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Immigration Skills Charge (Amendment) Regulations 2020

Volume 806: debated on Wednesday 7 October 2020

Motion to Approve

Moved by

My Lords, the immigration skills charge was introduced in April 2017. Its aim is to incentivise UK-based employers, including the UK branches and subsidiaries of overseas businesses, to take a long-term view of investment and training. It is designed to address the historic underinvestment in the training of domestic workers by UK employers.

The charge is currently paid by employers looking to sponsor a non-European Economic Area migrant for a tier 2 general or tier 2 intra-company transfer visa lasting more than six months. It also applies if the employers wish to extend the employment for a further limited period. The charge is paid upfront when the employer assigns a certificate of sponsorship to a migrant worker, and automatically calculated based on the dates provided by the employer as part of the sponsorship process. It applies at a rate of £1,000 per migrant per year for large businesses, with a reduced fee of £364 for small businesses and charities. To date, the charge has raised approximately £382 million. While the income raised is not additional funding for skills, it is helping to maintain the Department for Education’s existing skills budget and existing levels of investment in skills in England. Similarly, as education and skills are devolved matters, the income raised is helping to maintain funding levels for each of the devolved nations. It is distributed between England, Scotland, Wales and Northern Ireland using the formula devised by Lord Barnett.

Introduction of the charge was supported by the independent Migration Advisory Committee as part of its December 2015 review of the tier 2 immigration route. Subsequently, in its September 2018 report on the impact of EEA migration in the UK, the MAC continued to lend its support to this policy. Specifically, in relation to the abolition of the resident labour market test, which is not considered to be fulfilling its intended purpose of ensuring that employers look to recruit from overseas only where a suitable resident worker cannot fill the vacancy, the MAC stated that the immigration skills charge, alongside a system of salary thresholds, was the best way to protect against employers using migrant labour to undercut domestic workers.

The regulations are necessary to ensure continued application of the immigration skills charge under the new skilled worker route, which will replace the tier 2 general visa from January 2021 in the UK’s future points-based immigration system. I have outlined the costs and can confirm that these regulations do not change the amounts charged for either large businesses or small and charitable organisations.

The regulations also do not change the position in respect of EU, EEA and Swiss nationals, who are currently exempt from the charge. Given the ending of freedom of movement between the UK and the EU, we intend to remove this exemption. However, this will require separate consequential amendments following Royal Assent of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill.

As is currently the case, under the future immigration system there will continue to be exemptions from the charge, such as where the employer is seeking to recruit people into PhD-level occupations, where they are recruiting a person who is switching from the student route, or where the person is being recruited for less than six months. There are also exemptions for those within other sponsored routes such as tier 2 minister of religion visas and tier 2 sportsperson visas. These exemptions will continue to apply under the future immigration system.

The Government are making the biggest change to our immigration system in a generation and delivering on the will of the British people. These changes come at a time of global uncertainty as a result of the coronavirus pandemic, which has sadly resulted in lost and permanently changed lives. It has also resulted in many people across a wide range of sectors losing their jobs, at a time of wider economic uncertainty and instability. While it is right that the immigration system encourages those with the skills and talent that the UK needs to prosper, we must now, more than ever, continue to support our domestic workforce. The immigration skills charge is intended to do just that and ensure that employers contribute to our continued investment in developing the skills that the country needs. I commend these regulations to the House. I beg to move.

My Lords, the extension in these regulations of the charge to a wider range of skilled workers imposes an additional cost on charities and additional work for them. The voluntary sector at present is under great pressure, not only financially but in looking for really good global staff, along with businesses which recruit migrant workers who have skills that British workers do not. This is a thoroughly retrograde measure at a time when migrant workers are, more than ever, necessary to protect our economy and society from the economic consequences of the twin devils of Brexit and Covid.

My Lords, I am grateful for the opportunity to focus on the issue of sportspeople. I want to ask the Minister a few questions, which I am sure she will be able to clarify for me.

