Reply from Minister for Immigration on ICT

Dear John

Thank you for your further letter of 10 February on behalf of readers of your website, about Intra-Company Transfers (ICTs).  I am very sorry for the long delay in responding to your correspondence.

The Government can (and does) control ICTs in ways other than including them in our annual limit, to provide the flexibility which encourages businesses to invest in the UK, while preventing the route being used to fill regular long-term jobs which could be done by UK workers.

The changes we have made, which took effect from 6 April, mean that only managers and specialists paid £40,000 or more can come as an ICT to the UK for more than 12 months.  In many cases there will be genuine business reasons why multinationals need to transfer other existing staff for short periods, for example to take part in graduate training programmes.  We therefore allow such short-term transfers, but workers must be paid at least £24,000 and can only come to the UK for a maximum of 12 months.  They must then spend a further 12 months outside the UK before they can return.

As I mentioned in response to another recent letter, employers of ICT workers do not derive advantage from tax benefits that are not available to employers of resident workers in equivalent circumstances.  The rules on, for example, temporary workplace relief apply to ICT workers in the same way as they would apply to a worker transferred between workplaces within the UK.

It is true that some short-term transferees may qualify for exemption from National Insurance contributions in the UK.  However, it is likely that a worker who meets the conditions for exemption, and/or their employer, will continue to make social security contributions in the country from which the worker has been posted.  So, an employer who does not incur NI costs in the UK does not incur no NI costs at all.  These may, furthermore, be higher than those that would be incurred here – the UK has low contribution costs compared to similar economies.

A key reason these exemptions are in place is to prevent foreign workers who are here temporarily gaining the benefit rights which accrue from paying social security contributions.  There would not necessarily be an entirely positive benefit to the Exchequer if ICT workers were required to pay NI contributions in the UK.

All ICT workers must be paid at least the appropriate salary rate that is paid to resident workers for the particular type of job in question, as set out in the UK Border Agency’s codes of practice for sponsors.  These rates are applied to the gross salary package paid by the sponsoring employer.  If, as a consequence of tax relief, the gross salary package actually paid to an ICT worker is less than the appropriate rate which would be paid to a resident worker doing the same job, the employer would have to make up the difference in order for the worker to qualify for admission.

Where part of the salary package is given as an accommodation allowance in kind, the sponsoring employer must provide independent evidence of the value of that accommodation.

In my previous reply, I mentioned the need to adhere to our international trade commitments.  The Government strongly supports ambitious Free Trade Agreements (FTAs), which bring considerable benefits to UK businesses.

The temporary movement of skilled professionals (known as Mode 4) is an integral part of FTAs.  The commitments made are largely reciprocal and they enable UK businesses to win contracts and transfer key personnel to their establishments abroad.  At the same time, we take commitments which enable foreign-based companies to send workers to the UK where the presence of those workers is needed in connection with the supply of a service to a UK client.

These commitments do not allow the UK to apply an economic needs test, in other words to link transfers to national skills shortages, but nor do they prevent us from regulating the admission of such workers in other ways.  For example, we can impose requirements concerning their levels of qualifications and remuneration, to ensure that transferees are skilled and are not being used to undercut resident workers.

The European Union (EU) India FTA is expected to have considerable benefits to UK businesses trading with India, in the region of hundreds of millions of pounds per year. The EU’s offer to India on the temporary movement of skilled professionals has not been finalised, nor has the UK’s contribution to the EU offer.  We will ensure that any commitments placed on the UK by this agreement will be consistent with our commitment to reduce net migration to sustainable levels. 

To pick up on a couple of other points raised by your readers, the Government is currently consulting on breaking the link between working temporarily in the UK and settling here.  The consultation is open until 9 September and your readers can respond via the UK Border Agency website.  In addition to the proposals set out in the consultation, we have already introduced a new income requirement for settlement applications, as well as a criminality test which requires all migrants (except refugees) to be free of unspent criminal convictions in order to settle.

We are also introducing major reforms to the student route, including new restrictions on students’ permission to work.  These reforms are designed to ensure that every student who comes to the UK is genuinely coming here to study, not to work or with a view to settling here.

Yours

Damian Green MP

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33 Comments

  1. Michael Read
    Posted August 1, 2011 at 4:17 pm | Permalink

    And EU immigration?

  2. uanime5
    Posted August 1, 2011 at 5:44 pm | Permalink

    Well at least ICT won’t be used to bring in thousands of employees who will work for minimum wage.

