year would hamper business planning. Principally, some witnesses felt that such a system took no account of an applicant's merit. None was, however, able to propose a preferable alternative. It may be possible to mitigate some of the criticisms of first come, first served by stratifying the cap by Tier 2 sectors, to ensure that some do not dominate to the exclusion of others, that market needs are always recognised, and to release visas at regular intervals during the year. (Paragraph 103)

25.  We recommend that the cap should be administered more frequently than annually, particularly given the experiences of businesses under the US system, where annual visa allocations are exhausted within a day or two of opening. This would better meet changes in sector needs over the course of the year, and could be monthly, as the Confederation of British Industry has proposed. We also recommend that a number of visas be held in reserve so that where businesses or services can demonstrate a clear business case for bringing in a migrant outside the usual allocation period, they are able to apply for an emergency visa. (Paragraph 108)

26.  There has been a consistent tendency, under both the current and previous Governments, to rush through complex changes to the immigration system via amendments to the Immigration Rules, and we note that this has caused problems. In many cases changes have been enacted with almost immediate effect, failing to respect the parliamentary convention of 21 days' notice, and leading to a spate of judicial reviews. Such unnecessary haste leads to poor decision-making which is more likely to be challenged in the courts. We recognise the need to institute a temporary cap to prevent a rush of immigration applications ahead of the creation of a permanent cap. However, the Government must ensure that Parliament be given the opportunity fully to scrutinise all significant changes to the immigration system before they are introduced. (Paragraph 110)




164   Q 43 Back

165   Q 244 Back

166   Qq 42-43 and Q 244 Back


 
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