Migrant quota to be cut by up to a quarter

The number of skilled workers entering the UK from outside Europe should be cut by between 13 and 25 per cent according to the Migration Advisory Committee (MAC).

In its first report considering next year’s immigration cap level, the committee suggested the government reduce the number of Tier 1 and Tier 2 visas by between 6,300 and 12,600 in 2011-12.

The cutbacks were calculated using 2009 figures, when 50,000 of these work visas were issued to migrants from outside the European Economic Area.

But using last year’s data as a baseline could be “unrepresentative”, according to Gill Gordon, director of executive compensation at oilfield services company Schlumberger, and chair of employers’ campaign initiative the Permits Foundation.

“Basing a quota reduction on 2009 could hurt business, since it was not a strong year for many sectors,” she told PM. “Activity was generally depressed and it was not a representative 12 months.”

Immigration minister Damien Green has responded to employer concerns about filling highly skilled vacancies under the immigration cap by announcing a partial exemption for the intra-company transfer route – the most popular way for multi-national organisations to transfer staff across borders.

But Gordon argued these types of transfers, including those more than two years in length, should not be included at all. “Companies have to be very nimble and react as flexibly as they can to fast developing business circumstances,” she said. “But if businesses have to plan months or years in advance, that could be a real straitjacket for them.”

Gordon said the Permits Foundation – which is backed by over 40 major international companies including BT and Shell – was concerned the immigration cap would “damage the UK’s position as a global business centre” and tempt firms to locate operations elsewhere.

“The country is in a difficult business situation and companies have gone through a very difficult couple of years - the last thing we need at the moment is a major restriction on activity,” she continued. “The immigration cap together with the impact of recent tax changes could have a cumulative effect. Other regions and countries are very anxious to attract inward investment, and if companies are driven away from the UK that would be extremely damaging for the economy.”

The government has said it aims to reduce net migration – which stood at 196,000 last year – by “tens of thousands”. The MAC report acknowledged this aim could only be achieved by “cutting net migration under study and family routes” as well.

But MAC also confirmed that the dependants of people granted work visas should continue to be exempt from any restrictions, a recommendation Gordon welcomed.

“The UK has been a model of best practice as far as allowing dependants to work,” she said, describing such a restriction as “a block to mobility and improving the gender balance in companies”.

As female spouses often took up employment or looked to further their own career in a host country, an inability to do so meant highly skilled candidates often declined a international assignment, she explained.

Gordon added that the Permits Foundation estimated expatriates contributed £134,000 each per year to the UK economy though tax and national insurance - roughly three times that of an average employee.

Answering concerns that relocating foreign staff harmed job creation for UK nationals, she said:“It is expensive for companies to transfer staff. They only do so when people have very specialist skills or experience not available in the UK today, or there is a need to develop highly qualified senior managers through international assignments.”