Inter company transfers

A number of  contributors to this site have said it is too easy for companies to bring in overseas employees from outside the EU  to fill lower paid jobs which locals could easily do. Yesterday we were told that in future a company has to be paying the individual concerned £40,000 plus to qualify for an inter company transfer for a year or more. Are you all happy with this change?

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66 Comments

  1. Steve
    Posted November 24, 2010 at 8:52 am | Permalink

    40K is way too low. I would prefer to see as figure perhaps 50% more, with a specific requirement that the individual becomes a UK resident for tax purposes.

    • Graham
      Posted November 24, 2010 at 9:27 am | Permalink

      I agree with both of those criteria

  2. The ESSEX GIRLS
    Posted November 24, 2010 at 8:55 am | Permalink

    Our view is that the kind of skills level we would hope and need to attract would command a salary of at least £60,000 pa.

    We should be looking at the templates of other countries with the same dilemma.

  3. IanVisits
    Posted November 24, 2010 at 8:57 am | Permalink

    Considering the hassle and paperwork involved in hiring an overseas employee and bringing them to the UK, the idea that companies willingly engage in such practices when there are Brits clamouring for the same job is patently false.

    No company willingly wastes time and money like that.

    The main losers from the clamp down though are not the high-wage companies, but the farmers and manual labourers who desperately need low-paid staff, but the Brits are unwilling to do the work.

    I wonder how many people when pondering the sudden rise in price leeks etc in the supermarket will realise its because the farmers cant import cheap labour for a couple of months and have to pay a fortune to recruit British workers who demand a whole swathe of benefits and higher salaries due to the temporary nature of the work.

    • Iain Gill
      Posted November 24, 2010 at 2:53 pm | Permalink

      nonsence ICT visas go almost entirely to Indian nationals working in IT working for a small group of outsourcing companies

      the figures are publihsed

      farmers and manual labourers are using other routes of entry

    • alan jutson
      Posted November 24, 2010 at 5:10 pm | Permalink

      Ian Visits

      Ian, I think you will find that Farmers use Eastern European workers, who are Citizens of the EU, so it is open doors at the moment for them, no restriction at all.

      It is this open door policy and our present Welfare and Benefits system which allows UK workers to refuse low paid jobs.

      All Immigration needs to be reviewed, as does the Benefit system.

    • SimonH
      Posted November 26, 2010 at 3:20 pm | Permalink

      Ian,

      I work in IT and have seen many UK workers “let go” so that (overseas-ed) workers on ICT visas can take their place. The driving force is lower cost to the company, nothing to do with special skills which can’t be found locally (in most cases, the Indian workers just take over the job the now redundant UK worker was doing). As mentioned above, around 50% of the tens of thousands of ICT visas in IT over the past 5 years were granted to just (a few overseas -ed) IT consultancies who have no products themselves, they just (place-ed) their workers into UK client sites. You can’t really believe that they are bringing in workers with unique skills not available in the UK (the main aim of ICT visas).
      Given that the ICT workers’ tax arrangements are usually such that they are unlikely to pay much, if any, tax or NIC in the UK and the client company no longer has to pay employers NIC either, the income to the Treasury is significantly reduced. In addition the UK worker who was displaced from a job may struggle to find a job with the same pay or may even end up unemployed for a long term, so the tax take from that worker will be reduced or stopped and the Government may end up having to pay them benefits. There are now 2 people and their families who are making use of the various public services our taxes pay for, where there was only 1 initially.

      So the money coming in to the Treasury has reduced substantially for that particular job yet the cost may have more than doubled. In addition there is the pain and cost of all the social problems related to people losing their job and being unable to find another, as well as the loss to the local economy because the UK worker can no longer spend the way they used to.

      You’d expect there to be some other huge benefits to UK plc that might make this situation an acceptable cost, yet all that’s happening is that global corporations are reducing their costs. Due to the clever tax setup most of them will have, HM Treasury are very unlikely to see a penny more in income.

      ICTs are fine if used in the way they were intended but this blatant abuse is crippling our domestic IT workforce and the UK prospects for the future in this area are becoming bleak.

  4. Geoff not Hoon
    Posted November 24, 2010 at 9:13 am | Permalink

    Mr. Redwood. Shouldnt it really be more a case of who is right for a particular job..
    £40,000 is no great number for an employee, particularly one with a family to uproot, to find he is moving to the UK. In my company I moved a senior man to Peru for £70,000 per annum in 2000. In 2008 when asked if he woud like to come back to the UK for promotion on a starter of £125,000 he politely asked me to find someone else he was happy where he was and tax rates meant he was not that much worse off to stay ‘away’. Agree with Pete it should be at least 50% more.

  5. BarryS
    Posted November 24, 2010 at 9:18 am | Permalink

    The idea is correct but the pay rate is far too low. If someone is so highly skilled it is worth relocating them to the UK perhaps the company should be paying far more than £40K.

  6. Peter Richmond
    Posted November 24, 2010 at 9:36 am | Permalink

    I agree the figure is far too low. There are many everyday jobs, for example junior clinical psychologists and airline pilots which fall into this category. We should be training young people within the UK for these kind of roles and not leaving them open for non UK citizens

  7. oldtimer
    Posted November 24, 2010 at 9:49 am | Permalink

    Sounds too low to me. The other day I was reliably told that starting salaries for new graduates in one city firm were £40k pa. I imagine there must be many more firms in this category. On these grounds I think the threshold should be c£60k.

