Conservative manifesto pledge: Double the Immigration Skills Charge to £2,000 to reinvest in FE and skills

Alex Balch argues AGAINST

Barely a month after the Immigration Skills Charge (ISC) has come into effect (April 2017), the Conservative Party have said as part of their manifesto that they will double the charge from £1000 to £2000. The ISC was brought in following advice by the Migration Advisory Committee (MAC) – an independent panel of economists – last year. The amount is levied annually on organisations that employ high-skilled non-EEA immigrants, although there are reduced charges for charities and small businesses.

Most of the public scrutiny of the ISC has centred on the ways it will significantly increase costs for the NHS, something politically sensitive. But how will the charge improve funding for FE and skills?

According to the MAC’s analysis the original £1000 charge would raise over £200m, so £2000 could bring in significantly more, but of course these are estimates, and it is difficult to factor in all variables (Brexit? recession? exemptions? non-compliance?). This means the actual amount at the higher charge will likely be much lower than £400m. The Conservative manifesto promises it will be invested in ‘higher level skills training for workers in the UK’. Beyond this there has been little detail about how it would be ring-fenced or precisely where it would be spent.

Even if all the funds it (may) raise were allocated to training, this would not be enough to solve the country’s skills problem. This really is a case of the Emperor’s new clothes for FE. The sector has lost out comparatively to schools and higher education for decades, and the idea this could be redressed by a charge on immigration of high-skilled workers is frankly absurd. The underlying gap in funding was laid bare by a 2017 IFS report which showed that spending per pupil in sixth forms and FE remains at 1990 levels, while for schools it has gradually increased over the last 30 years and is now at least 70% higher.

Moreover, the ISC will only have a limited effect on reducing immigration levels – the other aim of the policy. The cost is probably not high enough to change employer behaviour significantly, especially at the high-wage end of the labour market. So why did the MAC recommend it? And why is the government so keen to present it as a solution to the skills problem? It appeals to the MAC’s economists, who break down everything into a cost-benefit analysis and see the charge as a neat way of punishing certain behaviours (recruiting immigrants) and incentivising others (investing in skills of British workers).

This really is a case of the Emperor’s new clothes for FE

For the government, using the immigration rules to deal with the skills problem is a useful way to signal something else: that immigration is to blame. It is like a re-run of the 2015 election when debates over welfare largely consisted of a race between all the political parties to raise the number of years they would remove rights to benefits for EU workers (who account for a small percentage of claimants).

Immigration is not the reason the UK has a skills problem, just as it has not made welfare or our public health system unsustainable. It does exactly the opposite. The evidence is that immigration makes a massive contribution to the UK’s fiscal wellbeing.

The government chooses to ignore this when there should be a public debate about how to spend the macro-economic dividend. Instead the Conservative Party cynically take advantage of misconceptions about immigration’s costs to scapegoat immigrants, blaming them for what is actually chronic underinvestment, while charging them (and their employers) even more into the bargain.

The MAC was originally set up to bring greater levels of rational thinking, improve the evidence base for immigration policymaking, and limit the damage done by politicisation. As is normal in the way that the MAC operates, it did not propose the policy; the government instead asked how it could be implemented. However, it has allowed itself to become party to a fallacy: that immigration causes the UK’s skills problem and offers the best way to solve it.

 

Alex Balch is a Senior Lecturer in International Politics and European Integration at the University of Liverpool