First, the reference to the exemption of “sports players” and “sports coaches, instructors and officials” includes the numbers “3441” and “3442”. I assume that that is for the Office for National Statistics coding system, and that the Home Office set out the requirements and the ONS categorised them. What is crucial overall is the UK points system, and the Home Office policy document about the new rules will formulate that. Indeed, there is reference in an explanatory note to the guidance being forthcoming, but at the moment we do not know what that guidance would be. Therefore, for sportspeople, it is difficult to have clarity on exactly what the regulations will require.

As I understand it, the requirement will be similar to the tier 2 regulations, which require that sports governing bodies decide on the very high standards required. For example, if you came in as the spouse of a researcher, you could take employment in virtually every area. But that is not the case in sport, because in sport you have to go back and satisfy the governing body of the sport that you met the very high standards required to take on employment under these regulations. Should that be the case, I ask whether it is wise to focus exclusively on the governing bodies of sports rather than the clubs, given that it is often the clubs that will be making employment offers to individuals. I hope that will be clarified in the guidance.

Take as an example the world of rowing. As I understand it, somebody like Sir Steve Redgrave might have the opportunity to apply to be performance director of British Rowing, and that as long as the sport’s governing body stated that there was a non-UK applicant who would do the job better, that is sufficient to satisfy the Government under these regulations. However, if it was the Leander Club doing it, I cannot see the system that would apply for the individual who wished to be performance director—say, Steve Redgrave.

It would be very helpful to have a little more clarity on that. I hope my noble friend will say that this will all be clear in the guidance: if she does, I would be delighted, but on the other hand I would be concerned that the House had not had the opportunity to review the guidance, because the devil is sometimes in the detail.

There is a general point. I may be wrong in this, but it seems to me that the definition of “skilled worker” in the 2017 regulations is much tighter than the definition in these revised regulations. Whereas, for example, you have a skill level from RQF level 6 coming down to RQF level 3 under the original 2017 regulations, now the Secretary of State has the right to determine that the skills are “appropriate”. “Appropriate” is a very generic word and is not defined clearly. To give the Secretary of State such powers may well be appropriate, but it is exactly the sort of thing that I imagine the Delegated Powers Committee, on which I used to sit, will look at and say that to talk about “appropriate” skills is a wide delegated power, rather than being very clear in the definition of what the skills should be in any given circumstance.

Finally, the definition of a sports player includes a separate definition and exemption of the cost for “sports coaches, instructors and officials”, but the sports player’s entourage if, for example, they are coming to Wimbledon and training in this country, goes much wider than sports coaches, instructors and officials. It could include sports physiologists, sports doctors or sports scientists that work with that sports player. I just wonder if there could be a catch-all definition for the sportsman or sportswoman’s entourage to be covered in that context.

My final point is a comment that I hope will be helpful to the Home Office in future consideration of draft statutory instruments. A number was provided for us to seek answers to these questions, but when you phone the number, you need a name, and when you ask for the migration policy unit, which is in the guidance to us as Members of Parliament, sadly, you cannot get through to anybody, because they do not have the extension of the migration policy unit. You need the name of somebody there, and that name is not in the guidance. For future assistance to Members of the House of Lords and, indeed, of the House of Commons, it would be useful to have a name associated with the telephone number, or the telephone number of the unit. Either way, that may be useful on future occasions.

My Lords, it gives me enormous pleasure to follow the noble Lord, Lord Moynihan. We have been friends for a very long time and I have always admired his energy and enthusiasm for his chosen causes, sport, of course, being the top one. I am not such an adherent of sport. I believe it is a cause for good and that it is important, but it is no more important than so many other things. I cannot quite understand why such an exemption should be made in favour of sport, when so many other needs are much greater, as far as immigration is concerned.

The noble Baroness, Lady Goudie, spoke about the particular need for carers. When one reads the list of people who will not be able to bring their skills to this country under the Immigration Rules, it is an extraordinary list. Carers are particularly singled out as ineligible to come in, yet carers are absolutely in demand and there is no evidence that our nationals are interested in training to take up that role. Even though the Minister explained that the purpose of these regulations is actually to raise money for training, she made clear that it does not directly find itself being put to use in that way. Where are we going to get the care assistants we need? One might also ask where we are going to get the pest control technicians that we will absolutely need and where we will find the lift technicians—these are not predominantly British at the moment, and I do not think sufficient numbers are being trained by companies to take up that role. I, for one, will be very wary of getting into a lift in the new year.

