Immigration law change: Why ‘getting it right is critical for economic growth’

Economy & Politics | Employment & Skills | Healthcare | Leisure & Tourism | National

Radical new rules on immigration and overseas talent recruitment are on the way – but how will they work and what are the implications for business? BLM investigates…

Government efforts to limit immigration and end the UK’s reliance on ‘cheap, low-skilled labour coming into the country’ mean new legislation is on the horizon for 2021.

A points-based immigration system, akin to that of Australia, will be adopted in the wake of Brexit, with would-be workers judged on credentials including skills, qualifications and salaries prior to UK entry being granted.

Home Secretary Priti Patel described the new legislation as ‘a historic moment for the whole country’.

She said: “We’re ending free movement, taking back control of our borders and delivering on the people’s priorities by introducing a new UK points-based immigration system, which will bring overall migration numbers down.

“We will attract the brightest and the best from around the globe, boosting the economy and our communities, and unleash this country’s full potential.”

The initial response from business organisations suggests the move has been well-received – in most cases. However, there are some sectors which are likely to be impacted more severely, while assurances are still being sought on other key details.

The new rules

So, what’s changed? The new system ends free movement, and will see EU and non-EU citizens judged equally when assessing residency applications.

Workers will need to meet a wide range of criteria relating to skills, qualifications and the ability to speak English, to be able to work in the UK – and must have a job offer for a role earning a minimum of £25,600 in place prior to entry.

Around 70% of EU workers currently in the UK would fall short of the benchmark.

Are businesses happy?

Generally speaking, they seem to be – providing rules don’t restrict access to skills and labour, help is available to navigate the new laws, and implementation doesn’t prove too expensive.

There are caveats, though. A Forum of Small Business survey says 59% of firms harbour concerns about being able to access workers with the skills they need post-Brexit, while 95% have zero experience of navigating immigration laws and want help to do so.

With UK productivity stagnant for a decade, and key sectors already facing a skills shortage, the government is being warned it must not place further barriers in the way of progress and growth for the nation’s businesses.

Carolyn Fairbairn, Director-General of the Confederation of British Industry, said: “Getting a new immigration system right on day one will be critical for economic growth and the UK’s global reputation as it forges a new path outside the EU.

“Firms recognise and accept that freedom of movement is ending, and have sought a system that is both open and controlled, valuing people’s contribution beyond their salary while retaining public confidence.”

And Mike Cherry, National Chairman of the Federation of Small Business (FSB), warned business needs must be considered when implementing change.

He said: “For many small businesses, a fair and flexible immigration system is just as, if not more, important than securing our trading future.

“One in five small employers in the UK have at least one staff member from the EU. These firms rely on talent from outside the UK to plug current skill gaps, grow their businesses and contribute to the wider economy. From graphic design studios,
to farms, to care homes, to engineering firms – tighter immigration restrictions will hurt businesses across all sectors and all skill levels.

Mike Cherry, National Chairman of the FSB.
Mike Cherry, National Chairman of the FSB.

“It is critical that workers, that are vital to unleashing the UK’s growth potential, are not locked out by a system that doesn’t meet the needs of the UK’s business community.”

The FSB warned that 13% of small UK firms would consider moving their business abroad and 8% may close the business if there were additional barriers to recruiting EU workers.

Which sectors will suffer?

While some skills are prized enough to warrant special dispensation, other sectors will find their recruitment ambitions face significant challenges.

Although the reduction in the minimum salary level – from the previous benchmark of £30,000 – will open doors to some, it will still prove prohibitive to others.

This is part of a deliberate government attempt to halt the influx of low-skilled workers, but will have an inevitable impact on certain types of business and employment.

Fairbairn said: “Several aspects of the new system will be welcomed by business, particularly abolishing the cap on skilled visas, introducing a new post-study work visa for overseas students, and reducing the minimum salary threshold.

“Nonetheless, in some sectors firms will be left wondering how they will recruit the people needed to run their businesses. With already low unemployment, firms in care, construction, hospitality, food and drink could be most affected.”

Law firm Migrate UK specialises in immigration law. Its founder Jonathan Beech has worked in the sector for 20 years and has consulted on immigration for the UK Border Agency.

He warns the hospitality sector in particular will suffer.

Beech said: “There are certainly particular sectors that will be more winners and more losers.

Jonathan Beech, MD of MIgrate UK.
Jonathan Beech, MD of MIgrate UK.

