Will caps on IT immigration just win votes or create a workable compromise?

If elected the Conservatives will make changes to the current migration system by putting limits on the number of workers permitted to enter the UK on Intra Company Transfers (ICT).

With an election looming any unpopular policy is sure to be seized upon by opposition parties. ICTs fit this bill.

The ICT scheme allows staff to apply for a permit to transfer to the UK from an overseas branch of their employer. But there are accusations that the system is being abused by Indian offshore IT service providers. Indian workers are being paid far less than their UK equivalents, which is not allowed under ICT rules. Also ICTs are only supposed to be permitted when there is a shortage of UK skills to fill posts, which is often not the case.

A recent freedom of information (FOI) request made by a Computer Weekly reader revealed the massive number of foreign workers entering the UK on ICTs, despite rising unemployment.

The data showed that for the year December 2009 to December 2010 a massive 45,924 ICTs have been granted out of 62,589 requested. A massive proportion of ICTs is typically made up of IT staff from India.

The numbers are increasing every year. During the dotcom boom in 2000 only 12,726 IT workers entered the UK on ICTs, according to a FOI request made by Association of Professional Staffing Companies (Apsco). Seven Indian companies accounted for 43% of the IT workers entering the UK on ICTs in 2008, according to more figures obtained by the Apsco.

“It seems extraordinary that when British workers can’t find jobs we are bringing foreign workers from halfway round the world. This is another sign that Gordon Brown’s ‘British jobs for British workers’ was a meaningless sound bite,” says shadow immigration minister Damian Green.

The Tories plan to keep the existing points-based system, which allows IT professionals into the UK, if they score highly enough on a range of measures. But the numbers will be capped.

“The one big gap in the points-based system is that there is no overall limit on how many permits can be issued in any one year,” says Green.

One industry source says this is merely electioneering. “This is a fairly blatant attempt to win votes.  The reality is that Western European countries all have ageing populations, and outsourcing or immigration will be one of the key ways of remaining competitive.”
But one IT worker recently displaced as part of an offshoring agreement says: “[The Tory plan] looks good, but the term ‘migrants’ is a worry. This suggests a long-term stay, when in fact the problem is due to ICTs on a short stay, perhaps a year or so. But it is better than Labour’s approach by a mile.”

Mark Lewis, of commercial law firm Berwin Leighton Paisner, also sees the logic.

He says, “There is no reason to have an infinite number or even such a high number of ICTs issued. So a quota may be the fairest way forward for offshore IT suppliers and UK business.”

But Union Unite is against the Conservatives’ plans to cap ICTs. Peter Skyte, national officer for IT and communications at Unite, says migrant workers play an important role in the UK economy but adds that a better balance is required.

“We do believe that there is a need to strike the right balance between enabling employers to recruit or transfer skilled people from abroad, providing fair access for UK and overseas migrant workers, and protecting job and career development opportunities for resident workers.” This, he says, is necessary to enable UK IT professionals to move up the value chain within their chosen occupations. “We are however opposed to the Conservative proposals for an arbitrary cap on migration numbers.”

Ann Swain, CEO at Apsco, says there was nothing wrong with the current system but it was being abused but it needs to be better enforced. “There seems to be no appetite to police it,” she said.

John Brazier, managing director at the of Professional Contractors Group (PCG) believes applying a cap to the number of ICT workers entering the UK would be a wise move. “Whilst ICT permits clearly have a value, their abuse and overuse is damaging. I hope the annual cap proposed by the Conservatives would be extended to ICT permits as a way of dealing with the displacement that has affected many contractors.”

But he adds that main issue is not the ICT permit itself but the abuse of the system. “What we need is better enforcement of the rules, and a way to ensure the marketplace is as fair as possible. ICT workers being paid less than the minimum salary undercut contractors.”

An influential source in the outsourcing industry says,”…the UK would be terribly handicapped if it closed it borders to talent, no matter where it comes from.”

Political change leads to changes to legislation but many proposed changes often disappear without a trace. The Tory plan to cap ICTs is taking IT industry issues to a high level. But whether the controversial ICT scheme is changed if the Tories win, or whether it needs changing at all, is less certain.

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Unfortunately it is quite easy to significantly underpay ICTs and comply with the current rules. Big business has lobbied hard for those loopholes e.g. counting expenses towards the going rate and setting the going rate well below the average salary that a UK worker doing the same job would be paid. The current scheme is also a big tax avoidance scam as long as the ICTs stay less than 2 years.

