Memorandum submitted by KPMG LLP
We are please to submit written evidence in
relation to the Home Affairs Select Committee inquiry into the
Immigration Cap. KPMG LLP employs a significant number of individuals
in the UK, most of whom are resident workers but some of whom
are non-EEA nationals. We feel it is vital that we continue to
employ these non-EEA nationals, and also that it continues to
be possible for us to recruit non-EEA nationals to fill vacancies,
if required. In this regard we would like to present the below
response for your consideration, to afford you a better understanding
of KPMG's operations both globally and in the UK, and the importance
of our non-EEA workers.
KPMG in the UK, like our competitors, is part of
a global network servicing global companies and organisations
where the global mobility of our professionals is absolutely critical.
This is absolutely central to the UK's position as the leading
global hub for professional and business services, providing the
expertise and global reach required for the whole range of transactions,
investment and financing activities for companies around the world.
In our response, we have provided an introduction
to KPMG as an employer, and the different categories for which
we recruit non-EEA nationals. We then respond to some of the questions
raised in the consultation document. We have included some further
comments and observations for your consideration. Finally, we
have explained KPMG's position on Diversity.
KPMG GLOBALLY
KPMG operates as an international network of
member firms offering Audit, Tax and Advisory services. We have
more than 135,000 people operating in over 140 countries worldwide.
Combined revenues for KPMG member firms increased to U.S. $20.11
billion for the fiscal year ended 30 September 2009, which was
a significant growth on the previous year and reflects KPMG's
position as a rapidly expanding leading professional service provider.
Each of KPMG's member firms is expected to operate in accordance
with KPMG's values and Global Code of Conduct.
KPMG IN THE
UK
KPMG LLP currently employs around 10,300 individuals
in the UK, in 23 different locations: Of these employees, approximately
6% are non-EEA nationals who are either sponsored by KPMG (ie
as work permit holders or Tier 2 migrants) or who hold highly
skilled visas (ie as participants in the Highly Skilled Migrant
Programme or Tier 1 migrants). Approximately 75% of these non-EEA
nationals are employed in London, the remaining are employed in
regional offices. Please see a breakdown below
| Number of
Employees with a
Visa
| Visa holders as a %
of employees in
that office
| % of total population
of visa holders
employed by KPMG
|
| Aberdeen | 9 | 12.33
| 1 |
| Birmingham | 23 | 2.67
| 3 |
| Bristol | 7 | 1.89
| 1 |
| Cambridge | 6 | 10.53
| 1 |
| Cardiff | 4 | 8.57
| 1 |
| Edinburgh | 8 | 3.83
| 1 |
| Gatwick | 12 | 8.57
| 2 |
| Ipswich | 4 | 7.69
| 1 |
| Leeds | 14 | 2.29
| 2 |
| Liverpool | 1 | 1.43
| 0.3 |
| London | 526 | 9.99
| 75 |
| Manchester | 27 | 4.48
| 4 |
| Milton Keynes | 9 | 10.11
| 1 |
| Nottingham | 1 | 0.65
| 0.3 |
| Reading | 18 | 5.13
| 3 |
| Southampton | 3 | 3.30
| 0.3 |
| St Albans | 13 | 13.27
| 2 |
| Watford | 9 | 1.94
| 1 |
| Total | 694 | 6.77
| |
The significance of London as a destination for our non-EEA
nationals is in keeping with London's position as a global hub.
Our success in the UK depends on being able to attract the best
talent from around the world.
KPMG AS A
SPONSOR
KPMG has held a Sponsor license under the Points Based System
since it was introduced in November 2008, and we are an A-Rated
sponsor. There are three main "routes" by which KPMG
LLP sponsors non-EEA workers, as follows:
Experienced hire
Experienced Hires are qualified and/or experienced individuals,
recruited to fill a specific vacancy in the UK, either on a fixed-term
contract or on a permanent basis. KPMG offers the same competitive
salary packages to non-EEA employees as it does to resident workers,
including private health insurance to the majority of employee
grades.
As a leading financial service provider, it is essential
that we recruit the most capable individuals available within
the global market in order to maintain our standards, as well
as our competitive edge. KPMG is renowned for its commitment to
diversity and has a policy of offering equal job opportunities
to talented individuals regardless of their race and nationality.
This was one of the contributing factors to KPMG LLP being voted
the Sunday Times' Best Big Company to Work. For 2009 and also
receiving a Lifetime Achievement award in this category in 2009.
