7th September 2009

Government to implement all changes recommended by MAC

The government has today announced its decision to accept recommendations by the Migration Advisory Committee (MAC) to changes within the Points Based System which the MAC published on the 19th August 2009.

The UK Border Agency has indicated that they will work closely with stakeholders over the coming months to implement the changes in a fair and strategic way. No timescale has yet been given for implementation of the changes, although indications suggest they will be introduced in early 2010.

Analysis of the points based system; Tier 2 and dependants.

Migration Advisory Committee (MAC) – background

The Migration Advisory Committee (MAC) is a body of expert economists who are tasked with providing independent, evidence based advice on migration and resident labour market issues to the Government. The committee is made up of the Chair (currently professor David Metcalf) and four other independent economists. One of the key duties of MAC is to advise the Government on sectors and occupations where shortages in skills and labour should be met by migration.

The Report

In March 2009, MAC was asked by the UK Government to address the following three questions in relation to points based system (PBS):

  • What further changes to Tier 1 of the points based system (PBS) should be made in 2010/11, given the changing economic circumstances?
  • Is there an economic case for restricting Tier 2 to shortage occupations only?
  • What is your assessment of the economic contribution made by the dependants of PBS migrants and their role in the labour market?

On 19 August 2009, MAC published its report entitled “Analysis of the points based system: Tier 2 and dependants”. It should be noted that MAC has limited its report to questions in respect of Tier 2 PBS. MAC will report on the first question (changes to Tier 1) in October 2009.

The Economic Contribution of Dependants of PBS Immigrants

The report makes the point that data on dependants is very limited because dependant immigration status is not recorded in national datasets. Tentative findings include:-

  • Spouses and partners tend to be younger than the principal immigrant;
  • Just over half of PBS dependants are in employment;
  • Even though a significant proportion are highly qualified, the majority of dependants who are employed are in unskilled occupations.

Given the lack of precise data, it has not been possible to develop a precise metric for identifying the costs/benefits of employment rights for PBS dependants, however a significant number of stakeholders who responded to the MAC call for evidence indicated that the liberal policy on dependants helps to promote investment in the UK and helps the UK to attract the best and brightest workers. Survey evidence suggested that allowing dependants to work in the UK may increase the attractiveness of the UK as a destination for principal immigrants.

The report reached the tentative conclusion that greater restrictions on working rights for dependants would not lead to improved outcomes, either for UK workers, or the UK economy. Further research should be undertaken in this area before any firm policy actions are undertaken.

Tier 2 Recommendations

The MAC did not find that there is an economic case for restricting Tier 2 to the shortage occupation route only. The report states that all of the existing routes should be retained. It was emphasized that the resident labour market (RLMT) route plays a key role in supporting key public services. The intra company transfer (ICT) route is important in terms of insuring the UK remains globally competitive and continues to attract high levels of inward investment.

However MAC considers that the design and enforcement of the RLMT and intra company transfer routes need to change.

In total MAC has made sixteen recommendations to Government. These are:-

(1) The UK Border Agency (UKBA) should consider whether specific professional qualifications should be regarded as equivalent to National Vocational Qualification (NVQ) Level 3, or Bachelors or Masters Degree level, when allocating points under the PBS, where there is good evidence to support such claims. A number of responses to the call for evidence indicated that employers within various industry sectors found that professional sector specific qualifications are a more realistic demonstration of skill than academic qualifications as they reflect on the job training and as such should be awarded points in Tier 2. MAC has recommended the UKBA undertake a detailed examination of professional qualifications in general and decide which should be regarded as equivalent to NVQ level 3, to a Bachelors Degree and to a Masters Degree. These professional qualifications should then be allocated points under the PBS.

(2) That a Masters Degree be awarded 15 points in Tier 2, instead of the current 10 points. The MAC found, through an analysis of various studies, that a person who holds a Masters Degree is likely to earn more than someone who holds a Bachelors Degree and will therefore make a greater economic contribution to the UK than somebody with a Bachelor’s Degree. It should be noted that Tier 1 PBS has recently been amended to allow for points for Masters Qualifications only.

(3) That 5 points be awarded for prospective earnings of at least £20,000.00 per annum instead of the current £17,000.00. The report indicates that a salary equivalent to £10 per hour indicates that an occupation is skilled. This amounts to approximately £20,000.00 per annum.

(4) That 20 points be awarded for prospective earnings of at least £32,000.00 per annum instead of the current £24,000.00. The MAC have concluded that the £24,000.00 salary threshold for the highest level of points (i.e. 20 points) currently available under Tier 2 is too low. The £24,000.00 salary is considered too low to guarantee that an individual holding no qualifications is skilled, since the data that the MAC had received indicated that the median pay of full time, working age employees in skilled occupations in the UK major market is £32,000.00.

