18 September 2018

The Migration Advisory Committee (MAC) has published its report on the economic and social impacts of Brexit today.

The long-awaited report is expected to guide the thinking behind the White Paper on the post-Brexit immigration system, which the Government has announced will follow shortly after the MAC report.

MAC recommendations – the not so good news
Among its recommendations, the MAC suggests a single immigration system for EU and non-EU nationals after the end of the transition period, defying calls from businesses to create a special and less cumbersome system for EU nationals.

In bringing EU nationals within the Tier 2 sponsorship system, the MAC recommends that employers should be required to meet the minimum salary levels under Tier 2, as well as pay the Immigration Skills Charge (ISC) for any newly employed EU nationals after the transition period. The ISC is currently £5,000 for medium and large sponsors for a 5-year sponsorship (in addition to other costs such as the Immigration Health Surcharge and Home Office application filing fees).

This is likely to disproportionately affect small and medium sponsors that may not have the resources to operate a sponsor licence or to increase salary levels and pay the ISC charges in order to recruit the talent they need. The only consolation the MAC has recommended to these businesses is a review of how the current licencing system works for small and medium businesses at present.

On the issue of lower skilled migration, the report recommends that there should be no specific provision for lower-skilled migrants to enter the UK. It also suggests that Sector-Based schemes should be avoided with the exception of creating a Seasonal Agricultural Workers scheme, which has already been announced.

MAC recommendations – positive changes across Tiers 2 and 5

However, it is not all bad news for employers. The MAC also makes the following welcome recommendations:

• abolishing the annual Tier 2 (General) cap – which remained oversubscribed for eight months between December 2017 and July 2018 and which caused many to wonder whether the Tier 2 system was fit for purpose;
• abolishing the Resident Labour Market Test (RLMT) or substantially expanding the exemptions to it, for example by lowering the salary-based exemption from its current level of £159,600 to below £50,000. This would vastly expand the pool of a readily available workforce, as well as cut down delays related to having to re-run genuine advertising to comply with the sponsorship-specific RLMT technical requirements for advertising;
• extending the Tier 2 (General) system to include medium-skilled workers at level RQF3 (bringing this down from the current level RQF6 for highly skilled workers). However the MAC advocates retaining the current minimum salary threshold applicable to the present higher skill level scheme – which would mean that many lower level occupations would be unable to access the scheme in any event;
• using the Tier 5 (Youth Mobility Scheme) as a ‘backstop’ in the event that more migration is required to service the UK economy. This may be done by extending the scheme to nationals of countries with which the UK signs trade deals in the future.

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