    • alan jutson
      Posted August 2, 2011 at 9:11 am | Permalink

      uanime5

      No, that is done with EU migration, all legal, above board, and nothing we can do about it whilst we are still members.

      The building industry is now at crisis level with Self employed people leaving/giving up in droves, as they cannot compete against cheap imported labour (no minimum wage to protect the self employed).

    • Gary Burgess
      Posted August 2, 2011 at 12:56 pm | Permalink

      Many ICTs are on basic minimum wage salaries that are topped up above £24k by expenses.

  3. Tim
    Posted August 1, 2011 at 6:48 pm | Permalink

    I have no faith in Damian Greene as here we are 15 months after the election and immigration is up and no measures have been taken to address the massive influx of people from Eastern Europe. He just spins and talks but takes little action. What contribution are these companies making to the public services these people use or do they get Health, Housing, education for their children for free as well?
    The latest figures show over 350,000 student visas annually. An obvious scam to do a pretend course. These are NOT all University students and they can bring their families and use our public services for free without any checks on their ability to suport themselves. Why am I paying such exorbitant taxes to pay for all things and people foreign e.g. EU £13 billion net, foreign aid £11.5 billion annually, billions in costs to our International Health Service where no checks are made for free services, education, housing etc etc. Enough is enough. Lets see results NOT spin. We’ve had over 14 years of that.

    • Andrew Johnson
      Posted August 1, 2011 at 7:22 pm | Permalink

      Agree completely- well said.

    • libertarian
      Posted August 1, 2011 at 10:19 pm | Permalink

      Agree completely Damian Green ( my MP sadly), has no notion of business, employment or in fact anything that’s going on in his own constituency. He’s a party apparatchik and that is it.

  4. Iain Gill
    Posted August 1, 2011 at 6:58 pm | Permalink

    Since the vast majority of ICT visas go to the Indian outsourcers to bring in Indian nationals who are routinely body shopped into large UK corporates at below market rates in the IT business this is skirting around many of the key issues
    Damien Green has many of the facts wrong
    I could decimate all of these arguments easily
    The government is leading the destruction of the UK IT business and the wealth it was creating
    This is a national scandal
    Damien Green should be sacked
    It is outrageous that he doesn’t sit down with folk like me and understand what is going on in practise

    • Mark
      Posted August 2, 2011 at 10:16 pm | Permalink

      I suggest you make your submission via the UKBA website consultation setting out the facts that you see in cold, logical format – perhaps with a copy to your MP.

  5. lojolondon
    Posted August 1, 2011 at 8:00 pm | Permalink

    All sounds fair and reasonable except ” a criminality test which requires all migrants (except refugees) to be free of unspent criminal convictions in order to settle.” – should read (ESPECIALLY refugees).
    And the elephant in the room – where 90% of our migrants come from and we have 0% control – will the Tories control EU immigration or do we need to vote UKIP?

    • Graham Eardley
      Posted August 2, 2011 at 9:25 am | Permalink

      Yes

  6. pils
    Posted August 1, 2011 at 8:00 pm | Permalink

    It is true that some short-term transferees may qualify for exemption from National Insurance contributions in the UK. However, it is likely that a worker who meets the conditions for exemption, and/or their employer, will continue to make social security contributions in the country from which the worker has been posted. So, an employer who does not incur NI costs in the UK does not incur no NI costs at all. These may, furthermore, be higher than those that would be incurred here – the UK has low contribution costs compared to similar economies.

    So some employees pay no NI and their employers too? It is “likely” that the employee and/or employer make NI contributions in their “home” country. Therefore an employer who does not incur NI costs in the UK does not incur no NI costs at all. Double negatives apart, likely equates to a certainty? Oh, and of course these may be higher than the UK, provided they’re from a similar economy, not necessarily the case. No source for the data relating to either the countries where NI may be higher nor whether these countries are the ones from which ICTs are generally sourced?

    The rest is equally risible…

  7. Freeborn John
    Posted August 1, 2011 at 8:46 pm | Permalink

    My experience is that the Internet has completely changed the game, and jobs now move to India, China, Southern Africa etc. rather than their workers coming to the UK. Immigration rules to keep these workers out, or to regulate conditions for their employment in the UK are therefore passé. The UK government would be far better advised to focus on how to keep Britain a competitive location such that multinational companies continue to employ Britons here, rather than worry about keeping foreign workers out when the new reality is that a multinational finds it far easier and more cost effective (as an example) to move a job to Bangalore than to bring an Indian worker to the UK.

