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Last edited 02 Sep 2021

Immigration skills charge

On 19 January 2016, the Migration Advisory Committee (MAC) published its Review of Tier 2 report: balancing migrant selectivity, investment in skills and impacts on UK productivity and competitiveness.

The Migration Advisory Committee (MAC) is a non-statutory, non-time limited, non-departmental public body, sponsored by the Home Office which advises the government on migration issues.

Tier 2 of the points-based migration system is the primary route for economic migration to the UK. The route is for skilled workers from outside the European Economic Area (EEA) who have an offer of employment in the UK in an occupation classed as skilled to NQF6 or above and consists of four routes:

Tier 2 (General).
Tier 2 (Intra-company ransfer).
Tier 2 (Minister of Religion).
Tier 2 (Sportsperson).

Tier 2 migrants are entitled to bring dependants (specifically children under the age of 18, spouses, civil partners, same sex partners, and unmarried partners) into the UK, providing they can support them without claiming benefits.

MAC was tasked with recommending proposals that would restrict tier 2 inflows, by, amongst other things, providing advice on how to apply an Immigration Skills Charge (ISC) to businesses employing non-EEA migrants.

In the report, MAC state that they strongly believe an ISC will incentivise employers to reduce their reliance on employing migrant workers and to invest in training and upskilling UK workers. The revenue accumulated could be used to help raise skills in the domestic jobs market through training, and decrease the demand for migrant labour. MAC believe that a charge of £1,000 per migrant per year could raise £250m for skills funding annually.

They propose the ISC should be applicable to employers recruiting migrants across all Tier 2 routes other than the intra-company transfer, skill transfer and graduate trainee routes.

However, Civil Engineering Contractors Association (CECA) chief executive Alasdair Reisner said, “The industry is already facing the apprenticeship levy on top of the existing contribution to the Construction Industry Training Board. Now we face the prospect of a further burden…. While our members share the Government’s ambition of creating a more highly skilled UK workforce, is it self-defeating to hinder their ability to import skilled workers from abroad when absolutely necessary”

Institute of Directors director general Simon Walker said, "The MAC’s proposals will hurt thousands of individual firms, which will find it harder to bring in the skilled workers in areas like IT, where we have shortages... Coming on top of the new apprenticeship levy, and the national living wage, the new tax on recruiting from overseas will pile further costs on businesses. This will send a message around the world that the UK is no longer open to international talent."

MAC itself accept that, ‘In the context of the Government’s objective to reduce overall net migration, reductions in non-EU work migration can only make a marginal contribution. If non-EU work net migration was zero, overall net migration would still exceed a quarter of a million.’

In March 2016, the government announced it was pressing ahead with the plans, and that the new charge would start in April 2017. However, new exemptions will give protection for international students and '...keep the brightest and best in the UK'. Ref gov.uk Government’s new Immigration Skills Charge to incentivise training of British workers.

Information about the charge can be found at gov.uk.