“The construction industry has been given a major boost after the MAC suggested adding a list of construction jobs, including carpenters and joiners, glaziers, window fabricators and fitters to the proposed plan to lower the skill level for vacancies. This could be a major advantage to the construction sector, worried that their vacancies were being phased out as ‘low-skilled’.

“On the other side, the hospitality sector will be hit hardest due to the qualifying salary threshold still remaining high at £25,600 and there being no regional variation.”

Lex Butler, Chair of events and hospitality association HBAA warns the new rules will have a far-reaching impact on the sector.

He said: “The government’s post-Brexit immigration plans will put at risk the UK’s position as a world-class destination for business and leisure tourism.

“The industry is working hard to recruit more UK-based talent to build careers in this industry but we shall not be able to replace all the migrant workers by the time the regulations come into place.

HBAA Chair Lex Butler.
HBAA Chair Lex Butler.

“Once again, being relatively low-paid is immediately equated with low-skilled, even though in this industry many staff with high levels of responsibility and skill fall below this financial threshold.”

Social care is another sector where the impact is expected to be significant. Care roles typically pay around £16,000, and at present 17% of people working in the sector are non-British nationals.

Yet one in every 11 roles – 122,000 – in the sector is already vacant, placing the sector at crisis level.

Ben Gershlick, Senior Economist at independent charity The Health Foundation, said: “The government’s new immigration system looks set to make our social care crisis even worse.

“Migrants are a crucial part of the social care workforce. Without any specific migration route for social care workers, these proposals will make it almost impossible for people from overseas to come and work in most jobs in this sector.

Ben Gershlick, Senior Economist at The Health Foundation.
Ben Gershlick, Senior Economist at The Health Foundation.

“Social care needs investment and reform to address the underlying causes of staff shortages. As it stands, the government’s new immigration policy will only make existing problems worse.”

Global Talent visa

There are some key fields which will be exempt from these new rules, however.

The new Global Talent scheme – operating since late February – will ensure a fast-track route into the UK for experts in science, maths and research. The scheme does not cap the number of people coming into the UK under this initiative, nor limit the length of their stay.

Patel cites the initiative as proof science, research and innovation sit at the top of the national business agenda.

She said: “The UK is a world leader in science, with research and innovation that changes lives being undertaken every day in this country.

“To keep the UK at the forefront of innovation, we are taking decisive action to maximise the number of individuals using the Global Talent route including world-class scientists and top researchers who can benefit from fast-tracked entry into the UK.”

Professor Julia Buckingham, President of Universities UK and Vice-Chancellor of Brunel University London, describes the move as a ‘positive step’.

She said: “The Global Talent visa will help to ensure that universities can attract the brightest scientists and researchers to the UK with minimal barriers.

“Universities are globally connected and this announcement signals that the UK remains open to talent from around the world.

Professor Julia Buckingham, President of Universities UK
Professor Julia Buckingham, President of Universities UK.

“Our universities carry out life-changing research and our knowledge base, economy, and wider society will benefit from the international staff we can attract through this visa route.”

Warning for government

With a new system now in the pipeline, a smooth transition will be sitting at the top of most companies’ wish list.

Making the rules simple, transparent and effective will be crucial, says Cherry.

He said: “Ultimately, small firms want a responsive immigration system that is alive to the skills shortages – at all levels – that are holding them back.

“We see the benefits of a points-based model, so long as it’s one that’s easy to use and affordable for small businesses – almost all of which have no experience of using our current immigration system.

“Against a backdrop of stifling skills shortages, sluggish economic growth and an ageing population, it’s critical that we get this right, particularly as the timeframes are so short.”

And Edwin Morgan, Director of Policy at the Institute of Directors, said: “The overriding concern for business is bureaucracy. The government must ensure firms aren’t faced with a Byzantine system when they need talent to grow.

“Implementing a new system and adapting to it will be a race against the clock for both government and businesses.”

And Fairbairn added: “Firms know that hiring from overseas and investing in the skills of their workforce and new technologies is not an ‘either/or’ choice, both are needed to drive the economy forward. So careful implementation across all UK nations and regions will be required.

Edwin Morgan, Director of Policy at the Institute of Directors
Edwin Morgan, Director of Policy at the IoD.

“A regularly reviewed shortage occupations list, with promises of further flexibility, will be vital for the effectiveness of the new system.

“Above all, the government must work with employers and employees – especially smaller firms – to ensure they have the time to adapt to new policies and practices.”

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