This speech was delivered at the Policy Exchange on 2 February 2012. This version is checked against delivery.
For the past decade the immigration debate in this country has been mainly about numbers. How many come here, and how fast they come here, has been the root of widespread political concern and public anxiety. That’s why we thought it would take a whole Parliament to bring them down to a sustainable basis. And as a result of all the actions we are taking, we anticipate net migration will come down to the tens of thousands. By the second anniversary of the General Election this May we will have implemented or announced radical changes in all the main routes of immigration and in the key area of breaking the automatic link between coming here and staying here forever.
The first small signs of the beneficial effects of these policies are just beginning to show up, with a 11 per cent fall in student visas and a 17 per cent fall in work visas in the latest quarterly figures compared with a year previously. But there is no quick fix. We know that net migration has consistently been around 150,000 to 200,000 a year since the late 1990s. The recent rise to 252,000 reflects the culmination of the policies of the last Government. That’s why we thought it would take a whole Parliament to bring them down to the tens of thousands on an annual basis. Everything we do is designed to help us reach this goal, while keeping us open to the brightest and best who will help drive economic growth.
We need to raise the whole tone of the immigration debate. Immigration remains one of the two or three most important issues, and it is frankly absurd that anyone who argues for firmer immigration controls is accused of dog-whistling or nastiness. That kind of response may have worked as a political trick ten years ago but even those on the left who take a detailed and intelligent interest in immigration matters recognise that the world has moved on. What we need is a national consensus on how we can make immigration work for Britain. We are evidently a long way from such a consensus but I want to start to build it.
Making the immigration numbers sustainable is a necessary condition for a successful immigration policy. But it is not sufficient. What I want to speak about today is another key element in the long-term transformation of British immigration policy, which is the development of the principle of selectivity. We need to know not just that the right numbers of people are coming here, but that the right people are coming here. People who will benefit Britain, not just those who will benefit from Britain. An immigration policy which reflects a consensus about who should be able to come here, and an immigration system that can actually deliver that. A legal framework which reflects the will of Parliament while respecting our international legal obligations. A system, and a policy, which makes immigration work for Britain economically.
This is absolutely necessary so that immigration policy can contribute to the wider agenda for economic growth. Recently the Migration Advisory Committee published a fascinating study about how we calculate the costs and benefits of immigration. This is the first authoritative study to look at this complex but absolutely vital calculation in detail. Economists across Government will be considering the MAC’s assessment in detail over the coming weeks. I believe it changes the whole intellectual basis of the immigration debate, and deserves far more attention than it gained when it was first published.
The MAC focussed on three main areas. First, when weighing up costs and benefits, whose welfare should be considered - the resident population or that of the residents plus new immigrants? Their view is that Government should focus on the impact of migration on the welfare of the residents. This would remove the bias in the system which meant that any increase in immigration was recorded as an increase in overall GDP and therefore by definition a benefit, whereas any cut in migration was a cut in GDP and therefore a negative. Also the MAC said that more consideration should be given to less tangible but potentially important impacts such as the positive dynamic effects on productivity which skilled migrants can bring.
Second, do immigrants displace British workers in the labour market? The MAC research showed that in certain circumstances there can be displacement of British-born workers by non-EEA migrants, up to a level of 23 displaced for every 100 additional working age non-EEA migrants. The MAC suggested that impact assessments should not always assume, as they have done, that if migration is reduced, none of the jobs vacated by migrants will be filled by resident workers.
And third, how can less easily quantifiable social impacts - for example the impact of migration on transport, housing, crime and consumption of education and health services - be accounted for? The inadequacy of the present data prevents a simple monetisation of this. However they should not then be ignored in favour of other more readily measurable factors such as tax and wages. A qualitative analysis which sets out potential distributional impacts which are complex and will vary according to local area, gender, income, age group or ethnicity would improve our assessment.
