Immigration system needs new foundation to drive UK’s global future post-Brexit

The government urgently needs to reform the UK’s immigration system if Britain is to remain globally competitive beyond Brexit, according to a new report by TheCityUK and EY, which looks at the immigration needs of the financial and related professional services industry but can be applied across all sectors [1].

Ensuring access to skilled overseas talent is vital to the UK maintaining its pre-eminence as the leading international financial centre. Global, outward-looking businesses need diverse expertise at many different skill levels. The UK must have a robust and flexible immigration system for business which is fit for the whole economy and gives firms the ability to fill skilled roles efficiently, especially where there are shortages. Any future trade agreements with the EU, or other jurisdictions, can then be built on this foundation, offering further streamlined immigration routes between the UK and its trade partners.

The report – ‘The UK’s future immigration system and access to talent’ – warns that following Brexit, the cost to firms bringing skilled European workers into the UK could increase by up to 300% if existing immigration rules are applied unchanged to European citizens [2], and if planned Tier 2 visa fee increases come into effect [3].

Through nine practical recommendations applicable across industries and to organisations of all sizes, the report sets out a renewed and dynamic approach to the UK’s immigration system. It outlines a system which would enable access to global talent and reduce the long-standing skills shortages which are holding back UK economic and productivity growth.

Miles Celic, Chief Executive Officer, TheCityUK, said,

Britain’s success is built on openness. Being able to attract and retain the most talented people with the right skills, from both the UK and overseas, is a top priority for business leaders across the industry. The UK’s ability to draw global talent has long been a competitive advantage. Losing this could undermine Britain’s position as the world’s leading financial centre.

A basic immigration system that is fit for the UK’s needs, future focused and fair is essential. Simply applying the current immigration system for non-European citizens to European citizens after Brexit will not work. Doing so is likely to worsen existing skills shortages and make it much harder to attract the talent British firms need to compete on the world stage following Brexit. 

Margaret Burton, Partner, Global Immigration, EY, said,

As we approach Brexit, there is a real need to review and reform the UK’s immigration policy to ensure it supports businesses and skilled overseas talent looking to contribute to the UK economy. The current Tier 2 visa system is out of date – we need a much more flexible and dynamic system, which responds to today’s very real skills shortages, particularly around technology, which will worsen if not addressed.

People are the foundation of any company. Without access to the right talent, the UK’s future position as a global business leader will be under threat.

The research also recognises the ongoing need for improved education and training of home-grown talent [4]. The financial and related professional services industry employs 2.3 million people – 1 in 14 UK jobs – and there is considerable reliance on non-UK citizens to bring unique skills, languages and experience from international markets, which is critical for working in a global environment and driving progress.

Across the country, 7.5% of banking and finance employees are European citizens and 4.7% are from non-European countries. In London this rises to 16.9% and 11.4% respectively, accounting for more than one in four of the sector’s London workforce [5].

Currently, the industry largely relies on the Tier 2 General and Tier 2 Intra-Company Transfer visa categories to access non-European citizens with skills in short supply domestically, to bring in specialist knowledge and train overseas staff. However, currently the UK is at or very near-full employment with historically low unemployment, while applications for certain categories of Tier 2 visas are routinely oversubscribed and rejected due to the Tier 2 visa cap [6].

The report’s nine key recommendations, applicable to all parts of the economy, are:

  • the introduction of a flexible short-term immigration category to enable qualifying international staff to work in the UK for up to six months without needing to apply for a visa first
  • the creation of a new independent Skills Advisory Board with representatives from business, education, the Home Office and parliament
  • employers to be allowed to sponsor visas for medium-skilled roles if the candidate has ‘top-up’ skills, such as digital skills or a STEM subject degree
  • a new ‘dynamic’ Shortage Occupation List that reflects the actual shortages employers face, including digital and cyber security skills
  • a new post-study work visa to allow graduates in STEM subjects to work in the UK for up to 2 years 
  • a specialist branch of the Tier 2 visa category to cover overseas experts
  • a change to the mechanism by which the annual cap is operated to take account of lower average salaries outside London and the South East
  • an extension to the period for which indefinite leave to remain can be retained while living outside the UK from two to five years
  • a consistent approach to controlling and reducing the burden of administration on employers and applicants.


End

Notes to editors

  1. TheCityUK and EY, ‘The UK’s future immigration system and access to talent’, 21 May 2018
  2. For the purposes of this report ‘European citizens’ denote all citizens, excluding UK citizens, of countries in the European Economic Area (the European Union Member States plus Iceland, Liechtenstein and Norway) and Switzerland.
  3. If the existing immigration system is applied to European citizens when freedom of movement ends, we anticipate that the majority of organisations will need to at least double their use of the Tier 2 visa category. The calculation includes proposed increases applicable to visa applications.
  4. Further work on this important issue is already underway and will be published in the New Year.
  5. TheCityUK calculations is based on Office for National Statistics data and is a breakdown of banking and finance employment in the UK, April 2016-March 2017
  6. Some categories of Tier 2 General visas are capped at 20,700 a year, parcelled out monthly, regardless of short term demand spikes or immediate skills shortages.