Memorandum submitted by The British Chambers
of Commerce (BCC)
SUMMARY
The BCC believes that this policy will only
be successful if the cap strikes the right balance—if the
level is too restrictive then the UK economy will suffer. More
consideration must be given to the effect a cap may have, not
only on migration levels, but also inward investment, the number
of business transactions that take place in the UK and global
competitiveness. The Impact Assessment must be reviewed with better
evidence sought on the cost implications for businesses and the
economy, in both the short and long term.
Our key points are:
— the merging of the Resident Labour Market
Test and the Shortage Occupation List would make it too difficult
for businesses in the regions to access the skills they require.
These two routes must be kept separate;
— the proposal that businesses should give
health insurance to migrant workers is flawed and would not work;
— employers are happy to play their part
in up-skilling domestic workers but the Government must take a
long term, strategic look at the UK's skills shortages, and act
to find solutions to them; and
— the costs to business as calculated by
the Impact Assessment must be increased if the `one in one out'
policy to reduce the regulatory burden is to be successful.
TIER ONE
Although the pool system is the "least
worst" option, we are very concerned that not enough research
has been done into the reaction of potential Tier One migrants
to such a system. Many businesses expressed concern that the highly
skilled, geographically mobile individuals who would qualify for
such a pool may decide to approach a country where they will not
have to wait around, as their skills are so highly valued. For
these individuals, the marketplace is truly global and the UK
Government must ensure that rules do not put off the exact people
we need to attract if the UK economy is to compete successfully
with other countries for the top talent.
We strongly support the drive to increase the
number of migrant investors and entrepreneurs coming to the UK.
Any inflexible requirements, such as the need to create a specific
number of jobs, are likely to hinder these efforts. We would support
reducing the current threshold, particularly for regions that
would particularly benefit from private sector investment and
in sectors where the UK is particularly looking to fuel growth.
UKBA should work closely with other agencies, such as UKTI, and
emerging Local Enterprise Partnerships to identify areas with
particularly opportunities and explore the possibility of individually
negotiated entrance requirements with UKBA, depending on the investor/entrepreneur.
"The UK should not put any further obligation
on investors especially if there is no such obligation on domestic
companies. The objective should be to encourage FDI as much as
possible."
Business based in Australia
TIER TWO
Level
Most of the occupations on the shortage list
would take years of training before an unqualified UK national
could be as good a candidate as an already qualified migrant.
For those occupations, there must be a commitment from Government
that the cap will not affect business's ability to get the skilled
people they require. For example, may of the occupations on the
list require individuals with engineering experience and qualifications.
Although, over time, the Government and business should work together
to ensure the UK produces more of these skilled professionals,
such a strategy would not bear fruit for over a decade.
Conversely, for the minority of occupations on the
list, such as care home workers, it will take less time to train
national workers to take these positions. Concentrated efforts
to train unemployed people in professions where there are local
and/or national shortages should form part of DWP's welfare reforms.
Mechanism
At a micro level, businesses are very concerned
that their businesses would be negatively impacted by a further
tightening of tier two. If a first come first served system is
be successful then it must operate on a monthly basis to give
businesses the maximum flexibility through the year.
The suggestion that some visas would be prioritised
within the system is positive, but just using wage levels as a
measure of the "importance" of a migrant to the economy/business
is too crude. Particularly in professional services in London,
relatively junior individuals command large salaries early on
in their career,[44]
and it would be unwise to prioritise them over individuals with
long careers in sciences or manufacturing who may be heading to
UK destinations where the pay is not as high as the South East.
Intra-Company Transfers (ICTs)
BCC is strongly opposed to the inclusion of
ICTs within the cap—regardless of whether there is an exemption
for individuals entering the UK on an ICT for less than 12 months.
On a macro level, it gives a bad impression to companies considering
setting up an office, or establishing their EU Headquarters in
the UK. Currently, 50% of all European headquarters are based
in the UK[45]
and the UK attracts 21% of all new investment projects in Western
Europe.[46]
We believe including ICTs in the cap puts both of these achievements
in jeopardy.
ICTs are used by companies for a number of different
reasons. Many global businesses with offices all over the world
want to able to transport senior people between them at will.
