Overhaul ICTs to protect UK IT, Home Office told

The first review of intra-company transfers in over five years has urged a total overhaul, amid potential evidence that Britain’s IT firms - and its IT workers - are being disadvantaged.

No longer will “undercutting and displacement” of pay, workers or firms occur, says the Migration Advisory Committee (MAC), if third-party contracting via ICTs has a new regime.

Set apart from the normal Tier 2 ICT route, the regime would be solely for multinationals wanting to import staff for contracts they’ve won, and would come with a £41,500 salary threshold.

So workers brought to the UK from overseas for IT occupations (which account for about 25,000 ICTs for third-party contracts eah year), would have to be paid a salary above this sum.

Programmers and Software Development Managers would be the workers caught most by the threshold (with 4,795 workers affected), as would IT workers overall (94% of all out-of-UK applicants affected).

Current figures cited by the committee also show that salaries for third-party contracting via ICTs to be "clustered" around minimum wage levels, implying transferees are "lower quality" than if via normal ICT usage.

Firms importing their overseas staff to the UK insist their transferees are ‘specialists,’ and say they tend to have eight years’ experience plus a UK salary of over £60,000, the MAC found.

But the claims from the ICT-using companies, the vast majority of which were found to be importing IT workers from India, are “not consistent” with data for the firms.

The committee added: “If we accept that salary is a good reflection of how specialist an individual is, then by definition the third-party contracting intra-company transferees are not as specialist as we were told.”

These firms can “circumvent” controls in the current regime designed to stop them from using the ICT route for ‘business as usual’ projects. The committee reflected on its findings:

“[Unlike conventional ICT usage] there is the possibility that this at the expense of UK IT firms and workers who would have been employed in the absence of third-party contracting.

“And because this lowers the return to working in the IT sector for UK resident workers, it may reduce the incentives to acquire these skills to the longer-term disadvantage of the UK.”

In other words, says the MAC, there is “a danger that the attractiveness of a career in IT is reduced for UK residents,” as “the stock of IT skills within” the country is not contributed to.

As a result, the MAC wants a review of IT skills shortages and the impact on immigration. It is calling for this on top of an existing Home Office probe into ICT abuse in the IT sector.

In a report published yesterday, the committee says: “[Using ICTs for third-party contracting] provides cost-efficiency savings to firms using these migrants as well as their customers, making them more competitive.

“It also risks providing these firms with an advantage over UK IT companies who do not have access to a similar pool of skilled labour outside of the UK. Ultimately, the government needs to consider which is their highest priority: maximising competitiveness, or preventing under-cutting and creating sufficient incentives to up skill the native workforce.”

Chris Bryce, chief executive of the Association of Independent Professionals and the Self-Employed, believes that the recommendation to overhaul ICTs is not before time.

“This report is recognition of a problem which has been dogging the UK’s IT industry for years”, he said. “These recommendations [from the MAC] must now be taken up by the government to ensure there is finally a level playing field for independent professionals running their own IT nano-businesses.”

 

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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