Chapter Two: Why current migration policy is not appropriate for Scotland
52. The previous chapter demonstrated that growth in the population, in particular the working age population, can help mitigate demographic change and contribute to addressing rural fragility, sustainability of services and public finances more generally. Migration is essential to this, as all of Scotland's population growth over the next 25 years is projected to come from migration. Natural change from births and deaths will be negative in each year of the projection. This is unlike the rest of the UK, where natural change contributes significantly to population growth – it is projected to account for 39% of the UK's population increase between 2016 and 2041.
53. Since the year to mid-2007, Scotland has relied on migration for population growth more than any other constituent country of the UK as Figure 2.1 shows. Over this period 63% of Scotland's growth has been due to net international migration compared to 53% for the UK as a whole. A further 25% of Scotland's growth was due to net migration from the rest of the UK.
Figure 2.1: Natural change and net migration as proportion of change in population between mid-2006 and mid-2016
Source: Mid-Year Population Estimates, National Records of Scotland, Office of National Statistics
54. Scotland depends on inward migration to grow its population. Nevertheless, it is UK policy to reduce net migration to a target of 'tens of thousands' per year for the whole of the UK. The Home Affairs Committee at Westminster recently concluded that the net migration target "is not working" and observed that "net migration of non- EU migrants alone, which the Government can control regardless of whether the UK is in the EU or not, has consistently exceeded 100,000 since 2010." 
55. There are also significant limitations in measuring the net migration target. While the migration system may influence the number of people coming to live here, it is more difficult to influence the number of people who choose to emigrate and move elsewhere. The main source of measuring international net migration is the International Passenger Survey ( IPS). The quality of the IPS is variable with the estimates becoming less reliable when broken down for particular sub‑groups or areas. Current estimates for Scotland and other parts of the UK have high levels of uncertainty due to the small sample size of the IPS.
56. The economic modelling in this paper makes clear, however, that the UK achieving its net migration target would be particularly damaging to Scotland. The migration patterns needed by Scotland include the long-term settlement of working age people who raise families here, while the UK focus is on reducing immigration and centres on relatively short-term work visas to address skills shortages.
57. The UK Government tightened many aspects of the immigration rules in 2012, and put new restrictions in place and obligations on public services and employers. This included withdrawing the post-study work visa route that replaced Fresh Talent and the imposition of additional maintenance and reporting requirements on international students. These measures were intended to combat perceived abuse by around 100,000 students overstaying their visa each year. Data published by ONS in August 2017 based on exit checks demonstrated that fewer than 5,000 students overstayed their visa in the previous year.
58. Students are also counted in the net migration target. International statistical standards require that students are included in reported migration figures, but there is no requirement that they are included in government targets on net migration.
59. These changes did not affect EU citizens directly. However, after the UK leaves the EU, free movement of people within the European Single Market is expected to be replaced by a more restricted migration policy for new EU arrivals, under UK law . Even without any announced policy changes, the impact is being felt.
60. The ONS briefing paper "Migration since the Brexit vote"  focuses on migration in the first full year since the outcome of the EU referendum. In that time, UK net migration fell by 106,000. This was the largest fall in any 12-month period since records began in 1964, and a reduction of around a third – although net migration remained significantly above the UK net migration target, at 230,000.
61. Ensuring ongoing access to labour from across the EU under free movement is of fundamental concern to many businesses across the Scottish economy, as highlighted in our paper Brexit: What's at Stake for Businesses.  Firms have repeatedly told us that any restriction on the free movement of EU labour could negatively affect their businesses, especially if it were to involve new administrative or bureaucratic requirements that would impose or increase costs. For many smaller businesses, in particular, such restrictions would make the recruitment of essential staff practically impossible.
62. Many businesses, including in agriculture and horticulture, have also expressed concerns about the impact that the negative rhetoric against migration is having on individuals already in Scotland, or those who may be considering coming here - a concern that is shared by the Scottish Government. We know anecdotally that many businesses who rely on seasonal workers, for example, are finding it harder to recruit workers since the EU referendum.
63. Some sectors have a particular reliance on free movement of workers from Europe. There are approximately 17,000 EU citizens employed in the tourism sector in Scotland, 9.4% of the total workforce. There are also 11,000 EU citizens working in Scotland's creative industries, in proportions as high as 35% for some of the national performing companies. The Scottish Government's evidence to the MAC sets out in detail the positive impact of EU citizens on different sectors and the risk to those sectors if migration is restricted.
64. Economic models show that a decrease in labour supply as a result of lower levels of migration has a substantial negative impact on both the Scottish and the UK economy, but the impact on Scotland is greater. This is further evidence to support the case that a different approach to migration is required in Scotland.
