The Home Office have primarily reduced the number of migrants coming to the UK from outside the EEA in the following areas:

Student Visas:

The Student Visa system was widely abused due to a number of small educational establishments operating English language courses and similar types of educational offerings bringing in people who had no intention of studying, with such companies often bringing far higher numbers of students to the UK than they could possibly accommodate.

These educational establishments were approved by the Home Office in the first place, so removal of the ease with which Sponsor Licences were granted would have remedied this situation. The Home Office went much further and removed the Tier 1 Post Study Work (PSW) visa.

The Tier 1 PSW visa was a strong incentive for international students to come to the UK and study (which also brought a large income to UK Universities) by allowing them to remain in the UK to work for up to 2 years after successfully completing a degree-level course, thus gaining valuable experience. Students now must leave the UK if they cannot quickly find a sponsored job at a suitably skilled and paid level once they have finished their studies.

This was a similar decision to the one made by the Australian Government, resulting in a huge drop in international student income for their Universities and a quick reversal of the policy.

International student numbers have dropped significantly and are expected to continue to drop. This is likely to result in significantly reduced income for British Universities and the result of a this could be the need for increased tuition fees for British students.

Highly Skilled Migrants:

Tier 1 General, formerly known as HSMP, was a very popular visa that enabled highly skilled and educated people to come to the UK without requiring employer sponsorship. This visa was very often used by those seeking to establish a business in a specialist area, surgeons, IT professionals and other similar trades.

The Tier 1 General visa was abolished after Theresa May announced that 30% of the ‘highly skilled’ migrants were doing low-skilled work such as working in supermarkets. This was of course during very difficult economic times and Tier 1 General visa holders were entitled to no benefits or state assistance, thus would take any work to ensure an income while looking for the work that they preferred.

Tier 1 General visa holders are now being targeted by huge increases in the application fees required to extend their visas. If they cannot extend their visas then they must leave the UK. Fees for main applicants and their dependants were increased by 50% in 2012 and for 2013 the fees for family members are also going to be increased by around 50%. These increases are far above the fee increases for any other type of visa and mean that an applicant with a wife and two children will now have to pay the Home Office £5,022 for a postal application that can take up to (or sometimes more than) six months to be decided, during which time the applicant is without a passport and is unable to travel. The estimated cost to the Home Office for processing the application is between £300 and £400 per applicant. If a same-day decision is required then the fee will be £6,522. This will usually provide a 2-year extension. In the face of tough economic times and large increases in the cost of living there are many applicants who will struggle to find the money for these huge fees.

Spouse Visas:

EEA citizens can bring their non-EEA partners to the UK without any financial requirements and without the need to evidence that either of them can speak English by exercising EEA Treaty Rights. A British Citizen living overseas now has to evidence an existing income and evidence English language ability. We are aware of many couples where a British wife has lived overseas for a number of years and raised their children, thus she has no income. The Home Office will not, however, consider the income of the non-EEA partner when an application is made from overseas – only the income of the British Citizen can be considered or savings that are held, the requirement for which is significant. This has left many couples unable to return home or having to face the prospect of returning to the UK alone to generate sufficient income to enable an application to be made. This will of course reduce the number of migrants coming to the UK but the difference between the rules for British Citizens and EU Citizens is significant and has caused much concern.

Work Permits:

There have been significant reductions in the types of roles that can be sponsored by UK employers. Sponsorship is a time-consuming and costly undertaking, with applications taking considerable amounts of time to be decided. Some progress has been made in this area for applications made inside the UK though. Of primary concern to UK Companies is the ability to hire those who are best-suited to the role and can bring maximum value to the business. There are many areas in which the best people are overseas and while this can sometimes be seen to take a job from a British Citizen there are a very large number of examples of this actually creating an increase in the number of jobs available to UK Citizens due to increased success of the UK Company. Of greater concern is the impression being given to international Companies that Britain is ‘closed for business’. Many international Companies will decide where to base themselves based on the ease of getting the best staff – making it hard (or impossible in some cases) for international Companies to obtain the people they need simply encourages them to base themselves somewhere that makes doing business easier.

‘Immigration’ has become a hot topic politically over recent years. Initial concerns were raised with regard to unrestricted migration from new countries joining the EU. Some restrictions were placed on Romanian and Bulgarian citizens coming to the UK, although these were not particularly harsh. Citizens from these countries will soon have unrestricted access to the UK labour market and to state benefits and this has been the cause of much posturing and discussion.

