Thank you Natalie (Natalie Evans, deputy director at Policy Exchange) for that introduction. And thank you to Policy Exchange for so generously hosting this event.
I wanted to talk today about one of the most important issues facing our country.
Historically migration has enriched our culture and strengthened our economy. Well-managed migration can benefit the UK, economically, socially and culturally.
And in today’s globalised economy, we need to be able to attract the best and the brightest to ensure our companies remain competitive and our standard of living remains high.
The benefits of well-managed migration are deeply rooted in British values, reflecting our openness as an economy and society, our liberalism and our tolerance.
So managed well, immigration is something that can bring great benefits.
But managed poorly, it is something that can cause great economic and social pressure.
So the debate we need to have today is about how we can manage migration in a better way, not about whether migration is good or bad. The government is committed to reducing the number of non-EU migrants and we will come forward with proposals shortly. Today I want to talk about the challenge we face and set out the context in which we are taking our decisions.
Immigration is out of control
Net inward migration in the last year was nearly 200,000.
Between 1997 and 2009, net migration to Britain totalled more than 2.2 million people. That is more than twice the population of Birmingham.
I am focused on getting immigration down to sustainable levels.
And public confidence has been undermined further by the individual stories of abuse of the system.
Like the couple who made over six hundred thousand pounds providing counterfeit documents, qualifications and certificates to support immigration applications.
We must take steps to crack down on this sort of abuse, in order to restore confidence in a well-managed system that can bring substantial benefits.
This government is committed to ending the detention of children for immigration purposes.
Why we want to reduce net migration
While the right type of immigration can stimulate growth, badly managed migration has led to serious social impacts in some areas, with pressure being placed on key public services such as schools, the health service, transport, housing and welfare.
And it also led to many more difficult to quantify social impacts, like the segregation we see in too many of our communities. This created community tensions and helped contribute to a society that is not as integrated as we would like.
The public should know that I will take action. I am determined to get the immigration system back under control. And I can achieve that without impeding business from getting on with the job of stimulating growth.
Delivering a sustainable level of migration
But we cannot do that, with the tools we currently have at our disposal.
The points-based system alone is not sufficient. It’s been tried and it is not effective.
Controlling immigration using the points-based system alone is rather like squeezing a balloon. Push down work visas and the number of student visas will shoot up. Clamp down on student visas and family visas will spring up. Bear down on family visas and work visas will explode.
With unskilled labour set to zero, all that happened was student visas rocketed by thirty per cent to a record 304,000 in just one year, as some applicants used it as an alternative work route.
So the points-based system on its own is not enough. We need consistent management of all aspects of the immigration system.
Let me deal with a myth that has arisen in recent months. We can reduce net migration without damaging our economy. We can increase the number of high value migrants: the entrepreneurs, the investors, the research scientists - at the same time as we reduce the total number of people coming to Britain through the economic routes.
We can attract more of the brightest and the best at the same time as we reduce the overall number.
And as the recovery continues, we need employers to look first to people who are out of work and who are already in this country.
We need an approach which will not only get immigration down to sustainable levels but at the same time, protects those businesses and institutions which are vital to our economy.
But bringing down net migration to sustainable levels will not be easy. And we will not be able to achieve it by focusing on just one area of the system or on one route into Britain.
We will need fast and decisive action and we will need steady downward pressure on each of the main routes into the UK.
That is why we are looking to propose a comprehensive package - focussing on all aspects of our immigration system.
As the Home Affairs Select Committee report this week illustrated, we need to take action on students, families and settlement as well as on people coming here to work.
On the economic route, the policy you will all have heard about is our proposal to place a limit on the number of people coming to the UK from outside the EU for work.
I want to set out today the priorities we have heard during our consultation for how that limit should operate in practice. I want to set out for business today how that limit should work. That will give business certainty about our proposals and will allow them to plan for growth. They want to be able to plan ahead - the annual limit will give them that certainty.
The limit should reduce the number of people coming here to work from outside the EU. The interim limit this year has reduced it by 5 per cent compared to last year. And the full limit will reduce it again next year.
Second, businesses have told me that intra-company transfers should not be part of the annual limit. We have listened carefully to this advice, as the Prime Minister announced earlier this week. And we need to ensure that companies only bring across the highly-skilled and the genuinely needed.
Third, we should change that limit each year, in response to the economic and social conditions. The Migration Advisory Committee - the well respected and independent advisory body on migration policy - will take stock of the position annually.
We will listen to their advice and the advice of others. We will look at the impact on public services and how they can cope. We will consider the needs of society; and we will adjust the limit and our policies accordingly.