(5) That the minimum threshold for gaining 10 points be raised to £24,000.00 per annum, and the minimum threshold for gaining 15 points be raised to £28,000.00 per annum.

(6) That certain occupations involved in the delivery of key public services, to be set out by the Government, be awarded an extra 5 points under the RLMT route. The MAC have recognised that by raising the salary thresholds for the points awarded for prospective earnings, this may disproportionately impact certain occupations involved in the delivery of public services, such as nursing and teaching. These crucial public services depend heavily on migrant labour. The purpose of providing an extra 5 points to these and other similar occupations will be to minimise the impact of the change in salary threshold.

(7) That the resident labour market (RLMT) route be kept in place. The MAC accept that the RLMT route contributes an important role in providing skilled employment to key public services and enabling employers to respond to their changing needs.

(8) That the required duration of vacancy advertising be increased to four weeks for all jobs. Under the current provisions, all vacancies must be advertised for two weeks, except when they attract a salary of over £40,000.00 per annum. MAC concluded on the evidence that more senior positions take longer to fill. Currently all positions must also be advertised on Job Centre Plus (with the exception of senior positions attracting salaries of £130,000.00 plus). MAC has concluded that the required duration of vacancy advertising be increased to four weeks for all jobs, both on Job Centre Plus and in another acceptable forum, even those with a salary of over £40,000.00 per annum.

(9) That the Government should consider the scope for introducing a certification regime for at least those employers identified as high risk.

The report considers whether it may be possible to introduce a certification regime for all COS issued following completion of the RLMT. The report concludes that the logical body to issue these certificates would be Job Centre Plus but that such a regime would place an insupportable burden on Job Centre Plus. MAC have therefore recommended that the Government considers introducing a certification regime for at least those employers which it has identified as being at high risk of not complying with RLMT requirements.

(10) The MAC recommend that the intra company transfer (ICT) route be kept in place. MAC received a significant amount of evidence and submissions in relation to UK employer’s use of the intra company transfer route. MAC has acknowledged the importance of this route to many multi-national companies operating within the UK and its consequent contribution to the UK’s economic success.

(11) That the ICT route should not lead to the right of permanent residence.

Evidence received by MAC from employers indicated that employers see the ICT route as a temporary migration route and that the vast majority of migrants who come to the UK under the ICT route did not remain in the UK long enough to qualify for permanent residence (currently five years). The report indicates concern that the residence labour market is never tested when an intra company transferee comes to the UK and remains in the role for a five year period and subsequently applies for indefinite leave to remain (ILR).

(12) That the qualifying period that the individual should be employed by the company overseas is extended from six to twelve months. The evidence suggested that the majority of migrants who come to the UK under the ICT route have more than twelve months prior experience with the company. The MAC conclusion was that a transferee with limited experience of the company is more likely than an experienced employee to be bought into carry out a job that could equally be done by a UK worker. Increasing the prior employment period to twelve months will serve to protect the resident labour market.

(13) That a separate scheme is created for graduates only, requiring three months prior experience with the company, but with a maximum stay in the UK of twelve months

MAC noted that, as part of their graduate training programmes, employers often move graduate trainees around countries on short term placements. There is no evidence to suggest that these short term moves displace UK workers. This separate category would be an acknowledgement that recommendation (12) would have a negative impact on the movement of graduate trainees. The MAC concluded that the shorter period of three months for graduate trainees can still meet business requirements whilst acting as an incentive to potential misuse of the route. The report also recommends that graduates coming by this route should not be able to switch to the primary intra company transfer route.

(14) That Government gives consideration to whether the level of resource currently being devoted to the enforcement of intra company transfers is sufficient, and whether the degree of transparency around enforcement of the system could be increased. The report indicates that MAC has received no firm evidence of outright abuse of this route. However it accepts that strong enforcement activity would allow better information to be collected and better detection of any abuse as it occurs.

(15) That allowances used for PBS points purposes are scaled down when calculating points for earnings under the PBS. The MAC declined to give a recommendation concerning the amount by which the allowances should be scaled down, but instead recommended that an appropriate factor be agreed between UKBA and HM Revenue and Customs (HMRC).

(16) That the UKBA and Her Majesty’s Revenue and Customs (HMRC) considered the scope for sharing information on what they are being told in relation to the intentions of particular immigrants and investigate potential abuse of the system on a risk based basis where there is indication that abuse of the tax system may be occurring.