In this article, Jonathan Portes examines the Coalition Government’s record on immigration, looking at each of the main routes for those coming to the UK from outside the European Economics Area (EEA): for work, for study, for family formation or reunion, and for asylum, as well as policies relating to free movement within the EEA. The next government, regardless of its political complexion, will face the same central policy dilemma as this government: the conflict between the perceived political need to “control” migration and the fact that, as a small open economy, excessive “control” will either inhibit growth, conflict with EU membership, or both.
Immigration was a central issue in the 2010 election, with the Conservatives pledging to reduce net migration to the “levels of the 1990s, when it was tens of thousands per year”. Meanwhile, the Liberal Democrats suggested an amnesty for irregular migrants who had been in the country for more than ten years. In fact neither policy actually made it into the Coalition Agreement. However, although not formally government policy, the “tens of thousands” pledge remained by far the most high profile commitment, with the Prime Minister restating it in very clear terms in April 2011:
“And I believe that will mean net migration to this country will be in the order of tens of thousands each year, not the hundreds of thousands every year that we have seen over the last decade. Yes, Britain will always be open to the best and brightest from around the world and those fleeing persecution. But with us, our borders will be under control and immigration will be at levels our country can manage. No ifs. No buts.”
This article examines the Government’s immigration policy record, looking at each of the main immigration routes for those coming to this country from outside the European Economic Area (EEA): for work, for study, for family formation or reunion, and for asylum, as well as policies relating to free movement within the EEA.
Figure 1: Long-term international migration, 1970-2014 (year ending June 2014)
Although the Coalition Agreement did not include a cap or even a target for net migration, it did include an “annual limit on the number of non-EU migrants allowed into the UK to work and live.” In the event this took the form of a cap on the numbers coming through one specific entry route, “Tier 2 skilled migrants”. These are migrants with a job offer from a UK company in certain “shortage” occupations or (more commonly) where no suitable worker could be found within the EEA, and the migrant was above a certain skill level. Following advice from the Migration Advisory Committee, the cap was set out at 20,700 per year.
Policy was made more restrictive in two other respects. First, the Highly Skilled Migrant Programme, which allowed migrants with certain educational and other qualifications to move to the UK even if they did not have a specific job offer, was closed. This was despite the evidence from Home Office data that the vast majority of such migrants were employed in skilled jobs. Second, the Post-Study Work Route (which allowed students to stay on after graduation for a period to look for or take up a job) was incorporated into Tier 2, making it much more difficult for students to stay on. However, although the Home Office wanted the cap to apply to other skilled worker routes, in particular Intra-Company Transfers (“ICTs” – skilled workers moving to the UK not to take up a new job, but within a multinational company), this was strongly and successfully resisted by the Department for Business.
The obvious criticism of a migration cap on skilled workers is that it is either damaging or redundant. Assuming that the skill thresholds are set at the “right” level – that is, at a level such that the marginal economic migrant can be expected to make a significant positive economic contribution – then why would the UK wish to stop additional such migrants moving here? This theoretical argument is also strengthened by practical considerations. Since the cap applies on an annual basis, if it does actually bite then companies will both have an incentive to apply early in the year (even if they don’t necessarily need migrant workers) and risk suddenly finding themselves unable to fill vacancies later in the year. And, of course, the stronger the economy the more likely the cap will bite – but when labour demand is very strong and there are skill shortages is precisely when the benefits of skilled migration are largest. None of these issues are theoretical – they all apply to the US H1B visa programme, which is generally regarded (including by both US companies and immigration officials) as a model of how not to make immigration policy.
Fortunately, however, the cap in practice has so far not had any impact at all, because it has not been hit and hence has not been a binding constraint. This in part reflects economic weakness in the first half of the Parliament, as well as what was initially at least the slow, burdensome and bureaucratic nature of the application process (which makes it particularly difficult for SMEs to secure Tier 2 visas). But it appears likely that more important than either of those factors was displacement into other routes, especially the ICT route.
In fact, overall,while the number of work visas issued fell sharply in the years leading up to 2010, primarily because of the economic downturn, any fall after that was very modest, and recent figures have shown a slight upward trend (again, likely to be driven by labour market developments). The separate immigration statistics show a broadly similar pattern. While it is very difficult to establish a counterfactual, it is clearly not the case (despite government rhetoric) that policies introduced in 2010 have resulted in a large reduction in economic migration, although they may have to have some extent restrained a further increase during the recovery.
Figure 2: Employment-related visas and non-EU migration for work purposes
As recovery in the labour market progresses, and skills shortages emerge, the cap may (finally) begin to bite: latest Home Office data suggests that, for the first time, it may actually be binding in March 2015. If so, the next government will be left to confront the contradictions of the policy: remove the cap, and admit that it was a misconceived policy from day one, or maintain it, and deny businesses skilled workers who they want and need and who meet the official criteria.
The government also introduced significant changes to the regulation of student migration, resulting in a substantial increase in the regulatory burden on the sector, and visa requirements were made considerably more restrictive. There were also a number of high profile investigations into alleged cases of visa “fraud”. But, as with skilled migration, the Department for Business (supported by the Department for Education and the Treasury) successfully resisted numerical limits.
The result was a particularly sharp fall in international students in private further education colleges, with a significant number of colleges closing down. Some of these were clearly “bogus”, in the government’s terminology, but much of the overall reduction in the number of students – over 80 per cent – appears to simply reflect the greater regulatory burden on the sector. However, this overstates the extent of the reduction, since a new “student visitor” visa, valid for up to 11 months, has been created. The student visitor visa is a particularly good illustration of the contortions resulting from current policy – the time period appears to have been designed specifically to ensure that those entering the country are not counted in the official immigration statistics (which are based on those telling the International Passenger Survey that they intend to remain in the UK for more than a year).
