Immigration Skills Charge set at £1,000
March 22, 2016
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Last year the UK Home Secretary’s independent advisors, the Migration Advisory Committee, were asked to review how businesses were using the immigration system. Their review had one main goal – to reduce the number of skilled workers coming to the UK, whether through legal restrictions or financial disincentives.
The MAC published their report in January and I, along with my colleagues, have been waiting to hear whether the government will accept their policy recommendations. Would minimum salaries increase to £30,000 for most skilled work visas, will the minimum salary for third party contractors go up to £41,500 and will there be a £1,000 per year skills charge for each sponsored worker?
Normally any announcement is made with a great fanfare – as a Home Office official I sat in on plenty of press conferences where Ministers revealed new policy to a gathered pack of journalists.
Yesterday the Home Office took a different approach. Lord Bates, the Home Office Spokesperson in the House of Lords, announced to his fellow peers that the MAC’s recommendation of a £1,000 Immigration Skills Charge (ISC) would indeed be implemented. More specifically, he told them that:
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larger sponsors of Tier 2 migrants will be charged £1,000 per migrant per year, with a reduced rate of £364 per migrant per year for small businesses and charities; and
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there would be an exemption for graduates switching from Tier 4 to Tier 2, as well as an exemption for migrants undertaking PHD level roles. He did not provide the precise detail of how those exemption would work in practice.
Lord Bates did not reveal a timetable for introducing the ISC, but we would not expect it to take effect before the autumn. The ISC is just one part of an Immigration Bill that is unlikely to be approved by Parliament before the summer and the provisions would require further legislation to take effect. It is unlikely that this secondary legislation could be in place before October.
In setting the levy at £1,000 the Home Office has accepted advice of the MAC, a recommendation they made in their January 2016 review. Lord Bates explained that the ISC will be collected by the Home Office, implying that it would be paid up front when a worker is sponsored, as was also recommended by the MAC.
The money would then be reinvested in the upskilling of UK workers. It is still not clear how that reinvestment would work in practice. The MAC favour a levy and grant system that sees every company put money in, with companies investing in their staff being paid back grants. It is too early to say whether it would work like that in practice.
The government also hope that the ISC will bring about a 'behavioural change in the way that people think about recruitment'. Lord Bates asserted that 'for far too long it has been an automatic thought to recruit people from outside the European Economic Area without giving proper attention to whether those skills are there in the resident labour market'.
What about the rest of the MAC’s recommendations? He gave nothing away, but we would expect to hear more soon. Next time though, I would expect a little more fanfare when the announcement is made.
