The Migration Advisory Committee (MAC) has published its Review of Tier 2: Balancing migrant selectivity, investment in skills and impacts on UK productivity and competitiveness. The MAC was commissioned by the Government to advise on a number of potential changes to Tier 2 to address concerns about the rising number of migrants in that route and reliance on them to fill shortages in the labour market. Tier 2 is the primary route for economic migration to the UK which consists of four routes: Tier 2 (General), Tier 2 (Intra-company transfer), Tier 2 (Minister of religion) and Tier 2 (Sportsperson). The latter two were not included in this report.

The MAC’s main recommendations include:

  • The minimum salary threshold should rise to £30,000 to reflect the current degree-level skill requirement for Tier 2. As the typical pay of migrants in some occupations, such as healthcare and teaching, is below the new proposed threshold the MAC recommends this new minimum is phased in.
  • An immigration skills charge (ISC) of £1,000 per year per migrant should be introduced to act as a skills levy on firms using migrant labour. The revenue accumulated from the charge could be used to help raise skills in the domestic jobs market through training, and decrease the demand for migrant labour.
  • That use of the Tier 2 (Intra-company transfer) route for third-party contracting should be moved into a separate route and a higher salary threshold at £41,500 be applied.
  • The resident labour market test (RLMT) to be extended to all in-country switchers, which will include Tier 4 students switching to Tier 2.
  • There should be no automatic sunsetting of jobs on the shortage occupation list (SOL), but employers should provide sufficient evidence when an occupation has been on the list for a number of years.

MAC does not recommend that Tier 2 (General) is restricted only to occupations on an expanded shortage occupation list or that there should be restricting automatic work rights for dependents.

Penningtons Manches and other partners suggested that Tier 2 needs to be made more accessible to start-ups and SMEs, as a start-up may not have the robust HR systems and policies in place to apply for (or maintain) a sponsor licence. Start-ups must obtain licences before they have the resources to monitor compliance themselves. Penningtons Manches raised the point that tech start-ups often rely on investors, accelerators and incubators to assist and advise them on operational functions such as HR and finance so that they can focus on development.

Commenting on the report and recommendations, Pat Saini, head of immigration at Penningtons Manches, said: “The Government should exercise caution when considering MAC’s recommendations. MAC itself recognises that its recommendations, while reducing net migration, will not meet the Government objective as, even if non-EU work net migration was zero, overall net migration would still exceed 250,000.

“Furthermore, some of these recommendations will restrict UK businesses - particularly start-ups - from accessing and employing the talent they need to grow and help plug the skills gap.”

A full copy of the report is available here