  8. Mark
    Posted November 24, 2010 at 10:10 am | Permalink

    I had personally suggested a £50,000 figure to Damian Green via the Blue Blog. The real test will be to see whether it is successful in curbing the abuse of ICT visas which has seen them used as a route for introducing large numbers of foreign contract workers to the UK particularly in the IT segment, taking advantage of tax privileges to reduce their employment costs. Examination of these tax privileges may offer a further part of the solution. A simpler, and automatically indexed provision would be to require them to be higher rate UK taxpayers. Another alternative route would be to require that each ICT visa granted should be matched by an outward ICT visa granted to a UK domiciled employee – I recall this was a basis for US H-1B visas – demonstrating that the transfer is to gain international experience.

    • Mark
      Posted November 25, 2010 at 8:17 pm | Permalink

      I did not notice the exemption for stays of under a year. That is an obvious loophole that should be plugged. If a multinational wishes to send someone on a training course, that should be handled as a student visa: few such courses last more than a couple of weeks or a month where they are internal, and longer external courses can be verified through the institution concerned. Anyone coming for employment should be subject to the salary minimum pro rata regardless of length of stay.

      • nonny mouse
        Posted November 26, 2010 at 6:54 pm | Permalink

        >>I recall this was a basis for US H-1B visas

        I have had American H-1B and O visas and while there are numerical limits on the H-1B I don’t think they are related to outgoing workers, just the result of party politicing in congress. O visas have no numerical limits but are much harder to get because you need to prove that you are outstanding in your field.

        The salary requirements for both are that the employee must be paid a minimum of the going rate for the job in the area of employment as defined by the department of Labor (e.g. that used to be around $72k/year in California) and that the job must be in a high demand category.

        All work related visas (as opposed to green cards which take years to get) require that the employer sponsors the employee and must leave the country when the job ends. I don’t understand why the UK lets people in without a job, even if they are skilled.

  9. Gary Burgess
    Posted November 24, 2010 at 10:18 am | Permalink

    £40k is the average salary of a UK Science and Technology professional so it is not a high barrier.
    It does not apply for those staying less than a year, so rotating cheap staff is still possible, and it will be too easy to send someone back and bring them in on a new 1 year visa.
    It also includes tax free allowances for legitimate business expenses so the actual salary will be much less than £40k.
    There is also no NI payable for the first 52 weeks for intra company transfers so again it will be much cheaper for employers to use transfers.

    The government should:
    a) not include tax free allowances for legitimate business expenses towards meeting the minimum salaries,
    b) increase the UKBA appropriate/going rates to the average UK salary for the job (and not the lower quartile salary it currently uses),
    c) require tier 2 (ICT and general) professionals to have at least 5 years previous professional experience (though not necessarily at the same company) like the proposed EU blue card scheme.

    There also needs to be better policing of the system. Up until recently, the largest users of tier 2 ICT visas exagerrated what they paid their workers when applying for visas. This happened for years without the UKBA and its predecessor noticing. It took a policy update in April to inform sponsors that they must use the ACTUAL salary+allowances and not some fictitious estimate to change this:
    http://www.financialexpress.com/news/uk-immigration-norms-to-shoot-up-cost-of-ites-firms/705190

  10. Simon
    Posted November 24, 2010 at 10:30 am | Permalink

    JR .

    People are going to notice that this is not a quota like Cast Iron was talking about .

    1) Will the 40K lower limit also apply to Indian workers who come in on the new EU – India “free trade” GATS mode 4 tickets ?

    Or will this be handled under an even more relaxed visa with even lower entry requirements ?

    2) How is it proposed to police whether companies are really paying 40k and not just claiming it on the Visa application ? (this abuse is the normal situation today)

    2b) In cases where the TNC (trans national corporation) is a service company , won’t the 40k be what the TNC is charging the worker out at rather than what they are actually paying the worker ?

    3) Is this 40k the i) NET cost to the TNC (equivalent to approx 36K salary + 4K employers NI) or ii) 40K salary plus 5k Employers NI etc ?

    4) Will the TNC and worker have to pay UK income tax , employees and employers NI on benefits provided to the worker (accomodation,travel in UK , subsistence) in the same way a British worker would have to pay out of taxed income ?

    Or will it be treated as untaxed business expense thus making 40k the total expense equivalent to a wage of 36k ?

    Will TNC’s have to make pensions contributions as UK employers will have to soon ?

    4) 40K even in India does NOT get skills which are so specialised that they are not already available in the UK .

    It’s about the equivalent to a new policeman on 26K basic plus pension , less if they do any overtime .

    For all but the most exceptional graduates it would be far more lucrative to join the policeforce than take a job in I.T. , Accounting etc where the majority of jobs would become pegged to 40k .

    5) India requires migrant workers to be earning 30 times the national average wage and finds other obstacles to keep foreign workers out . Hardly a reciprocal agreement .

    6) Even IF the Indian worker becomes UK resident for tax purposes , the tax paid by employer and employee will at most only equate to the tax that would have been paid by the British worker .

    The crux of it is the BRITISH TAXPAYER ends up SUBSIDISING the TNC and their customers to the tune of the entire unemployment and housing benefits of the displaced British worker .