Furthermore, as KPMG LLP offers such an extensive range of
services to our UK clients, we often need to recruit a large number
of employees who are specialists in their particular field, to
facilitate our growth. Frequently, a specific requirement of a
vacancy is that the applicant holds professional qualifications,
and has extensive previous experience relevant to the vacancy
on offer, such as experience of particular industries, geographic
regions and markets etc. As a global hub, we operate "desks"
that support the business corridors with developed and, increasingly,
high growth markets supporting trade, investment, UK listings
and transactions. This is an essential element of what the UK
professional services offer and demands at least some people with
the right qualifications, language skills and cultural awareness.
Where it is not possible for KPMG LLP to find a resident
worker who meets the specific requirements of a vacancy on offer,
it is important to have the ability to hire a non-EEA national
as opposed to recruiting a resident worker who does not hold the
necessary expertise and qualifications to effectively undertake
the role.
We have seen a significant increase in recruitment across
many areas of our business over the last 12 months and increasingly
it is becoming difficult to find the additional strength and depth
of talent in the UK resident market. For example, although we
are able to recruit some experienced financial services auditors
within the UK, we still encounter difficulties recruiting the
numbers of people that we need and we therefore have no option
but to seek the required expertise outside the EEA specifically
where there are significant financial services centres. It is
also very difficult to fill vacancies in our regional offices,
particularly in our more remote locations. We find that there
are insufficient resident workers in these locations who possess
the specific expertise we require, and that resident workers settled
elsewhere in the UK are unwilling to relocate to these relatively
remote locations.
KPMG has already been significantly affected by the recent
reduction in COS allocations for our Experienced Hire sponsor
license. The current Cap has been based on the number of COS we
issued last year; however last year our recruitment had slowed
down. If we take the recruitment figures for 2007 we recruited
approx 116 Experience Hire non EEA Nationals. During Interim Measures
we have been allocated seven Experience Hire CoS, which is insufficient
for our recruitment requirements.
Graduate Recruitment
KPMG LLP's investment in our UK graduate programme is substantial,
as this is seen as crucial to our business and future growth.
We believe that training and developing graduates into highly
skilled professionals and maximising their potential is one of
the keys to the continued success of KPMG. As a result, our graduate
programme is demanding, as successful applicants are required
to adapt quickly to a high pressure office environment, whilst
simultaneously studying for professional qualifications. Due to
fact that these professional examinations are fully supported
by KPMG (both financially, and through the high quality exam training
we provide), candidates are required to have high standards of
numerical and verbal ability before they are offered a graduate
role. We therefore look to recruit only high-calibre candidates.
As stated previously, KPMG continues to seek to recruit the
most talented individuals, and all applicants are assessed equally
on their abilities, academic achievements, interpersonal skills
and suitability for the graduate scheme. As such, you can appreciate
that it is not possible to fill our graduate places with resident
workers only. Although we receive several thousand applications
from resident workers each year, relatively few applicants will
meet the entry requirements, and those that do may not choose
to undertake employment with KPMG LLP. Although KPMG LLP's graduate
recruitment programme is extensive (and in particular targets
UK universities) competition for the best UK and EEA graduates
is fierce, and we are always in competition with other UK employers.
When looking at KPMG's target universities within the UK,
many of them have a high proportion of overseas students (15.3%
on average, according to the Complete University Guide). Our yearly
intake statistics reflect this:
| 2007 | 2008
| 2009 | 2010 |
2011 |
| Total number of graduates recruited | 875
| 760 | 612 | Target 879 (of which 680 have accepted places to date)
| Provisional target number of 826 |
| Number of non-EEA graduates KPMG sponsored |
122 | 105 | 52 |
76 accepted | c.115 |
| Approximate percentage of sponsored non-EEA graduates
| 14 | 14 | 8.4
| 11.6 | 14 |
On average over the past three years, 27% of the graduate
applications KPMG LLP in the UK has received have been from non-EEA
nationals.
If we were not able to sponsor these employees, it would
obviously have an impact on KPMG LLP's UK business and practices.
Without the ability to recruit overseas graduates, we would need
to reduce the total number of graduates we recruit, which would
naturally impact negatively on business growth. At present lowering
our entry requirements is not an option, as we need to maintain
our high calibre intake.
Please note that due to the economic climate, 2009 was not
a typical year in terms of recruitment activity, and our Experience
Hire and Graduate recruitment was low.
Global Mobility
KPMG's global mobility programme is for individuals who are
currently employed by one of KPMG's overseas member firms who
undertake either a short or long-term assignment in the UK. Likewise
KPMG UK sends its professionals outbound to other member firms
overseas. In August 2010, KPMG has 241 inbound assignments to
the UK, and 252 outbound assignments. Thus KPMG had a net out-migration
of 11 ICTs in the last year.
