Trade, Development, and Immigration

Scrap the cap on visa numbers

There are various ways in which governments can limit and control immigration. They can, for example, specify strict, detailed criteria which every applicant has to meet (in terms of skill levels, a minimum salary etc). Or they can set looser criteria, and then simply cap the overall number of visas.

The latter approach has the advantage of greater simplicity. The former has the advantage that, at least in theory, it allows the government to cherry-pick those migrants it thinks will benefit the country the most. This is, of course, predicated on the assumption that the state can pick winners, predict the economy’s labour requirements, and rationally plan the country’s workforce, an assumption which most free-marketeers will reject. But let’s not open that can right now. Let’s just pretend that the state can indeed do that well enough.

Either way – it is hard to see how those two approaches can be meaningfully combined. If you go for the first approach and set strict entry criteria, then everyone who clears those hurdles is by definition a “desirable” immigrant. They are the people the economy “needs”; otherwise, they would not have cleared the hurdles. So once you’ve taken the trouble to put a selective system in place, it would be nonsense to cap the overall numbers.

Yet this is what our immigration system for non-Europeans does.

The main type of work visa for non-EEA migrants is the so-called Tier 2 (General) Visa. The hurdles to get one are very high. The Tier 2 system is technically a points-based system, but in practice, it is more like a set list of requirements which applicants have to meet. This is because the maximum number of points per category is fairly low, so if you fall short of one of the criteria, you cannot easily cancel that out by over-fulfilling another.

Thus, a typical Tier 2 Visa immigrant must have a work contract for a skilled job already, they must have around £1,000 worth of savings in their bank account, they must have an English language certificate, and they must have clean criminal record. Their prospective employer must prove that they have been unable to find a suitable domestic applicant for this role. They must also show that they are going to pay the going market rate for your job: Tier 2 Visa applicants are not allowed to price themselves into the British labour market by undercutting domestic workers. They must pay an application fee of £610 for themselves, and another £610 for every dependant. They must also pay a healthcare surcharge.

If the people who manage to obtain such a visa are not “desirable” immigrants, I don’t know who is.

Nonetheless, the Home Office is currently rejecting applicants who tick all the right boxes en masse. This is because there is also an overall cap on the number of Tier 2 visas: no more than 1,725 per month must be issued. This means that thousands of people clear the hurdles, just to be rejected because the upper limit has been reached.

Between December 2017 and March 2018, the Home Office has rejected almost 2,000 medical professionals, about 1,500 IT/tech specialists, 1,800 people who would have worked in various professional services, 400 scientists and engineers, and so on.

Terrible economics, but good politics, I hear you say. The public doesn’t like immigrants, so we get the destructive policies we deserve.

But that is not so – it is not good politics. Surveys show that if you ask people about “immigration” in the abstract, attitudes are indeed very negative. For example, between 63% and 70% of people (depending on which survey you look at) believe that immigration to Britain is too high. These are remarkably high figures given ‘social desirability bias’, and given that it’s often hard to get a clear picture in surveys that offer a “Don’t know” response option.

But once you break it down into more specific groups, you get a much more differentiated picture. Around 70% of people believe that the government should allow more, or at least the current numbers, of immigrants “with high levels of education and skills, looking for high paid jobs”. You get similar rates of approval if you ask about “people coming to work in the British health service”, a group that is overrepresented among the rejected.

When asked about the most positive effects of immigration, the two most common answers are “Bringing people to fill highly skilled jobs where there is a labour shortage” and “Bringing in more people of working age who pay more in taxes than they claim in benefits”. That is pretty much exactly what Tier 2 Visa holders do. Asked about the most negative effects of immigration, the most common response is “People coming here to claim benefits for them and their families.” That is pretty much exactly what Tier 2 visa holders don’t do, and could not do.

I’m not saying that immigration policies should be drafted on the basis of YouGov surveys – but if you did, you would end up with something a lot more sensible than what we actually have. The much-derided ‘Gammon’ never asked for the nonsense that is currently happening.

What we should aim for is the most economically literate immigration policy that is just about compatible with public opinion. At the moment, we have almost the opposite. We clamp down hardest on the most popular groups of immigrants, inflicting maximum economic damage for zero political gain.

The cap on Tier 2 visas should be scrapped immediately, and without replacement. Realpolitik, which recognises the public’s hostility to immigration, is one thing. Needless economic self-harm, i.e. depriving ourselves of skilled labour where the public demands no such thing, is quite another.


Head of Political Economy

Dr Kristian Niemietz is the IEA's Head of Political Economy. Kristian studied Economics at the Humboldt Universität zu Berlin and the Universidad de Salamanca, graduating in 2007 as Diplom-Volkswirt (≈MSc in Economics). During his studies, he interned at the Central Bank of Bolivia (2004), the National Statistics Office of Paraguay (2005), and at the IEA (2006). He also studied Political Economy at King's College London, graduating in 2013 with a PhD. Kristian previously worked as a Research Fellow at the Berlin-based Institute for Free Enterprise (IUF), and taught Economics at King's College London. He is the author of the books "Socialism: The Failed Idea That Never Dies" (2019), "Universal Healthcare Without The NHS" (2016), "Redefining The Poverty Debate" (2012) and "A New Understanding of Poverty" (2011).

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