The ICTs and HMRC are being cheated out of 100 millions of pounds a year, and UK workers are losing their jobs.

A cap is a very imprecise tool and, until more details are made available, it will be hard to tell if it will help. The big question is how to do you allow the most beneficial to the UK in. I would like to think that the brightest and best will come here but that will not happen with companies expecting to pay slave labour wages to migrant because that is what the system encourages.

As for the UK needing young migrants because of the aging population, I thought we will all need to work a lot past 65 now. IT is one area that experience counts.

APSCo has consistently argued that employers using intra-company transfers (ICTs) should be audited more rigorously to ensure workers being brought in are not undercutting UK market rates. The UK Border Agency, which has responsibility for enforcement, could do much more to investigate alleged abuses of the system.

An alternative suggestion which has been mooted – and which APSCo considers potentially workable - is that the resident labour market test should apply to ICTs. That would mean employers could only transfer staff from overseas if their requirements cannot be met by the UK labour market. Employers would have to advertise requirements in the UK first, and demonstrate that the skills are not available locally, before being eligible for an ICT.

APSCo does not support the introduction of quotas for ICTs. The problem with Government imposed limits is that they are likely to be unwieldy and unresponsive to the market. How would it be decided what the limit should be? What if an employer cannot fill an urgent, niche requirement but the cap on ICTs has already been reached? If the UK immigration system is not sufficiently flexible we will damage our position in the global economy.

Ann Swain, Chief Executive, Association of Professional Staffing Companies (APSCo)

Caps, quotas or resident labour market test, anything that gives UK-based IT workers a fighting chance to compete for jobs on a level playing field. I'll compete on the basis of skills and cost with anybody who has to pay UK taxes, mortgage costs, pension, insurance etc.

But how can a UK-based IT worker compete with a cheap ICT import, who receives a low salary in India plus tax-free subsistence in the UK, and often stays in a cheap crowded company flat for 6 months or so before being shipped back home or re-imported on a revolving-door visa system?

And some of the worst offenders in the ICT racket are the big consultancies running government IT projects, who charge grossly inflated rates for imported staff but somehow avoid passing any of these savings on to the government client, who in most cases doesn't even get a decent system out of the deal. So the dwindling resources of the UK tax payer are actually being used to subsidise this process of undermining the UK tax base and systematically destroying our own IT industry.

And where is the benefit to the UK economy of allowing this to happen? The IT supplier pays little or no UK tax, the skills and experience gained by the ICT import are soon shipped back to India, and meanwhile another UK-based IT worker is on the dole and watching his skills rapidly age into obsoloescence.

And APSCO members don't help much: try getting a job based on skills that are a year or two out of date, or that you have managed to acquire through our own efforts during a long spell of unemployment, and you'll find that recruiters don't count your skills/experience as being worth anything, because they're operating on their all-too-familiar buzzword bingo basis, simply to cut down the vast number of applicants they have to process to more manageable volumes.

And while UK employers complain about skills shortages, they import inexperienced foreign staff and fire their UK-based staff, eliminating opportunities for UK-based IT workers to maintain or develop their skills at all levels of the UK-based IT profession. If there is a skills shortage (and from what I have seen most of these ICT imports have no better skills than the UK-based workers they replace), it is surely one created to a large extent by employers themselves.

In many cases, technical roles are deliberately de-skilled, precisely in order to replace a skilled and experienced UK worker with a cheap and inexperienced ICT import. The trend in the UK IT industry is towards a 20th century Taylorist model of cheap but inflexible production line workers, instead of the highly skilled and flexible workforce that we surely need in the 21st century.

So if UK employers need IT skills, why don't they start investing in creating, maintaining and developing those skills themselves, instead of dumping their own staff at the drop of a hat and replacing them with imported IT cannon fodder? Or make use of the huge EU labour market, where at least UK IT workers have a chance of competing on a reasonably fair basis.

Meanwhile, it is surely time to get rid of all these crooked government-abetted corporate scams for dumping UK-based workers, and start investing in our own workforce. The alternative is to abandon the idea of a skilled UK IT industry altogether, because pretty soon we will no longer have the skills base to maintain one.

Thanks Matt

I appreciate your comment. There seems to be a definite lack of focus on improving UK IT skills. I don;'t think youngsters will fancy investing time and money in an IT qualification if they end up losing out on cost rather than skills. The fact is workers in the UK on ICTs should get the same pay but companies are fudging this.

Thanks again for your email.