This analysis gives us the basis for a more intelligent debate. It supports a more selective approach to non-EU migration. The old assumption was that as immigration adds to GDP - national output- it is economically a good thing, and that therefore logically the more immigration the better, whatever the social consequences. It is not my view, or the view of the vast majority of the British people.
The key insight of the MAC’s work is that the measure of a successful immigration policy is how it increases the wealth of the resident population. It is easy to see the opposite in action. In the boom decade before the bust of 2008 the number of people employed in the UK economy increased by 2.9 million. But 1.6 million of the jobs were taken by non-UK nationals. That is emphatically not a sustainable policy.
What is sustainable is an approach which brings the numbers down but at the same time targets those whom Britain needs to attract to create a dynamic economy. Those who have the knowledge, ideas and the skills to make us a more productive place, and therefore a place where it is easier for UK citizens to find a job. This means developing a system which chooses carefully who we allow to come, and who we allow to stay.
The changes so far
As I say the main purpose and effect of the changes we have already introduced is to cut the numbers and bring the system under control. But we have been careful to consult before every individual change, to involve the independent Migration Advisory Committee, to publish the evidence on which we have based our proposals, and indeed to change the details of the proposals in response to the thoughts of others. This has allowed us to pursue both the path of reducing numbers and the necessity to start building a more selective system. A number of individual policies illustrate this.
We have already made significant changes to the rules governing the admission of skilled workers. Not just the annual limit but also a higher minimum skills requirement so that occupations such as cooks and careworkers are no longer eligible. We made sure that we retained a flexible approach for scientists, researchers, those paid more than £150,000 and intra-company transferees. And we closed the Tier 1 General route which allowed self-selecting migrants to come without a job offer. Adopting a more selective approach has ensured the system has worked smoothly, with the limit we imposed being significantly under-subscribed - we expect only around half the available places to be taken. This fact entirely contradicts the notion, which some commentators are fond of, that the limit is stopping businesses getting key workers from the global talent pool, there is not a shred of evidence for that.
For students, our new system ensures that only high-quality, genuine students can come to the UK to study with legitimate education providers. A key flaw in the old system was the lack of regulation of private providers. That’s why we asked the Quality Assurance Agency and the Independent Schools Inspectorate to extend their activities to cover these colleges; and why we required all Tier 4 sponsors to obtain Highly Trusted status from the UK Border Agency. The students themselves have to speak better English, and progress in their studies if they want to prolong them. And we’ve curbed those entitlements which were attracting students for the wrong reasons such as the right to work and to bring their families with them. At the same time we have made it easier for the low risk students to meet our visa procedural requirements.
In the coming weeks we will be announcing our conclusions about the settlement and family consultations that we have conducted. In those consultations there were a number of examples of the selectivity I am talking about.
In our consultation on family migration, we have made clear that we welcome those who are in genuine relationships. But there is an important caveat. We want those coming here to be able to integrate fully and to be independent. This means being able to speak English and having sufficient financial means to be able to prosper. We asked the MAC to advise on an appropriate income range for the sponsor’s income, which they have suggested should be between £18,600 and £25,700.
This will produce a new system for family migration which is selective in choosing people who are ready and able to take a positive role in the life of their local community and society more widely. Not only will this help us develop a more cohesive and united society, it will be of huge benefit to the individuals who come to settle here from all over the world, and who need to feel that they belong here. Importing economic dependency on the State is unacceptable. Bringing people to this country who can play no role in the life of this country is equally unacceptable. It leads to women leading isolated lives, cut off from mainstream British life. Furthermore marriage as an entrance ticket to the UK rather than as part of a loving relationship is not acceptable.
In our other consultation on employment-related settlement, we proposed to break the link between coming to work in the UK and staying on permanently. We will end the assumption that settlement is an option for all those who come to work. Instead, we will accord it to the brightest and best. We took advice from the MAC on how to do this and they recommended using pay as the most appropriate selection criteria. They suggested a threshold in a salary range of between £31 and £49k a year. So again the system will become more selective.