  11. michael read
    Posted November 24, 2010 at 10:30 am | Permalink

    Isn’t a reasonable bet that the figure is going to be gamed?

  12. backofanenvelope
    Posted November 24, 2010 at 10:43 am | Permalink

    I have a simple question. Are we party to any international agreements that require us to give British Passports to foreign nationals? Or any treaties that require us to grant permanent or indefinite leave to reside here?

    The government is making a complicated situation ever more complex.

  13. Mark, Edinburgh
    Posted November 24, 2010 at 10:46 am | Permalink

    Probably too low for SE England, but possibly OK for rest of UK, with the exception of offshore work.

    However there are many instances of this type of “market indicator control” failing in other sectors, e.g. energy retailing, because of the lack of will/ability to enforce and insuffcient penalties.

  14. Liz
    Posted November 24, 2010 at 10:48 am | Permalink

    I doubt if it will be enforced properly as none of the few existing rules are. It is difficult to believe too that firms cannot get the people they need from the existing workforce or unemployed . The Government should have looked harder at the motives of the lobby groups – cheap labour? foreign owned firms bringing in their own nationals? Those overseas takeovers coming back to haunt us?
    Then again why does the Government listen to vocal lobby groups more than the electorate for whom immigration was almost the top concern in the last election and will be at the next election too the way things are going?

  15. Simon
    Posted November 24, 2010 at 10:54 am | Permalink

    PS

    ….Many other nationals look after their own , unlike British Politicians .

    (Some people from overseas-ed) on an intra company transfer who has to recruit will always recruit another (person from abroad) . It will be a domino effect .

    Harriet Harman’s equality laws won’t be interested in that one .

    Aren’t MP’s meant to look after the interests of British Citizens over an above trans national companies and their customers ?

  16. Derek
    Posted November 24, 2010 at 11:12 am | Permalink

    Nowhere near high enough but this is only a sideshow.
    The tax and social welfare system in this country represents the longest national suicide note in history.Not only does it encorage mass immigration from within and outside the EU the strain imposed on our national finances is enormous.
    How much money are we sending to Poland through tax credits? How much money will we be sending to Eire through this mechanism which is so open to fraud.? What other little gems as yet lie uncovered?I understand that one can come to the UK and work for only 5 years in order to qualify for a state pension which can then be sent overseas. What is that costing us? Many people play the system very well indeed and I will be quite happy to provide more detailed examples if it were to be of interest to you.
    The large number of unskilled workers and their generally unintegrated large families are inevitably a heavy burden on the welfare system. How does this enrich the UK?
    It is so easy to be condemned if one raises any of this and it may already be too late but if we have a British as opposed to an international socialist Government there must be some speedy and radical reform.

  17. Julian
    Posted November 24, 2010 at 11:12 am | Permalink

    I’m not happy with it at all.
    British people have lost the work ethic and are largely unemployable.

    • Geoff not Hoon
      Posted November 24, 2010 at 3:48 pm | Permalink

      Julian, perhaps a bit of an over statement to say British people have lost the work ethic when a great many clearly have not. It would also be true to say too many have never had the work ethic let alone lost it. I know families in the midlands where three generations have never had proper jobs and, importantly, dont want them because for now they get by exceedingly well on benefits and the black economy.

      • Julian
        Posted November 24, 2010 at 5:52 pm | Permalink

        Geoff-It’s only a bit overstated (for effect!).
        The foreigners we employ want and need the work. Local people can take it or leave it.

  18. A.Sedgwick
    Posted November 24, 2010 at 11:15 am | Permalink

    I already have an apocalyptic view on the future of the world and we have few leaders, if any, to dissuade me from this notion. Overpopulation is the biggest threat to civilisation and our three main political parties continue to do their best to import it here beyond a stable society. We may have already reached the tipping point in this country. With 8 million economically inactive or underemployed why we need to recruit permanent employees from overseas with average talents is beyond me. The benefit trap is one explanation and another is low wages. The minimum wage was one of the few measures I supported in the Nulabour era, it needs to be steadily increased together with flat taxes. This is a much simpler route to getting people off benefits and into work.
    We are not talking about secondments and temporary personnel exchange in multi nationals here but exponential population growth in our country, officially the most densely populated in Europe.

  19. Neil Craig
    Posted November 24, 2010 at 11:37 am | Permalink

    Yes.

    Though the real gaping hole, apart from the one to the EU, is the ability to bring in spouses, children of spouses, parents of spouses etc etc. This ultimately has no limit.

  20. lola
    Posted November 24, 2010 at 11:53 am | Permalink

    No. Next cock up please.

  21. sm
    Posted November 24, 2010 at 12:03 pm | Permalink

    Obvioulsy this is non EU citizens.

    As long as its purpose is an ‘exchange’ for getting international experience, the visa is temporary and if the individual decides to stay the company must then pay a bounty of 3* gross salary earned in that period.

    This would then go to a training fund for that particular industry sector ran by a that sector to upskill the candidates in that area.

    There still should be an overall limit so it can be controlled properly and with an entrance visa fees of a £1000, with £300 annual fee. The visa applicant still needs to be points checked, character checked,health checked. The sponsoring company should not be owner controlled. Any breaches in the rules should be be payable by fines on the company and the cessation of further visa’s for that company or linked group.

