In the absence of a cap, the government will have to increase the cost of bringing staff to the UK from overseas on Intra Company Transfers (ICTs) if it is to meet its target of reducing long-term immigration to the UK.
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The Migration Advisory Committee (MAC) today published its report on the level at which the government should set its immigration cap.
The Tories promised a cap on immigration in the build-up to the general election and set an interim cap. The MAC report will make recommendations about the cap, to be set next year.
The government wants to reduce non-EU immigration to the UK to tens of thousands a year by the end of the current parliament. In 2009 there were 196,000 non-EU immigrants in the UK.
MAC chairman David Metcalf said the report was put together before David Cameron announced that ICTs would not be included in the cap. As a result ICTs are included and Metcalf said if the government is to meet its target it will have to find ways of reducing ICTs without capping them.
ICTs are used by businesses with UK operations, to bring staff from lower cost locations to work in the UK. This practice is particularly rife among Indian IT suppliers. ICTs were included in the report because they make up such a large proportion of immigrant workers in the UK, said Metcalf.
He said if there is no cap to limit numbers of ICTs, the government will have to use pricing mechanisms to reduce them. "There is more than one way to skin a cat," he added. "We are saying ICTs should be capped. This is not going to be.
The government could increase the costs of bringing workers in to dissuade companies from abusing the system. For example increase the minimum amount of money that an ICT worker is paid. This will stop companies using ICTs to bring cheap labour to the UK, which was never the intention of ICTs. It could also increase the cost to businesses of securing Certificates of Sponsorship.
Reports recently suggested the government is planning a £40,000 minimum salary for ICTs.
Metcalf also said the practice of businesses including expenses in an ICTs' total salary should be stopped. He described how Indian IT suppliers are paying staff in the UK Indian wages but bundling other costs on top, such as accommodation. He said only paid salary should be reported.
Metcalf is not alone in calling for changes to the ICT scheme. Yesterday think tank Migrationwatch called for changes to the rules on ICTs. These included the salary threshold being raised to £50,000 a year (except for graduate trainees) and the cost of the certificate of sponsorship rising dramatically.