London Chamber of Commerce and Industry Response to UK Border Agency (UKBA) Consultation on Limits on Non-EU Economic Migration

Transcription

1 London Chamber of Commerce and Industry Response to UK Border Agency (UKBA) Consultation on Limits on Non-EU Economic Migration Introduction The London Chamber of Commerce and Industry (LCCI) is the capital s largest and most representative business organisation, with some 2500 members across Greater London, ranging in size from multinational companies to SMEs and sole traders. An independent, not-for-profit business support organisation with some 70 employees, the LCCI puts the needs and interest of our members at the heart of everything we do. To this end, our policies are always informed by the experiences of our member companies. It is only by putting London s businesses first that the capital can maintain its outstanding record for creating well-paid jobs, leading the world in service provision and being Europe s favourite location for foreign direct investment. Importance of Migration to the London Economy While we understand the significant political pressures around migration policy, especially in the current climate of economic uncertainty, the LCCI remains extremely concerned about the Government s pledge to place an arbitrary cap on the number of non-eu migrants entering the UK. We believe such a policy could damage London s global competitiveness and ultimately stifle the creation of new jobs through growth and investment. Our research demonstrates that employers of all sizes in the capital continue to demand skilled labour, and rely on a dynamic pool of highly-skilled workers to successfully grow their businesses. According to a survey of London businesses the LCCI conducted in late 2009 in conjunction with ComRes, seven in ten London firms said they believe the capital would be less competitive without migrant workers. The research goes on to show that: Some 57 per cent of firms consider immigrants to be important to their business. Four in ten London companies estimate that foreign nationals make up more than ten per cent of their workforce. Over 65 per cent of companies say that on balance, immigration has a positive effect on London s economy, rising to 72 per cent of the largest businesses. Migrant workers were considered most important in Finance/Business Services (58 percent), Professions (68 per cent) and in inner London (69 per cent) compared to outer London. More than half of London companies disagree that the pressure immigrants place on public services outweighs the economic benefits they bring. Page 1 of 8

2 This data was collected in October 2009, when the UK was still in recession, indicating that even in tough economic circumstances, London firms recognise the value of migrant workers to their business and the wider economy. It represents a cross-section of the London economy, including some 80 per cent SMEs, and a range of sectors including finance and business services (25 per cent); professions (18 per cent); manufacturing, transport and logistics (19 per cent); retail/wholesale (7 per cent); and other services (31 per cent). This is worth noting as it is sometimes assumed that migrant workers are not as important for smaller firms, those who do not operate on an international basis, or those outside certain globalized sectors such as technology or finance. In preparation for submitting this response and in addition to the quantitative research, the LCCI met with a small focus group of London firms to assess the impact of such a cap on their businesses. Their responses to the UKBA and MAC consultation questions helped further develop the views and experiences articulated in the business survey results outlined above. While companies said they would not necessarily move out of London entirely if Tiers 1 and 2 were significantly reduced, many expressed the likelihood that certain parts of their business or even individual transactions could be moved to other locations if the right employees could not be hired in London. This could include other European locations, as well as further afield. A number of firms cited London s ability to attract highly skilled workers as a crucial part of the offer the capital presents. They believed that damaging this reputation of finding the brightest and best due to new immigration limits would be harmful to London s global position. Smaller firms we spoke to may not have the flexibility to move their headquarters or transactions abroad, but they still felt their businesses would be adversely affected by cutting Tier 1 and 2. Skilled employees are the lifeblood of small businesses, and being unable to hire the best person for the job because of immigration restrictions could place SMEs at serious competitive disadvantage. Crucially, firms of all sizes agreed that if they were unable to hire the right person for the job due to immigration restrictions, they would not hire a less-qualified or less-suitable resident worker. Instead, they would not hire anyone at all. On the other hand, companies confirmed that when they are able to hire a highly skilled worker for a specialist role in their business, this often enables them to hire local workers to fill support roles, thus benefiting the wider economy. LCCI responses to key consultation issues Considering the Government s established policy is to reduce net immigration to the tens of thousands by the end of this Parliament, while continuing to attract the best and brightest, the proposals to achieve such a reduction through Tiers 1 and 2 of the Points Based System (PBS) are improperly targeted. Tiers 1 and 2 are already closely aligned with real economic needs, as they ensure that only those workers with the highest level of skills, or those required by UK-based firms for a specific role or shortage occupation where no resident worker is available, are able to enter the country. Page 2 of 8