Tier 1 and Tier 2
The limit will be an important part of how we control the economic routes to Britain. But alongside the overall limit, we need to ensure that only the brightest and best can come. So we need to tighten the rules for who is eligible to apply in the first place.
Let me reassure you, I recognise the needs of business. I have worked in business and I understand how the modern business world works.
So I launched a consultation on our proposals and encouraged business organisations and other interested parties to respond - over 3,000 have done so. The Home Office team have also had face-to-face meetings with business leaders from across the country - and I am pleased to see some of them here today. I have listened to what all have had to say and I will ensure that the proposals that are brought forward reflect these views.
But where there is abuse of the economic route, we will crack down on it.
Business have told me that they want us to prioritise Tier 2 - skilled workers with a job offer - over Tier 1 - highly skilled workers without a job offer.
The CBI recently said: ‘We believe a workable… solution would encompass … protection of sponsored work permit numbers as a priority ahead of those without a job offer. … By prioritising the demand-led part of the system - Tier 2 - in this manner the government will be able to deliver on its goal of reducing net migration without damaging business.’
Recent Home Office research has shown that nearly a third of the Tier 1 migrants sampled - that is, people who are supposed to be highly qualified and highly skilled migrants - were not currently employed in highly skilled jobs.
The research came across examples of so called ‘highly skilled’ migrants working doing jobs that most of us would not classify as highly skilled. There is the individual who was issued with a Tier 1 visa and later became a duty manager at a well known high-street chain of fried chicken restaurants.
At the same time, last year the UK only attracted 275 high-value investors and entrepreneurs.
So I want a new approach: one that is more selective; that brings in more of the genuinely skilled; and those who will make a real difference to our economy.
Operating effectively, tier one should only be used by investors, entrepreneurs and people of exceptional talent; in short, the genuinely highly skilled.
Not only that, we also want to actively encourage entrepreneurs to come. As the Prime Minister said yesterday, we will reform the rules for entrepreneurs so that if you have a great business idea, and you receive serious investment from a leading investor, you are welcome to set up your business in our country.
Our research shows that many people entering the UK through the Tier 1 or Tier 2 routes are earning low salaries, are not highly qualified or are not highly skilled.
So we will need to look at taking action to raise the minimum skill levels in Tier 2 and ensuring those coming to do skilled work will be undertaking a suitable job with a sponsoring employer.
But work routes accounted for less than a quarter of the non-EU citizens entering Britain last year.
The majority of non-EU migrants are, in fact, students. Including their dependents, students accounted for around two thirds of the visas issued last year under the points-based system.
Numbers are now so high that last year the UK Border Agency had to suspend student applications in various parts of the world because the system could not cope with the numbers and could not prevent students without the right qualifications or applying to questionable institutions from getting a visa.
We want suitably qualified students with the genuine desire to study to come to study in our country but we must have a more robust system to manage their applications and, most importantly, to ensure their departure at the end of their legitimate stay.
People might imagine that by students we mean people who come here for a few years to study at university and then go home - but that’s not always the case.
We estimate that nearly half of all students coming here from abroad are coming to study a course below degree level. We have to question whether these are the brightest and the best that Britain wants to attract - they may be, or they may not.
I am particularly concerned about some areas of the education sector. Home Office data for students whose visas have expired suggests that students studying in privately funded colleges are much more likely not to have left the country than their counterparts in universities. And the vast majority of sponsor institutions who have had their licence revoked were privately funded colleges.
While we need to preserve our world class universities, we need to stop abuses.
We have also been left with astonishingly generous arrangements for students who graduate in the UK. They are effectively free to enter the labour market and look for skilled work. In 2009, 38,000 did so.
I want a system where we continue to attract the top students to our top universities. A system where well equipped students come here to study and at the end of their period of study return to their country of origin. And a system where we only let in those students who can bring an economic benefit to Britain’s institutions and can support Britain’s economic growth.
The areas of concern we will need to look at are: the standard of courses which students can come here to study; entry criteria and English language requirements; ensuring that students return overseas after their course; and, the right to work for students and their dependants.
We will also want to look at how we can improve accreditation and self-policing in the sector, and whether we can apply a more risk-based approach to the way in which we check applications who come here to study, so we focus our resources on those who pose the greatest risk, whilst making it easier for genuinely high-quality students.
Let me make clear: I will do nothing to prevent those coming here to study degree level courses and I will protect our world class academic institutions above and below degree level.