Our effort so far has been about cutting out abuse, getting the basics right, and getting the numbers down. That effort will of course continue, but building on this approach there is now scope to adopt a more selective approach among the pool of legal migrants.
For work, it is not just about controlling numbers through a limit. So we have asked the MAC to look at raising further the minimum skills levels we require from those who come here. Britain does not need more migrant middle managers, any more than it needs unskilled labour. We do need top of the range professionals, senior executives, technical specialists, entrepreneurs and exceptional artistic and scientific talent. One of the tasks for the future is shaping the system so that it allows us to be more precisely selective.
I have also asked the MAC to review the working of the policies we introduced last year on intra-company transferees. I know this route is fundamental to Britain’s ability to attract foreign direct investment and we need to get it right for our employers. Our approach, based on salary, is far more transparent and far less bureaucratic than that of many competitor countries. Employers can rely on it. I want to keep it that way. At the same time, as a route which sits outside the limit and does not require a resident labour market test, I need to be very sure it is not being used to undercut our domestic workers, particularly in sectors where a third party contracting model is used. So I await the MAC’s report with interest.
I want British employers to be able to access the best global talent. At the same time, employers need to do more to address skills shortages rather than rely on migration. Some jobs have been on the Shortage Occupation List since the MAC started to advise us on it three years ago. The List is not meant to be static or permanent. We owe it to British employees, particularly at a time of high unemployment even amongst graduates, to ensure that migration is not seen as the permanent solution, thereby perpetuating the shortage of British workers rather than alleviating temporary gaps in supply. That’s why it’s not just about tightening the migration system but also about focussing on the skills and training agenda.
Just as we are open to the brightest and best, we will continue to make clear that there needs to be no open route for unskilled workers to come here long term. So, for example, we have announced, having taken advice from the MAC, that the current transitional restrictions on Romanian and Bulgarian workers will be extended for another two years, given the current state of labour market disturbance. And, we have consulted about restricting the unskilled ‘overseas domestic worker’ route for household staff.
This coming April will see the introduction of our smarter approach to Post-Study work. Instead of giving everyone the right to stay for two years whether or not they have a job, we are introducing a system which allows only those with a good graduate-level job to stay. Those who are wanted by British employers not just those who want to stay.
Some of this about imposing restrictions on those we don’t really need. The other side of the selectivity coin is to use the migration system to attract those we do really want and need. Now that we have moved away from the old model of mass unselective immigration we can develop the system further to encourage the brightest and best to come here. This does not mean a return to the old, much-abused and self-selecting Tier 1 General route. Rather, it is about the development of new specialist routes.
For example, we have forged new partnerships with bodies such as the Arts Council and the Royal Society, to give them the opportunity to select exceptional talent to come to the UK. The principle of engagement in the migration system by sectoral bodies is an important one. Already the regulation of migration by sportspeople is delegated to a large extent to the sports governing bodies, who exercise it in a responsible manner. I hope the new Exceptional Talent Route will become useful in the future to make Britain the first and most natural port of call for world class scientific and artistic talent to work and prosper. No one would deny that the FA Premier League is not open to the best footballers from around the world and we want to work with representative bodies to bring about the same results in the other fields.
Let me give you some examples of recent approvals under the Tier 1 (exceptional talent) route. For the arts, the Arts Council has endorsed applications from one of today’s leading pianists, and from an expert on Visual Effects considered to be a pioneer in the field whose works include many of the recent James Bond films. We’ve also seen expert scientists using this route. For instance, a Chinese researcher who has made a remarkable contribution to the field of condensed-matter physics came to the UK under this route with the endorsement of the Royal Society and is currently a Tutorial Fellow and University Lecturerat a leading UK University. The Royal Academy of Engineering has also endorsed a number of applications from researchers demonstrating world class talent and potential, an Algerian Chemical Engineer who received a prestigious Fellowship to develop new bio-fuels at a leading UK industrial research centre.