I think we are rushing into this, and making an exemption for sport seems to lack a little logic. We need to train up sportspeople in the country, most certainly, but do we not have the skills to do that here? We have winning teams and top-class players. Surely, if we are going to concentrate on breeding winners, that is what we need to do: make the most of what we have locally? If that argument applies to training care assistants, then, surely, it applies to sport?

My Lords, I congratulate the Government on continuing this series of regulations, and I encourage them to go further when they next have a chance. Among the people coming in and paying this charge, there are groups of people who have very similar skills and for whom £1,000 really is not a sufficient incentive to the employer to start investing in UK employees for the future.

I would like to see the Government having the power to look at who is coming in and paying this charge and, when they see a group of people with similar skills, to increase the level of the charge for those skills to £2,000, £5,000, £10,000 or whatever is required to start the companies concerned investing seriously in educating our own people. Otherwise, it is just a tax. I would like to see this used as a serious instrument of policy to reduce the number of people coming in with skills that we could easily reproduce in our own population if we took the trouble.

My Lords, I thank the Minister for the explanation of the regulations. Like the noble Baronesses, Lady Goudie and Lady Wheatcroft, I have certain reservations and questions I would like to ask the Minister because all of this must be placed in the wider context. In the context of Brexit, immigration is emotionally charged and, in many ways, characterised much of the bitterness around the referendum and probably fuelled the majority for Brexit. I recall that from when I was a Member in the other place way back in 2016.

I am reminded of the debate on the principal Bill in Committee and on Report, and, in many ways, this piece of statutory regulation is a forerunner to that. We know what those particular issues are: the EU settlement scheme, the physical proof people are looking for and looked-after children. The other important area is that of carers, given the contribution of those from other countries who have been employed in the medical, nursing and caring sectors.

However, in relation to this specific piece of regulation, I will ask the Minister about some issues. For us in Northern Ireland, one issue related to the changes to business and sponsorship visas in relation to Northern Ireland might be the loss of some essential labour, and the move to using the UK visa system will be arduous, costly and a risk for a huge amount of Northern Ireland businesses, particularly at the time of this pandemic, when many of them are forced to do other things. Therefore, can the Minister offer any relief in relation to this or, possibly, investigate that?

Further to this, in relation to retaining this labour market, these businesses in Northern Ireland will also be in direct competition with those in the Republic of Ireland, since their employees can simply move half a mile, or half an hour, down the road and continue to work as an EU citizen, without having to meet all of these new requirements. I say to the Minister that this is a unique issue for Northern Ireland businesses, so I would appreciate it if the Minister could investigate it.

In the broader post-Brexit immigration system, the salary threshold will also have a disproportionate impact on Northern Ireland, as it is still capped at the same level across the UK without any consideration for differences in salaries and labour markets. There was some discussion earlier this year about the need for Northern Ireland to have its own salary threshold reflective of our labour market, but I understand that the Home Office is proceeding with a one-size-fits-all cap. Can the Minister offer any relief or comfort in this respect?

Many people from outside the UK through their employment in many situations, particularly in caring professions, have contributed to the enrichment of our society and economy throughout the UK. We do not wish to denigrate or erode that; we want to ensure that it is nurtured. Those people, who have offered us such good service, should still be facilitated.

I have asked several questions to which I would like the Minister to provide some answers. If she cannot do so in any detail today, I would be quite happy for her to write to me.

The noble Baroness, Lady McIntosh of Pickering, has withdrawn from this debate, so I call the next speaker, the noble Lord, Lord Paddick.

My Lords, I thank the Minister for explaining these regulations, although I am not entirely clear about them. She said that they are about the immigration skills charge and underinvestment by business in skills training, but then said that the money paid does not go into skills training, which I found a little confusing. The charge applies at a rate of £1,000 per migrant per year for big businesses, with reduced amounts for small companies and charities.

I presume that the regulations are necessary to bring the existing immigration skills charge in line with the new points-based system to be introduced from 1 January. If I understood the Minister correctly, that EU migrants from 1 January will have to pay the immigration skills charge is being dealt with under separate legislation and not under these regulations.

