When the cap no longer fits

It seems likely that the current coalition’s cap on tier 2 visas for skilled non-EU workers is here to stay, whatever the outcome of next month’s election.

A year ago that would not have made much of a difference. The mechanics of the cap mean businesses need to wait a little longer to sponsor workers, but, as it has never been exceeded, they have always got their workers.

However, it looks like that will change in May because, for the first time in four years, the cap may well be exceeded.

Bruising experience

The cap is an issue very close to my heart. Before joining Fragomen I led the Home Office team responsible for consulting on how the cap would work and subsequently writing the detail in law.

The consultation was a bruising experience – the sort you could euphemistically describe as ‘developmental’. Ultimately, the team managed to create a reasonably sophisticated mechanism for operating the cap in the event it was exceeded. But how should it work?

If you’re advising clients, you’ll need to give them fair warning. You’ll also need to answer four questions: what is the cap, who does it affect, why do we think the cap will be exceeded, and what happens if the cap is exceeded?

The cap is a numerical limit on the number of skilled non-EU workers that can be sponsored to enter the UK. Each year there are 20,700 places available. The total is split into monthly pots and any places not taken are rolled over to the next month.

It applies to most skilled workers sponsored in tier 2 general, the visa category for new or permanent hires. It also applies to the dependants of student visa holders switching categories to tier 2 general from within the UK.

The cap does not apply to high earners – people paid over £155,300 are in the clear. Nor does it apply to people switching to tier 2 general visas from within the UK or intra-company transferees.

In the financial years 2011 to 2013, an average of about 9,000 places went unfilled each year. Only 181 places were left over at the end of the 2014 financial year.

This increase in demand for places was starkest in February 2014. There were 2,392 places available and 2,409 places granted.

Demand surpasses supply

What will happen if demand for places continues to increase and demand surpasses supply? The short answer is easy – not everyone will get a place and some businesses will not be able to sponsor or employ the skilled workers they need. That is the fundamental and finite nature of a cap. The trick for policy makers is to ensure the right people get through.

The type of job is the critical factor. We know that a number of jobs are difficult to fill because there is an endemic shortage of appropriately skilled workers in the UK. We simply don’t have enough people to fill child and family social worker jobs or

computer gaming visual effects supervisors, for instance. These and other shortage occupations are pushed to the front of the queue for places. 

After that, jobs are largely prioritised by salary. Labour market economics tell us that people are paid what they are worth – the higher the salary, the greater their importance to the economy.

That said, it is often argued that academics and scientists are paid below their market value. You work in biochemistry because you love the subject, not for the money. We accounted for this by attaching a premium to those jobs.

A scientist or academic paid £22,000 is prioritised ahead of other non-shortage occupations earning under £75,000. 

The tricky bit 

The points system creates three distinct groups of applications: those scoring sufficient points to put them within the limit, those outside the limit, and those on the cusp.

Places will clearly be granted to those within the limit and those outside will be refused. Ultimately, there will normally be an overhang of applications on the cusp.

The system takes account of this. Where the overhang is less than 100 places above the limit, they will be granted and the next month’s allocation will be reduced accordingly. Where the overhang is over 100 places all of the cusp applications will be refused and the places carried over.

So, there are the mechanics. In principle, I stand by the policy, and will continue to challenge anyone to come up with a better solution. It will be interesting, though, to see how it works in practice, academically and professionally.

Ian Robinson, pictured, is a senior manager at Fragomen. He was assisted by research by Heidi Cook, a legal assistant @fragomen www.fragomen.com