Draft Immigration Skills Charge (Amendment) Regulations 2022

Sarah Dines Excerpts

Wednesday 16th November 2022 General Committees

[The Parliamentary Under-Secretary of State for the Home Department (Miss Sarah Dines)]

I beg to move,

That the Committee has considered the draft Immigration Skills Charge (Amendment) Regulations 2022. 

The immigration skills charge was introduced in April 2017. Its aim is to incentivise businesses in the UK to take a long-term view of investment and training in the domestic workforce. It is designed to address historical under-investment in the training of domestic workers by UK employers, and to deter some from turning to immigration as a cheaper alternative.

The charge is paid by employers seeking to sponsor migrants on a skilled worker visa or a global business mobility visa as a senior or specialist worker. The charge is paid up front when the employer sponsors a worker’s visa, and is automatically calculated based on the dates provided by the employer. It applies at a rate of £1,000 per migrant per year for large businesses, with a reduced rate of £364 for small businesses and charities.

In the last fiscal year, the charge raised approximately £349 million. Although the income raised is not additional funding for skills, it helps to maintain the existing skills budgets across the United Kingdom, and is consistent with the Government’s view that immigration must not be seen as a silver bullet to deal with skills needs in our economy. As education and skills are devolved matters, the income raised also helps 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.

Let us turn to the purpose of these technical regulations. Although it remains important that the charge be applied to most employers who use labour from outside the UK to fill their skills needs, there are good reasons to make specific exceptions. For example, workers are exempt if they are entering the UK for under six months, because they are then unlikely to be filling a job arising from a skills shortage.

These regulations will make two new cohorts exempt from the charge. The first of these is scale-up workers. In August this year, we launched the new scale-up visa. This enables UK businesses experiencing sustained high growth to attract top international talent and enhance the wider skills ecosystem. That visa was never intended to be subject to the immigration skills charge, as it focused on facilitating rapid recruitment and reducing the burden for UK businesses undergoing sustained high growth. This route provides workers with highly flexible conditions, including access to the wider labour market without sponsorship after six months. Consequently, the initial sponsoring employer should not be subject to the charge. As things stand, however, the route falls within the scope of the charge due to the wording of the current legislation. Sponsors of scale-up workers currently benefit from a waiver of the charge, but these regulations will codify the position by formally exempting them.

Secondly, I shall deal with the EU intra-company worker exemption. The second cohort to be exempt from the charge is EU workers who are undertaking intra-company assignments under the terms of the UK-EU trade and co-operation agreement. That agreement was ratified by Parliament on 30 December 2020. It secured preferential trading arrangements between the UK and the EU. One such accord was that neither party would apply taxes or charges, of a type such as the immigration skills charge, to workers undertaking intra-company assignments within the terms of the agreement. Both parties committed to dropping such taxes and charges no later than 1 January 2023. This is a legal requirement that is enforceable under international law. Accordingly, these regulations make the appropriate exemption for EU businesses sponsoring such workers.

[Shailesh Vara (North West Cambridgeshire) (Con)]

Can the Minister assure us that the EU is complying with its obligations?

[Miss Dines]

I understand that there is regular discussion on the issue and we are being afforded the same treatment. It is quite right to look at that, because we must make sure that this agreement is enforced equally, and that the UK and the EU are in equal partnership.

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

--- Later in debate ---

[Miss Dines]

I thank the hon. Gentleman for his submission. I remind him and the Committee that the UK economy is vibrant, and attracts lots of investment and, necessarily, business from abroad. There needs to be a careful balance. This is a very well thought-out change in regulations. On the money that has been raised, as I mentioned earlier, the skills charge has raised £349 million. That goes directly to supporting domestic training across the country, throughout the four nations.

It is welcome that the Opposition will not oppose these measures. The changes should not really come as a surprise, because one of the waivers granted is already being informally implemented. This is just carrying on with the status quo; there is no huge change. I am surprised that the Opposition might have wanted to oppose the regulations— and am grateful that they will not—because the second cohort is exempted to allow us to fulfil an international legal obligation; it must be right that the House does that.

We are asked, “What is the purpose of this?”. It is to stimulate Britain as a global magnet for international trade—that is quite a straightforward purpose. It is also to raise revenue, as I have said, and to support the United Kingdom in its international efforts to secure a strong growth economy. For all those reasons, I suggest that this is a relatively straightforward and technical change, and I ask the Committee to support it. There will continue to be a need for employers to recruit skilled workers from overseas where there are no such workers in the UK.

--- Later in debate ---

[Miss Dines]

I am grateful for the hon. Lady’s speech, although it may not be on the point of this technical change. I try my best not to be negative. This country is a magnet for businesses from across the world, and those who come under the skills schemes have very high-level skills. It is only right that the company sponsoring them pays into the kitty to promote our home development and training, which is exactly what the schemes will do. It is positives all round.

I know that the hon. Member for Glasgow North East would not want to be seen to be playing party politics on this matter. On Scotland moving away from the United Kingdom and becoming independent, she knows that the Government are committed to the Union. Although I am impressed by her fortitude in trying to make independence relevant to almost any issue, this is a technical regulation change. None the less, I thank her for her support, in that she is not opposing the regulations.

[Stephen Kinnock]

Will the Minister give way?

[Miss Dines]

Of course, although we really must conclude, rather than having a wide-ranging debate on everything to do with immigration. The regulations are about two exemptions that allow us to fulfil our legal obligations under our treaty with the EU.

[Stephen Kinnock]

I thank the Minister for giving way. My intervention is absolutely related to the regulations. I asked why there was no impact assessment. For the record, will she confirm that she does not think that there should be one, because she does not believe that the regulations could have a significant impact on the labour market? On cost, we are clearly reducing the number of employers that will pay the surcharge, so the changes will not increase revenue to the Exchequer as she says they will; they will do precisely the opposite. What will the cost to the Exchequer be? If there is to be no impact assessment, may I urge her to agree to keep the impact of this legislation under review, and will the Government make a statement on it within 12 months, so we can assess its impact on opportunities for our home-grown talent?

[Miss Dines]

I admire the hon. Gentleman’s ingenuity in asking for impact assessments; he has asked for one on almost everything that I have heard him speak about. However, the immigration skills charge is a tax, so an impact assessment is not required. If we had all the impact assessments that he has asked for, there would not be time in government to do much else.

I will conclude; the hon. Gentleman is always at liberty to write to me. The immigration skills charge is a financial tax through which the Government provide employers with vital funding that supports them in recruiting and training domestically. The regulations will not fundamentally change the operation of the charge; they simply create additional limited exemptions for highly skilled international workers recruited by UK scale-ups, and allow us to fulfil our legal obligations under our trade agreement with the EU relating to EU workers undertaking intra-company assignments in the UK. The exemptions will support our country’s economic recovery by supporting high-growth business in the UK and strengthening trade and investment to and from Europe. I commend the regulations to the Committee.

Question put and agreed to.