Immigration Skills Charge (Amendment) Regulations 2020

Baroness Williams of Trafford Excerpts

Wednesday 7th October 2020 Lords Chamber

Moved by

[Baroness Williams of Trafford]

That the draft Regulations laid before the House on 10 September be approved.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

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.

--- Later in debate ---

[Baroness Williams of Trafford (Con)]

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.