    • Mark
      Posted August 3, 2011 at 12:48 pm | Permalink

      If that is true, then there would be no impact from banning Mode 4 immigration entirely, because the jobs have all gone abroad already. That is plainly not the case, although many jobs have been relocated in manufacturing (due to green taxes and regulation, not the internet) and services.

  8. nonny mouse
    Posted August 2, 2011 at 12:29 am | Permalink

    >>It is true that some short-term transferees may qualify for exemption from National Insurance contributions in the

    I paid an NI equivalent while working on a temporary work visa in the USA (social security) without receiving the right to receive benefits there. For years I kept up my UK NI payments so I was double taxed, although they were very low and Gordon Browns pension changes meant that I no longer needed to do so (as I understand it, pensions are not conditional to lifetime NI payments anymore).

    There is no reason why we could not make ICT workers pay NI while working here. If America can do it then we can do it.

    >>The European Union (EU) India FTA is expected to have considerable benefits to UK businesses trading with India

    But it clearly has much bigger benefits to Indian businesses trading with the UK. Why would our government sign up to a program that puts our businesses and workers at a disadvantage?

  9. nonny mouse
    Posted August 2, 2011 at 12:33 am | Permalink

    >>including new restrictions on students’ permission to work

    They should be denied the right to work at all.

    Hundreds of thousands of foreign students are currently allowed to work 20 hours per week, yet native college graduates cannot find work. Do the maths.

  10. zorro
    Posted August 2, 2011 at 9:15 am | Permalink

    It is good to see that you were given a priority reply……six months later. There is nothing in that letter that couldn’t have been turned out within a few hours.

    It is quite clear that they do derive tax advantages otherwise the foreign nationals would not be employed because people in the UK would do the job….so why doesn’t it happen? In fact he admits it in the next paragraph. The argument about NI contributions is hilarious. He knows full well that the vast majority of Tier 2 ICT are Indian IT workers who are being paid less than the going rate. Companies run rings around the compliance (sic) regime enforced (sic) by UKBA and other government departments.

    I do like the bit where it assumes that it is ‘likely’ that the equivalent of NI will be paid by these companies in India. That sums up the dissonance very well.

    Who has ever argued that it would be beneficial to the Exchequer if they paid NI contributions?

    It is clear that Indian companies on these schemes will benefit more from Mode 4 overall. It is also clear that one particular section of the British industry will benefit from access to a massive market of prospective debt slaves…..could it be bankers?

    In any case the proof of this pudding (eton mess?) will be in its eating…..Ideally these new ‘tough’ proposals should mean that there will be a reduction in numbers on this scheme and it won’t be targeted for abuse…..Oh wait.

    Zorro

    • Mark
      Posted August 3, 2011 at 12:51 pm | Permalink

      Mode 4 immigration does not count in immigration statistics because it involves a stay of less than 12 months. Perhaps we should have some proper statistics for a start.

  11. Gary Burgess
    Posted August 2, 2011 at 10:09 am | Permalink

    Oddly, Damian Green claims there are no tax advantages but then goes on to mention temporary workplace tax relief and NIC exemptions (which are not available to the majority of UK workers). Many ICTs can come to the UK for up to 2 years and pay very little income tax and national insurance but have free access to the NHS, schools and many other services paid for by taxes.

    There is a lot of disinformation in the response so let’s go over some of it.

    a) ICT visas do encourage foreign/MNC businesses to “invest” in the UK, but does that help UK citizens? The inward investment argument is used by BIS/UKTI. UKTI reports on the number of jobs created and safeguarded by inward investment (typically around 90,000 a year). This is a small fraction of the millions of jobs created and lost in the UK every year. The reported numbers are estimates provided by the investing companies and are not verified (e.g. the Kraft takeover of Cadburys was included in UKTI’s 2009/2010 figures as safeguarding 2900 jobs when in fact several hundred were lost within a year and more redundancies are planned). As Iain Duncan Smith has recently pointed out, the vast majority of jobs created in the UK are filled by foreign workers. So attracting inward investment by offering easy work visas for foreign workers may not be delivering more jobs for UK citizens, which misses the point doesn’t it?

    b) The two main business uses of the ICT visa is to provide cheap temporary staff to third party companies (i.e. in direct competition with UK workers in the UK’s flexible labour market), and to acquire skills so that work can be offshored (which destroys UK jobs).

