APART from the economy, the most hotly debated issue between the three major parties in the election was immigration. The policies of the Conservatives and Liberal Democrats were completely at odds; the Conservatives favouring a cap on migration and the Liberal Democrats an amnesty for illegal immigrants. Now the negotiations to form the new coalition have been completed, it is clear that the Conservatives have “won” on immigration and the UK will soon have a cap on skilled migrants.
As yet, there are no details as to what that cap will be or how it has been arrived at, but a broad brush approach could have serious negative consequences for the UK as a whole, and in particular for London as a centre of international business and finance.
It is important to remind ourselves that skilled migration to the UK accounts for approximately 30 per cent of the total immigration into the UK and further to Labour’s introduction of the Points Based System two years ago there are already robust systems and checks in place to ensure that the UK only gets the skilled workers it needs. This helps to ensure that those workers are filling gaps in the labour market and bringing essential in-company experience and specialist skilled knowledge to the UK.
The system also ensures that the salary that is being paid is at the market rate or above, meaning that the UK only gets the migrant workers it needs while protecting opportunities for local labour.
Notably the vast majority of migration to the UK (approximately 70 per cent) comes from the EU. The UK was one of the few countries that opened its labour market up to the workers from the new EU countries in 2004 and, short of leaving the EU, there is nothing that the government can do to reduce the significant number of migrants that still come to the UK from these countries.
Any proposed cap will therefore only impact 30 per cent of migrant workers who are highly skilled and providing essential skills to UK businesses – knowledge workers that are exactly the types of individuals that the UK and London should be actively seeking to encourage. These workers also make a substantial economic contribution to the UK economy in terms of their tax revenues (latest figures from the IPPR suggest that in 2003-2004 immigrants made up 8.7 per cent of the population but accounted for 10.2 per cent of all income tax collected) and are not a drain on local resources as they must prove they can financially support and accommodate themselves before they are admitted to the UK.
Human capital is a key factor in influencing where multi national companies decide to locate. Traditionally, the UK’s immigration system has been seen as relatively responsive and flexible and has acted as a magnet to international businesses looking to hire and transfer the skilled staff that they need to build their businesses here. The proposed cap on the number of migrant workers that can come to the UK could act as a substantial deterrent to international business remaining in the UK and the City, undermining London’s position as the major European financial hub and a magnet for global talent.
In my view the proposal to cap skilled migration is nothing but a smoke screen; it certainly does not address the real issue of large scale European migration but it is rather a simplistic and knee-jerk reaction to appease the voting public that could fundamentally undermine the UK as an international business hub.
The current immigration system is far from perfect but it does protect local labour while allowing employers access to the skilled workers they need. Putting a cap on top of this system for short term political gain risks the continuing economic recovery of the UK.