The impact of the Tier 2 visa system

As the Home Office confirms updates on the new Tier 2 arrangements, David Sapsted reports on the implications for globally mobile sectors and their employees.

Tier 2 immigration visa system
Two surprising things happened in June: first, just weeks after taking office, Home Secretary Sajid Javid pledged to take “a fresh look” at the immigration system that limits the number of skilled workers from outside the European Economic Area able to take up job offers in the UK. Then, within a fortnight, Prime Minister Theresa May – the principal architect of the Tier 2 (General) visa system that limits the number of talented foreign workers able to enter Britain to 20,700 a year – announced that incoming doctors and nurses would no longer be counted in the annual quota.It was not just the National Health Service that cheered the announcement. Because health professionals take up more than a third of the Tier 2 quota each year, their sudden and unexpected exclusion from the annual cap meant that everyone from tech companies to the financial sector, education institutions to manufacturers got about 7,000 more opportunities to bring in more of the talented individuals from outside the EEA that they so desperately need.

Skills shortages

The UK’s escalating skills shortage has been exacerbated by an exodus of EU workers returning home because of Brexit, and a decline in the number arriving from continental Europe for the same reason. As a result, employers have been looking further afield for the skills they need, yet the stark fact is that, between December and May, an unprecedented total of 10,187 of 18,517 Tier 2 applications were rejected by the Home Office because the monthly visa quota had been repeatedly over-subscribed.Protests from British industry bodies over the situation found echoes elsewhere. “Indian engineers, IT professionals, doctors and teachers are among 6,080 skilled workers holding a UK job offer who were denied visas to the UK since December 2017, indicating that Indians are likely to be the hardest hit by the country’s annual visa cap,” the Times of India reported in May, citing figures from the Office for National Statistics indicating that Indian nationals accounted for 57 per cent of Tier 2 visas granted.Such a statistic could explain why the UK visa system remains a source of strain between London and New Delhi. Indeed, when Prime Minister Narendra Modi visited the UK in the spring, he refused to sign a memorandum of understanding with the British to facilitate the return of thousands of illegal Indian immigrants because the UK refused to offer Indian nationals easier access to visas.
Related articles from the Relocate website:For related news and features, visit our Immigration section.
A senior official at the Indian High Commission in London told the Times of India that the UK visa system represented “a hostile environment”, adding, “We need to see some easing of migration, especially of short-term visas such as for Indian students and those coming to work for companies.”The Indian government’s objections and a chorus of protests from so many business and professional organisations in the UK, particularly in the tech sector, appear to have brought about the ministers’ abrupt change of heart this summer – even before the government-appointed Migration Advisory Committee makes its recommendations in September on a new immigration system designed to meet the needs of the economy.“The system as it stands is dysfunctional, expensive and a brake on growth,” opines Adam Marshall, director-general of the British Chambers of Commerce. “The Home Secretary should start by scrapping the nonsensical cap on skilled workers, which hamstrings both fast-growing firms and the public services. He should then act swiftly to combat the perception that the UK is closed for business, by stripping back the bureaucracy and costs that make it hard for firms to hire the best talent from around the world.”

Concerns from industry

Problems with the Tier 2 system have been long in the making but have now come together in a not-so-perfect storm, resulting in the cap being imposed for six months between December and the beginning of June. For some time, the government has been ratcheting up costs under the system, making it prohibitively expensive for many smaller firms, while the minimum salary threshold to qualify under the scheme has steadily increased in line with the rise in the number of applications.Additionally, the rise in the number of EU nationals heading home because of Brexit and the drop in the number of Europeans coming to the UK has been exacerbated by the fact the employment rate among the local population is at an all-time high.Jonathan Portes, former chief economist at the Cabinet Office and now professor of economics and public policy at King’s College London, describes the cap as “economic self-harm,” adding, “It was always a mad policy but it didn’t matter so much when enough Europeans wanted to come here.”Simply increasing, or even abolishing, the 20,700 cap would still seem to be unacceptable to a government that remains committed to reducing annual net migration from the current 240,000 a year to below 100,000. But business leaders are equally adamant the quota either needs to go or be massively increased.
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Russ Shaw, founder of the Tech London Advocates (TLA) network of more than 6,000 tech experts and entrepreneurs, welcomes the move to remove NHS staff from the Tier 2 system. “We are starting to see positive engagement from the government,” he says.“Reducing the competition between the private and public sectors for skilled overseas workers is a welcomed first step – the priority must be to increase the current cap until supply meets demand. Access to talent remains a prominent concern but by taking immediate steps and aiming for one million tech workers by 2023, we can build for future growth.”Whatever the solution, the CBI is adamant something needs to be done...and swiftly. Restricting access to skilled workers is already adversely affecting many sectors in the UK economy, says Carolyn Fairbairn, the organisation’s director-general. “With record employment rates and without access to EU workers, firms are unable to get the staff they need to grow. For business, this issue is as important as our future trade deal with the EU. Training British workers isn’t enough on its own, nor is just hiring from overseas – business needs both.”Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online DirectoryClick to get to the Relocate Global Online Directory ©2018. This article first appeared in the Summer 2018 edition of Relocate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein. 

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