Immigration Skills Charge (Amendment) Regulations 2022

Lord Palmer of Childs Hill Excerpts

Monday 5th December 2022 Grand Committee

The immigration skills charge plays a valuable role in our immigration system. It encourages UK businesses to utilise domestic labour where they can and to invest in skills when they are in short supply. However, it is important that we make exemptions to the charge when there are sufficiently good reasons to do so. These regulations will support UK scale-up businesses to compete in the global market for the skills needed to continue their growth. They will ensure that we deliver on an important trade commitment to our partners in the European Union and thereby secure reciprocal treatment for British workers undertaking business assignments throughout Europe. I commend the regulations to the Grand Committee.

[Lord Palmer of Childs Hill (LD)]

I thank the Minister for that introduction. I will deal with the first item, on the immigration skills charge, and my noble friend Lady Northover will deal with anything I have left out and the second one.

First, this SI is important for what it does not say as well as for what it does. Can the Minister tell me how these proposals link with the research and development tax relief and tax credits, which will come in through the Finance Act? They seem very relevant to what we are talking about. In particular, will the tax credits relating to research and development for work carried out outside the UK impact on this statutory instrument?

Further to that, according to the Explanatory Memorandum, the Minister for Innovation says that these regulations

“are compatible with the Convention rights.”

Is the Minister for Innovation the correct person to make such a ruling? It seems rather like putting the gamekeeper in charge of the poacher.

Paragraph 7.5 of the Explanatory Notes says that

“This amendment to the regulations will codify the exemption.”


It would be useful to have, even in the notes, some empirical examples to show that this is the case.

In his introduction, the Minister talked about the effect in the EU, as distinct from in the UK. I would like him to confirm that the Government see this as reciprocal relief for workers from the UK working in the EU.

Lastly, the Minister said that there was no loss of revenue. However, the notes say very clearly that there is no impact assessment. How can he be so sure and blithely say that there will be no loss of revenue when there is no impact assessment? He may be quite right, but this is really asking us to believe something without empirical examples.

[Lord Coaker (Lab)]

My Lords, I thank the Minister for his introduction to the regulations. I agree very much with the noble Lord, Lord Palmer, about the SI being interesting for what it does not say as much as for what it does say. I have a couple of brief questions for the Minister; I will make some longer remarks on the next SI.

The SI has been through the other place, so we accept it, but we have certain questions about it. Why have the Government come to the conclusion that these exemptions are needed? In line with the point from the noble Lord, Lord Palmer, about what the SI does not say, what are the Government’s plans, at the same time as bringing forward exemptions such as these, to ensure that there are excellent training and opportunities for our resident workforce? How does this SI fit with the stated, explicit intention of the Home Secretary and the Government to reduce levels of migration, something which we have contested?

As the noble Lord, Lord Palmer, mentioned, an impact assessment for the SI has not been published. The Minister gave some limited explanation, but I would like to know why not, and how will the impacts of the changes in this SI be monitored if an impact assessment is regarded as unnecessary or indeed if one appears in future? We have no idea where we are without impact assessments.

For example, these changes are designed to increase the number of skilled migrants in this area. How many skilled migrants have there been under the scheme so far? With no impact assessment, how can we know how successful this charging scheme has been since it was introduced in 2017? It is supposed to incentivise employers to invest in training and upskilling the resident workforce and reduce reliance on migrant workers. As the noble Lord, Lord Palmer, says, without the impact assessment, how do we know that the Government have achieved their own policy objective? The charge was introduced to discourage employers from seeking the skills they needed abroad. Whatever the rights and wrongs of that, that was the whole purpose. How do we know it has been successful?

What the Government have done is say that they need a couple of further exemptions to plug a skills gap that they have identified. The charge rate is £349 million a year. How is that money spent? From my reading, it appears that it just goes into an amorphous pot of money. How is that used to address the skills gap in the UK? There are skills shortages which we are seeking to plug through this skills exemption scheme, among other measures. Alongside that, there is the paradox that there are huge numbers of unskilled jobs which are unfilled. How will the Government deal with the apparent paradox of a skills shortage and yet millions of unfilled, unskilled jobs? Whatever the SI says, that is surely the policy gap and issue that the Government need to address.

--- Later in debate ---

[Lord Palmer of Childs Hill (LD)]

Just to take up the points that the Minister kindly referred to, he said that this would not involve additional costs. Surely an impact assessment would have talked about how much take-up there would be. If the take-up is different, the costs will be different, because more people will seek the relief. Without empirical examples, we do not know.

The Minister said that the relevant Minister was correct when he said that this was compatible with the European convention. I would have thought this was a legal matter and should have had a report from the Attorney-General, rather than a Minister who was implicitly involved in it.

[Lord Murray of Blidworth (Con)]

I will deal first with the point about the impact assessment. As I say, as a matter of practice on taxes, the requirement to hold an impact assessment in the sense described by the noble Lord is not normally followed. However, as I say, the department closely scrutinised this question and came to the conclusions I already outlined.

On the obligation to the European Convention on Human Rights at paragraph 5 of the Explanatory Memorandum, Section 19 of the Human Rights Act requires a Minister presenting a piece of legislation to certify whether it is compatible. It is not normal practice that that attestation is signed by the Attorney-General. Plainly, all these matters are subject to legal advice, as the noble Lord would expect.