3Lessons from the current immigration system for non-EU nationals
29.Although there is currently a lack of clarity about post-Brexit immigration arrangements, which we consider in the next chapter, there are lessons to be learned from the operation of the current points-based immigration system. Over the course of our inquiry we heard from several business representatives and groups that had experience of recruiting high-skilled migrants from outside the EEA. The majority of this evidence related to Tier 2 visas for skilled workers.47
30.In this Chapter we consider this evidence and recommend changes to the operation of the current points based system. We also hope the Government will consider these recommendations when it is designing the post-Brexit immigration regime.
UK’s points based visa system
31.The UK’s points based visa system was first introduced in 2008. Applicants must score sufficient points to qualify for a visa, and the minimum number of points required varies for each tier. For work visa applications, points are generally awarded according to the applicant’s ability, experience and age. The five tiers are:
- Tier 1 is for ‘high-value migrants’ which includes entrepreneurs, investors, and those of ‘exceptional talent’;
- Tier 2 is for skilled workers with a job offer in the UK (and includes inter-company transfers) and skilled workers where there is a proven shortage in the UK;
- Tier 3 was designed for low-skilled workers filling specific temporary labour shortages, but has not been used;
- Tier 4 is for students aged over 16 who wish to study in the UK and have a place at a registered UK educational establishment;
- Tier 5 is for temporary workers, and has six sub-tiers including creative and sporting, charity, religious workers, and the youth mobility scheme.
32.In 2010, the UK Government first announced an objective to reduce net migration ‘to the tens of thousands’ throughout the UK. Since then, it has made a number of changes to the points-based visa system with the aim of reducing inward migration. These include changes to the qualifying criteria; the introduction of a cap on the annual number of visas which can be issued for skilled workers; and the introduction of a charge for employers recruiting skilled workers from overseas.
33.The UK immigration system has been criticised for its complexity, cost to employers and frequent changes to the way it operates. The Institute for Government has described it as “a significant burden on business, requiring employers to grapple with 10,000 pages of guidance when applying to sponsor a non-EU national”,48 while the Supreme Court has called UK immigration law as “an impenetrable jungle of intertwined statutory provisions and judicial decisions”.49 The then Home Secretary, Amber Rudd MP, has told the Home Affairs Committee that simplifying the immigration system is a “personal mission” and that she has asked the Law Commission to review the rules with the aim of making the system more user-friendly.50
Tier 2 visas
34.Tier 2 is for skilled workers and includes inter-company transfers. All employees sponsored under Tier 2 (General) must meet minimum skill level51 and salary requirements. From 6 April 2017, the minimum salary rate for Tier 2 ‘new entrants’ is £20,800, and for ‘experienced workers’ is £30,000. The job stated on a Tier 2 certificate of sponsorship must pay an ‘appropriate’ salary which usually means the greater of the relevant minimum (i.e. either £20,800 or £30,000) and the minimum rate for jobs falling within the relevant occupation code. Tier 2 workers who wish to leave their job and work for a new employer need to apply for a new Tier 2 visa. When applying for a visa under the points-based system, applicants are allocated a certain number of points based on having been assigned a certificate of sponsorship; earning the appropriate salary; English language skills; and ability to meet maintenance criteria.52 Most employers will also be required to carry out a resident labour market test, which involves placing at least two advertisements for the role to show that there are no suitable domestic candidates before being able to recruit a non-UK worker.