95% of the non-EEA nationals who come to the UK through the
Global Mobility route are Tier 2 sponsored workers, who come through
the Intra-Company Transfer route.
Reasons for an international assignment can be complex and
varied, but may include knowledge sharing between employees, participation
in training programs, or completion of a specific internal or
client projects. Some of the roles which non-EEA nationals fill
are designated "global roles," which are often leadership
positions or positions filled by individuals working on a specific
client engagement. We frequently receive requests from clients
that the same team of individuals assists on the same project
in a number of different countries (for example if a new product
or scheme is being launched globally), and in the UK this can
often mean sponsoring an assignees from an overseas offices.
UK INBOUND POPULATION
| As at August each year6 | 2007
| 2008 | 2009 |
2010 | Total | Average split %
|
| No. of EU/EEA Nationals | 62 |
119 | 71 | 65 |
317 | 28.6% |
| No. of non-EU Nationals | 209
| 229 | 181 | 176
| 795 | 71.4% |
| Total Inbound assignees | 271
| 348 | 252 | 241
| 1,112 | |
KPMG relies on its ability to provide assignments to non-EU
as well as EU nationals.
When considering the effect that any changes to the Tier
2 Inter company transfer route could have on our assignees, it
is worth noting that a number of KPMG's Global Mobility placements
are reciprocal schemes which are established between KPMG LLP
and KPMG's global network member firms overseas. If KPMG LLP was
no longer able to offer the opportunity for employees of our member
firms to come to the UK, it is likely that to impact the number
of places offered by the overseas firms, which would have a negative
effect on the professional development of our UK employees. It
would also naturally affect KPMG LLP's position and reputation
with our overseas member firms and the relative standing of the
UK in terms of competitiveness.
UK OUTBOUND DESTINATION COUNTRIES
| 2007 | 2008
| 2009 | 2010 |
Total | % |
| No to EU/EEA Countries | 29 |
58 | 61 | 28 | 176
| 17.2 |
| No to Other Countries | 196 |
208 | 221 | 222 |
847 | 82.8 |
| Totals | 225 | 266
| 282 | 250 | 1,023
| |
As can be seen from the figures above, comparing inbound
and outbound assignment numbers, these have been broadly equal
over the last four years, and for the last two years, KPMG has
had a higher number of outbound assignees than inbound assignees.
These demonstrate that on a net migration basis, KPMG's Global
Mobility Programme is not generating an inflow to the UK.
Impacts of migration on the UK economy, public services provision
and wider society
The impact to the UK economy of restricting Tier 1 and Tier
2 non-EEA immigration would be as follows:
— Due to the lack of available skills in the local labour
market, if employers can not hire international migrants, roles
will be left vacant, impacting on the growth agenda for KPMG and
other companies. Not only would this affect KPMG's UK operations
and employment of UK nationals, but it would seriously undermine
the whole sector and its current competitive edge. It would make
London and the UK a less attractive place for global companies
and investors to transact their business and seek their professional
advice.
— Each highly skilled migrant from non-EEA countries generates
UK jobs both directly through the employment of support staff
and indirectly through the business they generate and their consumption
of services in the UK.
— There is also a long-term benefit for the UK to global
mobility, as those that have come to Britain for education, professional
training, or in a professional role, develop an affinity for the
UK, our people and expertise and are more likely when moving on
(and most probably into more senior roles) to buy services from
and invest in the UK, to encourage their children to go to UK
universities and indeed to purchase UK goods.
— A restriction on immigration for highly skilled workers
will further hinder the UK's ability to compete as a destination
of choice for new enterprise, global and regional headquarters
and investment.
— Companies unable to hire sufficient employees in the
UK may have cause to review their operations in the UK and to
consider moving overseas, negatively impacting the UK economy..
Operations would simply move to other financial centres, albeit
over a period of time.
— Our Tier 1 and Tier 2 migrants tend to be light users
of public services but pay UK direct and indirect tax. They are
significant net contributors to the Exchequer and their loss will
have a negative impact the Government in the form of lost tax
revenues. Also, the loss of direct and indirect employment of
UK resident nationals generated by our highly skilled ICTs and
other migrants will also increase the government benefits bill
and further reduce the tax take.
One factor the Committee should consider if there is to be
any limit including ICTs is the NET in-migration—ie the
number of ICTs coming into the UK as opposed to leaving the UK.
