The coalition government’s annual cap on the number of skilled non-EU migrants is a “blunt tool” that will do nothing to prevent current abuse of the intra-company transfer system, critics have warned.

 
The Home Secretary Theresa May announced the cap yesterday, indicating that as of next year, there would be an annual cap of 21,700 on the number of visas issued to skilled or highly skilled workers from outside of the European Union.
 
Contrary to advice from the Migration Advisory Committee, however, intra-company transfers will be excluded from the immigration ceiling, although workers will need to earn more than £40,000 per annum if they are to stay in the UK for more than 12 months.
 
But the move has caused consternation in some quarters, with Ann Swain, chief executive of the Association of Professional Staffing Companies describing it as a “blunt tool, which could do more damage than good”. A key issue was that the “vast majority” of foreign workers arriving in the UK were EU nationals, who would not be affected by the cap.
 
“Worries over immigration centre on low skilled workers being undercut, so capping the flow of highly skilled workers seems a strange policy. By imposing an inflexible cap the government could be damaging high value sectors of the economy where skills shortages hinder growth,” she said.
 
But she was also concerned that nothing had been done to guard against “abuse” of the intra-company transfer system, which had been taking place for years.
 
“Many of the people coming in are filling mid-level roles, which could be sourced from the UK labour market. Some 80% of work permits issued in the IT sector are intra-company transfers, so to exclude them from the immigration cap would be nonsensical,” she told HR magazine.
 
Peter Skyte, national officer at the Unite union, agreed. “The government has spectacularly squandered the opportunity to deal with misuse and abuse of the intra company transfer scheme in its migration cap announcement in the face of largely empty threats by big business to withdraw investment from the UK.”
 
It had likewise failed to tackle the issue of tax and accommodation allowances for foreign workers, which undercut domestic pay rates, he added. Employers currently receive accommodation allowances of up to 30% of salary total or 40% if the Certificate of Sponsorship is less than 12 months. Pay and allowances are also often not taxed if the migrant worker is transferred for less than two years.
 
As a result, it was crucial that UK employers be provided with “greater incentives to source labour from the domestic market as envisaged in its original consultation on the migration cap”, Skyte said.