For the last few years the only answer to concerns about increased migration has been to decrease the number of fee-paying students and highly-skilled people who are able to come to the UK from outside the EEA. Many have expressed concern that the Government are in danger of damaging the education system, British business and the international reputation of the UK in the pursuit of what many believe to be unrealistic and unnecessary targets for net migration.

From 1 April 2012 the Tier 1 Post Study Work (PSW) Visa will cease to exist. This forms part of a wider policy to restrict the numbers of migrants coming to the UK. The Tier 1 PSW visa has been a key factor in attracting international students to the UK as it allows successful degree-level graduates to remain in the UK with the right to work for up to 2 years. This visa did not count towards Indefinite Leave to Remain (ILR).

Many other countries offer similar incentives to attract international students as the high fees paid by them helps to keep the cost of education lower for the citizens of such countries.

A few years ago Australia made a similar move to the one the the UK Government are about to make in an effort to appease those against migration. This proved to be a disaster as the educational establishments struggled financially due to the resulting loss of income. The Australian Government had to quickly reverse their decision. It is feared that the UK Government have learned nothing from this and are about to put yet further financial strain on an educational system that is already struggling in the current climate.

MPs were warned that changes to the student immigration system would “savagely cut” recruitment, lose at least £1bn in fees, and jeopardise the future of “stem” subjects – science, technology, engineering and maths – in particular.

The criticism followed a speech by the immigration minister, Damian Green, in which he highlighted cases of “unpleasant abuse” to justify the curb on overseas students, part of a package aimed at reducing net migration to the UK below 100,000 by the next election.

Green insisted that the impact would be restricted to below-degree courses, particularly those in private further education colleges, and that ministers would “do nothing” to prevent those coming to study at “our world-class academic institutions above and below degree level”.

Professor Edward Acton, vice chancellor at the University of East Anglia, speaking for Universities UK, told MPs that 30-50% of overseas students at British universities would be hit by the curbs as they went through “pathway courses”, especially in the English language, in preparation for degree-level courses.

Acton said the government’s focus on student visa abuse obscured the fact that its proposals would drastically reduce legitimate higher education recruitment. The impact on pre-university courses would cost universities about £1bn in fee income alone. The measures would amount to a “hostile act”, he told the home affairs select committee.

In addition to this, the Home Office have expressed a desire to stop successful students from remain in the UK and working for 2 years as is currently allowed under the Tier 1 Post Study Work Visa. This is a powerful incentive for international students to choose the UK for higher education and many are concerned that removal of this incentive will make the UK higher education system far less attractive to international students.

Similar changes were made in Australia, resulting in a drastic reduction in income for the Universities. Australia has now had to try and undo the damage done by again changing policy. It is a cause of great concern to some that the Home Office appear to be oblivious to the lessons that should be learned from this.

Home Office ministers want to impose tougher English language requirements on overseas students, restrict their ability to work while studying, and limit their ability to bring in dependants after graduating. Student visas are to be restricted to degree level and above for all but those with “highly trusted sponsors”.

It is estimated the measures will close the door on up to 120,000 students from outside Europe, out of the annual 300,000 student immigration programme.

Universities UK says Britain is second in the global student market, at 11.8%, behind the US, with overseas students making up nearly 15% of all higher education enrolments in 2008. They make up 45% of postgraduate students and sustain research in many “strategically important” subjects”. They make up 62% of postgraduates in engineering, 63% in maths and computer science, and 27% in physical sciences.

Directors of Imperial College London and the London School of Economics told MPs their overseas postgraduate research students were critical to maintaining their world-leading positions. They said individual universities should decide on the level of English needed, and pointed out that engineering English was different from that needed to study classics.

Green said the majority of non-EU migrants were students. He did not want to jeopardise the £5bn-a-year contribution of foreign students to the economy. “I am seeking to eliminate abuses within the system,” he said.

He was targeting the private further education sector offering sub-degree courses, in which 613 private colleges were rated less than “highly trusted” by the UK Border Agency. The sector brought in 91,000 students last year, he said.

He cited cases including that of a college that had two lecturers for 940 students, and another where placements included working in a pizza chain, as examples of abuse of the system.

The official consultation period on the student visa route closed this week. Green confirmed that he intended to press ahead with his proposals and may go further in limiting post-study work “at a time when graduate unemployment is at its highest level for 17 years”.

Recently the Home Office have had a number of Court decisions made against them.

