The next Tory U-turn: immigration

by Atul Hatwal

There it is again.

That faint squeal of tyres and slight waft of burning rubber – the hallmarks of a minister struggling to keep their policy on the road.

And now we wait for the noise to get louder, the smell more pungent, until the minister gives-in to the sliding chaos of another U-turn.

The latest threat to political pedestrians maybe a little while before it careens across the news pages, but it’s only a matter of time.

The Tory migration cap might get re-branded, re-engineered into a broad range of metrics and turned into an elasticated party hat, but the target of net migration in “the tens of thousands”, will ultimately go the same way as the NHS reforms, forest privatisation and weekly bin collections.

So far, Theresa May has been one of the quiet successes in the government, escaping relatively lightly in the gaffe stakes. She’s remained safe largely by moving slowly and not trying to reform every single piece of departmental policy within 10 minutes of arriving.

But with the migration cap, May has one of those too-good-to-be-true policies. A Jimmy Choo initiative that looked so alluring in the manifesto shop window that the Tories had to have it. But now, in government, somehow the shoe doesn’t fit, no matter what May does.

This week saw the first signs of the U-turn to come.

On Tuesday, the home secretary announced that the net numbers of foreign students in the UK would be reduced by 52,000 per year. On the face of it a major cut and a big step towards achieving the government’s target.

Except that in March, the reduction was going to be 100,000 per year.

The result of this lower target is to blow up the keystone in the bridge between the Tories’ manifesto commitment on immigration and delivery in government.

The importance of reducing foreign student numbers in achieving the cap target was revealed in November last year by Professor David Metcalf, the chair of the government’s expert migration advisory committee (MAC).

At the launch of the MAC report on how to deliver the cap, he was clear that the bulk of the reduction in net migration was going to come from cuts to the numbers of overseas students. The figure reported in the press at the time was that a net reduction of 88,000 students per year would be required for the government to hit its target.

The 52,000 announced is clearly a lower number than the 88,000 needed or the 100,000 proposed.

But for the government, that’s not the worst of it.

The projections in student cuts from November were based on reducing annual net migration of 196,000 per year – the total at the time – by 146,000, down to 50,000. Metcalf’s view was that cuts to non-EU student numbers would need to account for 60% of the reduction, hence the need for 88,000 fewer foreign students.

The latest figures indicate net annual migration in the year to September 2010 was 243,000.

To get to the target outlined by Professor Metcalf, Theresa May would have needed to announce reductions in student numbers of 116,000 per year.

As of Tuesday, according to their own plans, the government will be 64,000 short each year on their net target.

Even looking at what might squeak through as a political win – getting the total down to just below 100,000 a year – the government is still 34,000 short of what would be needed.

In practice, the gap will be larger. Based on the home office’s own impact analysis; their assumption is that 80% of the places formerly taken by non-EU nationals will go to UK and EU students.

Even if half of this replacement figure were taken by EU nationals, this would increase government’s annual gap from 64,000 to 85,000.

And the likelihood is that a projection of 50% of places being taken by British nationals is a serious over-estimate.

The vast majority of these institutions are already open to UK nationals. It’s just that British citizens, with access to colleges that have better academic track records and lower course fees, are unlikely to go for the more expensive, lower standard option.

The government is only now beginning to face up to the two root problems that meant a cap was always going to be unworkable.

First, cutting foreign student numbers might have seemed like an easy option, but its not.

They pay hundreds of millions of pounds in fees each year that help cross-subsidise British students. At a time when there is a gaping black hole in education finances created by the fees fiasco, removing this source of revenue could push ever more institutions towards bankruptcy.

The home office’s own impact assessment stated that the net cost to the British economy of the 52,000 reduction will be £2.4bn over four years – that’s after taking account of costs, like the students’ use of public services.

The net funds contributed to the UK economy by these 52,000 foreign students would have been enough to continue the future jobs fund guaranteeing every single one of the young unemployed a job or to take 5% off the duty on petrol.

The impact of cutting foreign students to the levels required by the cap over the course of this parliament would hit national income by almost £5.4bn making large swathes of the government’s current spending cuts programme futile.

This is the underlying reason the foreign student population grew so rapidly under Labour – they are major revenue generators for the economy.

A point not lost even on George Osborne’s treasury.

Second, even if the financial impact could be mitigated, the government does not control enough of the determinants of migration to guarantee delivery of its cap.

The migration figures are made-up of movements from 3 groups of nationals – British nationals, EU nationals and non-EU nationals. The government has no control over the first two groups which constitute 42% of arrivals into the country.

This means action to reduce the total inflow will need to be borne disproportionately by non-EU national students, bringing with it additional political and business costs from countries like India and China who see their citizens being discriminated against. In the coming years as Britain attempts to gain access to these export markets, this will become increasingly important.

If, at the same time as action on non-EU national students, there were to be a comparable increase in net migration by EU students, any progress towards a cap target would be reversed and there’s nothing the government could do about it.

In the current situation, it’s theoretically possible for the government to bar all non-EU nationals from work and education in this country and deport those that are here, and still miss its cap target.

Hardly a sound basis for policy.

This critical combination of lost revenue from foreign students and limited government control over the determinants of migration is what has doomed the cap.

Number 10 were presented with this analysis early on in government. But as with so much, they over-ruled it and pressed on in their quest to be radical.

Theresa May might think she has a mandate to drive through the manifesto policy and the backing of the PM, but so did Andrew Lansley and Caroline Spelman.

Remember – mirror, signal, manoeuvre.

Atul Hatwal is associate editor of Labour Uncut.

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One Response to “The next Tory U-turn: immigration”

  1. Simon says:

    I agree with the broad thrust of this piece, but you’re a bit loose with the terminology. There isn’t a “cap target”, there is a target (to reduce net migration to tens of thousands per year), and a cap (which is one of the means of achieving that target).

    The strict cap only applies to economic migrants coming in through the tiers 1 and 2 routes (respectively, ‘exceptional talent’ and work permit visas). These routes already subject to monthly caps, totalling 21,700 visas per year across the two tiers.

    Student visas are not being capped at all, but have become subject to new restrictions on accreditation, English language requirement and post-study work. This is why the estimates of numbers are so imprecise, and being revised so often.

    So I quite agree that the immigration target will very likely not be reached. The cap on non-EU economic migrants, though, looks set to be with us for a while.

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