The Effect of UK Visa Restrictions on British Business

The Highly Skilled Migrant Programme and its subsequent points-based replacement, the Tier 1 (General), has always provided a route for UK businesses to access the best international talent.

However, on 23rd November 2010, Home Secretary Theresa May announced that the Tier 1 (General) route will be closed effective of April 2011 in an attempt to place a limit on non-EU economic migration to the UK. A temporary cap is already in place. Replacing the Tier 1 is the ‘Exceptional Talent’ Visa, which will provide space for just 1000 individuals from a Science, Cultural or Sporting background, unlikely to stretch to Accountancy or Finance. The next best option for skilled overseas candidates is to apply for a Tier 2 Visa which will require them to gain sponsorship and a job offer from a UK company, or the Tier 5 which will limit their stay to 2 years. Even then Tier 2 Visas have been limited to 20,700 places per year themselves.

Many critics believe that these kinds of restrictions are particularly harmful when the state of the UK economy is still vulnerable and skills shortages are very much apparent. Businesses are particularly worried about losing key staff due to difficulties renewing their visas. A recent survey from the Chartered Institute of Personnel and Development (CIPD) and KPMG revealed that 17 per cent of UK employers have been unable to recruit non-EU migrant workers due to the temporary UK immigration cap. According to these figures, more than 52 per cent of the people moving to the UK with visas came from outside the EU.

The cap will have differing implications. Multinational institutions will find some peace of mind in that there are no restrictions imposed on intercompany transfers. Smaller companies and many public sector institutions such as the NHS, with 30% of their workforce born overseas, will not find this a possibility. Universities may have to cut jobs due to a fall in international enrolments and loss in fees. Monash University had to cut 300 academic jobs on the back of changes in immigration regulation in Australia in late 2010. Companies with sponsorship certificates set aside will sees these cut which may be detrimental with the proliferation of BRIC economies and greater emerging market talent.

Recruitment companies will be increasingly required to supply outstanding candidates as the demand for migrant workers increases and supply invariably drops. Certain finance contract markets such as Product Control, which is characterised by a high turnover of international professionals in particular, may see a rise in rates in order to secure international contractors from a smaller pool of talent. In general, agencies will need to keep better track of highly-skilled candidates, not just from abroad but from home as well.

Restrictions are likely to free up more jobs for British Citizens, but will this be at the cost of sourcing the best candidate for the job?



Craig Klessa is a Consultant for Product Control at Marks Sattin.