Reply from Damian Green MP, Minister for Immigration: ICTs

Thank you for your letter of 30 November 2010 to the Home Secretary enclosing comments from readers of your website about the Intra-Company Transfer (ICT) route.  Your letter has been passed to me to reply.  I am sorry for the delay in responding to you.

We are clear that the UK can benefit from immigration, but not uncontrolled immigration.  Over the summer we consulted on our proposals to ensure that we took a wide range of views into account.  One of the key questions that we asked was whether ICTs should be included in the limit.

The ICT route makes a substantial contribution to inward investment in the UK, boosting our economy and creating jobs for resident workers, not just migrant workers.  UK workers also benefit from working with the most highly skilled workers from around the world and sharing expertise.  We are also bound by our international trade commitments which do not allow us to, for example, require that ICT posts be advertised or that workers must have more than one year’s experience with their company before being transferred.

However, ICTs account for a significant proportion of Tier 2 numbers and those who come to the UK for an extended period will inevitably draw on public services.  We have also taken on board concerns that the route has been used by some companies to undercut and fill jobs that could be done by resident workers, particularly in the IT sector.  It would be remiss of us not to consider how ICTs should be accounted for in a policy for controlling migration.

Whilst we have decided, on balance, that ICTs will be excluded from our limit, we are making other reforms to the route to ensure that it is used as intended.  We will raise standards by only allowing senior managers and specialists, the people who the route was originally intended for, to enter for up to five years. These staff will need to be earning at least £40,000.  We will allow other ICT workers earning between £24,000 and £40,000 to enter the UK, but only for up to 12 months, after which they will need to spend a minimum period overseas before they will be allowed to return. In addition, we will remove a loophole that currently allows long-term transferees to stay in the UK for more than five years.

The minimum salary rates above apply to all ICT posts, not just the IT sector (where salaries are relatively high compared to many other sectors). In addition, for each individual type of job, employers must pay the appropriate salary rate that would be paid to resident workers, as specified in the UK Border Agency’s guidance for sponsors.

We do not think that employers should be penalised for ensuring their workers are properly accommodated in the UK.  Accommodation, through rent or mortgage payments, makes up a significant proportion of most workers’ expenditure, and we think that it is right that some level of accommodation allowances should be included.  We do not take into account business expenditures, such as travel to and from the migrant’s home country.

Salaries also cannot be artificially inflated on the basis of tax not paid.  If a sponsoring employer states that they are paying £40,000, then that is what they must actually be paying to the worker.  If the company does not pay the stated salary, they risk losing their sponsor license.

Many of the points raised by your readers relate to international tax agreements, which are not part of the Home Office’s remit.  Migrant workers benefit from international tax agreements in the same way that UK workers benefit when employed overseas.  Further information is available on the Directgov website at: www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10026136.

The changes we are making will help to stabilise the numbers coming through ICTs, which had previously been rising.  The changes apply to all ICTs, including those covered by the EU-India Free Trade Agreement.  They will ensure that we continue to give certainty to businesses that they will be able to recruit people with the skills they need, without admitting migrant workers to do jobs that could be done by resident workers.

Yours ever 

Damian Green MP

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43 Comments

  1. Peter M.
    Posted January 25, 2011 at 2:53 pm | Permalink

    Very welcome news. The trouble with ICT started for me back in 2003, when Gordon Brown was saying (on advice from Digby Jones, then chairman of the CBI) that Britain faced a chronic skills shortage. At the time, I was recently unemployed. Why was I out of work when my skills were patently top-notch? Because my existing know-how had been transferred wholesale to (businesses-ed), set-up in Bangalore.

    Industrial cost-saving initiatives together with rampant inward migration meant that thousands of highly skilled individuals in Britain’s private sector were priced-out of the domestic market. With no plan to cover the social fallout, Labour seemed to equate Industry’s demand for low-cost labour with a ruse they decide to brand as ‘skills shortage’.

    I spent the next 5 years trying to scramble back to value. Or as some prominent Indians would say in a classic business tome of the time, entitled: ‘Who stole my cheese?’
    I tried to survive this progressive ordeal by finding new avenues of personal value that I could resell. What this really meant is that I stopped delivering for large industrials, for good. I now work for SME and will never go back to work for an International corp.