Complexity of visa arrangements
35.Although around 8.4% of the UK population lives in Scotland, as at December 2017, only around 3.8% of certificates of sponsorship for Tier 2 (General) were from Scotland.53 Witnesses suggested that a key factor for the low proportion of Tier 2 visa issued in Scotland was the complexity of the system, especially for smaller businesses. The Law Society of Scotland told us that “Scottish businesses employing non-EEA nationals are often unhappy with the cost and complexity of the Tier 2 system” and has said that any reforms should be designed to ensure the system is simplified and accessible.54 The Federation of Small Businesses told us that 95% of small employers had no experience of the UK’s points-based immigration system, and did not have the capacity or the expertise to do so.55 CBI Scotland said that the existing non-EEA visa system was “a highly complex, time consuming and expensive process which many employers struggle to navigate”.56
36.The existing points-based UK immigration system for recruiting skilled workers from outside the EU is complicated and bureaucratic. The former Home Secretary herself has acknowledged the need to reform and simplify the system. The Tier 2 system is used proportionately less by businesses in Scotland than in England. The evidence we heard indicated that this is because of the complexity and expense for visa sponsors, especially for small businesses.
Visa cap and salary levels
37.The Home Office has set a limit on the number of Tier 2 visas which can be granted each year. The annual quota is 20,700, which is allocated as 1,700 Tier 2 visas per month. If the monthly cap is reached, applications are scored and prioritised based on salary, qualification level and shortage occupation status. If an application is unsuccessful because the cap is reached in a particular month, the applicant can reapply in a subsequent month. In practice, once the cap is reached, the qualifying salary level is increased. Prior to the end of 2017 the cap had previously only been reached once, in 2015, but reports published in February 2018 indicated that it had recently been reached for the third successive month.57 One explanation offered for this change is that fewer EU nationals have been applying for skilled jobs since the EU referendum.58 The Scottish Government described the impact of reaching the cap on Scottish employers:
For much of 2017, applications were within the monthly caps. In December 2017, the cap was reached, resulting in the salary threshold for a certificate jumping from £20,800 to £55,000. This meant that, without warning, many Scottish employers were unable to recruit from overseas, despite otherwise complying with all the rules. For example, the starting salary for a teacher is £27,438 while the top of the main grade teaching scale is £36,480.59
38.Madeleine Sumption described the Tier 2 prioritisation mechanism as “slightly odd”. She explained that:
Because there is a cap, when the applications come in they are prioritised and one of the most important factors is salary. For most types of jobs, in the January allocation, the salary limit went up from £30,000 to £50,000. That means there is a category of occupations earning between £30,000 to £50,000 that had been eligible for Tier 2 visas and suddenly are not.60
39.Barry McCulloch, FSB Scotland, described the current situation as a “one-size-fits-all system where the salary and skill thresholds are set at a UK level, which does not necessarily work particularly well for Scotland.”61 One option proposed by the Scottish Council for Development and Industry is the introduction of minimum salary levels which are more appropriate to the Scottish, rather than the London, labour market.62 However, the MAC has repeatedly recommended that the UK should not operate different salary thresholds for different regions and nations. Professor Madeleine Sumption, Migration Observatory, argued that as wages in Scotland were “relatively close to the UK average […] Scotland would probably not be hugely affected by a change in the salary thresholds”63
40.Since we concluded taking evidence for this inquiry, the Home Office announced that foreign doctors and nurses would be excluded from the government’s visa cap.64 Whilst the detailed impact on Scotland is unknown, it is likely to reduce the number of times the monthly visa cap is hit and the minimum salary level increases. NHS Scotland will also directly benefit from the ability to recruit medical staff without the constraint of the caps. This will particularly help with the recruitment of those medical professionals where there is a specific shortage in Scotland, as reflected in the Scotland only Shortage Occupation list.65 66
41.Measures introduced by the Government in order to meet its target to reduce net migration have added further complexity and cost into the immigration systems. The cap on the total number of Tier 2 visas issued each month is intended to help reduce net inward migration, but we heard evidence that in practice it prioritises those roles with the very highest salaries to the exclusion of other criteria—disadvantaging Scottish businesses in favour of those in London and the South East who offer the highest salaries. While we welcome the decision to remove doctors and nurses from the current cap the underlying issue of what happens when the cap is hit remains. We recommend that the Government review how the visa cap operates to ensure that it does not disproportionately benefit London and the South East at the expense of the rest of the UK—including Scotland.
