Memorandum submitted by the Confederation
of British Industry (CBI)
1. As the UK's leading business organisation,
the CBI speaks for some 240,000 businesses that together employ
around a third of the private sector workforce, covering the full
spectrum of business interests both by sector and by size. We
welcome this opportunity to contribute to the Committee's inquiry
into the government's implementation plans for the new points-based
system.
2. The CBI has been supportive of the development
of the points-based system (PBS) for migration. Our members recognise
the need to manage the migration system to meet both economic
and social needs. Employers want a system that is fast, transparent
and objective. A system that adheres to these principles will
make it easier to meet companies' skills and labour needs when
they need to employ workers from abroad—it should be flexible
and demand-responsive.
3. For any system to be successful, it must
be clearly explained and easy-to-navigate. Employers have accepted
playing a significantly enhanced role in both policing the system
and funding it over the past few years. Enhanced document checks,
greater responsibility through the sponsorship register and a
significantly bigger "stick" in the form of civil penalties
have all been introduced, while charges have risen significantly.
But employers' expectations of a corresponding rise in service
levels have not always been met. In this response, we will address:
— the PBS has the potential to play
a vital role in managing migration|
— ... and such systems have been
effective internationally;
— delays in implementation and planning
have led to an element of "last-minute rush";
— the Home Office has been responsive
to business' concerns, but it must be pragmatic in applying standards;
and
— intra-company transfers are an essential
tool for company performance—and they should not be hindered
by prohibitively high maintenance requirements.
The PBS has the potential to play a vital role
in managing migration ...
4. A properly balanced migration system
should be used to address short-term skill shortages, but not
long-term issues. Very high net inward migration is not sustainable
on a permanent basis, both in terms of a continuing supply of
migrant staff and for social integration reasons. In the longer-term,
skills issues must be addressed. At higher skill levels, investment
in improved education and training focused on relevant workplace
skills is the route to addressing skill shortages. For low-skilled
roles, tapping into the unused potential of the UK's economically
inactive population—particularly those on long-term incapacity
benefit but who have the capacity to work if helped with the transition
back to the workplace—has the potential to deliver good
results.
5. Redressing labour market shortages through
these routes would require significant progress on both the skills
and welfare-to-work agendas. Business has recognised the economic
importance of improving skills, investing £39 billion per
annum.[59]
But with the CBI/Pertemps Employment Trends Survey 2008
showing that 51% of firms are worried that they may not be able
to find sufficient skilled staff to meet their future recruitment
needs, it is likely to be some time before the need for net positive
skilled migration dissipates. This is emphasised by the fact that
UK employers' skill requirements continue to increase—our
survey found that more than three quarters of employers demand
higher skills over the next decade. The skills challenge facing
the UK is significant, and requires long-term efforts to improve
the domestic skills base.
6. A system that allows firms to address
shortages as they arise is seen as essential by CBI members. But
this must be actively managed to ensure shortages are recognised
and undercutting avoided—as was the case with Bulgaria and
Romania, where the CBI supported the decision to take a "pause
for breath" on allowing in unskilled workers so soon after
the 2004 accession.
7. Additionally, we are pleased that the
government retained the Resident Labour Market Test, so firms
can still hire where the Migration Advisory Committee (MAC) has
not yet been able to identify a shortage, but the firms can demonstrate
one exists. This is vital to the system's flexibility. The work
of the MAC is essential as there is considerable variation in
demand across sizes and sectors: according to the Employment Trends
Survey, firms employing fewer than 500 staff are less likely to
employ migrants than larger firms, and two thirds of construction
firms have hired migrant labour in the last 12 months, compared
to only a fifth of firms in the energy and water sector. Demand,
too, is sector-based, and as such it is important that the MAC
continues to monitor economic and labour market developments in
every industry and across all kinds and sizes of firms.
