On 19 December 2018, the Government published its white paper setting out its plans for a post-Brexit skills-based immigration system which will introduce a new single immigration system and end EU free movement.

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Overview

The white paper confirms that, from 1 January 2021, everyone except British and Irish citizens will be required to obtain immigration permission if they want to live, work and / or study in the UK. The paper emphasises that the future immigration system will apply in the same way to all nationalities, except where there are objective grounds to differentiate, for example, if specific concessions are granted to certain nationalities as part of a trade agreement with a particular country or group of countries or on the basis of risk.

The white paper also confirms that the Government intends to accept almost all the recommendations made by the Migration Advisory Committee (MAC), the independent body which advises the Government on immigration policy.

Visiting the UK

EU nationals, in common with other non-visa nationals, will not be required to obtain a visit visa before travelling to the UK. They will also be able to continue to use e-gates, which will come as a relief to those EU nationals who were concerned about the possibility of long queues at the UK border following Brexit.

Visitors to the UK will be permitted to switch immigration status in-country into Tier 2 sponsored employment, which will be a significant change from the current rules which only allow this switch in a few specific and exceptional circumstances.

When the Government last routinely allowed in-country switches from the visitor category, it resulted in situations where a number of “visitors” started to work for a UK employer before their work immigration permission application was approved. This led to the UK Government introducing the current policy and we can see this cycle repeating itself if this proposal is introduced and not properly policed.

In addition, the Government is considering expanding the range of permitted business activities that visitors may undertake in the UK. If the Government does proceed with this, it will need to ensure that this does not lead to individuals undertaking work for which they should be sponsored by a UK employer.

An Electronic Travel Authorisation (ETA) scheme for those who do not need to obtain a visa before travelling to the UK for a visit will be introduced. This system will be similar to the US ESTA scheme and will involve completing an on-line form which will enable the Government to conduct security checks before an individual travels to the UK. The EU intends to introduce a similar scheme, called ETIAS, for third country nationals visiting the EU, which is likely to apply to UK nationals once the UK leaves the EU.

Working in the UK

Skilled workers

Tier 2 (General), which is the category for migrants hired to undertake permanent positions in the UK, will be opened up to medium skilled workers (it was previously only open to the highly skilled) by lowering the skills threshold for this category from Regulated Qualifications Framework (RQF) level 6 to level 3. This will essentially bring the skills level for Tier 2 (General) back to where it was before April 2012.

However, the RQF level 6 skills threshold will be retained for the Tier 2 (Intra-Company Transfer) (ICT) category, which is the route that companies can use to transfer to the UK individuals who work for the company overseas.

Furthermore, the Resident Labour Market Test (RLMT) requirement for Tier 2 (General), which involves advertising the vacancy for 28 days to demonstrate there are no suitable local workers, will be abolished. The purpose of the RLMT is to ensure that employers are not undercutting the local labour market by employing migrants where there was a ready supply of local workers. However, the MAC found that the RLMT did not achieve this and only served to delay employers in accessing the skills they needed to fill vacancies. Instead, the MAC was of the view that the Immigration Skills Charge (ISC), which has to be paid by employers for each migrant they sponsor under Tier 2, provides the required protection of the local labour force. Consequently, this charge will remain in place for all Tier 2 migrants and it will be interesting to see whether it is raised to incentivise UK companies to employ local workers.

Confusingly, elsewhere in the white paper, the Government seems to imply that it will only abolish the RLMT for occupations at RQF Level 6 or above as it states that it will consult on whether it should introduce a “light touch” RLMT for jobs in the RQF levels 3-5 bracket.

The cap that applies to the majority of Tier 2 (General) migrants who are applying overseas will also be removed to ensure that the brightest and best are encouraged to come to the UK so that employers have access to the skills that add most value to the UK economy.

In addition, the Government is looking to lower the annual salary threshold for Tier 2 (General) which is currently £30,000. The MAC advised that it should remain at this threshold since this is the level of household income where an average family of migrants starts to make a positive contribution to public finances. However, following concerns from business that this is not reflective of wages paid to skilled workers in some sectors, the Government has agreed to consult with employers and representatives before setting the threshold.