3 The consultations around the PBS and the subsequent bedding down of the system have led to a situation in which most UK employers understand the system. Although some complexities remain for small businesses, changing the goalposts of the immigration system yet again could not come at a worse time. As businesses attempt to grow and develop post-recession, the proposed restrictions on skilled immigration will undoubtedly make it more difficult for them to hire the best workers to help achieve such growth. The numbers (as cited in the MAC consultation document) also call into question how effective it would be to cut migration under Tiers 1 and 2. While overall 278,000 non-eu migrants came to the UK in 2008 (according to the IPS), the majority of these came to study (126,000). Most students return to their country of origin after completing their studies, so the majority of these students will not remain in the UK for the longer term anyway. Meanwhile, 86,000 entrants came for other reasons, leaving the smallest figure (66,000) representing those who came to work, including workers under Tiers 1 and 2. In other words, migration under Tiers 1 and 2 accounted for just a quarter of the non-eu entrants in 2008; even if Tiers 1 and 2 were closed down completely, inflows would still remain well over 200,000 per year. Additionally, reducing Tier 1 and Tier 2 migration, even drastically, cannot guarantee an overall drop in net migration because the UK is unable to control EU migration, driven and determined by a whole host of issues in the sending country and wider economy, and the number of British citizens coming and going abroad; both of which affect the total balance net migration. It therefore seems that using Tier 1 and Tier 2 to cut overall migration will have limited effect, and will disproportionately damage the labour market and prospects for UK businesses without achieving the stated policy goal. It is understandable that in the absence of an ability to control EU migration, the government looks to other areas where it can have influence. However in this case the potential damage to the economy of both London and the UK more generally is not worth the small reduction in net migration that would be achieved, even by substantially reducing Tiers 1 and 2. Mechanisms for Tier 1 We are concerned that operating a pool system for Tier 1 in future will lead to an unnecessarily protracted process for approving migrants in this category. Expecting highly skilled workers to make an expression of interest, enter the pool, and then wait until the next UKBA review in the hopes of being invited to then apply for entry could have some unintended negative consequences. For example, a lengthy, bureaucratic and expensive application process could discourage the best and brightest from applying, meaning that the UK loses out on their skills, experience and financial contributions (through the tax system and personal expenditure while resident here). This could mean that from the global pool of candidates, the UK will only get those willing to wait, and may lose out on the most competitive applicants. Page 3 of 8

4 The pool system also undermines the principles of the PBS, which has now (after considerable effort) bedded down with both employers and applicants. The pool approach means that the number of points required under Tier 1 may not actually reflect the number required to exit the pool and gain entry to the UK, meaning applicants face a lack of transparency and consistency about the threshold they are required to meet. What is more, this provision would not provide the predictability required by businesses, and outlined in the consultation s objectives. Mechanisms for Tier 2 We agree that a first come first served system could work for administering Tier 2, as operates with the current work permits system. But reviews of demand levels must happen often enough to avoid undue delays for businesses requiring permits. This system also must ensure that SMEs (who may apply for only one or two permits maximum per year) are not disadvantaged vis-à-vis large employers. A monthly permit release system may therefore work best in limiting delays and ensuring that businesses who suddenly realise they need a permit can access one in a reasonable timeframe (i.e., without waiting until the next quarter). This is critical because companies needs can change quickly, and a responsive work permits system will help businesses stay competitive by being able to rapidly recruit for essential roles as they arise. We strongly oppose an auction system for visas, given the extreme disadvantage this creates for SMEs. The implication that entry to the UK is available at a price is undoubtedly problematic. This approach would also undermine the focus of proposed immigration rules, which are supposed to bring in the workers most required and skilled for the country s economic needs not those whose sponsors are willing to pay the highest fee. In principle we support applications being rolled over to the next distribution period. However, such a system must be closely monitored to avoid problems similar to those in the US, where quotas are filled before they even open, due to the number of previously submitted applications awaiting approval. Raising the minimum criteria for Tier 1 The criteria for Tier 1 of the PBS have already changed several times since it was introduced (including when it was the Highly-Skilled Migrant Route). We therefore do not support raising the criteria for this route, especially since the current threshold works well in ensuring that Tier 1 Migrants are highly qualified and able to contribute positively to the UK economy. Tier 1 already includes standards to be met in English which are sufficient and do not require further alterations. It is also important to avoid either incentivising or penalising those bringing skilled dependents, as either approach could foster an environment of unequal treatment. The Tier 1 criteria for UK experience should not change either, and we can see no advantage to amending it. Page 4 of 8

5 Allowing a limited number of points to be awarded for shortage skills could be useful, however. Although most of those in shortage occupations will enter under Tier 2, the opportunity to identify these skills under Tier 1 would be sensible and helpful for the businesses requiring their skills. The potential inclusion of health insurance as an additional points-scoring opportunity is problematic on a number of levels. For example, some entrants may have health insurance when they apply (i.e., through an employer) but are unlikely to carry it with them abroad and/or determine if any new employer in the UK will offer such insurance. Furthermore, having health insurance in the UK often means being eligible for specialist care on a private sector basis after referral from an NHS doctor. Therefore it is impractical to assume that private insurance will keep migrants from accessing the healthcare system at large. Further, the processes required to investigate the nature and coverage level of migrants health insurance would waste valuable public money at a time when it can ill be afforded, especially in pursuit of savings which would likely be small and are extremely difficult to quantify. With regards to sponsors being required to provide health insurance for their employees, we remain concerned about the impact of this provision on smaller firms. While larger companies often provide private health insurance for all their employees, this type of benefit is simply not affordable for many smaller firms. Having to provide insurance for a migrant employee due to the immigration rules whilst other employees do not receive such benefits could leave small firms open to costly and timeconsuming discrimination claims. To avoid such problems, there should be an exemption for small firms (for example, with 50 employees or less) from the health insurance requirement. Tier 1 Investors and Entrepreneurs Tier 1 Investors should not be included in any annual limit. The small number of people entering under this category, and the ongoing demand within the economy for dynamic, flexible and varied funding solutions means that these migrants should be encouraged to come to the UK. Similarly, Tier 1 Entrepreneurs should not be included. Again, only a small proportion of people use this route, and the economic and social value created by entrepreneurship, including new jobs, means that these migrants are in high demand and their presence should be particularly valued. Intra-Company Transfer (ICT) The Intra-Company Transfer (ICT) route should not be included within any cap, given that workers entering the UK under this category are by definition temporary and not eligible to apply for settlement. Therefore they do not affect long-term immigration numbers, and should therefore not be counted. Page 5 of 8