  2. Lindsay McDougall
    Posted January 25, 2011 at 2:56 pm | Permalink

    It’s a bit complicated, isn’t it, and you can bet that the wide boys will stay two steps ahead of the public sector workers meant to monitor things. Inclusion of ICTs within the limit would be much simpler. It might encourage British companies to train up British workers so that there isn’t a skills deficit.

  3. Iain Gill
    Posted January 25, 2011 at 3:00 pm | Permalink

    ABSOLUTE DISGRACE

  4. Gary
    Posted January 25, 2011 at 4:14 pm | Permalink

    Firstly, pethaps Damian Green should read the commentary of the research director of SSL. SSL produce research on the UK IT jobs market.
    http://www.jobadswatch.co.uk/direct/commentary.pdf

    He could also speak to the IT industry expert Richard Holway who has similar views on how the visa system is damaging the UK IT industry.

    Secondly, I do not think Damian Green understands how the allowances work. As I understand it they are mostly guaranteed rounded sum allowances for section 338 ITEPA 2003 expenses (i.e. travel and related subsistence and accommodation) for workers seconded to a temporary place of work for less than 2 years. The Migration Advisory Committee said it was common for intra company transferees to apply for 3 year visas but tell HMRC that the stay was for 1 year 364 days. These expenses would apply to UK workers sent to other offices of the same company or client sites in the UK but they would be on top of UK salaries. Requiring companies to pay them on top of rather than instead of salary is not penalising them but simply putting them on an equal footing.

    Thirdly, most allowances which the UKBA count towards salary would not count towards the national minimum wage. So we have the ludicrous situation were someone can be paid less than the NMW but easily pass the £24,000 minimum salary.

    • Simon
      Posted January 26, 2011 at 2:02 pm | Permalink

      That link to the Jobswatch site is excellent .

      I read it and thought everything looked incongruously rosy until I reached the summary where the crux of it is dropped like a bomb shell .

  5. Dennis Boater
    Posted January 25, 2011 at 4:21 pm | Permalink

    I still find it hard to believe that we have to bring in so called skilled workers from places like India,especially in the IT industries,when we have many unemployed in this Country. A complete ban on immigration is required until we have a lower,much lower,unemployment set of figures.What happened to British jobs for British workers?

    • lifelogic
      Posted January 25, 2011 at 8:55 pm | Permalink

      Clearly the government wants British workers to leave, work on the black market, be unemployed and be on benefits. What other explanation can there be for their policies?

    • Robert K
      Posted January 26, 2011 at 10:30 am | Permalink

      Indian workers in Bangalore don’t need to come to the UK – the whole point is that the tasks they do have been outsourced remotely to people who are as skilled as their UK counterparts but are prepared to work for less. This benefits the owners of the business that is doing the outsourcing and cuts costs to that business’s customers. The consequent efficiency frees capital for allocation into productive economic activity that benefits everyone. There is no such thing as a “British job”. It’s a phoney concept invented by politicians to curry favour with the electorate. You just had to hear Gordon Brown stand up in the last Parliament and make the declaration “British jobs for British workers” to see that in action. Jobs are offered by enterprises that need employees with the right level of skill and commitment at the right price. They should be free to shop around.

      • Simon
        Posted January 26, 2011 at 6:26 pm | Permalink

        Robert ,

        You say “The consequent efficiency frees capital for allocation into productive economic activity that benefits everyone.”

        I believe you are very wrong about this and that offshoring actually benefits very few people in the UK in the long term .

        This “productive economic activity” sounds good but could you be more specific please , might it give any solace to the growing ranks of the skilled unemployed ?

        You are right that pretty much everything in I.T. which can be offshored has already been offshored .

        There are however some jobs which can be done much more efficiently onshore because they require liason with user organisations . Typically higher level analysis and design jobs .

        Indian outsourcers recognise this so are (using -ed) the ICT route to relocate staff to the UK to take away the few remaining jobs .

        What is so unfair is the public subsidies and tax breaks given to companies for bringing cheap labour from abroad to displace British workers .

        You have to pay unemployment benefits for these displaced British Workers which makes you less cost effective and increases your chances of being displaced .

