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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