UK Screen Alliance opposes MAC proposal to extend Immigration Skills Charge to EEA skilled workers

Opinion  |  17 September 2018

The Migration Advisory Committee (MAC) has today (18th Sept 2018) published its final report into EEA Migration in the UK and has made recommendations to government about the shape of the UK’s immigration policy following Brexit.

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The loss of the Free Movement of Labour following Brexit is a critical issue for both Visual Effects and Animation. The skills required for these growing industries are in global short supply and so both VFX and animation face very similar challenges in the recruitment of suitable UK graduates and make extensive use of EEA and non-EEA labour to augment the local workforce. Both the VFX and Animation sectors are heavily committed to work to create a home-grown workforce and are engaging with universities, apprenticeships, T-Levels and schools’ outreach programmes.

Recent research conducted by UK Screen Alliance shows that approximately 1 in 3 people working in VFX come from the EEA and about 1 in 5 people working in animation are EEA citizens. In addition, 13% of the UK’s VFX workforce are skilled migrant workers from non-EEA countries.

Visual Effects (VFX) and Animation are vital components of the UK’s successful film, TV and commercials industries, which compete at the very highest level in the global market. A soon-to-be-released report by the BFI will highlight the notable economic contribution of these sectors to the UK economy. It is vital to the success of these industries that they continue to have access to the best people regardless of where in the world they originate.

The MAC report does not recommend any preferential treatment for EEA migrant workers and leans heavily towards applying a reformed version of the Tier 2 (General) visa system currently used for non-EEA migrants.

UK Screen Alliance welcomes several of the MAC proposals to simplify the bureaucracy of the Tier 2 regime but are extremely disappointed that MAC have recommended that the Immigration Skills Charge (ISC) be extended to cover EEA migrant workers. The ISC has since its introduction greatly increased the cost of employment of overseas talent as it adds an up-front payment of £1000 per year to the Tier 2 visa. UK Screen Alliance estimates that extending the Immigration Skills Charge to EEA workers could add up to £2.3million per year to the combined employment costs of the 6 largest VFX companies, which are responsible for attracting considerable inward investment work from overseas film and TV producers.

The MAC report is correct in its finding that the Immigration Skills Charge is disliked by employers and that the “Skills” part of the name is misleading, there being no clear route by which the revenue raised is directed towards training to fill the perceived skills gaps. MAC admits it should be more accurately named as the “Immigration Charge”.

MAC states in the report that it knows little about the impact of the Immigration Skills Charge, the Immigration Health Surcharge or of changes to the Tier 2 system and accuses the government of poor monitoring and evaluation of the impact of policy changes. The report speculates that extending the ISC to EEA workers would on balance be appropriate but offers no empirical evidence as to why this conclusion has been reached.  It admits that it will deter some employers from sponsoring skilled workers and will increase costs for those that do.

“MAC are critical of the government’s lack of monitoring or evaluation of the impacts of policy changes, admitting that little data exists on the impact of the Immigration Skills Charge, the Immigration Health Surcharge or changes to the Tier 2 system. However, for MAC to recommend the extension of the ISC to EEA workers seems reckless given the lack of evaluation of the current policy.”

Neil Hatton, CEO of the UK Screen Alliance

The ISC was introduced at exactly the same moment as the Apprenticeship Levy and the two have been a considerable burden on the leading VFX and Animation companies in the UK. The impact of both these new taxes has been to remove money for the training budgets of these companies rather than boost the skills of potential new UK recruits. VFX companies collectively paid over £1.1 million into the Apprenticeship Levy in its first year of operation, but due to the overly restrictive constraints on how it can be spent, only 1.1% of the levy paid was able to be channelled back into apprenticeship training.

“Skilled migration and the domestic skills agenda cannot be seen in isolation to each other. UK Screen Alliance welcomes the MAC proposal that the impacts and the level of the Immigration Skills Charge should be fully evaluated and asks that that the review should not just be restricted to the impacts on migration but also on the negative effects it and the Apprenticeship Levy have had on reducing training spend rather than increasing it.”

Neil Hatton, CEO of the UK Screen Alliance

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