Memorandum from the City of London Corporation
1. The desire to restrict and reduce migrants
entering the UK in response to broader public worries about the
impact on jobs and communities, is recognised by the UK's financial
and business services sector. There are, however, serious concerns
regarding the proposed method which the City Corporation feels
bound to point out. These views have typically been expressed
by representatives of leading City firms and trade associations
through a working group on migration issues brought together by
the City Corporation. The central issue for the City is the nature
of the proposed cap on those non-EU workers who are highly-skilled
as a means of limiting net migration in conjunction with the existing
points based system.
IMPACTS ON
THE ECONOMY
2. The City fears that this cap, coupled
with other changes to the domestic tax and regulatory environment,
could exclude those individuals who typically bring tangible benefits
to the UK, do not displace existing British workers, and whose
talents are mobile and welcome in many other centres. These individuals
could be investors, entrepreneurs, or key staff for the many international
firms situated in the UK.
3. Foreign firms locating in the UK are also
likely to employ a large number of British workers. For example,
foreign-owned businesses such as Goldman Sachs employ 6,000 people
in London, and Bank of New York Mellon employ almost 1,000 people
in Manchester—most of these jobs will be held by local workers.
These individuals will also pay higher rates of tax, to the benefit
of public purse. These individuals also benefit the UK economy
by being here. They are likely to be trained in skills that will
be passed on through training and education to British workers
and businesses and, on the whole, are less reliant on public services
such as education or the health service. Their spending on goods
and services in the UK also benefits the wider economy.
4. If companies choose not to locate in
the UK or move away, it is unlikely that these companies would
return at a later date. This, in turn, could exacerbate the effects
of the current fiscal and regulatory uncertainty which is already
impacting on the attraction and retention of business. The danger
in denying access to the UK for individuals covered by the cap
is that international companies doing substantial business here—especially
foreign owned banks and insurers—could take far-reaching
decisions on the location of key people and key business areas
and exclude the UK during this period of uncertainty and beyond.
IMPACTS ON
BUSINESSES
5. The impact of the various measures proposed
for Tier 1 (highly skilled) and Tier 2 (skilled with employment
offer) will have inconsistent effects on those businesses affected.
Reducing Tier 1 limits for the benefit of Tier 2 would benefit
some City businesses but would an adverse effect on others, for
example, professional services such as legal firms and many of
their larger international clients who are financial services
institutions. If Tier 2 "first come first served", or
a pool, or auction, numbers were squeezed, this would exclude
lower earners from entering the UK, to the benefit of more senior
executives.
6. Proposals for caps would see them being applied
arbitrarily irrespective of business needs going forward. Any
system of caps does not provide the certainty that businesses
require in their forward planning. Businesses that typically spend
money planning ahead for recruitment will not be able to work
with a system monthly caps that are not necessarily determined
ahead of those months in question. Difficulties will arise for
businesses as they develop and those that develop faster than
the system allows may leave the UK owing to this lack of flexibility.
INTRA-COMPANY
TRANSFERS
7. City businesses need more time to adapt
to any proposed changes to sponsorship certificates for intra-company
transfers (ICTs). For example, the interim limits set by the Home
Secretary in June saw many businesses' ICT allowance cut to zero—and
not 15% of last year's allowance as claimed by UKBA. Many of these
cuts were based on the fact that City businesses did not apply
for their quotas certificates last year due to the recession,
resulting in a lack of work placements within those businesses
as they look to reduce their own costs. Now businesses can make
those placements available once more, some firms have found that
their allocations have been reduced to zero as a consequence.
8. In place of the current arrangement, proposals
which allowed for greater limits on those Tier 2 or ICT quotas
whilst excluding from a cap senior executives, or those on a very
short stay, would be welcome. It would, however, be preferable
to see intra-company transfers set apart outside any set limits.
City businesses believe that set limits on ICTs are economically
damaging as those individuals are almost always economically beneficial
to the UK and have typically not taken the work place of an existing
UK resident. As with Tier 1 and Tier 2 "first come first
served" proposed limits, ICT quotas will also affect smaller
firms in different ways to larger ones.
DEPENDENTS
9. If highly-skilled individuals are here
on a very short stay—for example, Tier 1 senior executives—dependents
are unlikely to feature as a priority for them. However, retention
of flexibility for Tier 2 workers could act as an incentive for
businesses being able to bring key workers to the UK.
August 2010
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