Limits on Migration - UK Border Agency - Home Office

334 Pages·2010·3.06 MB·English

Limits on Migration
Limits on Tier 1 and Tier 2
for 2011/12 and supporting policies
Migration Advisory Committee
November 2010
Migration Advisory Committee
1st Floor Green Park House
29 Wellesley Road
Croydon CR0 2AJ
www.ukba.homeoffice.gov.uk/mac
e-mail: [email protected]
Limits on Migration:
Limits on Tier 1 and Tier 2 for
2011/12 and supporting policies
Migration Advisory Committee
November 2010

Contents
Chairman’s foreword 1
Migration Advisory Committee and secretariat 5
Summary 7
List of tables and figures 19
Chapter 1: Introduction 23
1.1 The Migration Advisory Committee 23
1.2 What we were asked to do 23
1.3 Our interpretation of the question 24
1.4 Scope of this work 25
1.5 Our approach 25
1.6 Structure of this report 26
1.7 Thank you 27
Chapter 2: Policy context 29
2.1 Introduction 29
2.2 Routes of migration to the UK 29
2.3 Dependants and the right to family life 31
2.4 Asylum 32
2.5 Tier 1 33
2.6 Tier 2 41
2.7 Other routes of migration 46
2.8 Policy and consultation on limits 48
2.9 MAC consultation on levels of limits 50
2.10 International comparisons 51
2.11 Implications 54
Limits on Migration
Chapter 3: Data context 55
3.1 Introduction 55
3.2 The UK economy 55
3.3 The UK labour market 57
3.4 Overview of migration data sources 63
3.5 Net migration and population growth 63
3.6 Tier 1 and Tier 2 context 75
3.7 Migrants and the labour market 88
3.8 International comparisons 100
3.9 Implications 100
Chapter 4: What we did 103
4.1 Introduction 103
4.2 How we consulted 103
4.3 Consultation evidence received 105
4.4 Analytical work programme 113
Chapter 5: Analytical framework 115
5.1 Introduction 115
5.2 Frameworks for analysing limits on migration 115
5.3 Our framework 117
5.4 Implications 120
Chapter 6: Objective 122
6.1 Introduction 122
6.2 Defining the objective for net migration 122
6.3 Accounting for flows outside the scope of a limit 124
6.4 Estimating the implications for Tiers 1 and 2 129
6.5 Implications 132
Chapter 7: Economic impacts 134
7.1 Introduction 134
7.2 Economic growth and GDP per capita 135
7.3 Inflation 155
7.4 Labour market 157
7.5 Net fiscal impacts 163
7.6 Conclusions 167
Chapter 8: Public service and social impacts 169
8.1 Introduction 169
8.2 Provision of health services 169
8.3 Consumption of health services 175
8.4 Provision of social services 181
8.5 Consumption of social services 184
8.6 Provision of education services 185
8.7 Consumption of education services 189
8.8 Housing 196
8.9 Crime and justice 203
8.10 Congestion 208
8.11 Social cohesion and integration 211
8.12 Conclusions 218
Chapter 9: Limits and policy options 221
9.1 Introduction 221
9.2 Coverage of limits on Tiers 1 and 2 223
9.3 Trajectory 232
9.4 Numerical levels of limits on Tiers 1 and 2 237
9.5 Balance between Tiers 1 and 2 239
9.6 Levels of limits on Tiers 1 and 2 in 2011/12 241
9.7 Policy options for Tier 1 245
9.8 Policy options for Tier 2: Options for all routes 254
9.9 Policy options for Tier 2: Intra-company transfer route 257
9.10 Policy options for Tier 2: Combining the Resident Labour Market Test and shortage 263
occupation routes
9.11 Policy options for Tier 2: Resident Labour Market Test route 263
9.12 Policy options for Tier 2: Shortage occupation route 265
9.13 Policy on settlement 267
9.14 Impact analysis 268
Chapter 10: Conclusion 274
10.1 Context 274
10.2 Summary of economic, public service and social impacts 274
10.3 Summary of required limits and policy options 276
10.4 Next steps and future work 278
Limits on Migration
Annexes
Annex A: Consultation 280
A.1 List of organisations that submitted evidence and did not request anonymity 280
A.2 Indicative list of organisations / individuals met with 284
Annex B: Estimating policy impacts on net migration 289
B.1 Introduction 289
B.2 Estimating the impact of visa reductions (out-of-country) on non-EU inflows 289
B.3 Estimating the impact of visa reductions on outflows and net migration 295
B.4 Estimating impacts of in-country policies 305
B.5 Uncertainty and volatility in net migration flows 305
Annex C: Summary of required limits calculations 313
C.1 Introduction 313
C.2 Summary table of options A and B and an alternative option 314
Abbreviations 315
References 317
Chairman’s Foreword
In June this year Three main channels of migration exist:
the Home Secretary work, study, and family. And there are three
commissioned the citizenship groups: British, European Economic
Migration Advisory Area (EEA) and non-EEA. This can be
Committee (MAC) to expressed as a three by three matrix with nine
advise on the level at cells. In this report, the MAC is only dealing
which “limits on Tier with one of the nine cells, namely the non-EEA
1 and Tier 2 of the work route. In 2009 work-related non-EEA
Points Based System migration, excluding dependants, accounted
(PBS) be set for their for 1-in-5 of the non-EEA inflow and just one
first year of operation tenth of the total inflows. And Tiers 1 and 2 of
in 2011/12 in order to contribute to achieving the PBS comprised only half of the non-EEA
the Government’s aim of reducing net migration work inflow. So, even if Tiers 1 and 2 were shut
to an annual level of tens of thousands by the down, it is unlikely that net migration would fall
end of this Parliament”. In doing so, we were to tens of thousands. This goal can only be
asked to take account of economic, public achieved by also cutting net migration under
service and social impacts. the study and family routes.
The Long Term International Migration (LTIM) It has been necessary to make a number of
statistics, which record changes to country of judgements and assumptions in providing our
residence of more than one year, show that in advice, including: the assumed initial level of