6 Furthermore, ICTs tend to be in the country for limited periods of time, generally between 3 and 5 years, but they are a crucial determinant in attracting international businesses to locate and remain in the UK. If international businesses cannot bring the people with the in-house knowledge to build and strengthen their UK branch, or to train them in an international context, they may consider locating elsewhere. The lack of international companies setting-up in the UK will have a huge economic and employment impact as international firms create ancillary support services and supply chain opportunities. Dependents We do not believe that dependents should be included in any limit. To do this will penalise those skilled workers with dependants. This will not only foster an environment for unequal treatment, as mentioned above, but it will also mean to potentially lose in the economic rewards associated to them (e.g., private schools). Merging the Shortage Occupation and Resident Labour Market Test (RLMT) routes We do not support the merging of the Shortage Occupation and RMLT routes. The Shortage Occupation lists, while useful, cannot possibly include every type of role in shortage across the UK, especially since the MAC does not produce regionally-specific lists (except for Scotland). In places such as London, the demand for workers in certain industries are acute, but may not be replicated across the UK as whole, making the RLMT approach much more appropriate for addressing such shortages. Sponsor Responsibilities The LCCI counts developing the knowledge, skills and employability of the resident workforce among our most important policy goals, and we have developed avenues to promote this, such as our Young Chamber programme with schools and the focus on apprenticeships. This experience of directly linking young people with local businesses has demonstrated to us the enormous amount of effort London firms dedicate to upskilling the local workforce through work experience, apprenticeships, graduate programmes and CSR initiatives. Also, the LCCI is currently developing a research project with Mishcon de Reya to examine the current business environment in London, opportunities available to, and challenges faced by, entrepreneurs looking to grow their business which will be with the Government shortly. While we fully agree that every effort must be made to upskill the resident workforce to ensure London and the UK s longer-term competitiveness, the fact remains that migrant workers are necessary to fill short-term and specialist skills gaps. Oftentimes, hiring a highly skilled migrant to fulfil a specialist role Page 6 of 8

7 means that new business, investment and jobs that support those skilled jobs (e.g. support services) will follow, leading to a virtuous investment and employment cycle. There should be more recognition of the excellent work so many companies, including those who hire migrants, undertake to invest in the resident workforce of today and the future. We therefore believe that a bureaucratic process compelling firms to prove their commitment to British workers fails to reflect the excellent work taking place across the economy, and undermines the ongoing efforts of businesses to support skills development. Pressures on local services and upskilling the resident labour force We appreciate that migration flows can create pressures on local services in some communities, which must be addressed. Although more than half of the businesses we surveyed disagreed that the pressure immigrants place on public services outweighs the economic benefits they bring, the impacts of migration can be highly differentiated across the country. Therefore, increased support and funding must be made available in those areas coming under significant pressure from migration. However, the assertion that businesses simply hire the best employees without considering the longerterm condition of the UK skills base is incorrect, as evidenced by the widespread concern our members and other businesses have for the future of skills in the UK. In fact, London businesses consistently rank education and skills development among their foremost concerns. Economic migration is therefore necessary to fill skills gap that exist now, and are expected to continue in the foreseeable future. And while the skills of migrants are essential to ensuring the UK s businesses can develop and thrive, migration should in no way deter either businesses or the government from continuing to improve the resident skills base. Flexibility and certainty The work programme of any new government will impact on businesses in a number of ways. And while firms understand that the changed economic and political climate does bring particular changes, regulatory certainty is critical in enabling London firms to plan for the future and grow successfully. Therefore any changes to the immigration or wider employment policy system must be carefully considered with business needs in mind, and effort must be made to articulate changes in a clear, business-friendly manner, utilising established business networks, including Chambers of Commerce. While the PBS is not perfect, businesses appreciate the certainty it offers and the clear structure it provides. Any and all amendments to skilled migration policy should therefore build upon businesses Page 7 of 8

8 understanding of the PBS, ideally without adding onerous additional complexities, particularly for SMEs who often lack specialist HR or legal expertise. Finally, flexibility is key to any successful immigration policy, and a balance must of course be struck between certainty and the ability to respond to changing economic and employment conditions. We welcome the opportunity to put forth our members views on this issue and are happy to do so in future with the aim of ensuring that UKBA recommendations are adequately informed by the experiences of businesses on the ground. Page 8 of 8