Many of the new rules can appear to discriminate on the basis of the applicant’s race. For example, the rules for Spouse visas were changed in 2008 to stop spouses under the age of 21 from entering the UK, whilst those not subject to UK immigration control were not subject to similar impositions.

Courts recently deemed this requirement illegal, yet immigration minister Damian Green has stated that he will appeal this decision if possible and that he thinks it reasonable for non-EU couples to not marry until 21, whilst not seeing a similar need for UK couples or EU couples to do the same.

The Home Office recently closed the Tier 1 General Visa route for new applications made outside the UK with less than 2 days notice. Those who had access to the online payments system (including Australia, South Africa, Canada and others) could still book an appointment today and will have their application accepted, whereas those without access to the online payment system, including applicants in India and Russia, do not have this opportunity, leaving many with appointments already booked that will now be cancelled.

Many have expressed outrage that applicants in some countries are able to confirm appointments in the New Year and will have their applications accepted, whereas applicants based in other countries are not given the same opportunity.

The business, scientific and education sectors, amongst others, have  expressed significant concern that business and the general economic recovery could be damaged by new immigration rules and restrictions on the movement of skilled migrants to the UK.

The Government has responded in part by allowing unlimited Tier 2 Intra-Company transfers, these being visas for Companies to bring overseas staff to the UK. This only benefits certain scenarios for large Companies, many of whom are non-UK and use tax rules to avoid paying PAYE tax and National Insurance on the salaries of such employees.

Many smaller UK Companies have expressed the belief that this places them at an unfair competitive disadvantage as they will not have access to the same global talent pool as their larger competitors.

Such Companies would have previously used the Tier 1 General route to access the required skilled workers but this has also now been closed.

As skilled migration accounts for a relatively small part of the overall net migration to the UK, the motives for this Government seeking to restrict access to skilled workers must be questioned.

This is not the first time that the Home Office have made this mistake. Indeed, creating new rules without troubling Parliament with them appears to have become somewhat of a habit, along with losing the resulting Court cases that inevitably arise.

The potential exists for more of the same should the Government attempt to introduce rules to keep dependant family members of non-EU migrants from joining their partners in the UK.

Vince Cable, the Liberal Democrat who is the coalition business secretary, publicly complained in September that the temporary cap had done “a lot of damage to British industry”. The CBI and many businesses agree with him.

The limit on skilled migrants is part of a package including deep cuts in the number of overseas students. They are designed to scale back annual net migration to Britain from the “hundreds of thousands to the tens of thousands”, according to the government.

In response to the judgment, Immigration Minister Damian Green said:

“Today’s judgment will have no impact on the permanent limit on non-European workers the government will introduce next April. This ruling is about process, not policy – the policy of having a limit has not been found to be unlawful. The court’s ruling rests on a technicality. We will set this right in the next few days to ensure we can continue to operate an interim limit.

“We remain firmly committed to reducing net migration to the tens of thousands, and will continue to do everything in our power to prevent a rush of applications before our more permanent measures are in place.’

The government will press ahead with its plans to limit non-EU immigration to the ‘tens of thousands’ rather than the ‘hundreds of thousands’, despite the significant weight of opinion in the business and education sectors and within the coalition Government itself against the proposed limits.

Research from PricewaterhouseCoopers (PwC) found that 28 per cent of UK companies plan to increase employee numbers in 2011.

This is more than double the number of businesses that had planned to create new jobs in 2010, which was just 13 per cent. However, of the firms planning new positions next year, only 15 per cent said the increases would be “significant”.

Michael Rendell, head of HR services at PwC, said that employers faced serious challenges in finding the right people for the new jobs.

Skills shortages are predicted to be the main problem, with 53 per cent of British respondents ranking it as their biggest challenge.

But UK respondents also ranked immigration restrictions on global mobility and employment laws as major challenges when filling new roles (34 per cent and 23 per cent respectively).

Rendell said: “The UK has lost its position as the world’s most educated workforce, which is particularly worrying as we come out of the recession and may limit future growth.”

He advised firms to “take a more systematic approach to learning and development”.

Rendell said: “Ensuring staff can be easily deployed internationally is ever more important for businesses extending their global reach, but UK firms have been particularly challenged by the immigration cap.”

He said that while the government has proposed to remove the limit on intra-company transfers for those earning more than £40,000, people earning between £24,000 and £40,000 will be restricted to a one-year stay.

