The Migration Advisory Committee (MAC), an independent panel of economists and academics that advises the UK government on immigration policy, has released its proposals for the shape of the UK immigration system for workers post 1 January 2021.

The MAC was commissioned by the UK government in 2019 to advise on salary thresholds and the potential introduction of an “Australian-style” points-based system. This new system will apply equally to all nationals, except British and Irish citizens, entering the UK from 1 January 2021 when freedom of movement from the European Union (EU) ends.

The UK government will respond to the MAC report in March 2020 and, while it usually accepts the proposals, it is not obliged to do so.

The report focuses mostly on workers and is silent on changes for students, high-net-worth individuals, the self-employed and family members, but we expect the government to present further proposals on these areas later in the year.

Summary

The MAC report recommends a modified version of the current UK immigration system, which is based largely on sponsorship, for example by a company or a university.

The new system would raise the barrier for entry for EU nationals (there are practically no barriers at present) but lower the barrier for entry for non-EU nationals.

The MAC hopes that this approach will ease the anticipated labour shortages if the number of migrants from the EU continues to decrease once freedom of movement to the UK ends.

Much of the report replicates the proposals already announced in the previous government’s 2018 White Paper which is not surprising as they were based on the MAC’s previous report analysing the same data.

The recommendations for those with a job offer

For those who have a job offer to work in the UK, the MAC recommends a modification of the existing Tier 2 (General) system in which migrants are sponsored by an organisation to work in an approved role.

  • The Tier 2 (General) category should be broadened to allow sponsorship of medium skilled workers. Currently, a job must be offered at RQF6 or higher (degree level) but this will be lowered to selected roles at RQF3 (secondary school leaver).
  • The salary threshold should be lowered from £30,000 to £25,600 for "Experienced Hires" and from £20,800 to £17,900 for "New Entrants".
  • The definition of New Entrant should be widened to include those working towards recognised professional qualifications and those moving into postdoctoral positions. At present, a New Entrant is someone who is switching from Tier 4 (General) to Tier 2 (General) or is under 26 at the time of application.
  • New Entrant salary thresholds should apply for five years, up from the current three years.
  • The salary threshold for those applying for Indefinite Leave to Remain following time spent in Tier 2 (General) should not rise any further. At present, the threshold is £35,800 and is due to rise to £40,100 for applications submitted after April 2024 – the MAC considers this level to be too high.
  • Salary thresholds should apply equally across the UK with no regional variations, though a limited pilot programme should be considered to attract migrants to “remote” areas, which are not defined.
  • The resident labour market test and annual quota should be abolished.
  • Consideration should be given to the abolition of the Shortage Occupation List as its main advantages (no resident labour market test and priority under the monthly quota) will no longer be relevant.

In general, these proposals will make sponsorship of individuals much easier and quicker for employers who have sponsorship licences. The abolition of the quota and resident labour market test could reduce the time taken to complete the whole Tier 2 (General) application process by two months.

From 1 January 2021, employers will be relying more heavily on their sponsorship licences since EU nationals arriving into the UK for the first time will need to be sponsored. This has the potential to put a massive burden on the existing sponsorship system, as we have commented previously, since companies who have never needed to sponsor a non-EU national, but regularly recruit EU nationals, will be required to obtain a sponsor licence. It therefore remains to be seen whether the UK government brings in changes to streamline this scheme.

The recommendations for those without a job offer

At the moment, it is challenging for migrants to enter the UK if they do not have a job offer from an organisation that can sponsor them, are not the family member of an existing resident or are not very wealthy.

The current Tier 1 (Exceptional Talent) visa has a very high bar of entry and the MAC criticises the narrow definition of talent and the risk averse approach of endorsing bodies. Consequently, the number of visas issued under this route is only around 600 a year.

The MAC recommends that Tier 1 (Exceptional Talent) should be modified to broaden its appeal and decrease the high skills threshold. Indeed, the UK government is already planning to rename it “Global Talent” and make changes this year.

The MAC suggests that the route should operate on an “expression of interest basis” whereby potential applicants submit their applications to a pool from which there would be a capped monthly draw. The draw would be points based so those with higher skills or stronger connections to the UK would be prioritised. There would also be a minimum points threshold to enter the pool.

Successful applicants could then apply for a visa while unsuccessful applicants would be returned to the pool for the following month’s draw, with the number of points required changing each month depending on the needs of the labour market.

This proposal places an administrative burden on the Home Office but has potential for highly skilled job-seekers. It will be interesting to see whether this provides a viable route for those wishing to enter the UK to undertake self-employment, which a large number of EU nationals do, as there is currently very little scope for individuals to obtain UK immigration permission to set up a new business unless they are very wealthy or have an innovative business idea.

Next steps

The UK government will publish a white paper in March 2020 with the proposed new immigration system due to be in force from January 2021. It remains to be seen whether the UK government will incorporate the MAC’s recommendations in their entirety or move in a different direction, especially as the MAC has substantially rejected the idea of moving to a pure points based system.