Shortage occupation lists
42.Another feature of the Tier 2 visa system is the shortage occupation list. This list is compiled by the Migration Advisory Committee on the basis of skills needs submitted by businesses and criteria set by the Home Office. In order to qualify for the list, jobs must meet the required skill level for Tier 2; be experiencing a national shortage of labour; and a case must be made for filling these shortages using labour from outside the EEA. There are currently 34 job categories on the list.67 For jobs on the list, employers don’t have to conduct the resident labour market test68 and applications are given priority if the cap on the maximum number of Tier 2 visas is exceeded. The minimum salary thresholds and immigration skills charge still apply. The Migration Advisory Committee conducts periodic reviews of the shortage occupation list, when requested to do so by the Home Office.
43.There is a separate specific shortage occupation list for Scotland, which enables the Migration Advisory Committee to recommend a different set of shortage occupations for Scotland. This includes all roles on the main UK-wide list, and two additional job categories on the Scotland list—medical practitioners and medical radiographers.69 The Scotland Office offered this as evidence that “Scotland’s skills needs are largely aligned with the rest of the UK”.70 Rt Hon Caroline Nokes MP, Minister for Immigration, told us that the Government’s view was that “by maintaining a separate shortage occupation list for Scotland, we do take into account the different circumstances”.71
44.However, witnesses told us that the Scotland shortage occupation list did not reflect all of the skills shortages in Scotland, and that attempts to add new roles to the list had been unsuccessful. COSLA told us that it had a long-standing history of responding to Migration Advisory Committee consultations but “have to date had little success in influencing the shortage occupation list for Scotland”.72 Professor Boswell has claimed that Migration Advisory Committee reports considering occupations for the shortage occupation list for Scotland “frequently discount evidence on shortages from Scottish employers and other representatives as insufficiently persuasive”. She states that this could indicate that “it is possible the lack of use of the shortage occupation list for Scotland may be due to an inability of Scotland’s relatively smaller economy to make full use of this facility rather than indicating a genuine lack of variance”.73
45.Giving evidence to our predecessor Committee’s inquiry on the demography of Scotland the Scottish Government said that there had been “a great deal of disappointment” amongst Scottish business stakeholders, who have “put forward very good cases to the Migration Advisory Committee as to why more jobs should be on the shortage occupation list in Scotland and that there evidence has not been used to put those vacancies on.”74
46.Professor Manning, Chair of the MAC, described to us the decision-making process used when reviewing shortage occupations, saying that there were three criteria: is the job skilled, is there a shortage and, is it sensible to solve that shortage by putting it on the shortage occupation list?75 In the case of the teachers, where unsuccessful application had been made to get some teachings roles on the shortage occupation list for Scotland, Professor Manning said the decision to refuse the application was based on the fact that, as there had been fewer than ten visa sponsorship applications for teachers in the previous year from Scotland, not enough teachers were being recruited through the Tier 2 visa process to merit placing it on the shortage occupation list.76
47.The Immigration Minister told us that the existence of the shortage occupation list for Scotland indicated that the UK immigration system was able to take account of Scotland’s needs. However, at present, there are few additional roles on the Scottish list and we heard that Scottish businesses and sectors struggled to get roles, where they are experiencing a shortage, on the list. There is also no process for groups which have made a submission to the Migration Advisory Committee to receive a formal response or explanation if their proposal is rejected. We recommend that the Migration Advisory Committee review how the shortage occupation list is compiled, how the business and academic communities are engaged in this process, and how it communicates the outcome of its reviews, particularly to groups that have been unsuccessful in suggesting roles are included on the list. The Government should also empower the MAC to conduct regular reviews of the shortage occupation list for Scotland without requiring a specific commission from the UK Government. We consider further how Scottish input into the work of the MAC can be improved in chapter 6.
