UK: MAC Report - 18 November 2010

Last Updated: 22 November 2010
Article by Caron Pope, Louise Carson, Deirdre Murphy and Siobhan Owers

On 18 November, the Migration Advisory Committee ("MAC") published its report on limiting Tier 1 and Tier 2 of the Points Based System.

The full text of the report can be found here.  The fact that it runs to over 300 pages shows what a challenge the MAC has had in looking at the Government's objective to cut migration to the "tens of thousands" during the lifetime of this Parliament.  The key recommendations are highlighted below and we anticipate that the Government will make an announcement once the report has been considered in Cabinet (probably within the next 2 weeks).

Key recommendations 

  • The MAC finds that Tier 1 and Tier 2 migrants on average "almost certainly make a positive net fiscal contribution".  Additionally the Government's objectives for immigration cannot be met by reducing the numbers of Tier 1 and Tier 2 migrants alone.  "All other things being equal, reducing non-EU work related inflows to zero would only bring net migration down to 141,000".  The MAC confirms that the Government needs to look at other migration routes particularly students (Tier 4) and family routes.
  • The quota for Tier 1 (General) and Tier 2 should be set between 37,400 - 43,700 (a 13% - 25% reduction on 2009).  
  • This figure includes intra company transfers (ICTs).  If, as expected, ICTs are removed from the quota (either completely, or if they meet certain salary/skills thresholds or for assignments of less than 12 months) these figures will need to be adjusted. 
  • Dependants will not be included in the quota nor will in-country applications (i.e. extensions or switching from one category to another).

Tier 1 (General) 

  • The limit should be set between 8,000 and 11,100 annually. 
  • The interim cap was set at 600 for each calendar month from 19 July to 31 March 2010.  The speed with which the quota has been used in October and November highlights the difficulties in operating a monthly quota figure.
  • A  regular recalibration of points should be undertaken so that only the most highly skilled will qualify
  • Tier 1 (General) migrants must show at the extension stage that they are employed in a graduate level role. 

This addresses a recent report showing that a significant proportion of Tier 1 (General) migrants were in fact undertaking low-skilled positions.

Tier 2

  • The numbers should be reduced to between 29,400 and 32,600 for 2011/2012.
  • The Government could consider excluding from the Tier 2 quota visas issued for less than 12 months provided that switching into longer term immigration categories is either not permitted or then causes the migrant to fall within the quota.

However, the Government has given clear indications that intra company transfers will be either wholly or largely excluded from the quota.

  • The points calibration should be amended so that only the most skilled roles will qualify. 

We anticipate that this will mean that all roles will be at a minimum of graduate level.

  • There should be a scaling down of the allowances which can be taken into account for ICTs  and requiring sponsors to pay more by way of salary.
  • Extension applications for ICTs should be made more difficult.  The Government should also consider limiting the categories who can apply for settlement. 
  • The MAC recommends that there should be some form of certification of the resident labour market test to check that it has been correctly undertaken. 

This was flagged as an area of concern in their 2009 report. At present, applications are not scrutinised by the UKBA unless they are picked for assessment at the audit stage.

  • The Government should consider auctioning a small number of Certificates of Sponsorship each month.  This would mean that employers who are willing to pay the highest price will be able to secure CoS for key new appointments.


The MAC can only make recommendations - nothing is yet decided ( at least publicly) and the Government is free to accept as many or as few of the recommendations as it chooses.  We would however expect the following; - 

  • The permanent quota will be a fact of life post April 2011 and, while it will undoubtedly be painful for some sponsors, it is unlikely to be as devastating for business as we had first feared (though there will be enormous challenges ahead).
  • ICTs will not form part of the quota, although it remains to be seen whether there will be a blanket exemption.  Short-term visas (less than 12 months) may be excluded and/or there may be scope for roles paying a significantly high salary or for roles at a senior level to also be excluded from the quota.  David Cameron's assertion that ICTS would not form part of the quota at Prime Ministers Questions, while not binding, was a useful signpost of Government thinking and Theresa May has subsequently confirmed this.  We also expect the threshold for ICT extensions to be set higher and for applications to be scrutinised more carefully.
  • The quota will not apply to Tier 2 extension applications.  This will be in line with the revised guidance published on 1 November for the Exceptional Allocation of CoS's which confirmed that all extensions would automatically be approved under this process.  This has removed some of the problems caused by the temporary quota for sponsors who were "saving" their Certificate of Sponsorships to extend existing employees.
  • The salary threshold for Tier 2 will be raised and there may also be a scaling back for allowances that can be taking into account for ICTS. 
  • Part of the quota may be auctioned.  Although this is likely to be a very small proportion of available Certificates of Sponsorship, it will be interesting to see how much some employers will be willing to pay. 
  • Tier 1 (General) applications will become harder both at the initial stage and at the extension stage.  We expect the minimum salary threshold to be raised significantly (a starting salary of at least £70,000 has been mooted) to limit the number of eligible candidates.
  • The MAC report is only the first in series of reviews of immigration.  We anticipate that Tier 1 (Post Study Work) visas will be restricted, while Tier 1 (Investor) and Tier 1 (Entrepreneur) are being redesigned to encourage more applicants.  The category which is in line for the hardest hit is Tier 4 (Students).  However, the education sector is likely to resist any significant curb on the number of permitted applications.

The UKBA is still to report back on how the new system will work in practice (their report is expected by early in the New Year) and we will continue to be part of the discussions.  We will report as soon as we have any announcements on the quota.

This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to

Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.

The original publication date for this article was 22/11/2010.

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