    The purpose should not be to undercut current wage structures on the cheap hence i suspect £40k is low, if the skill was really in need, the salary would and should be higher (it would then attract local workers to train in that area paid for by an industry wide funded scheme, particularly sponsoring companies).

    The salary rate would then reach a competitive level for the UK/EU economic area.

    It seems unfair to non EU applicants but that’s what the EU is,a political stitchup, unfair and undemocratic.

  22. James Strachan
    Posted November 24, 2010 at 12:47 pm | Permalink

    I think that 40K is about right – providing that it is actually paid and not just written on a piece of paper.

    This limit will fend off a lot of computer programmers from India who are (a) badly paid by British standards and (b) wildly unproductive.

  23. lola
    Posted November 24, 2010 at 12:57 pm | Permalink

    I should expand on my previous comment. The immigration cap is like giving an aspirin for a brain tumour. It’ll treat the headache but not cure the problem. The reason we get immigration is because indiginous people have been priced out of work. The benefits system is a disincentive to work because more money is available on benefits than in work. And employment in the UK carries an overhead of between 50% and 60%. That is, it costs twice what it should do to put someone to work because of the overweening overhead of ‘the State’. And people employed by the state on fat salaries in ‘depressed areas’ are paid well over the odds hence making it impossible for private sector employers to compete. Let’s not forget that all these state jobs are tax consumers not tax payers. Tackle all these indiginous problems and immigration will fall. As regards high paid immigrants generally speaking they will be skilled people who add value. But here again is the indicator of the failure of the UK . The failure of our educational ‘system’ to enable people to gain skills in areas like engineering. This nonsense evidenced itself with IR35. Pre IR35 local people could cut their implicit overhead costs to their employers by using private service companies. IR35 stopped this and rather than collect more tax it just made loads of skilled people uncomeptitive and employers turned to other methods of employment cost control to keep themselves globally competitive – they set up divisions in India and ‘seconded’ skilled people on comeptitive wages to the UK.

    The immigration cap is a classic of tackling a problem in exactly the wrong way.

    The problem is the high tax, high regulated over-bureaucratised over- benefited UK economy. Tackle those evils and the immigration ‘problem’ will melt away.

    • Simon
      Posted November 24, 2010 at 3:42 pm | Permalink

      Lola ,

      Agree with what you say and would add that other things need to be done to bring the cost of living down so that high wages are not neccessary .

      In particular the parasitic financial services industry which appropriates such a high proportion of peoples earnings in interest on overpriced houses and fees on substandard investment products , especially pensions .

  24. Alte Fritz
    Posted November 24, 2010 at 1:24 pm | Permalink

    I cannot comment on an appropriate threshold, but Steve is right in his implication that overseas nationals tend, where possible, to avoid paying normal UK taxes through the medium of tax avoidance schemes.

    Issues like this can only cause resentment in the UK, but how does one address the problem that our own candidates pay fall short of what the employer needs? I do not see how the state reconciles the decisions of employers, which are no business of the state, and the level of immigration which is.

    • Simon
      Posted November 24, 2010 at 3:10 pm | Permalink

      Would you want to trust a hospital which employed the cheapest doctors and nurses it could find ?

      Companies which take the same attitude towards their data and information they derive from it deserve what they have coming .

      Unemployment rates amongst I.T. graduates are almost twice those accross all graduates as a whole .

      It’s not the ICT’s for trans national corporations (TNC’s) which bring a couple of people to the UK which are the problem .

      Over half of all ICT’s are for I.T. posts and the majority are lodged by a very small number of huge foreign based services companies like Infosys and Tata which each apply for thousands every year .

      These jobs are not even advertised in the UK as the TNC’s concerned have no interest in employing British workers even if they are cheaper . For a start they can’t converse in the native tongue with the sweatshop backoffice overseas .

      I dispute that the pay of our own local candidates falls short of what employers “need” . It’s more a matter of what the big customers (Banks , Marks and Sparks etc) of these TNC’s want and they know govt will roll over at the slightest excuse .

      Ever increasing use of migrant labour and attendent increase of indigeneous unemployment is not in the long term interest of the British people .

      Money needs to circulate in our own economy a few times where it can do some good rather than haemorrage overseas .

  25. Robin Smith
    Posted November 24, 2010 at 1:31 pm | Permalink

    I would suggest more certainty of the original presumption before proceeding to a more complex question. That is:

    1) What force is stopping locals from doing the lower paid jobs in the first place? It must be a very powerful one surely?
    2) And why are locals not happy lower paid jobs are being taken up, leaving them to move on and meet this new greater demand in higher paying jobs elsewhere?

    Until these question are answered
    we cannot proceed to a more complex question without risking more confusion.

    Some logic for this can be found at the following links:

  26. Stuart Fairney
    Posted November 24, 2010 at 1:33 pm | Permalink

    I will perhaps be alone in this, but c’est la vie; the libertarian in me favours unrestricted immigration

    • rose
      Posted November 24, 2010 at 2:38 pm | Permalink

      Unrestricted immigration as a libertarian principle only works without a welfare state.

      • Stuart Fairney
        Posted November 25, 2010 at 7:06 am | Permalink

        Yes indeed, quite correct, I do not support the welfare state since the model has clearly failed (though don’t expect any mainstream politicians to notice, say so or do anything about it).