Any restrictions on this practise would have a negative impact
on the willingness of such businesses to base themselves in the
UK.
"Difficulties in transferring specialists from
elsewhere in the organisation would very likely mean our parent
company would not continue to support a development studio in
the UK"
Subsidiary of a Global Software Development Business
Some businesses have said that ICTs are crucial
to their staff training and drive to promote from within. If individuals
from other offices cannot come to the UK office to train and work
in different fields then the utility of the UK office is diminished.
It also puts at risk the availability of opportunities abroad
for UK individuals based in London who may wish to gain experience
elsewhere.
"We look to hire and promote from within as
current employees have business knowledge—including ICTs
in the cap puts this in jeopardy"
Global business with over 7,000 employees in
the UK
Some businesses have been clear and said that
the inclusion of ICTs in the cap will reduce the number of jobs
their company bases in the UK, and may have affected their decision
to set up here in the first place. Business strongly disagrees
with the premise that less ICTs would mean more jobs for UK workers.
Importantly, other businesses have said that
the number of employees in the UK would not change, but that the
number of transactions would decrease. For example, if a law firm
is doing an international deal which involves the working of several
offices, they may choose to base that work abroad and transfer
in the expertise there as required. This would damage the UK economy
by reducing the tax take from highly skilled individuals who would
no longer be working from the UK office and potentially reduce
the corporation tax receipts also as the transaction was recorded
elsewhere.
Whilst we appreciate that the Government has
a commitment to reducing the net migration flow into the UK, removing
the flexibility from global businesses that have chosen to invest
in UK jobs is not the way to do this, and could have severe long
term consequences for the economy.
Merging the Shortage Occupation and Resident Labour
Market tests
The entry requirements for Tier Two were significantly
tightened by the previous Government in response to the economic
downturn. Business is no fan of the resident labour market test,
which requires them to advertise in a Job Centre Plus with often
no prospect of success, and often delays the filling of the post.
However, merging the two routes would make it more difficult for
businesses where there is a local shortage, rather than a national
shortage, in the skills and/or experience they require.
The conclusion that the consultation paper comes
to is that, "migrants should only be brought in where every
reasonable avenue to recruit a resident worker has been exhausted."
This implies that the preference is a domestic worker that is
"good enough" should be recruited by a business, rather
than the best candidate, who may or may not be a migrant worker.
Similarly, the assertion that both a national and local labour
market test must be fulfilled before a migrant worker may be employed
ignores the fact that just as some skilled workers are highly
geographically mobile, some workers are not. Just because there
is not a national shortage of workers in one sector does not mean
there is not a local shortage in some regions. Merging the two
lists risks undermining businesses' ability to hire the best and
most productive candidate for the job and also may compound the
skills shortages that some regions currently face.
"In my region, unemployment is so low at entry
level that it is near impossible to recruit locally for these
roles."
SME, Service Sector
Dependants
Although BCC has no evidence on the contribution
of dependants to the economy, we are concerned that their inclusion
in the cap would lead, at some stage in the process, to someone
taking into account the number of dependants a migrant has before
offering them a visa. This could lead to the UK falling foul of
discrimination and human rights legislation, as well as meaning
bad decisions are made on which migrants are allowed to work in
the UK. If dependants are to be included in the cap, safeguards
must be put in place to prevent this (eg redacting the number
of dependants from a migrant's application to UKBA).
Up-skilling UK workers
Many employers already take their responsibility
to train and up-skill their workers very seriously. Many also
take responsibility, not only for local supply, but also for whole
areas of expertise. For example, the NEC in Birmingham has recently
developed an apprenticeship in rigging, which is being rolled
out across the UK. What employers cannot do, and nor should they
be expected to, is be responsible for strategic skills planning
and identifying skills gaps and knowledge across the whole economy.
If the cap is to work, the Government must have
an immediate plan to put in place to up-skill UK workers in the
occupations currently (and predicted to be ) listed on the shortage
occupation list. This plan should give indicative timescales which
will aid the Migration Advisory Committee in setting the level
of the cap. The shortage occupation list provides a stark warning
as to where our skills system is failing in providing the employees
that business needs—the science and engineering careers.