  6. Gary
    Posted January 25, 2011 at 4:41 pm | Permalink

    Damian Green has effectively said that those paid less than £40,000 (who will still be allowed in after April without restrictions for up to a year) are migrants that the route WAS NOT originally intended for. They are not the specialists (with uncommon knowledge) and senior managers that qualify under international agreements on intra corporate transfers. They are not the “most highly skilled workers from around the world ” that would benefit the UK. They are mostly cheap temporary workers who are sent to work at client sites and displace UK workers.

    There is no reason why they should be allowed to come to work in the UK without the need to advertise the job. They contribute little taxes to the UK Exchequer. There is no reason that they should not be capped (preferably at zero).

    I do think Damian Green is right that the ICT route does encourage foreign direct investment. However if foreign companies choose to “invest” in the UK and use the ICT route to supply most of their UK workforce, then I do not think that is the sort of FDI that the UK needs.

  7. Javelin
    Posted January 25, 2011 at 4:41 pm | Permalink

    Let me also add non-EU workers should not be allowed to stay in the UK long enough to claim residency or citizenship even if they are in the 5% or workers allowed.

    I also think that the sponsering company should pay additional National Insurance to non-EU workers, say 10% for themselves and each dependent, to cover the cost of hospitals and schools they are using.

    • Iain Gill
      Posted January 25, 2011 at 5:34 pm | Permalink

      so many things to be said

      even if they paid the same NI as a brit or more they would still not be paying enough to cover hospitals and schools as far too many bring in wifes and children already in need of expensive treatement before they get here, they should be told to buy their own health insurance at commercial rates

      and of course some of the outsourcing companies are paying tax in tax havens rather than here

      Re “UK workers also benefit from working with the most highly skilled workers from around the world and sharing expertise” yes in the IT business that mainly means Americans. (words left out) Hardly any Americans come in on ICT visas.

      and of course Mr Green has failed to grasp how much prime British intellectual property is being siphoned off abroad by the Indian outsourcers only to be used against us

    • Bazman
      Posted January 29, 2011 at 4:58 pm | Permalink

      Business cannot afford any of this is if you remember the standard reply. They have still yet to recover from the cost of child labour laws which proved a major blow of unnecessary red tape and expense to the Chimney sweeping industry not to mention the robbing of incomes of the families child sweeps.

  8. Mr Davies
    Posted January 25, 2011 at 5:25 pm | Permalink

    We used to have a successful and valuable IT industry and then nuLabour gave it to India. It is a failure of this tory-lead government that they are not correcting the situation. We only have the Finance industry left and everyone is so busy banker-bashing that there is a danger that will go too. Then who will pay the £1 trillion deficit?

    We have millions unemployed and they are still bringing in immigrants!

    Shame on all the politicians.

    • Robert K
      Posted January 26, 2011 at 10:37 am | Permalink

      NuLabour did not give our IT industry to India. Indian outsourcing companies created cost competitive services that were attractive to UK enterprises. If the argument is true that the West has a technological advantage over the BRIC countries because our economies are more advanced, then we should have no problem in losing commoditised businesses like call centres to India. Workers here, should they wish to earn six times as much as a call centre worker in Bangalore, need to develop skills that make them six times as attractive to an employer.
      I agree with you about the ongoing assault on our financial services industry, however.

      • Winston Smith
        Posted January 26, 2011 at 11:53 am | Permalink

        To demonstrate the farcical policies on employment and immigration, I would like to invite you to a call centre in London, close to where I live. The staff are, almost exclusively, recent South Asian and African migrants. I have talked to some of them and it seems many are here on student visas, working for minimum wage. Our regulations are so lax that it is no longer necessary to outsource to an overseas call centre, you just import the workers to a domestic site. Meanwhile, local youth unemployment runs at 25%. We have serious problems.

  9. Jason
    Posted January 25, 2011 at 5:47 pm | Permalink

    Why are ICT numbers still excluded from the cap? When does this come into effect? What about the current ICT visa holders that are currently here?

  10. Electro-Kevin
    Posted January 25, 2011 at 5:48 pm | Permalink

    Is £40k a ‘senior management’ wage ? It sounds like an undercutting of junior management wages in many professions at that rate. It doesn’t qualify for top rate tax (not that it should.)

    More broken promises.

    Slightly off topic: how do we reconcile mass immigration with meeting carbon emission targets ?

