Written evidence submitted by the London Chamber of Commerce and Industry

1. London Chamber of Commerce and Industry (LCCI) is the capital’s largest and most representative business organisation, with over 3,000 companies in membership across all 33 London boroughs, from SMEs to multi-national corporations. Member companies operate across various sectors, reflecting the broad range of businesses in the capital.

2. LCCI’s July 2015 report, Worlds Apart, follows increasing concerns from businesses about restrictions to Tier 2 visas and looks at what the Government can do to support businesses who recruit from outside the EEA, including taking measures to simplify the visa system and introduce credible third party sponsors to reduce the cost and administrative burdens for small businesses.

3. LCCI welcomes the Committee’s inquiry into the Tier 2 (General) visa following the cap on visas available being reached for the first time in June 2015, disrupting businesses who were refused visas. In the long-term, moves by the Government to further restrict non-EEA immigration risks is harming to London businesses in recruiting workers with skills that are in short supply within the domestic and European labour market.

4. 57% of London businesses looking to recruit in Q2 2015 struggled to do so[1], highlighting the difficulties that companies face in hiring skilled workers, in both skilled manual roles and professional/managerial roles. The cap of 20,700 Tier 2 visas means that employers will continue to face difficulties in recruiting for roles that are not on the Shortage Occupation List.

5. Some employers and sectors are more likely to be affected than others, with positions offering lower salaries less likely to score enough points to obtain a Certificate of Sponsorship (CoS) if numbers of applications for Tier 2 visas continue to exceed the cap. Applications received in June 2015, for example, required applicants to have at least 50 points, as opposed to the lower limit of 32 points. This threshold means that jobs paying under £27,000 and that are not on the Shortage Occupation List would have seen applications rejected, further impacting on skills shortages.

6. SMEs are also more likely to be affected by changes to the visa system, as they typically have less experience and fewer resources available to recruit from outside the EEA. Start-ups, particularly in the tech sector, are particularly affected by caps on immigration, as they are less likely to be able to compete on base salary with larger companies, and instead offer employees other benefits, such as shares in the company. These companies often employ non-EEA workers because of the specialist skills shortages in the tech sector in the UK.

7. LCCI believes that the cap on Tier 2 skilled workers is negatively affecting businesses that need to hire employees where there is a skills gap in the domestic and European labour markets. Upskilling workers through apprenticeships and other training schemes is to be welcomed, and will help in combatting skills shortages in the long-term. In the short-term, businesses, particularly start-ups and SMEs, should be able to easily hire skilled migrants from outside the EEA without being penalised.

8. Changes to the Tier 2 migration system should be undertaken with a review of how the system works for businesses. For example, the Resident Labour Market Test (RLMT) currently requires positions paying under £71,000 per annum to advertise via JobCentre Plus if they wish to hire a non-EEA migrant, meaning they are unlikely to receive the applicants with the skills required for the role. The RLMT should be made more flexible, with businesses having the option to run an advertisement in two relevant publications for 28 days instead.

9. Granting visas to workers by salary penalises businesses that are unable to offer the highest salaries, and sectors, such as the hospitality industry and the health service, where average salaries are lower. This restriction also affects graduates, who are more likely to be earning lower salaries at the beginning of their careers and who have also been affected by the closure of the post-study work visa in 2012.

10. The cap of 20,700 Tier 2 visas per year means that businesses will continue to struggle to recruit employees, particularly in industries where there are pronounced skills shortages. The statutory cap being reached in June means that this is likely to happen again, further risking London’s international competitiveness as overseas workers and students choose to work in countries with more welcoming immigration policies.

11. Businesses do not often actively choose to recruit workers who require a Tier 2 visa, but that doing so is the only way to access the specialists and highly skilled workers that they need to grow their business. The Government’s immigration policy must maximise the contribution of non-EEA workers to the UK, simplifying the administrative process and reducing the costs for businesses, particularly for SMEs.

For more information on this submission please contact Sophie Mew, Policy and Public Affairs Officer.