        • rose
          Posted November 25, 2010 at 11:45 am | Permalink

          And even then, a more liberal and humane criminal justice system distorts the balance so that many more criminals and terrorists are encouraged to base themselves here than would otherwise be the case. What is your answer to that conundrum?

        • Stuart Fairney
          Posted November 25, 2010 at 3:09 pm | Permalink

          I clearly had not reckoned with the honesty of the admirable Howard Flight. I see DC couldn’t run away fast enough!

  27. Rob
    Posted November 24, 2010 at 2:06 pm | Permalink

    The number seems alright to me, but the time limit of a year does not.

    Does this not mean simply that there’ll be a lot of rotating “internships” going on as companies bring people over for one year only before sending them on their way?

  28. D K McGregor
    Posted November 24, 2010 at 2:07 pm | Permalink

    It’s a start , but how long will it be before the slippery employers devise circular routes for the excess salary back into their own pockets? As usual , it will come down to how well legislated and enforced it is to make any difference at all. I am not holding my breath.

  29. Gordon Mccann
    Posted November 24, 2010 at 2:26 pm | Permalink

    What I find most concerning about the rush for businesses to fill job opportnuities from abroad is;
    What happened to our British workers? and why is the educational system not providing people of the correct educational standard to fill these jobs?

    We are spending many billions of pounds to provide people with the qualifications that are not need to improve our competative edge.

    Until we match the needs of commerce with the education of our population we will be left behind. Especially by the rapidly rising Eastern economies.

  30. Edward Barnes
    Posted November 24, 2010 at 2:30 pm | Permalink

    I thought that the base salary figure announced was £24k for ICTs staying less than one year, this figure to include “allowances” (i.e. expenses) as at present.

    Apart from making the observation that this minimum (even without the allowances) is far too low for “skilled” workers, attention should be drawn to various abuses and loopholes, none of which are addressed in the announced changes.

    There appears to be no monitoring that transferred staff actually receive the salaries presented on their applications, nor is there verification that their employers pay a commensurate amount of NICs and Income Tax. Even were the same jobs to be offered for local recruitment at the same rates, there is a clear financial advantage to employers to going the ICT route.

    Secondly, there is no monitoring, but plenty of evidence that vacancies filled by ICTs are not being advertised for local recruitment and hence there is scant justification that these roles cannot be filled by local staff. Since a significant proportion of ICTs are in IT roles, where UK graduate unemployment reaches its apogee, it is difficult to believe that no suitably-qualified UK-based candidates exist.

    The conclusion that ICTs will continue to provide a stream of low-cost labour in areas where there is no UK shortage appears to be perpetuated, despite the changes announced yesterday.

  31. Andrew
    Posted November 24, 2010 at 2:44 pm | Permalink

    Alas the suggestion will not fix the problem of ICT abuse:
    a) Only putting the £40k minimum salary on stays of over a year is silly and it should apply for less than a year too. It is just creating another loophole that will be abused. The ICT route should not be used to bring in cheap labour whether it is for 354 days or 5 years. There is no advertising of these jobs so UK workers are excluded from them.
    b) The minimum salary needs to exclude tax free allowances (which are legitimate business expenses and not remuneration). These should not count towards the salary. Someone transferred between offices of the same company within the UK would get these on top of their UK salary and not instead of it.
    c) There needs to be some policing effort. Especially on the part of HMRC to make sure that they are getting NI and IT on the at least the 40k minimum salary.
    d) There really does need to be a lot of effort put in to ensure that there are low-level opportunities for UK IT graduates and that the financial incentives are there to train these people instead of shipping-in people from overseas- otherwise in 5 years time there will be no experienced UK people to move into more senior roles and build and entrepreneurial IT industry in the UK,

  32. David
    Posted November 24, 2010 at 2:48 pm | Permalink

    It is a start in the right direction. At the time when we’re all hoping that the displaced public sector workers are subsequently employed in the private sector, it’s hard to find any justification for allowing non-EU workers to take work that could be done by EU workers.

    Specifically in IT, the problem is that the tier 2 visa route has been massively abused by a few large companies where it is clearly illegal for a non-EU worker to replace what is referred to as a ‘settled worker’ or to take the job that could be done by a ‘settled worker’: A senior manager, i.e. reporting to the company’s board (which is easy to identify) or someone with uncommon skills (easy to abuse). These large companies have substantial lobbying power but they do not have any interest in British Jobs.

    I don’t understand why the £40K minimum salary for ICTs only comes into affect after 12 months? Surely this will allow the abuse to continue?

    It would make much more sense to define percentage limit of UK-based permanent employees that must be maintained such that, for example, ICTs may not take up more than 5% of the employee base.

  33. Alan Wheatley
    Posted November 24, 2010 at 4:25 pm | Permalink

    This seems to me to have the characteristics of a crude fudge.

    If it can be argued that a vacancy in the UK should be filled by a UK citizen, assuming a suitable person is available, then it makes no sense to impose an arbitrary salary threshold above which restrictions do not apply. It might be thought that as part of the numbers game a suitably high threshold will limit the number of transfers, but even this is dubious as it is likely the more highly paid are the employees a company would most wish to transfer as they are more likely to be key to what ever business initiative a company is trying to achieve.

    I would also think a more relevant criterion would be the length of the transfer. Time limited transfers, where the transferee (and those accompanying them) can not acquire a right of abode or rights that UK citizens benefit from would seem to be reasonable no matter what the salary.

