The number of visas issued to foreign students will be cut by up to 120,000 in an effort to achieve David Cameron's pledge of a dramatic fall in immigration.
Theresa May, the Home Secretary, announced plans yesterday to impose a limit of 21,700 next year on the total of skilled non-European workers allowed to move to Britain. But she excluded staff who transfer jobs with the same employers to Britain from the cap, bringing the total number of skilled workers to be admitted to the country next year to an estimated 35,000 to 40,000. That will be a modest reduction of 10,000 to 15,000 on the previous year, a fraction of the scale of cuts required to meet the Prime Minister's target.
The Government's focus is now turning to foreign students who represent some 60 per cent of the migrants coming to Britain. Mrs May signalled that in future visas would only be issued to students taking up degree courses.
She told MPs: "A recent check of students studying at private institutions below degree level showed that a quarter could not be accounted for. Too many students at these lower levels have been coming here with a view to living and working, rather than studying. We need to stop this abuse."
The Home Office estimates that more than 40 per cent of the 300,000 student visas are for courses at below degree level – equivalent to some 120,000. Under the plans, visas will only be issued for places at universities and further education colleges, although some visas will be reserved for specially-approved institutions providing lower-level courses.
Mrs May also announced that the Government planned to close the "post-study route" for foreign graduates, which last year enabled 38,000 overseas nationals to enter the labour market. The Home Secretary said there would be an eight-week consultation on the proposals, suggesting detailed plans will be set out early in the New Year.
Whitehall sources indicated yesterday that deep divisions remained within the Coalition over the issue; ministers originally planned to set out the moves at the same time as the cap on skilled workers. Mrs May also announced a cap of 21,700 on skilled workers admitted to the UK next year. Visas will be allocated according to qualifications, salary and job shortages in their professions. It will include 1,000 places reserved for top scientists, researchers and senior figures in the arts.
The Government has bowed to pressure from industry and commerce – supported by Vince Cable, the Business Secretary – to exempt "intra-company transfers" (ICTs) from the cap. Last year, 22,000 workers arrived through this route. But the rules on ICTs will be tightened to stipulate that foreign nationals will have to be taking up posts carrying salaries of a minimum of £40,000 – or £24,000 if they are coming for less than one year.
Mr Cable said: "We have protected [businesses'] ability to bring the skills and talent to the UK and give them certainty around their continued ability to move their global workforce."
John Cridland, director general designate of the Confederation of British Industry, said: "This sends out the message that Britain really is open for business." But Ed Balls, the shadow Home Secretary, claimed that Government policy was in "complete chaos and confusion" and claimed that Mrs May's plans for a cap were a "con" because of the exclusion of ICTs.
John Mountford, international director of the Association of Colleges, warned that non-EU students coming to the UK on courses below degree level "subsidise UK universities and UK students" by going on to degrees later.