Arbitrary UK Visa Quotas Lead to Perverse and Damaging Outcomes

Brexit is fast approaching and the UK’s labour market is feeling the strain. Migrant workers from the EU are heading home and — it turns out — the economy needed them after all. Employers faced with staff shortages are applying for more visas to bring in skilled workers from the rest of the world. This is not a sign that UK companies are addicted to foreign labour or determined to overlook the un­employed natives on their doorsteps. The truth is, there simply are not many idle Brits any more. The share of UK-born people in jobs is the highest on record. Just 1.1m are unemployed, the lowest in more than 20 years, and many need intensive support and training. They are not going to step overnight into the shoes of a Spanish doctor or a German engineer.

This workforce crunch has shone a harsh light on the UK’s approach to non-EU migration. If ministers want to create a functioning system for EU migration after Brexit, then this is a perfect example of how not to do it. The policy is inexplicably generous to some would-be migrants and arbitrarily stingy to others.

On the generous side, the UK offers “ golden visas” for three years to wealthy people. All they have to do is invest £2m in government bonds, share capital or other assets (excluding property). They can apply to settle permanently after three years if they invest £5m. These visas are supposed to attract “wealth creators” to Britain. But being in possession of wealth does not necessarily mean you created it, nor that you will create more of it in a way that benefits the UK. If that is the hope, then requiring investors to buy gilts seems a low bar. The investors’ money will be at no risk, and taxpayers will pay them back with interest. Besides, the UK government has plenty of buyers for its bonds — just look how low yields are. It does not need to sell itself so cheaply.

Some other countries at least make a stab at ensuring that investment visas help their economies in some way. The US’s EB-5 visa programme requires investment in commercial enterprises that create or preserve jobs, though this scheme has had problems too.

Britain only issued about 350 golden visas last year. But the principle is important. Because while the government has opened the door for people with capital, it has put up a wall for people with human capital who want the same opportunity.

If a UK employer wants to hire a skilled worker from outside the EU on a general “tier 2” visa, it must prove the position could not be filled by anyone already in the country. The government has also capped such visas at 20,700 a year in a bid to reduce annual net migration to tens of thousands. For the first time this year, applications have regularly exceeded the monthly cap.

When demand outstrips supply, the government prioritises people in official “shortage” occupations, such as nursing. It then ranks applicants by salary, preferring higher ones. As a result, Britain has been rejecting thousands of skilled workers with jobs to go to. This includes hundreds of doctors and medical professionals whose salaries are no longer high enough to make the grade.

It is bizarre for the government to refuse to allow a hospital in Newcastle to hire a doctor simply because a drug company in Cambridge needs a scientist and can afford to pay a little more. But arbitrary numerical caps lead to arbitrary decisions.

A decent migration policy, for EU and non-EU workers, would recognise that a person’s value to society is based on more than their wealth, or their salary. It would ditch fixed numerical targets, which lead to perverse outcomes. And it would reflect a truth that ministers seem to have forgotten: that skilled people have choices.

The big danger for Britain on the eve of Brexit is that, as ministers debate hubristically which workers to allow in, the workers in question decide they would rather take their skills elsewhere.



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