I am keen that within this route we attract not only established experts but also those who show exceptional promise. The British Academy endorsed an application from a Canadian academic who holds an outstanding record for someone near the beginning of her career, and is coming to the UK to produce internationally leading research with one of the top research groups in the world.
We are already attracting more investors and entrepreneurs under the much more open and generous arrangements we have created for them. Recent examples include a Russian businessman who has gained fast access to global markets by setting up a parquet-manufacturing operation in the UK. It is hoped that the start-up operation, based in London and Hertfordshire and set to employ 10-30 people over the next three years, will develop to become the international hub of established Russian firm ArtParquet. His experience of applying for the visa: “the procedure is well balanced, clear and understandable”
The Entrepreneur visa also gave Oil and gas company (Canyon Oil & Gas) the means to grow their company internationally by setting up in the UK. The Company’s energy specialist who obtained a Tier 1 entrepreneur visa said “I am very impressed with the Tier 1 visa, as well as the UK’s business culture and work ethic”. The Company is focusing on markets in Southeast Asia and Sub-Saharan Africa, and aims to expand once it acquires assets.
I now want to build on this by introducing a new route for international graduate entrepreneurs, that is to say those international students who have engaged in supervised entrepreneurial activity during their university studies in the UK and who want to stay on after their studies to develop their ideas.
I have asked the MAC to review the case for easing the Resident Labour Market Test requirement, so that jobs for high earners do not need to be advertised here first. That would make it easier for employers to recruit the most economically valuable migrants to come here.
We will improve the working of the system for some short-term business visitors and entertainers. Britain is one of the great artistic and creative centres of the world, and we do not want to be discouraging world-class performers from coming here. I am aware that this has been a sore point for some time and we are taking action. The system does work well for most people. To take an example from the circus world, a British circus proprietor can issue a certificate of sponsorship (work permit) in the morning for a Mexican juggler on an initial contract for three months and then immediately send it electronically to the artiste who can catch a plane that same day and enter the UK, as a non-visa national, without the need for a visa.. This is a system, I am told, that is not available anywhere else in the world and works because the circus management also assume their responsibilities in operating that system.
Nonetheless, I am looking at allowing some who are more akin to visitors than workers and who do not have regular sponsors to come through the visitor route rather than having to obtain sponsorship under the points-based system. We need to keep improving the functioning of the system for those using it responsibly. So far I have kept the framework of the migration system created by the last Government and have focussed on getting the detail right. Looking ahead, I shall want to retain the strong points of that system, such as sponsorship, but ensure that we can be more responsive and flexible, both in saying yes and no, in specific cases.
We have added Taiwan to the list of countries with whom we have a Youth Mobility agreement which allows young people to work here for up to two years, in return for the equivalent opportunities for young British people. This scheme has as its preconditions reciprocity - in terms of scope and numbers in bilateral agreements - and selectivity. It is limited to low-risk, non-visa national countries with which we have an effective returns agreement. It replaced the shambolic and non-selective Working Holidaymaker scheme which attracted such levels of abuse it had to be suspended in several countries.
I am also keen to develop the use of Government Approved Exchange schemes which are tailored to specific circumstances. They enable temporary work, usually for schemes where there is a training, work experience or cultural dimension which does not affect the domestic labour market. Examples include the UK/US Fulbright Teacher exchange programme sponsored by the British Council or the Medical Training Initiative organised by the Academy of Medical Royal Colleges. I mentioned earlier the closure of the Post-Study Work route. A Tier 5 GAE scheme potentially offers a smart alternative for trainee professionals. The onus is on the professional body to take the initiative in setting up a scheme and then sponsoring the trainees. Again, I am keen to encourage the active involvement in the migration system of those bodies that stand to gain by it: an element of self-regulation, rather than relying on the Home Office to take all the responsibility.