We call on the Government to tell business what they are doing
to stimulate UK citizens' interest in these areas—from primary
school to adult learning—rather than relying on business
to see the skills gaps and train individuals as and when needed.
"Without a culture and educational shift of
mammoth proportions the task (up-skilling domestic workers to
fill the skills gaps) is too great and in any case would require
decades."
Food Manufacturer
Health Insurance
BCC believes that economic migrants are net
contributors to the public purse in the UK.[47]
These workers are often highly skilled, likely to be young and
have working dependants. We do accept that in local terms, some
areas may have resource issues, such as access to school places
or availability of health services, which it appears migrants
contribute to. However, there is not a causal link between the
two.
BCC does not support the suggestion that sponsors
should have to give their non-EU migrant workers health insurance.
There are several major obstacles to this policy being successful:
1. A business would have to provide private healthcare
to domestic workers as well, otherwise risk falling foul of discrimination
legislation. This would be very expensive.
2. Migrant workers could still choose to use
NHS services if they wished.
3. Private healthcare provision varies in quality
and reach. A scheme which only pays a percentage of the consultant
fees is unlikely to tempt the majority of workers away from free
NHS services.
4. Private healthcare does not cover all services-
such as Accident & Emergency.
A solution may be that for businesses that do
not want to offer private healthcare as a benefit, they could
instead make a small contribution to the Migration Impact Fund—at
no higher rate than the current £50 worker contribution.
This fund could then be used to reduce pressures on local infrastructure
projects where business may see some return (eg transport) rather
than purely on health spending.
Impact Assessment
The Government's announcement that a "one
in one out" system will apply to new regulations that place
a burden on business means that it is even more important that
the Impact Assessment (IA) is rigorous and accurately measures
costs and benefits. If the costs are under-calculated, then the
Home Office will not be under an obligation to reduce the costs
to business in another area—resulting in the de facto regulatory
burden increasing.
The non-EU migrant cap will affect all businesses,
and a proportion will take a special interest and require more
detailed knowledge of the changes. Given this, it is unreasonable
that the IA states employers will only spend £100,000 familiarising
themselves with the new system. In April 2009, our Workforce Survey
found that 60% of businesses were aware of the Points Based System
(PBS). If we made the generous assumption that awareness has not
risen over the past year, this still means that around 740,000
businesses are aware of the PBS and would presumably want to familiarise
themselves with the changes this Government intends to make to
the system. The IA calculates it would cost each of these employers
less than 1p to familiarise themselves with the new rules. BCC
would like the new IA to have a more realistic cost for familiarisation,
based on the ASHE figures for management wages and a more rational
estimate of the time it will take.
We were also disappointed that, although there
are several references in the IA to negative impacts for business
in the short term, there is no attempt to cost this impact. In
the longer term, an assumption is made that business will be able
to adapt to the levels, whatever they are set at and regardless
of the sector the business operates in. As is clear in our response
below, business is very concerned about the effect that the cap
will have not only on their own business, but also on the economy
in general and on both the number of jobs in the UK and number
of transactions that take place here. Without a rigorous IA assessing
the impacts felt at a micro, regional and macro level, BCC believes
it will be difficult for Ministers to make a decision based on
the level of risk to the economy and regulatory burden on business.
CONCLUSION
It is of critical importance to the economy
that the ICT route is not included in the cap—if there are
restrictions on this route then global companies will reduce their
investment, jobs and number of transactions in the UK. We support
measures to up-skill UK nationals to reduce reliance on migrant
workers in shortage occupations -but the Government must recognise
that this is a long term goal, and in the short term, skilled
migrants must be allowed to enter the UK and fill the gaps in
the labour market.
August 2010
44 Many law firms in London offer over £50,000
as a starting wage to their newly qualified solicitors
http://www.chambersstudent.co.uk/pdf/Salaries%20and%20Bens.pdf Back
45
http://www.ukti.gov.uk/pt_pt/uktihome/aboutukti/localisation/113922.html Back
46
http://www.ukti.gov.uk/uktihome/media/pressRelease/110612.html Back
47
http://www.ippr.org/members/download.asp?f=/ecomm/files/FFLabMigFINAL.pdf&a=skip Back
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