We will follow exactly the same principle as in the skilled work route - a more selective approach, which attracts the highly skilled, the talented and the genuinely needed, but reduces numbers overall by weeding out those who do not deserve to be allowed in.
The sheer number of students coming in, and the large proportion of total inward migration this represents, means we cannot delay in taking this necessary and decisive action.
An area where we have already taken action is the family visa route. Unsurprisingly perhaps, over two thirds of the 63,000 people who entered the UK in 2004 to join family here, were still in Britain five years later. And last year, some 40,000 marriage visas were issued.
We estimate that the family route accounted for nearly 20 per cent of non EU migration last year.
This summer, we ordered the UK Border Agency to clamp down on sham marriages. They have had significant success, conducting 53 operations and making 118 arrests. Shockingly, this included the arrest of a vicar who was subsequently jailed for staging over 300 sham marriages.
As well as tackling abuse of the marriage route we need to ensure that those who come here can integrate successfully into society and play a part in their local community.
So from 29 November, those applying for marriage visas will have to demonstrate a minimum standard of English.
This is only right. People coming to this country must be able to interact with the rest of the population.
And we need to go further. We must look at measures to tighten this route, for example by introducing processes to allow us to check that the UK sponsor is able to maintain and accommodate the foreign spouse.
Temporary versus permanent migration
But the common link with all of these temporary routes in the immigration system is that they can all lead to permanent residency. That is, temporary stays can become permanent stays.
No one is suggesting that those who come here to marry legitimately should not be able to make the UK their permanent home. But, under the current system, many skilled workers are allowed to apply to stay here permanently. In 2009, 81,000 people who entered the UK for employment were granted settlement.
And Home Office research shows that over a fifth of students who entered Britain in 2004 were still here five years later. Many of those were only supposed to be coming for short courses in the first place.
The consequences of such unchecked permanent migration through the back door are clear.
It is too easy, at the moment, to move from temporary residence to permanent settlement.
We will not implement the last government’s policy of earned citizenship, which was too complicated, bureaucratic and, in the end, ineffective.
If people enter this country saying that they will only stay here temporarily, then it is obvious that they should only stay here temporarily.
Working in Britain for a short period should not give someone the right to settle in Britain. Studying a course in Britain should not give someone the right to settle in Britain.
Settling in Britain should be a cherished right, not an automatic add on to a temporary way in. That does not mean bolting our borders shut. It means welcoming the brightest and the best, genuine family members and people who can help our economy.
As the Minister for Women and Equalities as well as the Home Secretary, I am passionate about the cross-government work to increase integration, participation and equality of opportunity.
As a government we want to build in Britain a more integrated society. A society where everyone participates and interacts in our national and community life, and where everyone has the opportunity to better themselves.
This is not the role only of the Home Office, let alone of our immigration system. It is the role of many areas of government, like the Department for Communities and Local Government, the Department for Education and of wider civil society. But there are things that we can do to help.
We know that speaking English is key to integration. Our requirement for foreign spouses to be able to speak English will help and we are committed to reviewing language requirements across the immigration system with a view to tightening them further.
There is no question that immigration has enriched Britain culturally and economically in the past. And it can do so again in the future. That is what our policies are intended to do.
But uncontrolled immigration is bad for our economy and it is bad for our society. It puts pressure on the public services that people rely on and creates unnecessary tension and discord.
I want a more selective approach which prioritises our universities, attracts the brightest and best workers and minimises abuse in the study and family routes.
I want to attract more of the best and the brightest at the same time as we reduce the overall numbers. I want to increase the contribution of migrants to the UK, as we reduce the total. I want to bear down on all the routes into Britain and to crack down on abuse of the system.
We will cap the number of economic migrants from outside the EU and ensure only those workers who are genuinely needed for our economy are allowed in. We will reduce the numbers of bogus students coming here to study. And we will strengthen controls on family visas.
For all these routes, I want a clear way to control who can settle in Britain - that is a historic privilege that we should not fritter away lightly.
I want the message to go out loud and clear that Britain will remain open for business. Our economy will remain accessible to the best and the brightest in the world, that’s why, as the Prime Minister said yesterday, entrepreneurs will be welcome; scientists will be welcome; wealth creators will be welcome.
But we must make sure that migration is properly controlled.
We will reduce net migration from the hundreds of thousands to the tens of thousands. It will not be easy. It will take hard work and a great deal of political courage. But the British people want us to do it and it is the right thing to do. So we will do it.
You can also read our news story about her speech: Theresa May vows to restore public confidence in the immigration system.