New visa rules would give us talent problems

Ahead of the Autumn Budget, the conversation focused on boosting economic growth. Yet the Office of Budget Responsibility (OBR) revised forecasts show weaker growth over the next four years, adding pressure to the need to balance this alongside public concerns about immigration levels and skill shortages in key industries.

The OBR has repeatedly estimated that higher net migration leads to lower deficit and debts as incoming migrants are more likely to be of working age and therefore more likely to contribute to public finances.

This has been taken into account in the Home Office's proposals to change the requirements that migrants will need to meet to qualify for a permanent stay, known as indefinite leave to remain. Under the proposals, migrants looking to remain in the UK permanently will need to show that they have been economically active over a minimum period of time and therefore show that they have made a net contribution to public finances.

Stuart McWilliams foresees difficulties for firms recruiting from abroad

For employers, the change could make international recruitment harder. Where a business is recruiting talent from abroad, they must pay an Immigration Skills Charge to the Home Office, so the increased qualifying period - from five to ten years - will increase the cost of the hire for the business by up to £6,600. There will also be increased costs for the migrant and any family members who come to the UK, and to stay competitive, some businesses will be required to pick up these costs as well.

Beyond cost, the new proposals have the potential to create a talent attraction problem for Scottish businesses. An example of this is the field of Artificial Intelligence (AI), which Scottish Enterprise estimates could increase Scotland's GDP by between £2.74 billion and £19.33 billion by 2035. As major economies race to become leaders in AI innovation, there will be competition to attract the best and brightest workers, regardless of nationality. The UK's proposed 10-year route to indefinite leave to remain will be longer than the countries we are competing with for talent, and it remains to be seen whether the proposed discounts for high earners and key skills are sufficient to attract the talent needed to grow, and train domestic workers, in this sector.

Similar concerns exist in the renewable energy field, which also has the potential to drive economic growth. As the UK pushes towards achieving net zero by 2050, there is an immediate need for skills in the sector. In the long term, UK businesses can prioritise recruiting and upskilling domestic workers but, in the short-term, immigration can play a role in filling immediate gaps. However, current immigration rules limit the type of jobs that qualify for work visas and leaves the UK short in key areas. There is a strong case for boosting growth in this area with a sector-specific “Green visa” to enable businesses to bring in project specific skills, but it will be difficult to balance any proposals for new immigration routes with public concerns about immigration levels.

As the UK looks to boost economic growth, and establish itself as a leader in new technologies, it is important that public concerns about high levels of net migration are balanced with the need for recruiting key skills from across the globe. The new proposals may temper the public’s concerns, but risk creating additional barriers to growth in key sectors.

Stuart McWilliams is a Partner, MF Mac