Managing Migration: Points-Based System - Home Affairs Committee Contents


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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