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London Business Leaders Are Treating the New MAC Report with Caution

London-based business groups have commended the MAC’s recommendations for a post-Brexit immigration system in principle, but have argued more could be done to safeguard the capital’s economy.

On Tuesday, the Migration Advisory Committee (MAC) released their long-awaited report into the UK’s post-Brexit immigration system. The 278-page document is a response to two separate commissions from the government- one on how best to design our salary thresholds once we leave the EU, and the other on how a points-based immigration system could work in the UK.

Initially, it may seem strange for the government to be so fixated on the introduction of a points-based system, not least because the UK’s work visa route is already classed as such. However, it must be noted that our existing system is points-based in name only. As quipped by the MAC’s departing chair Professor Alan Manning in the opening pages of the report, packaging what we currently have as ‘points-based’ is essentially pointless.

Present applicants under the UK ‘points-based system’ must not only satisfy all eligibility requirements, but possess a job offer from a sponsored employer. Points accrued in one area cannot be used to offset weaknesses in another, thus demonstrating the inaccuracy of the name. The committee have advised that the government retain the current structure, but only for applicants that possess a job offer. This will ensure that the country continues to recruit skilled workers who will make a positive contribution to the economy.

For visa applicants who do not have a job offer from a sponsored employer, the MAC advises introducing a truly points-based system that awards points based on desirable characteristics, such as language proficiency and work experience. It is thought that the best way to achieve this is to modify the existing Tier 1 Exceptional Talent visa route. At present, there are 2000 places available each year for an Exceptional Talent visa; it is not contingent upon having a job offer, however one must be recognised as possessing either exceptional promise or exceptional talent. By merging this route with a truly points-based system, it is hoped that the UK will be able to select the best and brightest minds.

An arguably more noteworthy recommendation from the MAC is that the current £30,000 salary threshold for skilled workers should be reduced to £25,600. This is designed to offset the impact that the end of free movement will have on the labour market. Many non-EEA nationals are currently unable to obtain a Tier 2 Visa due to the threshold being too high- it is hoped that the reduction will enable greater numbers of medium and highly-skilled workers to enter the UK economy, thus avoiding post-Brexit skills gaps.

Business leaders in London have reacted to the MAC’s proposals with caution. In many ways, they are seen as a step in the right direction. With London more reliant on European workers than the rest of the country, the proposed salary threshold of £25,600 will help the capital’s businesses to continue to attract the talent they need to flourish, counteracting the impact that the end of free movement will have. A 2017 report produced by London First and PwC found that a considerable amount of London workers in the construction, creative, financial, transport, retail and hospitality and healthcare sectors were born overseas. This sheds light on the importance of devising an immigration system that addresses the economic needs of the capital.

Various commentators have asserted the need for businesses to play a role in shaping the post-Brexit immigration system. In the report, the MAC recognise that London will be affected the most by changes to immigration due to the ‘greater share of migrants living there’. But they also state that the new salary threshold will not vary from region to region were it to be adopted by the government. This is because it would be too complex and many of the salary thresholds would be similar, because London aside, there is little variation.

Sean McKee, who is director of policy and public affairs at the London Chamber of Commerce and Public Policy, stated that ‘while businesses will be encouraged by the MAC’s proposal, some will still question whether the newly proposed figure will be enough’. He added that ‘as a global city, London has a greater reliance on international workers than the rest of the UK’, and expresses dismay over the MAC’s recommendations that regional variations need not be implemented. However, the MAC calculate that, were regional variations to be adopted, London would have a salary threshold around 25% higher than the rest of the country.

According to Jasmine Whitbread, London First’s CEO, the committee should have gone further and recommended a salary threshold of £20,000, as this would enable us to keep the economy at full strength. She argues that, whilst it is positive that the MAC show recognition that keeping the current threshold would decimate a number of industries, businesses in the capital need to ‘have a seat at the table’ as plans for the new system are finalised.

It is clear that the implementation of the recommendations would be a step in the direction in relating to preparing for Brexit’s impact. However, London will be the part of the country most affected by our departure from the EU due to the proportion of its workforce that hail from overseas- 38% compared to an average of 18% elsewhere. With this in mind, there is considerable logic behind the idea that an even lower salary threshold is what is needed for the economy to continue to prosper.