The Migration Advisory Committee (MAC) was commissioned by the home secretary to advise on a number of potential changes to Tier 2 of the points-based system to address the government's concerns about the rising number of migrants using Tier 2 and the reliance on them to fill skills shortages.

This commission followed a May 21 2015 speech by the prime minister in which he said that "we should be getting to a place where we only bring in workers from outside Europe where we have a genuine skills shortage or require highly-specialist experts". It was recognised, however, that "the UK economy benefits from highly skilled workers and we want to keep migration routes open for the brightest and best workers who will help Britain succeed".

The MAC recently issued its report on the matter, concluding that the best way for the government to achieve its aim of restricting numbers under Tier 2 and focusing on more highly skilled migrants is through price. The MAC specifically recommended that:

  • the cost of Tier 2 recruitment be raised via higher overall minimum salary thresholds and the introduction of an immigration skills charge; and
  • use of the Tier 2 (Intra-company Transfer) route for third-party contracting be moved into a separate route and a higher salary threshold be applied.

The MAC did not recommend that Tier 2 (General) be restricted to occupations on an expanded shortage occupation list; nor did it recommend restricting automatic work rights for dependants or an automatic sun-setting of occupations on the shortage occupation list.

A number of detailed points have emerged from these broad conclusions, including the following:

  • In order to restrict numbers of Tier 2 migrants, the MAC proposed raising the overall minimum salary threshold from £20,800 to £30,000. The MAC recognised that some migrant workers – mostly in the public sector – are paid under the threshold and suggested a phased increase in the salary threshold. A lower threshold of £23,000 should be offered to graduates.
  • The committee strongly supported the introduction of an immigration skills charge. It believed that this will incentivise employers to reduce their reliance on migrant workers and encourage them to invest in training UK employees. This cost will be in addition to raising salary thresholds. The MAC has suggested a figure of £1,000 a year for each Tier 2 migrant.
  • An overhaul of the Tier 2 (Intra-company Transfer) route has been recommended in order to reflect the divergence in the use of this route. The traditional route – whereby highly specialised staff come to the United Kingdom to impart their skills or gain experience – was found to be of significant benefit to the country. However, the MAC also identified significant use of the route to bring in migrants to service third-party contracts, predominantly in the IT sector. It found that third-party contracting cuts IT costs, but does not sufficiently contribute to the stock of IT skills within the United Kingdom. The MAC therefore recommended that third-party contracting become a separate route under Tier 2 with an increased salary threshold of £41,500.

The report has been sent to the government for consideration. While the government is under no obligation to implement these recommendations, precedent suggests that they are highly likely to be implemented through changes to the Immigration Rules in April 2016.

For further information on this topic please contact Ben Sheldrick at Magrath LLP by telephone (+44 20 7495 3003) or email (ben.sheldrick@magrath.co.uk). The Magrath LLP website can be accessed at www.magrath.co.uk.

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