All these are examples of how the migration system can select those who will be the dynamic agents of economic growth in our country. This selective approach is the right one for employers, migrants and Britain because it is sustainable, helps integration and complements the resident labour market rather than replaces it.
That’s how we are becoming more selective on the work route. But the biggest immigration route is the student route. We are now on the way to eliminating the abuse created by the laxity of the old system. There is still some way to go on that and we will keep our changes under review. For example I am watching closely the developments in the Australian student visa system. They have just strengthened their migrant credibility test, a feature not present in ours. And I am keen to focus not just on the inflow of students but also their departure. Reinforcing the notion that study is for a limited period, extensions are for those who progress academically, and post-study work for those who will really contribute. Improving outflows of students at the end of their course, will not just reduce the net migration gap but will also reinforce the benefits of circular migration, by sharing the benefits of UK education with the countries where the migrants are from.
But on a wider level, the debate about student immigration needs to move on. It has been a polarised one, with the drive to stop bogus colleges and bogus students on the one hand and a desire to expand international student numbers for the greater economic good on the other. Somewhere in between there is a discussion to be had about the legitimate students coming here. Of course international students bring economic and wider benefits. But, as the MAC said in their recent report on Impacts, there is scope for further examination of whether and to what extent foreign student tuition fees boost the UK economy and crucially how UK residents ultimately benefit from that. We need a better understanding of the economic and social costs and benefits of student migration: from the point of view of the wider UK economy, the education sector itself and the students themselves. There needs to be a focus on quality rather than quantity. The principle of selectivity should apply to student migration just as it does to work migration.
But we have seen in recent years a number of high-profile court cases in which people have been allowed to stay here by asserting rights under Article 8 of the European Convention on Human Rights. Many of these rights, at least in the form they have been given expression through the case law, are not recognised as such by the bulk of the population. That leads to the ridiculous and damaging situation where the whole concept of Human Rights is called into question. This is not healthy for anyone. It is also dangerous for there to be a long-term stand-off between Parliament and the judges, which is why we want to give better Parliamentary guidance on what should be considered in these kind of cases in future.
I do want to do what I can to avoid any obvious mismatch between immigration rules on the one hand, and the interpretation of human rights legislation on the other. When we bring forward the new rules on Family migration which I referred to earlier, they will set out to Parliament the Government’s view on how the balance between individual rights and the public interest should be struck. That means the Rules will reflect how the conditions we set for entry and the right to remain are in our view proportionate and therefore consistent with Article 8 entitlements. This means the Rules will mean what they say and we, applicants and the public will be clear about who is entitled to be here, on what conditions and why.
This selective approach will also be relevant to the way we develop our border security, our visa system, and the services we offer tourists and business visitors in the future. If we want the brightest and best, and we do, then we must make the process comfortable and welcoming for them. Both our policies and the practices of the UK Border Agency must become as smart, selective and tailored as we can make them.
Our first priority has been, and remains, to get the system back under control, to get the numbers down and keep them down. We have laid the foundations for a sustainable system. Now we shall shape it, to make it work for Britain. The main point I make today is that everyone who comes here must be selected to make a positive contribution. That is at the heart of our commitment to reduce net migration. We have talked in the past about a Points Based System. In the future it will be more accurate to talk about a contribution-based system. Whether you come here to work, study, or get married, we as a country are entitled to check that you will add to the quality of life in Britain. There are people who think that all immigrants are bad for Britain. There are also people who think that all immigrants are good for Britain. To move the immigration debate on to a higher level let’s take it as read that they are both wrong, and that the legitimate question in today’s world is how can we benefit from immigration.
My answer is that we are building, as fast as we can, an immigration system which is smarter, more selective and more responsive. An immigration system that delivers what Britain needs rather than what special interest groups demand. The change from the unregulated chaos of immigration policy in the past to this new vision will take some time to be fully visible. But we have taken significant steps already, and the announcements we will make shortly will be another important part of the journey towards an immigration system in which the British people can have confidence.