    c) There is a some equivocation over what an equivalent resident worker is. A transferred worker within the UK would get similar tax relief, but this would typically be on expenses paid on top of their basic salary. Yet for setting the appropriate salary, the UK equivalent is a (lower quartile) worker who is not in receipt of temporary workplace expenses/allowances, and in bizarre UKBA logic the allowances/expenses paid to ICT workers can count towards this. Thus ICTs can be underpaid and undercut UK workers.

    d) NIC is a tax which mainly goes to the NHS (over 20%) and to pay current pensions (over 60%). Giving a complete exemption for 52 weeks while still giving free access the NHS is unfair. ICTs are unlikely to gain additional benefit rights as they have “no recourse to public funds”, cannot remain in the UK if they become unemployed and would need to contribute for at least 10 years before they get any pension entitlement. The majority of ICTs are from India, and the Indian equivalent to NIC are Provident Fund contributions. The Provident Fund contributions for the Indian salary are a small fraction of NIC paid by an equivalent UK employer and employee.

    e) “appropriate salary rate that is paid to resident workers for the particular type of job in question”. The appropriate rate salaries are based on national lower quartile salaries, so they are well below average UK salaries for the type job and even lower when you adjust for location (e.g. most ICTs go to London and the south east).

    f) “Mode 4” commitments do allow “UK businesses to win contracts and transfer key personnel to their establishments abroad”. However the commitments were never intended for large companies to source the majority of their workforce via visas (which the top 5 users of ICT visas do). The UK has the least restrictive regime for companies sending their foreign employees to work here, and it goes well beyond international commitments. In recent years Ireland, Canada, Australia, the USA and other countries have all brought in heavier restrictions and policing especially around intra company transfers.

  12. sm
    Posted August 2, 2011 at 12:50 pm | Permalink

    The EU.. (again) …the.EU (India) FTA…… why not just say its beyond our powers, its an issue controlled by the EU?

    If we have control….. why is £4ok deemed appropriate … it seems awfully low… i would think £60k or more is closer to the mark.

    £24k for £250,0000 to the Uk government. This deposit should be taken upfront- and be protected against liquidations.
    What NI is paid in India?

    Personally not convinced… no numbers limits…nothing hard

    I think he should sit down with Iain Gill or similar and Iain report back. Looks like hiding behind the Borders Agency consultation.

    • Iain
      Posted August 2, 2011 at 9:11 pm | Permalink

      Yes, I am getting really fed up of hearing a politician say we have obligations to what they signed us up to with the EU, FTA for skilled migrants, blah blah blah. It seems they have binding obligations to everyone apart from us, us they royally screw and break their promises to at every opportunity, when it should be us they honour their promises to first , foremost and always.

  13. sm
    Posted August 2, 2011 at 12:56 pm | Permalink

    Sorry.. my backstroke key went crazy

    £24k for <12 months again much too low.

    The importing company should be responsible for all the hidden socialized costs… health screens, health NHS costs, admin,visa etc

    If the tranferee' s settles in the UK or aquires the right the company should then make a sizeable contribution of 10* gross salary. This deposit should be taken via a guarantee and a deposit upfront.

    • Iain Gill
      Posted August 2, 2011 at 6:05 pm | Permalink

      “socialized costs” are much bigger than that

      starting with free schooling for their children, they should have to pay like Brits do who work in their country

      moving onto free NHS treatment for folk already seriously ill when they enter the country, in fact workers with seriously ill spouse or child disproportionately come here for that very reason. the nhs as a model only works when we all start off with equal risk.

      moving onto displacing brits from the workforce and the social security payments that costs this country

      moving onto the UK intellectual property they systematically strip and move out of this country and use against us

      and so on

  14. Winston Smith
    Posted August 2, 2011 at 4:43 pm | Permalink

    In the past year our trade exports to India have slipped below that of Belgium.

    Yesterday, hidden in the Times’s law section was an ECJ ruling on incapacity benefit payments to non-EU citizens who have worked a period in an EU country. They ruled that EU nations should continue to pay benefits to such people after they have returned to their home nations. So, Indian IT workers can now claim incapacity benefit on say the grounds of depression, stress, backache, etc, return home and live out their lives courtesy of the UK taxpayer. Perhaps someone can look into this ruling.