“It does not make economic sense for businesses to bring people into the UK for less than two years so this limit poses a serious threat to the flexibility of the UK’s labour market,” he said.

UK firms view employment laws as less of an issue when recruiting for new posts than employers in America, where 50 per cent of respondents in the worldwide study flagged it as their main concern. However, Rendell warned that there is a “risk” for UK firms if more employment laws are brought in.

“With financial services in particular being hit with a raft of regulation, Britain’s ability to compete with markets where there is less of a compliance burden could be reduced.”

The Tier 4 Visa currently allows international students to enter the UK to study at a variety of levels, including various courses that are below degree level. Many students first enter onto courses to improve their English language ability and then go on to degree-level courses at University.

Many Universities receive a large amount of funds from international students and would not welcome a reduction in such income.

In order to encourage international students, previous Governments introduced incentives to make studying in the UK more attractive. One of these incentives was the Science and Engineering Graduates Scheme (SEGS), designed to encourage successful graduates in Science and Engineering sectors to remain in the UK as such skills were (and still are) in high demand in the UK.

SEGS was later replaced by the International Graduates Scheme (IGS), which allowed all graduates to remain in the UK and work. Upon introduction of the Points Based System, the Tier 1 Post Study Work Visa (Tier 1 PSW) replaced the IGS.

All of the above visas were designed to encourage international students to enter the UK for the purpose of study by allowing them to remain in the UK and work. This was a strong incentive for international students to spend their money in our education system.

In addition to the above, international students currently have the right to work part-time up to 20 hours per week and full-time during non-term time. This is often required in order to help students support themselves while studying.

The proposed changes would remove Tier 1 PSW and require them to leave the UK immediately after their studies have finished. In addition, the proposed changes would remove the right to part-time work during weekdays unless the work was on campus.

Current rules also permit dependant family members to enter the UK with the student visa holder. This can be necessary for those with spouses and children as the right to a family life is a fundamental human right. Dependants are also allowed to work, thus helping the family to support themselves while studies are undertaken.

The proposed changes suggest that dependants are allowed to enter if the course is for more than 12 months but that they are not allowed to work at all. This could be seen as a ‘back-door’ method of blocking the right to a family life. Indeed, any attempts by the Government to limit migrants rights to a family life would be fraught with peril and legal action could be almost inevitable.

The final major change would be to remove the ability to get a Student Visa for many non-degree level courses.

Similar proposals were discussed in Australia and were met with strong opposition by Australian Universities who feared that the loss of significant revenue would impact negatively upon their ability to provide educational services.

Many education providers in the UK share the same fears as their counterparts in Australia. Any reduction in the perceived attraction of studying in the UK could result in significant reductions in revenue for the UK education sector and other education providers in countries such as Australia are likely to benefit.

These proposed changes, along with the recently announced changes, are designed to significantly reduce net migration to the UK. As the Government is only willing to deal with skilled migrants, who make up the minority of migrants, there is a real danger that the Government will not meet it’s targets and damage economic recovery in the process.

It is of interest to note that the proposed changes make no mention of the Student Visit Visa. This allows non-EU students to enter the UK to attend short courses of up to 6 months and 37,715 non-EU students came to the UK last year on a student visit visa.

During the third quarter of this year the number of ICT visas issued was 8,000 – an increase of 25%. If this rate is maintained it will result in around 32,000 workers entering the UK under the ICT route, compared to around 22,000 for the previous year.

If Tier 1 General is removed, as has been stated by the Government, then even more use of the ICT route is anticipated. As there are no limits on the numbers of migrants that can enter under the ICT route the Government will find it difficult to reduce immigration of skilled workers. Many in the UK believe that the goal of reducing the number of skilled workers coming to the UK is fundamentally flawed and potentially damage to economic recovery in the UK.

Many IT Companies use the ICT route to bring in workers from their overseas office and the ‘allowance’ paid in the UK often avoids attracting income tax or National Insurance contributions, thus allowing these Companies access to cheaper labour than a UK Company that is not able to use the visa and tax loopholes.

Many smaller Companies and other organisations such as the NHS foresee significant difficulties ahead as they do not have access to the ICT route and are therefore unable to compete or attract the best international talent.

The total Tier 1 and Tier 2 Visas that will be approved has been limited to 21,700 and does not include the Intra-Company Transfer route. The new limit will be set annually and thus allow no flexibility in terms of the number of visas that can be issued should unforeseen business requirements arise.