Immigration skills charge
48.In April 2017, the Government introduced the immigration skills charge with the aim of cutting down on the number of businesses taking on migrant workers and incentivising businesses instead to train domestic workers to fill those jobs.77 It is currently set at £1,000 per employee per year, with a reduced rate of £364 for small or charitable organisations. This charge applies whether or not a job is on the Shortage Occupation List. The Conservative Party’s 2017 manifesto pledged to double the immigration skills charge by the end of the Parliament, and use the revenue to invest in higher level skills training for workers in the UK.78
49.CBI Scotland told us that the charge was not meeting its intended objectives and that the revenue raised was “not used to address the skill shortages that increased the demand for overseas workers”.79 The Scottish Government has described the immigration skills charge as “an unhelpful burden on employers seeking access to skills and talent from across the world” and has called for it to be discontinued in Scotland.80
50.Professor Manning told us that the Migration Advisory Committee had recommended the immigration skills charge to the Government as “a useful tool” and a good way of encouraging businesses to employ local residents without actually stopping them from employing migrants.81 However he said that “there is not much of an evidence base at the moment” as to whether it was successful in incentivising employers to train up the resident workforce.82 The Immigration Minister described the charge as:
an important part of our suite of policies to make sure that we have a vibrant UK labour market that, while facilitating the attraction of the brightest and the best to the UK, also very clearly reinforces the message that we want employers to look at home-grown talent first.83
51.It is not clear whether the immigration skills charge is meeting its objective of supporting investment in improving the skills of the UK workforce or incentivising employers to try and fill vacancies with domestic workers. We recommend that the Government commission the MAC to investigate whether the skills charge is an effective tool for encouraging investment in the domestic workforce before deciding whether to replicate the charge in the post-Brexit immigration system.
52.Given that one of the main purposes of the immigration skills charge is to incentivise employers to recruit locally, it is perverse that the charge applies to jobs which are included on the shortage occupation list—where the Government has acknowledged there is a shortage of domestic workers to fill these roles. We recommend that jobs which are on the shortage occupation list be exempt from the immigration skills charge.
47 Tier 4, student visas, are considered in more detail in chapter 5
48 Institute for Government, Implementing Brexit: Immigration, (accessed 4 July 2018)
49 Supreme Court, Patel and others (appellants) v Secretary of State for the Home Department [2013] UKSC 72
50 Home Affairs Committee, Home Office delivery of Brexit: immigration. Third Report of Session 2017–19, HC 421 para 73
51 The required skill levels and occupation codes are published by Government at https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-j-codes-of-practice-for-skilled-work (accessed 4 July 2018)
52 The maintenance criteria involves proving that the migrant and any dependent can be supported without recourse to public funds.
57 Immigration Advice Service, Tier 2 Visa Cap reached for third month in a row, February 2018
58 Lexvisa, UK reaches Tier 2 Visa cap for skilled workers for third consecutive month (accessed 4 July 2018)
59 Scottish Government, Scotland’s population needs and migration policy: Discussion paper on evidence, policy and powers for the Scottish Parliament, page 34, February 2018
62 Scottish Parliament’s Culture, Tourism, Europe and External Relations Committee, Written evidence from the SCDI
64 UK Government, Doctors and nurses to be taken out of Tier 2 visa cap, 15 June 2018
65 UK Government, Scotland only Shortage Occupation List, Accessed 14 June 2018
67 https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-k-shortage-occupation-list
68 Which involves advertising the job in the UK twice to show there are no UK workers who can fill the role.
69 https://www.gov.uk/guidance/immigration-rules/immigration-rules-appendix-k-shortage-occupation-list
73 Boswell, C, Kyambi, S & Smellie, ‘Scottish Immigration Policy After Brexit: Evaluating Options for a Differentiated Approach’, 2017.
74 Oral evidence to Scottish Affairs Committee on Demography of Scotland and the Implications of Devolution, HC 82, Q299
77 UK Government Press Release, Government’s new Immigration Skills Charge to incentivise training of British workers, March 2016
78 Conservative Party, 2017 Manifesto
80 Scottish Government, Scotland’s population needs and migration policy: Discussion paper on evidence, policy and powers for the Scottish Parliament, para 60, February 2018 0
Published: 11 July 2018