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Immigration cap will cost UK economy £360m a year

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In June, shortly after taking office, Conservative minister Theresa May sent a tightly-scripted question to the Migration Advisory Committee (MAC), a body sponsored by the UK Border Agency of the Home Office. It read as follows:

'At what level should limits on Tier 1 and Tier 2 of the points-based system be set for their first full year of operation in 2011/12, in order to contribute to achieving the government's aim of reducing net migration to an annual level of tens of thousands by the end of this Parliament, and taking into account social and public service impacts as well as economic impacts?'

Yesterday MAC published its response. It said that net migration last year stood at 196,000. To meet government targets, it recommends that the number of skilled migrant workers coming into Britain through Tier 1 and Tier 2 should be cut by between 13% and 25% next year -- limiting them to between 37,400 and 43,700 -- which would be even tighter than the current temporary cap, which has been in place since June.

MAC acknowledges this could damage the UK plc to the tune of £360m a year because of the positive contribution that skilled migrants make to the economy in areas as diverse as healthcare, engineering, and the arts.

The report also notes that: "It is not possible to reduce net migration to tens of thousands by limiting work-related immigration alone". Consequently, the number of overseas students from outside Europe will need to be cut from 163,000 a year currently to 76,000 a year -- which will also impact the UK economy, since tuition fees from international students totalled over £2.5bn in 2008.

In addition, deep cuts in the 55,000 people who come to join their families settled in the UK will be needed too.

Commenting on the findings, Sarah Mulley, Associate Director at the Institute of Public Policy Research, said: "The migration advisory committee's analysis shows clearly how difficult it will be for the government to fulfil its promise to cut immigration substantially. The government now faces an unpalatable choice between introducing a policy which it knows will be damaging to the economy and public services, or failing to fulfil a key promise to the electorate."

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