This will then better reflect the Government policy of reducing
the overall net immigration while at least somewhat limiting the
damage to UK competitiveness. So ICTs would only be limited (or
count towards any limit) when they exceeded the number of ICTs
(of non-EEA nationals) leaving the UK.
Alternatives to employing migrants, including training and
up-skilling of UK resident workers, reduce reliance on migration?
— KPMG employs a highly skilled team of professionals,
the majority of whom have achieved accounting qualifications which
take over three years to complete, as well as ongoing professional
and discipline specific training throughout their careers. Our
professionals are required to complete a minimum of 30 hours Continuing
Professional Development (CPD) each year. While we employ a majority
of staff from the local labour market, and have a well established
graduate training programme as mentioned above, it is a key part
of our recruitment strategy that we have representation and experience
of operations in all continents. To replace the knowledge and
specialist experience of these professionals would require many
years of training. — KPMG also has programmes for school/college
leavers and experienced professionals from other fields. We are
committed to the Fair Access to the professions agenda and have
been actively engaged in a whole range of programmes to support
UK nationals from less privileged backgrounds, or those that have
had severe difficulties (eg the homeless, ex-offenders etc.) into
work and preparing them for work-readiness.
— In order to meet our clients' requirements, we provide
sector expertise from all areas in the global markets in which
they operate. It is essential that we have insight into how these
sectors operate in different countries across the world, with
awareness and understanding of national and regional perspectives.
It is difficult to see how this can be gained other than by recruiting
a proportion of people from these countries.
— Thus, employing non-EEA nationals will continue to
be essential for KPMG in the UK so long as Britain remains a global
hub for professional, business, financial and creative services
and it will continue to benefit the UK Government and UK economy.
At the same time, we continue to invest heavily in supporting
UK nationals and residents have the required skills.
Expected Trends over the Parliament in non-PBS migration and
impact of non-EEA migration affect this?
— KPMG expects the requirements for both EEA and non-EEA
migration to be a vital part of its business model over the lifetime
of Parliament. We will continue to send our professionals outbound
on international assignments, so there will outflow of EU and
UK nationals during the period as well. As the economy recovers
from the global recession, the role of London and the UK will
be vital and if we at KPMG and the sector more generally are to
retain our competitiveness, it will be essential to be able to
increase our recruitment and global mobility.
— We will continue to need to employ individuals with
specialist international skills and experience, in order to facilitate
out clients' needs in an ever growing global economy. Therefore,
the ability to recruit worldwide is essential and we could not
provide the same service with a reduction in the number of visas.
Specific impacts to KPMG would be:
— Some areas of the firm would have cause to review
their operations in the UK and to consider moving operations overseas.
This would be of particular concern if we can not recruit the
number of graduates we need.
— Our clients expect us to have globally experienced
staff to match their global organisational structures. Our recruitment
activities (including the Resident Labour Market Test) have demonstrated
to us that there is not sufficient skilled talent within the UK
and EU labour markets, particularly for our roles where it is
a job requirement to have experience of global operations, so
it would hinder our recruitment activities.
— It would restrict areas of our professional expertise
that we provide to clients, which in turn could impact the firm's
growth agenda, for example our ability to provide specialist jurisdictional
Tax advice. This would clearly have a short, medium and long term
impact.
— The essence of some of our service offerings is "rapid
diagnostic" so we do not have the time to train people before
commencement of a project and it is not practical to have operationally-ready
people in each country. Therefore we rely on the ability to bring
in the experienced staff from other member firms globally at short
notice to meet our clients' demands.
— Crude restrictions on our ability to hire new professionals
or move KPMG people to the UK will affect our ability to take
full advantage of the recovery and indeed, blunt the UK's ability
to recover faster. Restriction based on net movements, or excluding
ICTs, will have a lesser impact but still present major challenges
especially if Tier 2 recruits are limited to "shortage"
occupations.
Impact of cuts to new highly-skilled Entrants or extensions
of existing non-EEA professionals
— The impact of a loss of visa is greater on the individual
who is already established within the UK and who has to leave,
and on KPMG as the firm will have invested significantly, both
in support for their initial relocation, as well as ongoing during
their employment while in the UK in salary and training. Accordingly,
if and where cuts are considered necessary, KPMG's preference
is these are applied to new out-of country applications and does
not include extensions to current visas as this would have a negative
impact on our business model.
— For example, the majority of our graduate intake are
on three year sponsored (Tier 2 General) visas, and their professional
training takes three years. If we are unable to obtain sufficient
number of visas to continue to sponsor them beyond the initial
term, KPMG will not be able to recoup its investment in their
training. This will also impact our client relationships as it
will affect our ability to maintain consistency in our client
teams.