... and points-based systems have been effective
internationally
8. Points-based systems have been effective
elsewhere, but the UK's system faces unique challenges. Canada,
Australia and New Zealand operate points-based systems that exist
for different purposes, and it is the success of the system in
meeting these different needs that suggests it will work for the
UK.
— Canada has one of the largest net
positive immigration systems in the world, and the points-based
skilled worker system is the primary route into the country. There
are also specialist provincial systems. Points can be attained
in much the same way as in the UK, but there is little provision
for the immigration of unskilled labour.
— In Australia, the system is coupled with
other entry routes, including employer-sponsored work permits,
schemes for investors and to reunite families, as well as a low-skilled
worker system that operates via labour agreements between government
and employers. The main points-based system is the focus of skilled
migration. As there are so many routes, the system faces different
administrative challenges to the UK's approach. The points pass
level is relatively high, reflecting a more neutral approach to
total numbers. Applications that fail narrowly are placed in a
pool for two years. If the pass mark is lowered to the level of
their score during that time, pooled applicants are issued visas.
— The New Zealand system is designed
to address the shortage of skilled labour, and the vast majority
of offshore applications are from those who already have a job
offer. Temporary work visas are also available. But overall immigration
to New Zealand is low (around 50,000 per year) and unskilled labour
shortages are not a major factor in the New Zealand immigration
service's thinking.
9. The UK's new system is more extensive
than each of these approaches as it provides a major entry route
at each skill level. Experience from the Commonwealth suggests
that points-based systems are well-suited to individuals with
high skill levels, but international evidence of their usefulness
in relation to unskilled migrants is harder to come by. For the
UK, this is not a major issue as the EEA is expected to provide
the balance of unskilled labour for some years to come.
10. The experiences of Canada, Australia
and New Zealand emphasise that points-based systems are advantageous
in two key ways:
— flexibility: for general-access systems
such as Australia's, the points pass mark can be adjusted in line
with expectations of labour market need. Systems can focus on
particular skill shortages and respond directly to demand by introducing
a shortage occupation list, as in New Zealand. Immediate flexibility
in the UK is offered by the Resident Labour Market Test; and
— transparency: all three Commonwealth
countries are able to offer an assessment tool on their website
that enables potential migrants to see how many points they have.
Immigration service decisions are can be more easily justified
by reference to this relatively objective standard.
11. We are confident that the points-based system
has the potential to offer flexibility and transparency, and to
be a demand-led programme that responds to the needs of industry.
But it is important that employers understand what is required
of them, particularly as there is no overlap between the old and
new systems.
Delays in implementation and planning have led
to an element of "last-minute rush"
12. At the system's inception, we acknowledged
that employers should take a reasonable share of the financial
and administrative responsibility for bringing migrants to the
UK—so long as the government plays its part in minimising
complexity for employers and delivering a high quality service.
But CBI members have some concerns on this front, ranging from
a lack of detailed guidance at a sufficiently early stage to a
backlog in processing tier 1 applications.
13. The CBI has been very supportive of UKBA's
recent efforts to improve their communications and effectively
target employers. But we have raised members' concerns that delays
in the tier 1 application system have held back firms' workflow,
for instance in getting skilled scientists for medical research
projects. There are concerns that this will not improve under
the added pressure generated by the large number of individual
and sponsor applications under tier 2, for which detailed rules
were only published in September 2008 ahead of the November launch.
We have welcomed UKBA's reassurances that they are investing in
staff and systems to ensure a smooth launch and have noted a significant
improvement in speed and communication over the summer.
14. Compliance with the new system has required
many firms to invest considerable resources in making changes
to their HR structures—changes which can take some time
for large firms. For small employers without significant HR capacity,
these requirements slow down the application process. For employers
whose HR function has been outsourced, every change to legislation
incurs extra costs, and the more complex the system, the greater
the expense. Given the late publication of the detailed rules,
those employers that are not aware of the system may only now
be aware of the work they must do before the November roll-out
date.