Figure 3: Student visas issued
Meanwhile, the university sector, which has complained vocally about the bureaucratic burden of the new visa requirements, has now largely adapted, and the number of international students is now rising slowly again. In the intervening period, the UK has lost some market share, particularly from India (where the reputational impact has been severe) to its main competitors (Australia and the US). Perhaps more damaging is the closing of the Post-Study Work Route; while graduates can still stay on if they secure skilled employment, this is considerably more difficult both in theory and practice (for example it is much more difficult for universities to retain post-graduates) and as a consequence the UK has become a significantly less attractive destination for the most valuable students.
The vast majority of those migrating to the UK for “family” reasons are spouses (contrary to myth, there is no general right to bring in family members other than spouses and, in some cases, children: parents and other relatives are generally only allowed to move to the UK if they require care, which must be financed by the UK resident family member). The main policy change introduced by this government was an earnings threshold for the UK spouse, set at £18,600. This appears to have resulted in a noticeable reduction in the number of spouse visas granted, although the flow has now stabilised.
Figure 4: Family migration
Asylum seekers and asylum policy were at the centre of the political debate in the early to mid-2000s, as numbers increased to more than 80,000 in 2002 alone. However, as numbers fell back sharply, this receded. In 2010 there were fewer than 20,000 applications, and at least for new applications the system appeared to be functioning considerably more efficiently than in the past. The main decision facing the government was whether to continue the “backlog clearance exercise” that had begun under the previous administration to deal with asylum applicants whose files had been lost, or whose cases had otherwise got lost in the system; they chose to do so. While this had no impact on the immigration figures (since the applicants in question were already in the country) it resulted in the regularisation (effectively an amnesty) of (it appears) well over 200,000 applicants over the life of the programme.
However, in recent years, applications have risen again, to close to 30,000 a year, primarily as a result of developments in the Middle East and North Africa, and so have delays and backlogs, presumably as a result of staff reduction. The number of applicants waiting more than 6 months (the official target) for a decision has doubled in the past two years, to more than 12,000. The risk is obviously of (yet another) build up in unprocessed cases, which will have to be (again) resolved by a regularisation programme.
Finally, while of little quantitative significance, it is worth noting that the one unequivocal pledge pushed by the Liberal Democrats that was incorporated into the Coalition Agreement was to end the detention of children for immigration purposes. The government claims to have indeed implemented this, although the Liberal Democrats have, arguably disingenuously, altered the wording somewhat ex-post. However, although the numbers of children being detained have indeed fallen sharply, the claim to have ended detention of children for immigration purposes is does not appear to be consistent with the official data.
Free movement within the European Economic Area
As long as the UK remains within the EU, there is little or nothing the UK can do in terms of immigration policy to impact migrant flows to (or from) the UK. The government promised to apply “transitional controls” (which apply only to the right to work, not the right to migrate) as a matter of course in the future for all new EU Member States but in the last five years the only new EU Member State is Croatia, and no new accessions are immediately in prospect. Transitional controls on Romanians and Bulgarians were ended, as provided in the Accession Treaty, on 1 January 2014.
As has been extensively documented, migration from other EU member states has continued at a fairly high level (from the countries that joined in 2004) while increasing from states in Southern Europe that have been particularly affected by the crisis. In addition, there is some evidence that the increased restrictions on work visas for non-EEA nationals have resulted in increased migration from within the EEA: this appears to be particularly the case in the health and social care sector. As predicted, relatively modest restrictions on benefit availability for EEA nationals do not appear to have had any noticeable impact on migration flows; there is no quantitative evidence that suggests “benefit tourism” is a meaningful phenomenon, nor that the availability of benefits is a significant “pull factor”. There has been some rise in migration from Bulgaria and Romania since the ending of controls, but it has not been on the scale of the more alarmist predictions.
Figure 5: Immigration of EU citizens (gross)
The promise to cut net migration to the “tens of thousands” was generally regarded by immigration policy experts as unachievable, or achievable only at an economic cost no sensible government was willing to pay. In practice, the latter course was never tested: resistance from within government from the Department of Business, supported to a greater or lesser extent by the Treasury, meant that even non-EU migration was only reduced very substantially for non-HE students; for most other routes it has stabilised. Non-EU net migration is currently about 150,000 a year, slightly higher than EU net migration.
This does not mean the policy changes had no impact: the increase in the regulatory burden on business and the education sector has been substantial, and has certainly resulted in some reduction in skilled and student migration. The most damaging single decision was probably the closing of the Post-Study Work Route. However, overall, any economic damage was considerably mitigated.
Meanwhile, migration from within the EEA, mostly for work, has increased, mostly as a result of factors outside the government’s control, although restrictions on non-EU migration may also have contributed slightly.
Figure 6: Long-term international net migration by citizenship, 1975-2014 (year ending June 2014)
So the next government, regardless of its political complexion, will face the same central policy dilemma: the conflict between the perceived political need to “control” migration and the fact that, as a small open economy, excessive “control” will either inhibit growth, conflict with EU membership, or both.
This article was originally published on the NIESR blog and gives the views of the author, and not the position of the British Politics and Policy blog, nor of the London School of Economics. Please read our comments policy before posting. Featured image credit:
Jonathan Portes is the Director of the National Institute of Economic and Social Research. He was formerly Chief Economist at the Cabinet Office in the UK.