We recently summarised the Government’s policy statement setting out the initial details of its plans for a new UK points-based and salary threshold immigration system to apply from 1 January 2021, following the end of free movement between the UK and EU. 

Following consultation with its members and with other small business organisations in Australia, Austria and Canada to understand how Points Based Systems (PBS) in those jurisdictions impact small firms, the Federation of Small Businesses (FSB) has published its detailed report (A World of Talent: Building an Immigration System that Works for Small Businesses), summarising its findings and setting out a number of policy recommendations to the UK Government regarding the implementation of the PBS in the UK from January 2021.   

The report makes for interesting reading and contains a number of stark findings in respect of small businesses' current struggle to recruit, at all skill levels.  

The reported skills deficit is partly a consequence of a lack of investment in adult and lifelong training to meet the need for upskilling.

For example, the report notes that one of the unintended consequences of the introduction of the National Living Wage in 2016 and consequent increase in wage costs, has seen in a decrease in small businesses’ staff training budgets. 

Overall, the report welcomes the vision of a single, streamlined points-based immigration system, but urges that this must be accompanied by a significant reduction in the overall costs of hiring staff for small firms. Also the vast majority of small businesses have had no experience of using the immigration system and need time to adapt to this over a longer transition period. 

For example, FSB evidence shows that 48% of the small businesses surveyed cannot meet the current Tier 2 visa costs for a small business (1-50 employees), which are estimated at £3,101. It is therefore essential that these costs are reduced and that carefully regulated umbrella sponsorship bodies are set up, over time, to support small businesses to manage their immigration duties.

Amongst other recommendations, the report urges that under the new PBS the Government exempt any business that employs fewer than 50 people from having to pay the Immigration Skills Charge for sponsoring migrant workers and to introduce a temporary unsponsored route that allows migrants at all skills levels to come to the UK for a period of two years, not one year. This would permit small businesses time to adjust to changes within the labour market. 

The statistics show that 58 per cent of small business employers employing medium-skilled staff (i.e. those with “A” level equivalent qualifications) do not pay £25,000 and would therefore be unable to apply for a Tier 2 visa (the Government has proposed a minimum general salary threshold for the PBS scheme of £25,600). The report concludes that if small businesses are unable to meet the salary threshold of the PBS when recruiting skilled staff and cannot source appropriate labour from within the UK, this could lead to bottlenecks constraining the growth of small firms, particularly as the UK continues to face skill shortages.

At Markel Law we regularly comment on SME related matters.

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