15. After such a slow start, UKBA has recently
made good efforts to contact firms and work with intermediaries
to distribute information and raise awareness. UKBA's priority
between now and the start of the system should be to get clear
guidance to all employers. When employers understand what is expected
of them, they will be in a better position to apply to become
sponsors. Moreover, they will be better able to assess before
November whether their HR teams are able to discharge their obligations,
or whether they will need to make new arrangements.
The Home Office has been responsive to business'
concerns, but it must be pragmatic in applying standards
16. Aside from their practical concerns,
employers have experienced difficulties with the sponsor rating
system. As the guidance was delayed, firms that have applied have
not received the rating they expected because of a lack of awareness
of the requirements. As a result, some firms will wait to apply
until their HR systems are in place—increasing the pressure
of applications in the autumn.
17. The CBI has urged UKBA to be pragmatic about
sponsor applications in the first few months: for those employers
that marginally fail to achieve an A rating at first attempt,
a degree of leniency should be applied, including offering informal
transitional arrangements to enable firms to reach an A rating
in a reduced time period without suffering the reputational damage
of a B rating. Reputation protection is a major concern for employers,
and one of the reasons for the relative paucity of sponsor applications
so far is a fear that unless they know what is expected of them,
firms risk a B rating.
18. The PBS will only succeed if employers
are given the support that they need by UKBA visiting officers
and account managers. Many CBI members have reported good and
helpful service from account managers to date, and even though
guidance was not available on the internet until recently, they
have shown they have sound practical knowledge of the system.
But some have suggested that some regions are less helpful than
others, emphasising the need to have consistency of service across
the UK.
19. The process of inspection by visiting
officers has also been remarked upon. Some firms' experience has
been negative: the visit felt like an interrogation, which compounded
the pressure of introducing a new system without thorough guidance.
Employers must be able to have confidence in the guidance and
support systems, and as the system begins UKBA should prioritise
this important area.
Intra-Company Transfers (ICTs) are an essential
tool for company performance—and they should not be hindered
by prohibitively high maintenance requirements
20. ICTs have been an area of concern for
our members for sometime—we raised the vital nature of these
placements in our initial response to the government on the PBS
in 2005. The economy benefits greatly from the links and knowledge
transfer that ICTs enable, and such exchanges are to be encouraged.
21. Employers have accepted the idea that those
entering the country under tier 2 and as ICTs should be able to
prove that they have the means to support themselves in the UK.
But in many cases the maintenance requirement is an insuperable
barrier. The requirement to have a minimum of around £800
in the migrant's bank account for at least three months before
entering the UK is designed to ensure migrants have sufficient
resources to cover their first month in the country. But for a
large number of employees requiring a work permit, this is impractical
and unnecessary. Many firms provide accommodation and provide
allowances on arrival in the UK, so to provide extra funds before
arrival would be superfluous. Indeed, many employees do not have
£800 in their accounts, particularly if they currently work
in low-paying countries. And the timescale is impractical, too—the
whole recruitment process will be pushed back by three months,
which defeats the object of hiring migrant workers to fill immediate
skill gaps.
22. Additionally, depositing money in bank
accounts three months prior to the arrival of ICTs or migrants
under tier 2 exposes firms to fraud—particularly if the
migrant workers are new hires. If they subsequently do not work
for the firm, it would be difficult to reclaim the deposited cash.
Although the sum is large for the individual, it is not sufficient
to warrant the firm chasing the debt, so the concern is that this
would rapidly become a simple way for the unscrupulous to extract
money from UK companies.
23. A workable solution should be drawn
up whereby firms be required to indemnify individuals by providing
accommodation and expenses to at least the value of that offered
in the government's proposal. In this way, the government's objective
of the individual being provided for will be met without a delay
in recruitment or exposure of resources.
September 2008
59 Learning and Skills Council National Employer Skills
Survey 2008 Back
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