  11. ian wragg
    Posted January 25, 2011 at 5:58 pm | Permalink

    I worked overseas for nearly 25 years. At no time was it forseen that I should or could claim residency.
    My employers had to pay for medical, educational and other costs.
    If my contract wasn’t renewed I left the country within 7 days.
    If employers bringing in ICTs etc had to pay for Public Service provision the numbers would drop rapidly.

    • Simon
      Posted January 26, 2011 at 10:09 am | Permalink

      Are you saying that there is a lack of will on the part of our elected representatives to do anything about the abuses of ICT’s ?

  12. JR
    Posted January 25, 2011 at 6:54 pm | Permalink

    To add to the immigration debate why do we not have a law that rescinds the British Citizenship of any immigrant who commits an offence which gets a custodial sentence over 12 months and deport them and their family. I believe France has just voted in such a law so if they can why not us?

  13. Simon
    Posted January 25, 2011 at 7:26 pm | Permalink

    J.R. well done for getting some anwers .

    Surely the only way the state can guarantee a person is getting paid £40,000 a year is by them paying tax on it in this country . Is that going to happen ?

    The system still looks far too easy to abuse ; I don’t see any new safeguards to prevent this .

    In particular the “accomodation allowance” , it’s all to0 easy to set this at a level which exceeds actual accommodation costs . Even receipted accommodation costs are easy to overstate in the case of shared houses .

    If an accommodation allowance of £21,000 a year is available without providing evidence of expenses then a migrant worker who is staying in the cheapest B+B in Wokingham which costs only £5,200/year will be getting a £15,800 helping hand towards the employees £40,000K costs with the result that they are actually only paying them £24,200 .

    Or have I misunderstood something ?

  14. linda kaucher
    Posted January 25, 2011 at 7:32 pm | Permalink

    So why is the whole thing about the EU/India Free Trade Agreement, and especially the importance to that Agreement of EU concessions on Mode 4, being kept so secret from UK workers who will be hard hit?

    The EU’s trade lawyer has admitted that Mode 4 access for its transnationals is the only thing India is asking for in this, and that India wont sign up without it.

    And although this is an ‘EU Agreement’ other information that has emerged shows that the UK is prepared to take the lions share of the Mode 4 commitment, in effect allow the entry of an unlimited amount of ICTs and Contractual Service Suppliers, another Mode 4 ‘category’.

    So – the Damian Green needs to be asked:
    ‘WHY, IF IT’S ALL SO INNOCUOUS AND BENEFICIAL, IS IT ALL BEING KEPT SO SECRET, PRESUMABLY UNTIL THE AGREEMENT IS IRREVERSIBLYSIGNED UP ?’

    After all Cameron and Cable have led a TRADE delegation to India in the last few months, but still didn’t ommitted to mention that this huge Agreement being fast tracked. Looks like secrecy to me.

    • Simon
      Posted January 26, 2011 at 10:15 am | Permalink

      Undoubtedly Linda ,

      Aren’t you the lady who sent in a deposition during the non-authentic consultation period ?

      I tried using the most well known search engine to find anything on Gats Mode 4 in the EU-India trade agreement and it was conspicuous by it’s absence . The censorship seems to envelope all the major newspapers , BBC and internet search engines .

      If anyone finds that hard to believe try to find information on it yourself .

  15. Iain
    Posted January 25, 2011 at 8:47 pm | Permalink

    ‘We are bound by our international trade agreements’

    Cp-out, what is the point of electing a Government if they choose to abide by what other Governments agreed to

  16. Mark
    Posted January 25, 2011 at 8:49 pm | Permalink

    I never had a problem with the idea of no limit to numbers for more senior employees (although I would have pitched the associated salary at above £50,000). Some such people become highly valued local employees, perhaps key to running certain businesses, and don’t need to be kicked out every five years either: many will not stay that long, and the few that do will be of value. The emphasis for immigration control should surely be on the lower paid ranks, whose skills are hardly unique. These proposals do not address that problem adequately.

  17. Gary
    Posted January 25, 2011 at 9:14 pm | Permalink

    I forgot to say thank you for raising this with the Home Office.