The Government is also aware that some start-ups need to employ talented staff to help their businesses grow, but may not be able to pay them high wages at the outset, instead offering equity stakes in their businesses. It therefore intends to explore options to support such start-ups, which, presumably, may include taking into account equity stakes when deciding whether a role satisfies the minimum salary requirements.

Unfortunately the Government has said that, in line with the MAC’s recommendations, it will still not consider introducing separate immigration policies on a regional basis. Furthermore, there is no mention of changing the minimum salary for Tier 2 (ICT) applicants, which is currently £41,500 per year.

The MAC will also be asked to review the Shortage Occupation List (SOL) – the list of roles that require skills which are recognised as being in short supply in the UK – to include roles which require skills at RQF levels 3-5. Currently, where an employer wishes to sponsor an individual to fill a role on the SOL, the employer is not required to comply with the RLMT requirements and the application is given priority under the current Tier 2 (General) cap. However, once the RLMT and the cap are abolished, there does not appear to be any reason to continue to have a SOL, unless being on the SOL will secure other advantages, such as roles on the list being subject to a lower salary threshold or being exempt from the ISC.

Another potential outcome of the abolition of the RLMT and the cap is that this removes two of the main reasons why, when transferring an individual from a company entity overseas, a UK company would choose to sponsor the individual under Tier 2 (ICT) rather than Tier 2 (General), since Tier 2 (ICT) does not lead to indefinite leave to remain (also known as permanent residence or settlement), unlike Tier 2 (General). Since the Government's policy is not to make it easier for individuals coming to the UK to eventually settle, it will be interesting to see whether the Government introduces any new restrictions on Tier 2 (General), such as a requirement that the individual must be on UK payroll or apply a higher ISC, or makes any concession to the Tier 2 (ICT) category, such as broadening the types of allowances which can be taken into account when deciding whether the role satisfies the relevant salary threshold or removing the ISC, to encourage employers to use the temporary Tier 2 (ICT) route.

Sponsorship

The Government believes that the Tier 2 sponsorship system works well in its current size. However, it is aware that many more businesses will have to engage with the system to sponsor EU nationals following Brexit.

Consequently, the Government intends to streamline the system, looking to use the data it already holds, for example, in HMRC, Companies House etc., when deciding whether a company satisfies the requirements to be issued with a sponsor licence and, once it has been issued with one, is complying with its sponsor duties. This will presumably lead to the Home Office doing more “desktop” reviews, involving cross-checking records across numerous Government departments.

The Government also plans to bring in a system to address the needs of small businesses which only need to sponsor a small number, or even just a single, migrant. In that situation, the company may not even need a licence but may be able to apply directly to the Government for permission to sponsor the migrant. If this system is introduced, it would be similar to the one in operation before the introduction of the current system in 2008.

Low-skilled workers

The Government agrees with the MAC’s recommendation that there should be no dedicated route for low-skilled labour. However, it recognises that some sectors rely on lower skilled workers from the EU and that businesses in these fields will require a period of time to adjust. In addition, there are some situations where a skilled individual will only be required in the UK for a short period, for example, in order to fulfil a temporary contract.

The Government therefore proposes to introduce a temporary immigration route for a transitional period to allow workers of any skill level from certain low risk countries to come to the UK for a short period.

Successful applicants will be granted entry for a maximum of 12 months and, at the end of their stay, they will be subject to a 12 month “cooling off” period during which they will not be permitted to re-apply to enter the UK under this category. Individuals entering under this route will not be able to bring their dependant family members and the category will not lead to settlement. This route may be subject to an annual cap.

The route will be subject to an annual review by the MAC and amendments may be made to ensure that it is not being abused. Although, depending on economic and compliance factors, the route could be closed at any time. A formal review of the category will be undertaken in 2025 to see whether it should be retained.

The Government also recognises the particular challenges faced by the agricultural sector so will introduce a seasonal agricultural work scheme, on a pilot basis, in 2019. This will be open to a wider range of nationalities.

