Brexit provides a unique opportunity to evolve trade and migration policy to benefit UK business

As the UK’s immigration system gets set to transform into a new unified system for all non-UK nationals, there is a unique opportunity to evolve trade and migration policy to benefit UK business. This will help to ensure there are no gaps in the system, which could lead to post-Brexit skills shortages and missed trade opportunities.

A new report by TheCityUK and EY, ‘International trade agreements and UK immigration policy: a practical blueprint for evolution’, sets out proposals for how the UK can seize the moment and evolve decades-old trade and migration policy to deliver real benefits to the economy [1]. It urges UK policymakers to use the same speed, innovation and determination shown on domestic immigration policy during the early stages of Covid-19. This is needed to ensure the UK’s immigration system is agile enough to support the development of business-friendly free trade agreements post-Brexit, and provide UK business with the opportunity to benefit from mutually agreed measures globally. The report makes it clear that one of the biggest risks the UK faces is not being ambitious enough with regard to services trade and missing an opportunity to be more creative in this area.

The report highlights how vital this is for financial services, the UK’s largest net exporting sector, which relies on specialised non-UK talent for 28% of its workforce (16% EU nationals), rising to 42% in FinTech (28% EU nationals). Research on the impact of the UK’s new immigration system found that 38% of EU nationals currently working in the financial services sector would not have qualified under the system had it been in place when they arrived [2].

Miles Celic, Chief Executive Officer, TheCityUK, said,

Innovations in domestic immigration policy over recent months have moved at lightning speed. Previously unthinkable changes were delivered overnight, including automatic visa extensions for essential workers, scrapping switching rules and new virtual rights to work.

“Two areas where the UK should now seek to be innovative and collaborative are trade agreements and migration policy. But to do this, significant gaps remain that need to be tackled, otherwise roles vital for the UK economy and supporting global trade will be left unfilled. Mobility agreements with trading partners, well publicised to UK businesses and backed by detailed implementation, will be critical to helping to address these gaps.”

Seema Farazi, UK Financial Services Immigration Leader at EY, said,

The UK entered 2020 already facing the most momentous changes to its immigration system in over 40 years. Add to this a global pandemic with all the complexities this brings to travel, migration and trade patterns, and you have a perfect storm, but also a perfect opportunity to reframe thinking. A key principle around migration policy must be simplicity and usability. Done well, mutual agreements on migration are an important tool in delivering beneficial trade deals and strengthening ties with our most important trading partners, and done right, they will continue to support our world-class financial services industry and ensure the UK, and UK business, remains globally competitive.”

The report sets out the following recommendations to allow the UK to use its new independent trade and investment policy to build a more attractive, innovative and truly international UK economy:

  1. Increased certainty for UK business around short-term travel. Short-term business visits to other countries are often frustrated by a lack of clear information and guidance on permissible and prohibited activities. In free trade agreements, the UK should focus on the form of commitments in this area and include a granular list of activities that are allowed or otherwise.
  2. A hybrid, streamlined short-term category to allow productive work. Where a visitor into the UK needs to perform productive work, with very few exceptions, they cannot enter under the visitor rules and must apply for a work visa, even where the work activities are incidental or for a very short period. There is a significant increase in administration, cost and timeframes associated with applying for a work visa, and there is no middle ground between visitor status and a work visa. The UK should implement, potentially on a mutually agreed basis, a new immigration route that combines the controls associated with sponsorship with the flexibility of visitor routes.

  3. Simplified immigration rules supporting service delivery commitments. The UK’s implementation of its commitments to facilitate contractual service suppliers to enter the UK via the Tier 5 (International) Agreement is overly complex, infrequently used, and places an excessively high administrative burden on the UK company receiving the services. Future trade agreements should provide more detail on the required implementation of commitments, to avoid the way in which they are implemented frustrating the purpose of the commitment which can result in trade distortion.

  4. Prioritised agreement of reciprocal Youth Mobility Schemes with trade partners. The UK’s Youth Mobility scheme works well and provides a convenient self-sponsored immigration route that gives employers some relief from reliance on the sponsored worker system. But to date the UK has not agreed reciprocal youth mobility arrangements with the EU and without such arrangements in place, the end of Freedom of Movement risks bringing about a potentially overwhelming reliance on the UK’s sponsored worker system with its associated administrative burden and costs.

  5. Where mutually agreed, introduce an Intra-Company Transfer (Trade Partner Nationals) route. Short-term assignments to the UK of between six months and two years under the Intra-Company Transfer scheme attract significant additional costs – the Immigration Skills Charge (ISC) - £1,000 per year. This additional cost increases friction associated with short-term assignments and reduces flexibility for UK employers with branches overseas. The UK should offer introduce a bespoke Intra-Company Transferee (ICT) route for nationals of trade partners, where reciprocated.

  6. Clearly articulated and accessible principles. Employers tell us that the processes and procedures associated with visa applications, both into but particularly out of the UK, are often overly complex, with poor published guidance and high levels of uncertainty over when, if at all, visas will be granted. These challenges increase friction and the cost of administering applications and decrease certainty. The UK should seek to agree with its trading partners, via free trade agreements, the adoption of a standard set of principles governing how visa applications are submitted and processed and actively promote awareness of opportunities.