    It seems to me this is where cases should be judged on their merits, with the company wishing to make the transfer arguing the case to be allowed to do so. For instance, a team of employees transferred to help set up a local manufacturing plant would stay until the locally employed workforce was up to speed. Contrast a journalist working as a foreign correspondent would not expect to hand over to a locally employed person as the essence of the job is that it is undertaken by a foreigner.

    So, what do I think. Not a lot. But perhaps at the end of the day it will matter little as the numbers affected will be dominated by EU citizens, who are not affected by the regulation.

  34. Andrew
    Posted November 24, 2010 at 4:31 pm | Permalink

    As a career software developer, I am intensely disappointed by the exemptions from the Immigration cap announced for intra-company transfer (ICT) work permits.

    ICT permits have a long and well documented histoy of abuse by the large (overseas-ed) IT Service Providers, who exploit them to supply inexperienced and low
    paid IT graduates to large UK companies. Over the last decade around 20000 (overseas-ed) IT staff per year have been imported in this manner, despite UK IT
    graduates suffering consistently high levels of unemployment (aprox 17% at the moment).

    Instances of this abuse are well documented : see

    UK IT workers train overseas replacements

    and

    (other unchecked links left out-ed)

    As Marilyn Davidson, Director of the Association of Professional Staffing Companies ( a UK Recruitment industry body) coments: “Most workers coming to the UK on intra-company transfers have generic skill sets that are readily available in this country. We are certain that a large proportion of these roles,
    if advertised at UK market rates, could be filled by the resident labour market,”

    It is also striking that employees of just three or four large …. companies account for the vast bulk of these ICT permits – are we really to believe that they each employ thousands of key senior personnel with knowledge of their employers’ business that is in critical demand by large well-known UK companies ?

    The lofty assumption is that these work permit schemes are all about attracting hughly skilled people, but in reality the majority of the ICT permits granted in the IT sector go to recent IT graduates with very little experience – believe me, I’ve had to train some of them !

    To illustrate this see the Telegraph report below that shows that a work permit intended attracting the brightest and the best from outside the European Union actually ended up being granted to shop assistants and security guards!

    Just one in four highly skilled migrants in skilled jobs

    In the absence of any special skills, these people get the work because they’re cheaper. In companies I have worked at, there is rarely any pretense about this – the presence of (overseas ed) developers on site is openly acknowledged as a cost saving initiative !

    Mr Cameron should remember that he was not elected on a platform of devaluing the skills of UK nationals by allowing an unchecked influx of cheap labour – quite the opposite. He was also not elected to sacrafice the careers of consituents and tax payers to the corporate IT lobby, who have been scaremongering so vocally on this issue of late.

    Allowing this scandal to continue unchecked would represent a cynical and flagrant breach of trust by a government that could not have been clearer in it’s promises to check such shameless exploitation when it was elected. Such base behaviour was of course expected of the the last Labour administration – but the country expects much better of the coalition government.

    Andrew , Sussex

  35. Simon
    Posted November 24, 2010 at 4:58 pm | Permalink

    The £40k limit for ICT visas is a red herring .

    Indian Citizens will be able to work on UK soil for an India service company providing I.T. or any other service as if they were EU citzens for the UK minimum wage of £6 an hour .

    This all happens in December when the EU sign the free trade agreement which includes GATS mode-4 arrangements that Hague , Osborne and Cable love so much with India .

    If I’m mistaken please correct me Mr Redwood .

  36. Paul B
    Posted November 24, 2010 at 5:20 pm | Permalink

    How can a debt laden graduate compete with a ICT-er who pays minimal income tax and for whom the employer pays no NI?

  37. Nick Price
    Posted November 24, 2010 at 7:10 pm | Permalink

    There is wide scale abuse of the Tier 2 ICT system in the IT industry from low skilled staff being transferred from (abroad-ed), and displacing highly skilled UK staff by being paid lower salaries of 15 to 18K.

    Blue chip companies are being hit with very poor IT implementations from low skilled ICT staff that are reducing the companies change agility, and providing very poor Web applications for their consumers and suppliers. The result is that UK companies are becoming uncompetitive compared to foreign international companies due to deficiencies in their electronic services capability.

    Government is also being hit with a rapid rise in failed IT projects, which are predominately staffed by low skilled ICT staff producing designs that are sent off shore.

    – 34,365 ICT visas were issued to ‘software professionals between Nov 08 and July 10
    – IT is not on the skills short list
    – Association of Professional Staffing Companies (APSCo) “there are no recognised skill shortages in the UK IT sector and that there is a pre-existing pool of IT labour in the UK” (Sept 2010)
    – APSCo “ICTs are used because it is easy and saves on employment costs. Employers don’t want the expense of hiring UK or EU nationals. This is nothing to do with lack of skills in the UK workforce.”

    Employment hit from ICT visas:
    – 17% unemployment rate for IT graduates, highest of any graduates. (source: BBC News
    – 60% drop in the number of undergraduates on Computer Science course over the last 5 years even though the industry is growing at over 20% a year. (source: association of vice-chancellors)

    Tax Hit of ICT visas:
    – No NI is payable for the first 52 weeks (source HMRC
    – Double tax treaty with Indian is used to avoid PAYE tax for the first 6 months
    – Higher rate tax paying UK employees are being replaced with multiple ICT workers on just above minimum wage salaries.
    – Dependents are brought over who are using the NHS and schooling.
    – ICT sponsors can claim £1,500 to £1,800 per month in tax free allowances from HMRC without having to provide receipts that the expense was actually incurred. This is used to reduce the corporation tax paid.