Youth mobility

The Government intends to expand the Youth Mobility Scheme, which allows nationals from certain countries aged between 18 and 30 to come to the UK for two years for work or study, to EU countries. Although individuals who enter the UK under this category can do highly skilled work, the Government is of the view that many undertake low skilled work so expanding this scheme should assist in addressing any low skilled labour shortages. However, the Government has stated that it will only introduce such a scheme if a reciprocal arrangement is agreed with the relevant country.

Self-employment and self-sponsored routes

Routes for investors, entrepreneurs and those with exceptional talent which allow individuals to undertake self-employment in the UK will be retained. Plans to make changes to the Tier 1 (Investor) route to address concerns that the route is being abused have already been announced. In relation to the Tier 1 (Graduate Entrepreneur) category, the Government intends to launch a replacement “start-up” visa route which will enable business people to apply for a visa following endorsement by a university or an approved business sponsor. For more experienced candidates, it intends to replace Tier 1 (Entrepreneur) with a new “innovator” category, which will also require endorsement by a business sponsor who will assess the applicant's business ideas for their innovation, viability and scalability.

One major concern for EU nationals is that, currently, they can undertake self-employment in the UK without making any investment in a UK business. However, the Tier 1 (Entrepreneur) category requires an investment of either £50,000 or £200,000 to be made, depending on the circumstances. In addition, in order to qualify under the Tier 1 (Investor) category, they are required to invest £2m in the UK. Since a significant number of EU nationals enter the UK to establish successful businesses, it will be interesting to see whether the Government reduces the investment requirements when it introduces the new start-up and innovator categories. If it does not, there is a danger that there will a huge drop in successful EU nationals entrepreneurs coming to the UK to undertake self-employment.

The Government has also stated that it intends to expand the numbers permitted to enter the UK under the Tier 1 (Exceptional Talent) programme.

Study in the UK

All graduate and post-graduate students, who have completed their degrees in the UK, will be granted six months’ post-study immigration permission during which time they will be able to look for permanent skilled work and undertake temporary work. Those who have completed a PhD will be granted a year. Currently, bachelor’s and master’s students are normally given an additional four months’ immigration permission after they are due to finish their course, during which time they may undertake temporary work. It is therefore not clear whether the proposed six months immigration permission will be in addition to the four months which is normally granted to students. This change goes some way to reversing the 2012 decision to abolish the Tier 1 (Post-Study Work) route, which enabled those who had graduated with a minimum of a bachelor’s degree from a UK institution to work in the UK for two years post-study.

Currently those in the UK with student immigration permission studying at bachelor’s level or above are able to switch into sponsored employment once they have completed their degree. The Government intends to extend this by allowing these students to apply to switch into sponsored employment up to three months before the end of their course in the UK. Those applying from outside the UK will be able to “switch” into sponsored employment, up to two years after graduation. This should mean that these students will be able to continue to benefit from the lower, new entrant salary threshold for sponsored workers which normally only applies to recent graduates.

Conclusion

The Government’s proposals as set out in the white paper purport to follow the MAC’s recommendation that, when the UK leaves the EU, the current UK immigration system should apply to EU nationals. However, the white paper, in fact, contains substantial changes and introduces a number of new categories to the current system. The changes include applying some of the rules in slightly different ways in certain circumstances, for example, small businesses that only need to sponsor one or two individuals may not be required to obtain a sponsor licence. There is therefore a danger that this new system will become even more complex and tricky to navigate and it will be difficult for companies and individuals to know which rules apply to them.

On the other hand, the white paper arguably represents the biggest liberalisation in UK immigration policy this century, reversing a number of restrictions which have been implemented in the last 10 years. It is also introducing, for the first time, albeit temporarily, an immigration category which will allow people of all skills levels to work in the UK on a short term basis. It will therefore be important that the Government introduces suitable processes to ensure that individuals and companies comply with what, on the face of it, are more generous rules. What UK business does not want to see is yet another "boom and bust" cycle of liberalisation followed by progressive tightening which has been a depressing characteristic of the immigration system since the start of the century.

Throughout the document, the Government emphasises its intention to consult with stakeholders over the next 12 to 18 months to ensure that the new system meets the needs of UK business and the country as a whole. It is to be hoped that the Government genuinely engages with the users of the system to ensure that the system is as straightforward to understand and operates as efficiently as possible.