    There are probably 48,000 unemployed UK IT workers according to the last e-skills labour market report. Meanwhile over a thousand IT workers come into the UK on intra company transfer visas every month. The tax and national insurance subsidies for using temporary foreign workers need to be stopped.

  18. zorro
    Posted January 25, 2011 at 10:44 pm | Permalink

    John,
    Thank you for forwarding the nub of our arguments to the policy makers.

    ‘We will raise standards by only allowing senior managers and specialists, the people who the route was originally intended for, to enter for up to five years. These staff will need to be earning at least £40,000.’…..

    – These are the only people who should be considered for entry – no-one else

    ‘We will allow other ICT workers earning between £24,000 and £40,000 to enter the UK, but only for up to 12 months, after which they will need to spend a minimum period overseas before they will be allowed to return.’

    – Really….how long is the ‘minimum’ period?….For all the reasons we said on the previous blog, a coach and horses will be drawn through this one. It will be a revolving door with no benefit for the UK (Exchequer or unemployed) only the foreign employer.

    With regards to the EU – India agreement, is Mr Green claiming that the employers of people who enter under the auspices of that agreement will have to abide by the same terms (wages) of his ICT conditions outlined here? – Yes or no?

    Thanks
    zorro

  19. English Pensioner
    Posted January 25, 2011 at 11:11 pm | Permalink

    We need to motivate the sponsoring companies to find British workers. I find it Hard to believe that there are many jobs in this country where we have no suitable personnel, especially with the present high unemployment figure. What the companies probably mean is that they cannot get anyone at the salary they are prepared to pay, which is a totally different matter. The government should make a large annual charge for these permits to employ non-EU staff. If these people are really needed and not an attempt at cost cutting, they will be getting large salaries, and any extra would be relatively minor in comparison.

  20. Rodney Dawkins
    Posted January 25, 2011 at 11:46 pm | Permalink

    Two things occur to me – previous rules were flouted with impunity, also cheap, foreign technical labour has been largely discredited. The horse has already bolted.

  21. lifelogic
    Posted January 26, 2011 at 8:38 am | Permalink

    Were MPs were loosing their jobs in this way they would take action rather quickly I suspect.

  22. Gary
    Posted January 26, 2011 at 8:46 am | Permalink

    For reference, it is Regulation 145(2) or (3) of the Social Security (Contributions) Regulations 2001 that exempts them from national insurance contributions for the first 52 weeks. Almost all NIC is tax for paying for the NHS and existing pensioners and less than 0.5% goes to contributary JSA so there is no fair reason for the exemption.

    The reason the higher salary has been targeted at those staying a year or more is because anyone saying they are staying for less than a year does count towards LTIM numbers which the government will use to measure net migration. It is simply a clever way to manipulate the figures.

    • Gary
      Posted January 27, 2011 at 10:35 am | Permalink

      Sorry – should have been “anyone saying they are staying for less than a year does NOT count to LTIM numbers”.

  23. A.Sedgwick
    Posted January 26, 2011 at 8:51 am | Permalink

    As the most densely populated country in Europe many of us do not share your sweeping comment “we are clear that the UK can benefit from immigration”. We are full. The answers are to train our own people, restructure the tax system to eliminate the benefit trap and bureaucracy for business and leave the EU. Your reply is pure Brown speak and rather endorses the Richard Lambert view that this Government does not have a blueprint for business, just continues to build on the old flawed foundations.

    • alan jutson
      Posted January 26, 2011 at 9:24 am | Permalink

      A Sedgwick

      Agreed:

      I simply do not believe that we have this sort of massive skill shortage in the UK. If we have, then surely it is in our interests to retrain and reskill our own population.

      We are an overcrowded island, we need to try to limit people coming here to those who are going to create wealth and employment, not take it and leave.

    • Andrew Johnson
      Posted January 26, 2011 at 2:57 pm | Permalink

      Agree completely

  24. Gary
    Posted January 26, 2011 at 9:00 am | Permalink

    I should have said does NOT count to LTIM numbers.

  25. Gary
    Posted January 26, 2011 at 1:21 pm | Permalink

    Robert K – This discussion is about companies bringing in “temporary” workers from (overseas -ed) to work in the UK and not offshoring jobs to (overseas -ed).

