Immigration is always a highly topical and politically charged policy issue. In last year’s general election, the Conservative party in particular were keen to say that they would take steps to take net migration back to the levels of the 1990s, where it was at the tens of thousands as opposed to the hundreds of thousands it is currently.

Now in power, the Conservatives, as part of the coalition government, have finished fleshing out how they envisage focused immigration with effective limits should work in practice. From 6 April 2011, a number of changes to the existing points based system will come into effect. These changes are designed to control the number of people who come to the UK from outside Europe. So what exactly will happen on that date?

Highly Skilled Migrants

The Tier 1 (General) category, which is used for highly skilled migrants, will be closed from 6 April 2011. It is worth noting that this is currently one of the main routes used by applicants to gain entry into the UK, and its closure will have a substantial impact on the options available to applicants seeking to gain entry into the UK. For individuals who are already in the UK under a Tier 1 (General) visa, the government has confirmed that they will be able to extend their stay as long as they meet the necessary requirements in place.

Investors and Entrepreneurs

The government has also announced that the Tier 1 (Investor) and (Entrepreneur) categories will be reformed and will not be subject to any limit on numbers coming into the UK. The reasoning behind this move on the government’s part is a simple political calculation - namely that attracting foreign talent will boost economic growth in the UK and aid the economic recovery.

For investors, the attraction is that they will be able to settle faster in the UK if they invest large sums of money. Investors will continue to qualify for settlement after 5 years if they have invested £1,000,000 in the UK. However, the difference is that the settlement process is speeded up in instances where larger sums of money are invested. For instance, those who invest £5,000,000 will be able to apply for settlement after the investment is in place for 3 years, and for those investing more than £10,000,000, the length of time is reduced even further to 2 years. Moreover, there will be extra flexibility afforded to this category with allowable absences from the UK being increased from 90 to 180 days per year without affecting the investor’s right to settle. It is clear that the government is trying to court high net worth individuals to the UK, and the reforms to this category will make this courtship a lot easier.

The new rules for entrepreneurs are equally enticing. The standard investment for an entrepreneur will remain at £200,000, but the government will now allow high-potential businesses to come to the UK with £50,000 in funding from a reputable organisation, and up to 2 business partners will be able to use this route if they have joint access to funding. Furthermore, a new 6 month prospective entrepreneur visa will be introduced to allow entrepreneurs to ome to the UK to secure funding and make arrangements for their business, before transferring to a full Tier 1 (Entrepreneur) visa while they are here. The approach taken by the government in relation to this category fits squarely within its strategy for economic growth.

Exceptional Talent

There is another category which will be introduced from 6 April 2011, which is the Tier 1 (Exceptional Talent) category. This is focused on those who will be recognised or have the potential to be recognised as leaders in the fields of science, arts and humanities and this category will be limited to 1,000 visas for the first year.

Employer-Sponsored Migrants

The other significant changes are in Tier 2, which is for skilled workers who are sponsored by their respective employers. Here, the government has again sought to restrict the number of individuals obtaining entry through Tier 2 and have taken a tough approach to ensure that the net migration into the UK drops dramatically.

From 6 April 2011, the Tier 2 (General) category will be subject to a limit of 20,700 places for 2011/2012 for graduate level occupations only. The limit will be subdivided into 12 monthly allocations, with 4,200 places being made available in the first month of April and 1,500 places for each month thereafter. The consequence of these changes is that employers will now have to apply for a certificate of sponsorship from the UK Border Agency (the government agency that runs the immigration system) for a specific post if they want to bring someone into the UK, and the UK Border Agency will then prioritise all applications for a particular month according to a points schedule which takes into account shortage occupations, higher academic qualifications and salary.

This represents a big change from what happens now where employers assign certificates of sponsorship to a particular applicant from those allocated to them by the UK Border Agency at the start of the year. Employers will now be at the mercy of the annual limit, and there will be no guarantee that a certificate of sponsorship will be obtained straight away. Using the points schedule, the UK Border Agency will approve valid applications solely on the number of points scored, starting with the highest. This means that those applications that meet the threshold of the point schedule but score a relatively low number of points (compared to other applications in a particular month) are less likely to be allocated a certificate of sponsorship.

Where the limit is oversubscribed in a particular month (which is likely to be the case), certificates of sponsorship will be awarded first to those applications with the highest points. Any employer who has applied in that oversubscribed month and has met the threshold in the points schedule but not been allocated a certificate of sponsorship by the UK Border Agency, will have to reapply in the following month, as their application will not be automatically rolled forward.

The UK Border Agency has, in part, tried to soften the blow of these changes to the Tier 2 (General) category by front-loading the first month of April (by making 4,200 of the 20,700 places available) and by confirming that they will not be charging employers for applying for certificates of sponsorship (a fee will only be incurred when the certificate of sponsorship has been issued).  

The Tier 2 (Intra-Company Transfer) category (which allows employers to transfer employees into the UK from an international office) will not be subject to the annual limit of 20,700 places. The government made this concession after considerable pressure from the business community. However, there will be some reshaping of the category, with individuals only being able to come to the UK for up to five years if they are paid over £40,000, and for a period of 12 months if they are paid between £24,000 and £40,000. In both cases, there will be a 12 month cooling off period at the end of the stay meaning that individuals will not be able to re-enter the UK for 12 months after their visa expires for the purposes of Tier 2 (Intra-Company Transfer) sponsored employment, as well as no right to apply for settlement in the UK. Although, the changes are not as onerous as the ones for the Tier 2 (General) category, the inability to now apply for settlement, the introduction of the cooling off period, the correlation between salary and length of stay, and the fact that the job will have to be equivalent to a graduate level occupation, are all new measures which mean that even this route has been significantly tightened.

In all, the changes are designed to better focus the benefit of immigration, whilst ensuring that net migration is not uncontrolled. It is fair to say that the immigration landscape will dramatically alter from 6 April 2011. For employers, the changes introduced by the government do pose some difficulties. There are limited options available to employers to counter these reforms to the immigrations system, but probably the best approach to take in anticipation of these changes and to avoid any unwanted headaches would be to identify those employees who may be affected and those whose applications could be submitted and dealt with before 6 April 2011. The risk is that by not doing so, employers will be confronted with a stricter and more burdensome immigration system on that date, with visa applications taking longer, involving additional paperwork and ultimately failing in a much higher proportion of cases.