20 February 2020

The Home Office recently revealed in its policy paper the main features of the new immigration system, coming into force in 2021. Overall, it contains few surprises. The government has chosen to focus on bringing net immigration down and have announced that businesses will need to adjust, investing in technology and automation. Whilst some of the Migration Advisory Committee (MAC)’s recommendations to avoid workforce shortages have been followed, they inadequately deal with the abrupt cut-off of EU low-skilled workers.

Positively, the Home Office followed most of the MAC’s recommendations to relieve the immigration system from the most pressing issues. It will lower the general minimum salary threshold from £30,000 to £25,600, bring the minimum skill level down to A-level and remove the cap on skilled workers. The salary threshold for new entrants (recent graduates and people under 26) will be set at 30% lower than the rate for experienced workers. Importantly, businesses will no longer have to conduct a resident labour market test, which was often a futile and time-consuming procedure to verify that no suitable resident worker would be able to fill the vacancy.

As predicted, the catchy points-based system (PBS) is mostly points based in name only. The new PBS will consist mostly of mandatory requirements: a migrant must have a job offer, the minimum skill level and speak English. The latter requirement, which has been presented by the Home Office and media as if a new requirement, is already an established mandatory requirement for many immigration categories, including Tier 2 (General). Additionally, migrant workers must earn at least £25,600 and this is where the limited “tradable points” character is incorporated. Those earning less, but still at least £20,480, can gather extra points to qualify if they fall under the limited exceptions of filling a shortage occupation or having a relevant PhD. Only the PhD exception is new, but also negligible, because few professionals with a PhD are likely to be paid under the minimum threshold. The Home Office states that it will continue to refine the system, considering adding further flexibility allowing additional attributes such as other qualifications, experience and age to be traded against a lower salary. This may have a more impactful but complicated effect.

The changes mentioned above do nothing to remedy the shock to the labour market once the effects of Brexit set in at the start of 2021. Sectors relying on low-skilled and low-paid labour from the EU such as retail, hospitality, manufacturing and the care sector will bear the brunt of the new system. The reduced pool of workers will bring challenges for these sectors, forcing a review of business models. Adjusting to this will be difficult and costly for business. Further, current EU staff will be able to demand higher salaries as the free flow of new EU low-skilled workers ceases as of 2021.

The policy paper further explains to businesses that they will have to prepare for the immense cut in labour forces to come and that the government has already taken measures to address this. For instance, they have committed to expanding the pilot scheme for seasonal workers in agriculture to 10,000 places and will further expand the recently launched the Global Talent Visa. However, the former promise is way below the 70,000 places the National Farmers’ Union had requested and the Global Talent Visa route only applies to a very limited group of migrants. The impact of these measures will come nowhere close to remedying the loss of access to 90,000 EU migrants per year who have kept low-skilled sectors in business. Moreover, there is no provision for self-employed workers of which many EU migrants are.

Lastly, the Home Office announced it has no intentions to remove the Immigration Skills Surcharge or the Immigration Health Surcharge, which makes migration a very costly process. The inevitable workforce shortages awaiting in 2021 make the Home Office’s promise that “the UK is open for business” ring hollow. The Home Office says that it wants to create a high wage, high-skill and high productivity economy but it remains to be seen how this will be achieved with the proposed system which will be costly for business and close the door on the EU low skilled workers who are essential for the economy.