Tier 1 General, formerly known as the Highly Skilled Migrant Programme, as effectively been scrapped. Instead, Tier 1 will allow for up to 1,000 people of ‘Exceptional Talent”, such as scientists, academics and artists.

May also made clear that this route would not be just for those who have achieved international recognition but would also include those who show “sufficient exceptional promise to be awarded such recognition in the future”. It is unclear at present how this would be assessed.

The announcement was met with strong criticism from the Scottish Government, which said the economy will suffer.

External Affairs Minister Fiona Hyslop said: “We are deeply concerned about the damaging impact the annual limit will have on the Scottish economy.

“Scottish businesses, employers, universities and the NHS share our concerns that the UK proposal is not right for Scotland.”

Ms Hyslop said a flexible approach to immigration was needed, with regional variation to support the Scottish economy.

She added: “The immigration cap will do the opposite. It will have a negative impact on business investment.”

Colin Stanbridge, chief executive of the London Chamber of Commerce and Industry (LCCI), said his member organisations were worried by more severe limits on highly-skilled workers: “While we are pleased that the Government has listened to business on intra-company transfers, we are still concerned that the lack of flexibility inherent in a cap will have a detrimental effect on London’s competitiveness and productivity.

“The Government’s decision to reduce Tier 1 to just 1,000 people a year was an unwelcome surprise which will deprive London of some the brightest and best professionals in the world.”

The NHS, which is highly reliant on foreign recruitment, reacted with concern, saying that the health service would be disproportionately affected. Karen Charman, head of employment services at NHS Employers, said: “The immigration cap introduces an unreasonable administrative burden on the NHS, resulting in costly bureaucracy, extensive paperwork and delays in recruitment.

“The intra-company transfer route is not available to the NHS and, as such, a 25% reduction has effectively been applied to the supply of visas available.”

The new rules are being seen by many internationally as Britain closing the door to skilled workers.

May said the changes would limit the number of staff that international corporations are permitted to transfer to Britain from offices overseas by the Intra-Company Transfer (ICT) route by only allowing the visa to be issued for more than 12 months if the salary offered was at least £40,000 per annum.

A key part of this announcement was the fact that allowances can be included towards this salary requirement. This will please a some of the large IT Companies, a number of these being Indian, who currently pay a salary outside the EU and a UK allowance within the UK on which no tax is paid for those staying less than 2 years. There is no restriction on leaving and then coming back and the Unite union has criticised this practice as it allows a non-EU worker to be employed at a lesser cost than a British worker.

The Government is unable to limit the number of ICTs that can be issued as there is a ban on a numerical limit under a GATT-WTO treaty.

The immigration cap will have only a limited impact on Britain’s overall immigration rate, as work-related visas account only for about 20 percent of migration.

Attempts to reduce the net immigration figures would therefore have to also include students and family members if the Government are to reach their stated goal of net immigration being in the ‘tens of thousands’.

Legislation that attempts to restrict family reunification could be in breach of laws relating to the rights to a family life and are likely to be legally challenged. It is hard to see how Britain could be an attractive destination for highly skilled workers if they might be forced to be apart from their families.

International students are an essential source of funds for British Universities and many expect reduction of student migrants to be focussed on the large number of English language courses that are below degree level. While this could be good news for British Universities, there remains concern over the Tier 1 PSW visa. This allows international students who have successfully graduated from a UK University to remain in the UK for up to 2 years with permission to work. This is seen as a valuable benefit for international students – to remove the Post Study Work visa would be to diminish the attractiveness of studying in the UK.

The government will consider the report’s findings alongside the responses to the UK Border Agency’s own consultations on the annual limit. Both will inform the government’s decision on how the limit will operate when it is introduced next year.

Immigration Minister Damian Green said:

‘We thank the Migration Advisory Committee for their report, which we have analysed in great detail, and we will be announcing the details of our policy shortly.

‘Bringing down net migration to sustainable levels will not be easy. We will not be able to achieve it by focusing on just one area of the system or on one route into Britain.

‘By introducing an annual limit, we will reduce the number of people who come to the UK to work from outside the EU. But this is just one of the ways we intend to reduce the level of net migration back down to the tens of thousands each year.

‘We can reduce net migration without damaging our economy. Britain will remain open for business, and we have already announced that managers and specialists will continue to be able to come to the UK through an exempted intra-company transfer route.’

The Government usually accepts recommendations made by the MAC and recent rumours indicate that the least ‘hard-line’ recommendations are likely to be followed.