UK Immigration skills charge to be introduced by government

The UK government says that they are concerned about skilled worker shortages in the UK. However Government policy is making the situation worse by making it more and more difficult to employ highly skilled nationals from outside the EU. Also, new charges for businesses are unlikely to improve the situation. In the 8 July 2015 budget announcement, UK chancellor George Osborne, spoke of an ‘apprenticeship levy.’ This was quickly followed by an announcement from Immigration Minister, James Brokenshire that there will be an ‘immigration skills charge.’

Immigration skills charge to be introduced

The immigration skills levy brought in with the 2015 Immigration Bill will be another burden on business. James Brokenshire said: “The purpose of the charge is to encourage UK businesses to fill vacancies using the resident labour market. The overall aim is to reduce the burden of the UK’s immigration system on the country’s taxpayers.”

The charge will become applicable to many if not all employers sponsoring workers from outside the European Union under the UK’s tier 2 points based system. The move will further dissuade employers from recruiting foreign nationals given the cost of the whole process, which includes applying for a tier 2 sponsorship licence, applying for tier 2 certificates of sponsorship and then applying for a tier 2 visa. UK immigration is also making the whole process more difficult by refusing more and more applications and making it overly burdensome to apply.

At present, details concerning the immigration skills charge are sketchy. UK immigration will provide more details after considering the results of the recent consultation. It is expected that proceeds of the immigration skills charge will be used to fund training and apprenticeships.

Apprenticeship levy another burden on business

During his budget announcement, George Osborne said that the number of UK apprenticeships would be increased, with a target of 3 million set for 2020. Each year, the government spends over £1.5 billion funding apprenticeships, with the cost to provide the new apprenticeships set to reach £3.5 billion, which leaves at least a further £2 billion to be found.

It’s understood that the apprenticeship levy will make up the bulk of the shortfall. However, if the Government reduces funding from the current level or decides not to provide any funding at all the cost to business to fund new apprenticeships could be much higher than £2 billion.

The levy is set to be aimed at Britain’s larger companies, with the money raised being used to fund a digital voucher scheme for apprenticeships. The voucher will be given to a training provider chosen by the employer.

As with the immigration skills charge, there’s little information available concerning what qualifies as a ‘larger company’ and there’s no indication as to how much the levy is likely to be. However, there was a consultation about the levy that closed on October 2. The consultation also asked for comments about the minimum size of companies that should pay the levy.

Hostile reaction from businesses to the proposed charges

Not surprisingly, the immigration skills charge and apprenticeship levy have received a hostile reaction from the business community.

The Confederation of British Industry (CBI) called the proposals for an apprenticeship levy a ‘blunt tool,’ while other commentators have been left infuriated by the noticeable lack of detail. SMEs (Small to Medium Enterprises) have also been left in a state of uncertainty, not knowing if they would be expected to contribute.

The CBI has repeatedly called for the Conservatives to scrap the target of reducing net immigration to less than 100,000 per year. They feel that the immigration skills levy “risks sending out a message that Britain isn’t open for business”.

A spokesperson for the Department for Business, Innovation and Skills said: “The levies are a clear indication that the government wants UK businesses to train and recruit workers from within. They want businesses to rely less on skilled foreign workers.”

UK businesses are going to be facing more and more costs and more Government bureaucracy. Instead of helping businesses these policies may actually do the opposite and result in more UK businesses going out of business.

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