UK Migration System
65. While immigration policy remains reserved, the Scottish Government will advocate for and attempt to influence change in the UK migration system to ensure Scotland's needs are met, as far as they can be, within UK policy.
66. There are changes to the UK-wide policy and systems that would benefit Scotland and other parts of the UK. We highlight five areas where UK Ministers should revise their policy:
- net migration target;
- family migration;
- immigration skills charge;
- Scotland shortage occupation list; and
- post-study work visa.
67. The UK Government target to bring net migration down to the 'tens of thousands' is arbitrary, not based on evidence, feeds negative rhetoric about migration and contributes to the sense of the UK as a hostile environment for migrants. If the UK Government were to end free movement of people as they intend and actively pursued a migration policy intended to meet the net migration target, it could be deeply damaging to all of the UK and to Scotland in particular. Economic modelling in this paper suggests the GDP impact for Scotland of the UK reducing net migration in this way could be over £10 billion per year by 2040.
68. Scotland accepting only a proportionate share of the UK net migration target in that scenario would exacerbate the already significant demographic challenges the country faces and stifle economic growth. Therefore, as part of any future immigration scenario, the UK Government should abolish their net migration target; or, at the least, migration to Scotland should not be included within the target. In line with public opinion and as the Scottish Government set out in response to the MAC, if the UK Government maintains a net migration target then international students in the UK should also not be included in it.
69. The restrictions the UK Government has placed on family migration in recent years combined with an expansion of EU law rights for family members has created the paradoxical situation where EU citizens living in the UK, exercising treaty rights, have an easier pathway to bring their non- EEA family with them than do British nationals. The UK Government should continue to protect the rights of the family members of EU citizens after Brexit, and should take account of the value of family life by extending rights to the family members of UK citizens
70. The Immigration Skills Charge is an unhelpful burden on employers seeking access to skills and talent from across the world. The charge constitutes an additional bureaucratic and financial burden on Scottish businesses and employers should not be penalised for employing the skilled staff that they need. The application of the skills charge in Scotland should be discontinued.
71. The Scotland Shortage Occupation List is the only current element of the UK immigration system where there is any attempt to consider the different needs of Scotland relative to the rest of the UK. However, it is not a devolved responsibility  – the Scottish Government has no formal role in determining what occupations are considered in shortage in Scotland. Scottish Ministers cannot currently commission the MAC to consider changes to the Scotland Shortage Occupation List. The Home Secretary makes that decision on the basis of advice from the MAC, and the MAC offers that advice in response to a commission from the Home Secretary. The Scottish Government contributes to this process, but only as a stakeholder and in the same way as any other individual or body can respond to MAC calls for evidence.
72. Therefore, while the shortage occupation list for sponsored work visas is in place, the UK Government should review the administrative procedures around it to give a formal role to the Scottish Government in commissioning and determining what occupations are in shortage in Scotland. In the longer term, there remains a question about whether the Shortage Occupation List is a helpful measure, or if there is a more systemic way to fix the problem it attempts to address.
73. As previously discussed, the success of Fresh Talent in Scotland from 2005 saw the post-study work visa mainstreamed into the UK immigration system in 2008. This was later withdrawn by the UK Government in 2012. The Smith Commission recommended reviewing that decision, suggesting that the UK and Scottish Governments work together to consider reintroducing the withdrawn route to post-study work for international graduates in Scotland, a position supported by universities, employers and all political parties in Scotland. The UK Government should respect the Smith process and the cross-party consensus that exists in Scotland, explored in Box 4, and reinstate the post-study work visa at the earliest opportunity.
Box 4: Progress on Smith Commission recommendations
The report of the Smith Commission recommended that the Scottish and UK Governments work together to explore the possibility of reintroducing a post-study work route.
"The parties have agreed that the Scottish and UK Governments should work together to explore the possibility of introducing formal schemes to allow international higher education students graduating from Scottish further and higher education institutions to remain in Scotland and contribute to economic activity for a defined period of time."
Following the publication of the Smith Report in December 2015, the Scottish Government has repeatedly sought to work with the UK Government to explore the possibility of reintroducing a post study work scheme. Scottish Ministers established a Working Group and Steering Group, with representation from all Scottish political parties, that put proposals and recommendations to the UK Government on how post-study work in Scotland could proceed. However, the UK Government remains reluctant to constructively discuss the reintroduction of such a route and has ruled out any movement without consultation or engagement with Scottish Ministers or stakeholders in Scotland.
The UK Government's current post-study work offer is not adequate for Scotland. The 'Low risk Tier 4 pilot', which was extended in December 2017, simplifies the visa application process for international students studying a Masters' course of 13 months or less at specified universities and extends the length of time they have to seek work from four to six months after completing their course. This falls far short of calls for a post study work route.