    UK Defense & Intellectual Capital Hit
    – Cyber warefare defence requires skilled UK national IT professionals.
    – Police cyber crime fighting likewise.
    – Most blue chip companies have 40 to 60% of their business processes either automated or semi-automated with IT systems. The intellectual capital of the company is embedded in the architect and development leads. This is lost with ICT staff going back offshore.

    How do ICT sponsoring companies fool the UKBA ?
    – Salaries of £34K are being stated on visa applications but salaries of only 15 to 18K are actually being paid when the ICT visa worker is in the UK.
    – This is done by adding expenses such as air fares and accommodation to their salary on their P60s, so that HMRC don’t know what the true salary being paid is.

    I have seen personally in a number of blue chip companies rolling redundancy programmes for UK IT staff who are subsequently asked to mentor and train up low skilled ICT visa staff who then take over their jobs.

    Many of these blue chip companies have canceled their IT graduate schemes. This is now spreading to other graduate professionals.

    The changes announced by the government yesterday have not addressed any of these abuses and issues, as:
    – A salary of 24K can be paid for ICT staff applying for 12 months visas, allowing them to get around the new 40K level
    – UKBA have an existing minimum salary levels, which means that if it was enforced ICT IT staff should be on a minimum salary of 41K for the role they are performing. This is not being enforced or addressed.
    – Unlimited number of ICT visas can be applied for.
    – The massive abuses of expenses hasn’t been tackled at all.

    I worry what graduate jobs will be available for my son, as he will not have the same opportunities that I did, as graduate recruitment schemes and jobs are rapidly disappearing due to ICT visas.

    • Simon
      Posted November 27, 2010 at 8:24 am | Permalink

      If the number of people taking computer science courses had not dropped 60% in the last 5 years the rate of unemployment would be higher than 17% .

      How many of the other 83% are doing Mc Jobs ?

      Lets hope less and less people waste their time doing CS courses and choose something more productive like law or PPE .

      If ICT sponsors can claim £1,500 to £1,800 per month in tax free allowances from HMRC without having to provide receipts , aren’t’ all the airline tickets and other expenses going to be cross-charged to the Indian arm to offset corporation tax there ?

      Thus the allowance becomes a straight subsidy of 28% of (12 * £1,800) = £6,048 .

      I can’t reach any conclusion other than it is not by accident that the deck is being stacked against the British Worker .

  38. Seymore Bush
    Posted November 24, 2010 at 9:00 pm | Permalink

    John

    I have been working in the IT industry for over 23 years. I have worked for many companies mainly multinationals. In the last 10 years or so, there was initially a push to outsource as many jobs overseas as possible, mainly to India, for a number of companies this approach did work very well, hence they decided to bring overseas workers to the UK via ICT scheme.

    In the large multinationals, the UK work force was displaced by the overseas workers who were often made to train the overseas workers before been made redundant. This has been happening for the last 10 years or so.

    The ICT workers are brought in are mostly at a very junior level, positions that can easily be filled by graduates from UK , any maths , science , engineering graduate could be trained for these roles, within a month or two, even computing was not their prime subject of study, I should know I graduated in Chemistry.

    The companies who utilise their overseas workers have no intention of employing any workers from UK as they are simply more expensive. Simply look at the number of UK employees companies like (companies named-ed) to number of ICT Visa’s issued. There have many years to build up their workforce in UK, but failed to do so.

    ICT workers do not pay any tax or NI in the UK, hence at times of hardship to many people in UK, its very difficult to work out how this is fair. The government keeps saying “Were all in this together !” It cant be fair to give tax free jobs to overseas worker and keep UK worker unemployed. This tax advantage and low salary makes it very easy to undercut the UK workers on price.

    I have worked in large companies where ICT’s makes up 90 – 97% of the department, some of these department are more than 250 people. These are not specialist in their field, but doing general testing and development duties.

    Yesterdays announcement was a step in the right direction in introducing a minimum salary of 40K, however it should have applied to ALL ICT Visas. It make very little sense to exclude the the first year. The overseas companies will simply keep recycling workers, a few months break before applying for new visa.

    There are 40K plus unemployed IT workers in the UK, surely it make sense to support these people to get back to employment, why would you not do this, makes no sense.

    I believe there is a place for Inter Company Transfers, however it should be for very senior positions, not for junior staff as currently is case.

    Kindest Regards

    Seymore Bush

  39. Steve P
    Posted November 24, 2010 at 10:07 pm | Permalink

    John,

    I think the salary limit is ok. The best idea I’ve seen is to auction off a limited number of ICT visa’s to the highest bidder. This would ensure the rampant (word left out) ICT abuse that is taking place at present would stop overnight.

  40. Andrew Eastwells
    Posted November 25, 2010 at 6:10 am | Permalink

    The low salary limit proposed for permits in the first year is an implicit acknowledgement that a permit intended for senior executives and specialists with niche compaly skills is being abused to import low paid inexperienced staff.