2009 net migration had risen by 33,000 from net migration in 2010; the precise nature of the
2008 to 196,000. It is this measure which ‘tens Government’s net migration objective for the
of thousands’ refers to. However, the Annual end of this Parliament; the trajectory in terms
Population Survey (APS) tells a significantly of how quickly migration flows move towards
different story about net migration. The LTIM that objective; the extent to which EEA migrants
and APS data measure different things, will replace limited non-EEA migrants; the
but there is merit in examining all available likely relationship between the LTIM data and
information. This will apply in particular when visa numbers; the number of dependants per
the results of the 2011 UK Population Census main visa holder; and, crucially, the share of
are available: after the last census, in 2001, reductions in net non-EU migration to be borne
it was found that the LTIM data were under- by the work routes, rather than by the student
counting out migration. and family routes.
Until 1998 net annual migration (LTIM) was Two possible sets of limits on Tiers 1 and 2 are
never above 80,000. Since 1998 it has never presented, which can be viewed as defining
been below 140,000, and it has exceeded a potential range. These limits comprise the
the 200,000 mark in three of those years. first tranche of the reduction in the non-EU
Therefore, the Government’s wish to limit net work inflow required to reach the tens of
migration is wholly understandable. thousands net migration figure by the end of
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Limits on Migration
this Parliament. In both of the two scenarios for limited periods but choose to settle here and
we have assumed that the study and family make the UK their home. And whilst there is no
routes bear their pro-rata share of the required quantitative evidence that foreign-born migrants
reduction, but have made different assumptions are directly displacing resident workers, it is
about the fraction of the pro-rata share of non- possible that the open-ended provision of
EEA work-related routes borne by Tiers 1 migrant labour is creating an environment that
and 2. means businesses and those responsible for
education and training do not focus sufficient
It would be remiss not to point out that there effort on increasing the skills and potential of
is widespread concern among employers the resident population.
regarding the impact that limits on migration
could have. Many major companies – including It is plausible that any small adverse impact
those responsible for substantial UK investment of a limit on GDP and the public finances will
and jobs – argue for the intra-company transfer be partially offset via: recruiting from the UK
element of Tier 2 to be excluded. Public sector unemployed or inactive; recruiting from the
employers argue for flexible limits which EU; and in the longer-term by up-skilling UK
could be interpreted as requesting that any workers and changing production methods
limit should not apply to them. Bodies such (capital deepening). But, in the meantime,
as the Trades Union Congress (TUC) and it is vital that the allocation mechanism to
UK Commission for Employment and Skills implement any proposed limits on Tiers 1
(UKCES) also oppose such limits. and 2 targets for exclusion those marginal
migrants who contribute least to the UK.
Such a response is not surprising. The This implies giving priority, for example, to
introduction of the PBS coupled with the migration that leads to foreign direct investment
global recession has already caused the work and employment of UK workers, or which
component of the non-EU LTIM inflow to halve contributes significantly to the public finances.
between 2004 and 2009. In 2009 there were Some priority may also be required for limited
50,000 work-related visas issued under Tier migration into vital public services such as
1 General plus Tier 2. The further reduction health, education and social care.
in work visas needed to bring net migration
down to tens of thousands by the end of this On the basis of the above, the MAC suggests
Parliament is non-trivial. For 2011/12 we that more stringent reductions should be
estimate that the required reduction falls into made to Tier 1 than Tier 2, given the weight
the range of 6,300 to 12,600, a fall of between of evidence we received from employers
13 and 25 per cent. presenting strong arguments in support of Tier
2. Under Tier 1 we suggest making the Post-
Evidence distilled in this report suggests that Study Work Route (PSWR) more selective and
non-EU Tier 1 and Tier 2 migrants, at present for out-of-country applicants we propose raising
levels: have a small positive impact on GDP earnings and qualification thresholds. The issue
per head; do not increase inflationary pressure; of salary multipliers (which convert pay in a
contribute positively to net public finances; foreign country to UK sterling) also needs
play a small but important part in the provision urgent resolution.
of education, health and social services;
increase pressure in the housing market a Tier 2 will, however, have to share some of
little; and probably have little effect on crime the burden. The points thresholds need to be
and cohesion. recalibrated to ensure those migrants who
contribute the most economically are given
On the other hand, as the Home Office’s priority. The intra-company transfer route
Migrant Journey Analysis has made clear, needs to become more selective in terms of
migrants coming to the UK to work add to the which migrants can come for only three years
population and many individuals not only come and those who can come for longer. The use
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