  15. Mike Stallard
    Posted August 2, 2011 at 4:49 pm | Permalink

    February to July – long time. Tomorrow our little team goes up to London for the all important interview about our Free School with the DfE. Why, then will it take a whole month for the decision to be given?
    Why the delay? No commercial organisation would take that long (unless they meant to!) and hiring a Head/Principal is done on the spot.

  16. zorro
    Posted August 2, 2011 at 5:51 pm | Permalink

    It’s taken six months for the Minister to get back to you on this but the content of the letter does not seem to address the concerns which were initially raised.

    The Minister admits in the fifth paragraph what he seems to deny in the fourth re tax advantages. These tax advantages are not available when hiring domestic workers. It would be great if it were the case as it might encourage job creation.

    The argument about NI contributions is a red herring. The vast majority of ICT visa go to Indian nationals (mainly IT workers) and the use of word ‘likely’ in relation to the payment of an equivalent NI in India speaks volumes….

    I wonder how many companies have been penalised for infringing regulations around Tier 2 ICTs….might be worth a question?

    No-one has ever suggested that if these Tier 2 ICTs pay NI it would be beneficial overall to the Exchequer.

    Interestingly, as a result of these agreements with India, British banks will be able to weave their debt inducing wonder with the local populace.

    In any case the proof of this pudding (Slough slurry – don’t want to offend anyone who went to Eton….) will be in its eating. Will the new ‘tougher’ checks mean a reduction in overall applications in support of the attempt to reduce net migration?

    Best not to hold one’s breath there…

    zorro

  17. Electro-Kevin
    Posted August 3, 2011 at 5:02 pm | Permalink

    An interesting post.

    There are serious careers being taken up by European immigrants. They don’t bring skills with them nor particularly good English language. Yet they can embark on training and a career the type of which locals queue in their hundreds for the possibility of an interview.

    How can this be right ? How can it be fair ? What possible benefit can it be to this country except if viewed from the perspective of an arrogant middle-class which seeks to undermine and undercut the aspirant working-class at every opportunity ?

    Despite the fact that I have experience as a Eurostar train driver I’m pretty sure that I wouldn’t have a hope in hell of getting a job with SNCF, even if I’d moved to France with my skills fully validated.

  18. Simon
    Posted August 3, 2011 at 7:35 pm | Permalink

    J.R.

    Could we hear your opinions on this please ?

    What careers advice would you have for a young person leaving school today ?

    Perhaps you could present Damian Green with a question , let us make it multiple choice to give him every chance .
    Who has the higher overall pay package .
    – a Met Police Constable with 12 months experience
    or
    – the average employed British software developer in Greater London with 10 years experience

  19. Simon
    Posted August 3, 2011 at 7:50 pm | Permalink

    John ,

    What sort of message does it send out to Highly Skilled/Tier 1 General immigrants who have gone through all the proper channels to get into the UK that graduate trainee first jobbers can jump the queue through an ICT scheme ?

    The whole thing is designed to offer cheap labour to multinationals courtesy of subsidies from the British Taxpayer . It isn’t intended to keep anyone out , far from it .

    Damian Green was even giving multinationals tips about how to get round the rules in his interview with John Snow .

    Your party needs to offer people something if they want to get their votes .

  20. outsider
    Posted August 3, 2011 at 8:30 pm | Permalink

    Those of us old enough to remember foreign exchange controls before 1979 will remember the “dollar pool”, a market set up to match the dollar investments leaving the country with those coming in. If demand for dollars was higher than supply at the normal exchange rate, the market reached a “dollar premium” that equated supply and demand.

    This kind of market is what we need to control immigration (beyond our legal or moral obligations). If employers want to bring in more workers than the number leaving the country, the market would establish a cash premium that the sponsoring employer would have to pay to equalise the numbers. That would be fair; it would guarantee control and would be much more efficient than officials and ministers deciding which occupations are essential or non-essential.

    The reason immigration control is not taken seriously is because the NHS is the biggest recruiter from outside the EU. If a market were to work, it would have to cover the public sector as well as the private.

    With a proper market, employers who really needed to bring in expertise for the benefit of the economy would not be deterred but total (legal) numbers would be strictly controlled.

  21. sm
    Posted August 4, 2011 at 6:41 pm | Permalink

    As one of the larger or largest employers why is the NHS not mandated to be more supportive of declared government policy, it should train its own from within the UK and EU(if we must) , definitely not take from countries which potentially need the skills more.

    Why is the NHS allowed to recruit outside the EU?

  • 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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