    Like the Highly Skilled Migrant visa, most Intian Intra-company transfer permit holders are only in the UK because they are cheaper – just like the Highly Skilled Migrant permit, there is widespread abuse – see:
    (Two links I could not get to work-ed)
    and
    Just one in four highly skilled migrants in skilled jobs

    The lofty assumption is that these work permit schemes are all about skills, but in reality the majority of the ICT permits granted in the IT sector go to recent IT graduates with very little experience . Similarly the Telegraph report above shows that a work permit intended attracting the brightest and the best from outside the European Union actually ended up being granted to shop assistants and security guards!

    In the absence of any special skills, these people get the work because they’re cheaper. In companies I have worked at, there is rarely any pretense about this – the presence of Indian developers on site is openly acknowledged as a cost saving initiative !

    Andrew – Sussex

  41. Iain Gill
    Posted November 25, 2010 at 6:14 pm | Permalink

    http://rds.homeoffice.gov.uk/rds/pdfs10/immiq310tabs.xls

    home office announced new immigration figures

    ICT visas are up by a 3rd from third quarter 2009 to third quarter 2010

  42. Bazman
    Posted November 25, 2010 at 8:48 pm | Permalink

    Red herring. Applies only to non EU citizens. In the real world employers undercut local labour by using young desperate people such as East Europeans, often Russians, that live five to a room and five to a car and don’t work for 40k. This combined with a revolving door recruiting policy and use of employment agencies to circumvent existing employment laws not to mention a cavalier attitude to service and quality of product is what has produced the workless situation of many unemployed people in Britain today. Prices have trebled and the price of property has trebled just to add the the misery for the average person on less than 20k. Which I would say would be the vast majority of the population. Little wonder the benefit bill is so big. It’s subsidising Private industry and tax evasion.
    Have nothing and be happy with it. What would the average wage be in Britain be if there was no minimum wage all you people who don’t think 40k is much money? You must be on The Starship Enterprise Allowance Scheme. Beam me up Scotty.

    Reply: Russians are non EU citizens I believe.

    • Gary Burgess
      Posted November 26, 2010 at 9:54 am | Permalink

      Whether it is strawberry pickers from Poland or software engineers from India, businesses will bring in non-UK workers because it generates more profits (allegation left out)
      It is more profitable because it is cheaper than employing or training up a similar calibre UK worker. It is cheaper partly because they can be paid less (and will accept poorer working conditions) but also because there are tax and national insurance savings (e.g. the employer does not have to pay employer NI for intra company transfers for the first 52 weeks).

      Businesses are not charities. They would not sponsor workers from outside Europe unless it was more profitable to do so. It gives them a competitive advantage over companies that employ UK workers, so they grow, and companies that employ UK workers shrink, or go out of business, or start employing non-UK workers to compete.

      The question is whether it is in the best interests of the UK to allow this.

    • Iain Gill
      Posted November 26, 2010 at 10:03 am | Permalink

      actually a number of russians were clever enough to be in East Germany when the wall came down, and gained EC German passports at that time, I know because I’ve worked with them, seems there was a fairly relaxed attitude to giving German passports to whoever was in East Germany at the time

      but this is a very side issue on this subject

      • Bazman
        Posted November 26, 2010 at 7:38 pm | Permalink

        Basically they do what they can get away with for as long as they can get away with it? I’ll bear it in mind as I am also not a charity and like business not desperate. Common sense tells us this is not in the best interests of the UK, or at least the majority of the population.

      • Mark
        Posted November 26, 2010 at 9:03 pm | Permalink

        I’ve encountered Russians who masquerade as Baltic nation nationals – the Kaliningrad corridor offers scope, as conversations in their native language revealed.

    • Bazman
      Posted November 26, 2010 at 7:50 pm | Permalink

      A large number of Russians are the ethnic majority in Eastern European states and historically seen as an oppressive occupying force. This allows them to obtain passports to western Europe. Shall we say lower class on this site? With bland Baltic accents. Russia is the gateway. “I’m Brian and so’s my wife!”

  43. David
    Posted November 27, 2010 at 3:00 pm | Permalink

    John,

    Have a look at IBM and other software providers. They are using (good) Indian IT staff (more than likely on UK Government contracts!!) They pay them 1/3 of UK rates.

    • Iain Gill
      Posted November 27, 2010 at 5:38 pm | Permalink

      Yes (named companies) etc are bringing in many IT workers undercutting Brits in the workforce, (these named companies) etc have essentially setup mini outsourcing outfits of their own

      Larger numbers are the Indian outsourcers themselves who bring in many thousands many of which are subcontracted immediately into another company in the UK – and of course because they are day to day working in another company any “uncommon knowledge” that they have of their host company is nonsense as they are just contracted into another company as cheap generic workers

      • Iain Gill
        Posted November 27, 2010 at 5:45 pm | Permalink

        which brings to mind another simple rule which could be introduced, ban use of ICT visas to bring in staff which are then subcontracted into other companies

        • Gary Burgess
          Posted November 29, 2010 at 5:22 pm | Permalink

          … which is what the US tried to do with the 2004 L1 Visa Act. The L1 visa is the US intra company transfer visa.

          This was after testimony to the senate by IT workers such as Pat Fluno on how they had been replaced by workers provided by TCS:
          http://judiciary.senate.gov/hearings/testimony.cfm?id=878&wit_id=2515

          It is worth reading and many UK IT workers will recognise what Ms Fluno describes in the US in 2003 has been common place in the UK for years.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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