As I've illustrated in the past - the Government NEEDS cheap labour to keep the UK afloat.
Joe has a point about the cheap labour, however-
If there was a amnesty for the 600000 or 2million depending upon who you believe, they would all end up with the rights to minimun wage ,holiday and sick pay. Given that employers are already saying that a small rise in NI payments would lead to job cuts what would the consequences of an amnesty be? Answer more unemployment amongst the imigrant population all of who would now be also eligible for dole and social payments. In short it would cost us all to grant an amnesty.