    Working in the UK and having access to the UK infrastructure etc is the main comparative advantage that a UK worker has over a worker in (some overseas places-ed). Visa rules give that advantage away. The current UKBA rules and HMRC tax and NIC rules mean that tier 2 ICT migrants and their employers avoid paying for public services and infrastructure, but benefit from them. This also means they can undercut UK workers and UK companies that do pay taxes in the UK.

    On the wider issues of immigraton, offshoring and globalisation, as Friedman supposedly said, you cannot have immigration and a welfare state (and employer sponsored visas are a subsidy to businesses that use them). However with offshoring, globalisation and business controlled migration, things will have to change more radically than the removal of the welfare state. The state, tax collection and public spending will have to radically change and shrink for the UK to keep a comparative advantage in a globalised world. Any country or economic bloc that does do this will lose out as businesses, profits and jobs will move to the most efficient location. There will not be any room for governments to charge taxes to help its or any other countries poor. It simply is not efficient.

    I am putting forward a rather stark view of the future. It just seems the obvious direction that we are heading and we may as well be honest and get on with it (e.g. let’s cut all foreign aid now) or find another direction.

  26. Simon
    Posted January 26, 2011 at 2:13 pm | Permalink

    Having had a chance to digest it there does not appear to be anything new of any substance .

    Damian Greens letter is just a rehash of what was stated at the time with some ceremonial hand wrinsing along the lines of being unable/unwilling to do anything about it .

    Not much to show for 8 weeks wait .

    Should we take that as an indicator of the Govt’s level of concern over British Jobs for British workers ?

    J.R. please could you go back to DG and tell him that people are not impressed or reassured that they will not be replaced by cheap imported labour and ask him to try again ?

  27. ADilbert
    Posted January 26, 2011 at 11:57 pm | Permalink

    This is nothing more than indentured labour. The ICT worker is tied to the company and paid back in India (not through the UK tax system) . They meet the minimum salary requirements by including expenses, the worker often gets less than minimum wage (just ask the the Professional Contractors Group to provide some examples). There is no tax benefit to the UK , infact a negative one due to the reduced pay/unemployment benefits of the displaced UK worker.
    I used to provide IT training for graduates on behalf of numerous Blue Chip companies. I haven’t trained any UK graduates since 2001. I have however been asked to train numerous ICT workers. Supposedly to get an ICT visa the skill must be unavailable in the EU. Why can’t the powers that be see through these lies????? This country is run for the benefit of large corporations and not the citizens of this country. A total utter disgrace. People should be getting angry.

    • Simon
      Posted January 27, 2011 at 9:41 am | Permalink

      Getting angry is a start but to achieve anything people need to get organised .

      Each of the 3 major parties has a few good men and women but the parties themselves are under the control of International big Business .

      I had hoped that the unions would stand up for the British Worker but have a sneaking suspicion that the TUC has also been infiltrated and that the higher echelons are very much part of the system .

      Clearly anyone who votes for one of the big 3 parties at the next election thinking it will change anything is delusional .

      The dumbing down subversion technique has created a nation of sheople .

      If you are young enough and in good enough health the only sensible choice is to emigrate .

  28. James Crowley
    Posted January 28, 2011 at 1:03 pm | Permalink

    (refers to a link which did not work-ed)

    Almost 65,000 workers have come in through this loophole.

  29. Bazman
    Posted January 29, 2011 at 4:51 pm | Permalink

    If you advertised jobs for tradesman paying twice the going rate then you would have to many tradesman. Thus proving the problem is not a shortage of skills but a shortage of money. Often they are just looking for someone daft/desperate enough to do the work for that money. Should anyone do skilled work for national minimum wage (NMW)? Companies are often asking for this via agencies. Personally I just put the phone down on them. The wages and expenses paid by many companies have remained the same or fell for the last ten years at least. It is the same old story with many companies in that they say they have no money despite all evidence to the contrary What they mean is that they have no money for you. Nobody can compete with people living five to a room and five to a car and in some cases being housed in accommodation barges by the company.
    It’s interesting to see how anti business the above commentators become when they see their own wages eroded. How many where against the national minimum wage? The next time you need any work doing on your house and are quoted £50+ for labour point out that the NMW is six quid and see how far that gets you.
    I have never said I would not work for NMW but I will never do my trade for it no matter how desperate I am.

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