Immigration Skills Charge: Employers pay and Government has taken it away

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The Apprenticeship Levy may have taken over many employers’ minds in April and it’s fair to say it’s taken over our blog on a few occasions too but there was another tax/payment of sorts that crept in in April this year – The Immigration Skills Charge.

The Immigration Skills Charge was initially mooted by the then Prime Minister David Cameron in early 2015 with Mr Cameron arguing that employers were underinvesting in the domestic workforce and instead taking the “easy” option of recruiting overseas (see our blog on why that’s not the case).

The idea of the Skills Charge would be to levy employers that recruit non-EEA workers and use the monies raised on UK apprenticeships. Of course, fast forward a few months and we then had the announcement that the Apprenticeship Levy would be introduced.

*Cue confused faces all round* What then would the Immigration Skills Charge be used for? Surely Government would scrap it and not burden employers further?

Nope, that wasn’t the case. Government pressed ahead with its introduction meaning that any employer recruiting a non-EEA worker to work in the UK for 6 months or more either as Tier 2 (General) visa or an Tier 2 (Intra-Company Transfer) visa (so if you’re recruiting a highly skilled non-EEA national or bringing an employee from outside of the EEA who works for your business into the UK branch of the business) you have to pay £1,000 per employee per year.

Having to pay an additional charge on top of the regular costs of obtaining a visa as well as complying with minimum salary threshold requirements is not what employers want, or indeed need. However, what is now really troubling employers is – where is the money going? What’s it being spent on? Who exactly is pocketing the Immigration Skills Charge?

There has been a change in tone away from funding apprenticeships (clearly the Levy is for that) to “training the domestic workforce” – assuming then non-Apprenticeship training?

The point is monies are being taken from employers, revenue if being raised, but Government has been silent on how the funds will be deployed.

What’s more, despite our calls, we didn’t hear a peep out of Government at the Budget, so we’re making our call loud and clear once more –Government must must must set out how it intends to use the money raised from the Skills Charge.

And here is what we consider to be the key underlining principles for deploying the revenues raised:

  1. Avoid duplication: The Apprenticeship Levy is currently focused, and should remain focused on apprenticeships. Revenue from the skills charge should be used on training outside of an apprenticeship, which is equally as important.

     

  2. Monies should be targeted where there is a gap in support for training: The Apprenticeship Levy has consumed many manufacturers’ training budgets, with a third of companies saying they have absorbed the cost of the Levy within their training budgets. As a result, employers now have less to spend on other training such as up-skilling and re-skilling existing or older employees and training returners into the company. Therefore Government should target funds where there is no public support currently available.

      

  3. Access to funds should be transparent and easily accessible: Any future access to funds collected from the Skills Charge and made available to employers needs a transparent and easy process. Previous skills funding streams, such as the Employer Ownership of Skills Fund, have been overly complex and restricted, deterring employers, particularly SMEs, from engaging.

 

Author

Head of Education & Skills Policy

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