Reduction of dependent numbers
Under a cap on immigration, necessarily an allocation of
a dependant visa reduces availability for a main migrant visa.
Accordingly, KPMG prefers the number of dependant visas is targeted
in preference to main migrants. However, we recognise that many
of our employees are only able to accept a position and relocate
to the UK if their family relocates with them, so it is important
that the allocation of dependant visas is not removed entirely.
Rather we recommend selection criteria such as skills base of
the dependant, or minimum period spent in the UK before a dependant
visa is allocated, could be determining factors for dependant
visa eligibility. Providing dependents with the opportunity to
pursue their career is a competitive advantage for the UK and
makes a greater contribution to the UK economy and tax revenues.
Impact of tier 2 reductions
Global mobility is essential to our business model and to
the UK's competitive position. Additionally, there is not sufficient
skilled talent within the UK and EU labour markets so it would
hinder our recruitment and growth activities. To recap, we feel
that KPMG LLP would be affected in the following ways:
— We would lose some of our most talented and capable
employees, or be prevented from transferring these individuals
from overseas offices to help to develop KPMG LLP.
— The quality of the services we offer to our clients
would be impacted negatively.
— Our business may not continue to grow as predicted.
In addition, KPMG prides itself on being an equal opportunities
employer and would always recruit the most suitable person for
the role, regardless of whether they are an EEA national or not.
Reducing the number of visas available would obviously impact
on our ability to uphold this, which would go against KPMG values
and Global Code of Conduct.
FURTHER COMMENTS/OBSERVATIONS
FROM KPMG
Most economic migrants contribute to the economy rather than
being a burden on it. For example, under our most commonly used
package for an assignment into the UK, the individual is paid
peer salary and benefits in line with KPMG's remuneration strategy
to pay competitive UK salaries, benchmarked externally. The individual
also receives support to cover their relocation costs and establish
a property in the UK. If accompanied by a spouse, they receive
a payment to help facilitate the spouse acquiring employment in
the UK (for example to assist with career guidance or training
costs). The assignee pays UK income taxes and receives private
medical insurance in line with KPMG's UK benefits package and
are in generally good health. Senior members of staff can also
receive private schooling assistance for their children. These
professionals are not a drain on public resources, but rather
contribute significantly to the UK economy.
There is a structural problem of a shortage of qualified
accountants to serve the needs of UK business. Specifically for
financial services, we operate in an increasingly global market
where UK is at the centre of the world's flow of money, transactions
and markets and we need people that have experience of different
accounting and regulatory frameworks (eg Islamic finance, Chinese
accounting standards, Japanese regulatory frameworks) to service
this vibrant marketplace and retain the UK's global competitiveness.
Additionally, on the back of the financial crisis the demand
for assurance skills is growing significantly as investor and
regulator confidence is rebuilt. The visa restrictions would severely
hamper our ability to service this need in the next few.
DIVERSITY
KPMG's approach to diversity is to recruit and retain talented
people, irrespective of their race, colour, creed, religion, age,
gender, national origin, citizenship status, marital status, sexual
orientation, gender identity, disability, veteran status, or other
legally protected status. This policy applies to recruiting, hiring,
rates of pay and other compensation, benefits, promotions, transfers,
demotions, terminations, reductions in force, disciplinary actions
and all other terms, conditions, or privileges of employment.
28% of our graduate intake is from minority ethnic backgrounds,
and our diverse workforce has often been cited by our clients
as an advantage we have over our competitors.
KPMG LLP has frequently been at the forefront of diversity
projects and implementation, and an example to our member firms
overseas. We would find it extremely regrettable if, due to restrictions
on immigration, we are no longer able to "lead by example,"
and continue to act in accordance with KPMG's Global Code of Conduct.
We are proud of the UK's leading role as a centre of excellence
in accountancy and related services, the ability to recruit the
best talent from around the world and for global mobility within
accountancy networks is essential to this status and reputation.
If the Government are determined to pursue a cap on migration,
despite its impact on economic competitiveness, we would argue
it should exclude ICTs and that we should also continue to be
able to also recruit highly talented individuals to specific roles
from outside KPMG under Tier 2 even though it may not be defined
as a "shortage occupation". We would argue that there
should be an exemption for senior positions which could be set
at £100,000 per annum. Further, if ICTs are to be included
we would strongly argue that not only should the limit be on NET
transfers but that secondments under two years should be seconded
to maximise the economic benefit to the UK, KPMG and the individual
professional of the secondment. The large majority of our secondments
are over a year and generally of two years' duration.
October 2010
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