I am also a little confused by the Explanatory Note, however brief, which says:

“Regulation 3 adds exemptions to the requirement to pay the charge.”

That is clergy, sports players, sports coaches, instructors and officials. My understanding was that these people were exempt already, so I do not understand what “adds exemptions” means if they were already included.

I have a lot of sympathy with the question asked by the noble Baroness, Lady Wheatcroft: why sport? I understand that the guidance available on Home Office websites may not be up to date, but for a sportsperson to be exempt, they need to be

“internationally established as a player or coach at the highest level.”

That indicates that the sort of people we are talking about will be those who earn a considerable amount of money. I understand that sport covers from grass roots up to international level, but these will be internationally established people on extremely high salaries, so why are they exempt? I understand that it might be argued that the sort of skills training that sportspeople get is not impacted, but surely, as she explained, this money goes into some central pot to assist with skills training generally. Can the Minister explain why internationally established players or coaches at the highest level are exempt from the immigration skills charge?

We have discussed only in the past week or so in the House the issue of immigration, the job market and the resident market test in terms of encouraging employers to employ UK workers rather than foreign workers, so I have some sympathy with the noble Lord, Lord Lucas. He asked whether £1,000 was really enough to encourage employers to employ UK staff rather than people who are migrants, particularly as the resident market test is being done away with.

I can understand clergy being exempt from the charge, because one does not normally expect clergy to be paid an extraordinary amount of money. It therefore does rather concern me that the guidance in relation to clergy states that, once you have been sponsored for three or six years, you cannot return to the UK under level 2 within the next 12 months unless

“the salary for the job that the Certificate of Sponsorship Checking Service shows you are being sponsored to do (including any allowances listed as acceptable for this purpose in paragraph 79 of Appendix A to the Immigration Rules) is £159,600 or higher.”

I think—although I do not know—that it would be unusual for members of the clergy, who I understand include monks and nuns, to be paid this salary or higher, or that the sort of accommodation with which they are provided, which can be included, would run to that sort of cost. So, all in all, this is very confusing.

However, if these regulations do not add these other people as exemptions because they are already exempt, and if their purpose is simply to align with the new points-based system from 1 January, I am content.

I too thank the Minister for her explanation of the content and purpose of this provision, which amends the Immigration Skills Charge Regulations 2017. The 2017 order set out the details for the payment of the immigration skills charge, which is levied on employers who sponsor a skilled migrant worker. This order amends the 2017 regulations by changing the definition of a skilled worker to whom the immigration skills charge applies to reflect the changes the Government are making to the Immigration Rules. At the moment, the definition of a skilled worker includes that they must have been the subject of a resident labour market test and have a certain level of qualification, namely level 4 and above of the Regulated Qualifications Framework.

The Government are scrapping the resident labour market test and reducing the qualifications needed to access the skilled worker route to include, as I understand it, the equivalent of A-levels—level 3 and above—of the Regulated Qualifications Framework. As the Minister said, both these changes were recommended by the Migration Advisory Committee. Thus the SI will redefine a skilled worker as someone who reaches a skills and a salary threshold, is sponsored by an employer and is applying on a route that permits stays of over two years, regardless of the length of stay of the particular individual. As has been said already, it also maintains the existing exemptions from the charge for sports people and ministers of religion.

Can the Minister say what impact the Government expect the changes made by this provision to have on the number of employers and the number of migrant workers accessing the skilled worker route after the end of the transition period, compared with the respective numbers who would have been expected had the changes in this provision not been made?

Can the Minister also say whether there is any limit on the number of migrant workers who can access the skilled worker route each year if they are sponsored by an employer and meet the qualification criteria? Is there any cap on the number? Can she indicate what overall increase in revenue from the immigration skills charge the Government expect as a result of the change in the definition of a skilled worker and the end of free movement?

The Minister has already told us how much has been raised by the immigration skills charge since it was introduced, but what percentage of the annual skills budget of the Department for Education does the income from the immigration skills charge represent? I await with interest the response of the Government to the concerns and questions of my noble friend Lady Goudie, the noble Baronesses, Lady Wheatcroft and Lady Ritchie of Downpatrick, and the noble Lord, Lord Paddick, who all raised very interesting points.

