The immigration cap, which comes into force on 6 April 2011, will have little effect on the number of economic migrants entering the UK because businesses can continue to use the uncapped Intra Company Transfer (ICT) scheme to access skills, according to Migration Watch.
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The government's immigration cap is unlikely to appease unhappy IT professionals because the ICT immigration route, which has not been capped, is the one used by businesses and IT suppliers to bring staff into the UK. Migration Watch said the preferential tax arrangements for ICTs, as well the ability for short term ICTs to come to the UK on low salaries, will actually encourage businesses to employ overseas staff instead of British workers.
Because ICTs are often paid living allowances, which are not taxed, as part of their pay, they are much cheaper to employ. For example Migration Watch estimates that an ICT on £40,000 a year, which is the amount set as the minimum a worker should be paid if they stay over a year, saves the employer 10% (see table below). Employers also benefit because the worker is tied to them as part of the permit, so staff retention is easier.
Table: Example of breakdown of costs of a UK and an ICT worker for the first year
Additionally the ICT rule states that workers that earn £24,000 can come to the UK for less than a year and don't even appear in immigration figures. This makes it difficult for UK workers to compete.
ICT visas are used by multinational suppliers because they are allowed to bring staff to the UK if they have a UK operation. Thousands of IT workers, mainly at Indian suppliers, come to the UK every year on ICT visas. According to the Association of Professional Staffing Companies (APSCo), about 80% of non-EU IT workers come to the UK on intra-company transfers.
The total number of Intra Company Transfers that came to the UK between 1997 and 2008 was 317,895. A massive 166,410 were from India.
To give an example of IT's major contribution, there were over 12,000 analyst programmers, 5,395 computer programmers, 2,590 computer engineers and a massive 65,150 workers in other IT-related occupations among the ICT visas granted during the ten-year period.
Migration Watch warned the government must control labour immigration in the future. "It is important to ensure that migrant labour is not so easily available as to undermine employers' incentive to train British workers. As the economy eventually recovers, the government will have to hold their nerve if the wider objective of reducing net migration is to be achieved."
Sir Andrew Green, Chairman of Migration Watch, said progress has been made, but pointed to the Liberal Democrats for watering down coalition policy.
"There has been some welcome progress but, despite the best efforts of Home Office Ministers, it is now clear that a number of key measures have been obstructed by Liberal Democrat objections. This may be inevitable in a coalition government but the public should be clear about where responsibility lies. Meanwhile, if the number of economic migrants shows any significant increase, public opinion will want these issues to be re-visited."