Blocking the way

How City firms, dependent on recruiting graduates across the globe are being affected by the immigration cap
Commercial awareness
Politics and economics

The government's immigration cap policy is proving controversial. Violet Holloway considers how problems with the student visa system should be tackled, while The Gateway shows how City firms, dependent on recruiting graduates from across the globe are also being affected.

Currently, around 100,000 non-EU nationals come to Britain to study each year. Foreign students are attractive to Britain - the annual revenue from their tuition fees currently stands at £12 billion. And for most foreign students, British tuition fees are a good deal when set against the much higher sums demanded by American universities. The two-way cultural benefits are as significant as economic ones. US-born Amanda, who came to Britain to study for a one-year postgraduate course at the University of Edinburgh, said: "Britain has such a rich history, and also an established theatrical tradition that I wanted to explore." Intellectual exchange works both ways; interaction with overseas students enhances the university experience of British nationals.

But critics say that the student access route to the UK is being exploited by those seeking a backdoor way in. Reuters reported in September that 20 per cent of non-EU graduates had remained in Britain for a period after their visa end-date. It seems sensible that, in these times of economic difficulty, we should be channelling our resources towards existing citizens and ensuring that the British welfare system isn't being abused.

Student budget

The Home Office's guidelines are clear. Students undertaking a year-long study at a registered institution are permitted a stay of four months after the completion of their course, and a lesser period for those on shorter programmes.

The former Labour government made some moves to tackle breaches of these rules. In February this year, 200 bogus colleges were removed from the list of institutions permitted to give their students access to visas. In March, providers of NVQs, and other vocational courses, were deemed no longer eligible sponsors, and new privileges were given to those institutions with track records of compliance with the law.

The Conservatives' pre-election campaign commitment to tackle net migration more aggressively has led to the announcement of more significant changes to the student visa system. Students from countries outside the European Union will be subject to these measures, which are part of a broader strategy intended to cut immigration down from hundreds of thousands to tens of thousands, when they are brought into force next April.

Education, education, education

But what are the real reasons for the coalition government's crackdown on student visas? This specific targeting of the issue warrants closer examination. Applications to higher education institutions have risen year on year since 2001, without a corresponding rise in the number of places available. This deficit of university places is a problem that has developed over the last decade, thanks to former Prime Minister Tony Blair's policy of aiming to have 50 per cent of school-leavers going into higher education. The result was the notorious U-turn on top-up fees, and a uniquely debt-laden generation entering a difficult job market. The situation was worsened by outsourcing to cheaper overseas locations and immigration from new EU member states. Faced with this situation, the new government has chosen to attempt to cut the numbers of eligible foreign applicants, which (theoretically) opens up more spaces for British-born students, and results in fewer unemployed youngsters and a reduction in benefit costs - all of which looks rather good on a Tory campaign brochure designed to appeal to the party's core voters.

It is essential that attempts to narrow the channels of immigration go hand-in-hand with measures to ensure that those with a genuine desire, and the merit, to study in the UK do not find the door slammed in their faces. Earlier this year, a blanket suspension was imposed on student visas for those from Pakistan, Bangladesh and parts of India, after what was described as a "disproportionate rise" in applications. Such a sweeping and unjust step suggests a propensity on the part of the coalition government towards knee-jerk responses. However, earlier this year, Nick Clegg raised concerns about the direction immigration policy was taking. It is to be hoped that the Liberal Democrats, whose pre-election proposals on immigration were less drastic than those of the Tories, will serve as a moderating force in government.

The effect on the economy

The immigration cap means that fewer student and working visas are now available to foreign nationals.

People across the board are saying that limiting the talent pool available to recruiters in the Square Mile in this way is already having an adverse effect on the British economy.

Under the new immigration policy, fewer able overseas graduates will be able to get jobs in the UK and fewer talented foreign students will come up through the British university system.

  • Vince Cable, Business Secretary, says that the cap is doing huge damage to investment banks and other City firms.
  • Boris Johnson, Mayor of London, has also raised concerns about the cap, questioning how accountancy firms, banks and law firms will be able to employ the people they need for their global businesses today and in the future.
  • Investment banks and other City firms are reported to be considering moving some operations out of the UK if the system does not become more flexible.
  • Business lobby groups the Confederation of British Industry, the British Chamber of Commerce and the** Federation for Small Businesses** have all expressed reservations about capping immigration on economic grounds.
  • A group of Nobel prize-winning scientists, including some of those involved in the invention of a one-atom thick material 200 times stronger than steel, recently warned that the proposed visa restrictions could deprive science and industry of talent.

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