While we are not opposed to these regulations, they represent another wasted opportunity to improve the immigration system and support our NHS, because they do not exempt NHS employers from paying this charge. Paragraph 12.3 of the Explanatory Memorandum says:

“An Impact Assessment has not been prepared for this instrument. The charge is classified as a tax and is therefore out of scope of the new Better Regulation Framework.”

The immigration skills charge is thus, the Government agree, a tax, paid by employers who recruited from overseas instead of from the domestic workforce, and is intended to act as a disincentive and to promote local recruitment. In the context of the NHS, however, it punishes trusts and indeed taxes them, as they have to fill clinical skills shortage gaps by recruiting badly needed skilled staff, including specialists from abroad, with the Government simply taking back through this tax much-needed money from a sorely stretched NHS—money the Government provided to the NHS in the first place on the basis that it was needed to provide front-line hospital services. They are taking this money back through a tax from a health service even more sorely stretched during Covid-19 and facing the certainty that in less than three months’ time, with the ending of free movement, an even greater proportion of skilled migrant staff will attract the skills tax.

A recent freedom of information request showed that the quarter of NHS trusts responding had in total paid over £15 million pounds through the charge, or tax, since 2017. Local NHS trusts requiring specialists from overseas are being penalised and taxed for a failure by the Government to implement a skills strategy that provides sufficient available home-grown skilled staff for the NHS. The Government were forced into a U-turn on their policy of charging health and care workers from overseas to use the NHS they work in and support through the immigration health surcharge. However, the Government continue to insist on their employer paying the immigration skills tax and continue to claw back funds from already stretched hospital budgets. It does not make sense, and these regulations are another lost opportunity to rectify an inexplicable policy that will be further expanded to cover those coming from EU countries in less than three months’ time. The deficiency in these regulations is not in what they say but in what they do not say.

My Lords, I thank all noble Lords who have spoken in this debate, with quite varying views, on the immigration skills charge.

I shall come to the noble Lord, Lord Rosser, first. On the numbers affected and the limits on numbers, I know that there will be no cap and, although I do not have figures to hand for the numbers affected, I can certainly write to him if we have them. Clearly, that would be a retrospective view, because it is about to be brought in, but we will certainly have the numbers since 2017, when it was introduced. The noble Lord also asked me what percentage of the DfE budget the charge represents, but I do not have that figure either.

The noble Baronesses, Lady Wheatcroft and Lady Goudie, asked if this is a retrograde step. This charge has been in existence since 2017, and in what it does and does not do, the exemptions are nothing new, such as where employers are seeking to recruit people into PhD-level occupations, where someone is switching from the student route, and those under the ministers of religion and sportspersons tier 2 route. Those exemptions will continue to apply; they are not new under the future immigration system.

The definition is those who come under tier 2 and tier 5. The noble Lord, Lord Paddick, asked why they are necessary. It is to ensure continued application of the skills charge under the new skilled worker route. From what he was saying, I think that he is satisfied on that rationale. I think my noble friend Lord Moynihan asked what the definition of a sportsperson is. It is someone recognised by their sport’s governing body as being at the highest level of their profession internationally. I understand that it does not apply to their entourage.

The noble Baronesses, Lady Wheatcroft and Lady Ritchie of Downpatrick, asked about the lack of exemption for health and care workers. As they will know, the Government are proactively supporting the health sector with a number of unprecedented initiatives, including introducing the new health and care visa. The income from the ISC is used to address skills and training gaps in the resident workforce, which includes the healthcare sector, but the noble Lord, Lord Paddick, is absolutely right to point out that it is funding those sectors not directly but indirectly. The rationale behindit is that we provide resident workers with the opportunity to develop skills which will enable them to progress in their career. As I think I have already pointed out, it is raised and paid into the Consolidated Fund and distributed to the DfE and the devolved nations using the Barnett formula.

Those are the questions that I can answer today. If I have left anything out, I will write to noble Lords, but on that basis, I beg to move.

Motion agreed.