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Plugging the skills gap to enable SME growth

By Ian Fraser

Published: The Daily Telegraph

Date: 6 November 2014

old_st_ian_buswellSMEs are calling on the government to take a more enlightened approach to immigration policy, warning the current approach is blocking access to talent, hobbling growth prospects and jeopardising the recovery.

In a 2010 pre-election announcement, the then opposition leader David Cameron set a target of reducing net migration to the UK to 100,000 people per year. But – despite ploys as “Go Home” vans and the eradication of some specialist visas for non EU citizens – since he entered Downing Street his government has singularly failed to achieve that. Net immigration to the UK was 243,000 in the year to March.

The coalition government is considered to have entered an “arms race” with the anti-immigrant United Kingdom Independence Party in the wake of UKIP’s success in the European election in May. Driven by a determination to prove it will take a harder line on immigration than UKIP, the government seems eager to introduce more restrictive policies. One mooted plan would see an annual cap on the number of national insurance numbers issued to low-skilled migrants from elsewhere in the EU, a ploy that EU president Jose Manuel Barosso has warned would be a “historic mistake”, as it flies in the face of the EU’s core freedom of movement rules.

Kitty Falls, specialist immigration solicitor at law firm Dutton Gregory, said that SMEs are becoming increasingly frustrated with the government’s moving of the of the immigration goalposts. She described its current approach as “unreasonable”, describing a 100,000 target was “unhelpful and flawed” as so many variables including migration from the other 27 EU members states is beyond the government’s control. Hiring from outside Europe has become a minefield of bureaucratic hurdles and legal fees.

Falls singled out a revised system for sponsoring skilled workers from beyond European Economic Area (“Tier 2”), due to come into force on 6 November, for particular criticism. “Under the new system, the employer bears all the responsibility, bureaucracy and risk of managing the sponsorship process,” said Falls. “But employers must also accept the government can step in and veto their decision at the last hurdle. It’s the worst of both worlds.”

The government’s 2012 closure of post-study work visa programme for overseas students has caused bafflement in academia and in the digital technology space. Tech firms, especially fast-growth startups, have grown accustomed to being able to scour the earth for talent, but can no longer do so as a result of the programme’s closure.

Bertie Stephens, chief executive of e-commerce company Flubit, said: “For us, as with most tech start-ups, time is of the essence in growth. We have to seek out expertise that we’re currently missing, and often there isn’t a qualified person in the UK or EU. The UK needs a more streamlined process for visas, like a slick technology platform that matches up pre-approved international tech professionals with start-up businesses.”

Stephens said leaving the EU, something UKIP and Conservative backbenchers now advocate, and which is due to be the subject of a referendum in 2017 if the Conservatives are re-elected, would be a hammer blow. “If the free flow of citizens ceased, it would collapse a great part of the tech industry,” he said. Other cities from Toronto to Sydney are already seeking to exploit British restrictions by stepping their efforts to open their doors to skilled migrants, particularly in the technology sector.

The government has responded by introducing a Tier 1 “exceptional talent” visa in April with a view to leaving the door open to the most promising individuals in technology. However the quota of just 200 a year is viewed as too low by tech sector insiders.

TechUK, a trade body, wants the UK government to introduce a “smart” immigration policy , whereby the country keeps its doors open to “entrepreneurs and future wealth creators”. Key demands include reinstitute the two-year post study work visa, remove caps on graduate entrepreneur visas and extend exceptional talent visas beyond start-ups to other firms.

Federation of Small Businesses chairman John Allan said: “We know from our latest quarterly research that nearly one-third of small firms are struggling to find employees with the necessary skills to allow their businesses to grow. This gap continues to be a major challenge for small companies. It’s vital that UK firms have access to free and open labour markets so they can find employees with the skills they need.”

Martin Whitlock, author of Human Politics: Human Value believes political parties are, in many cases, addressing a “straw man” with anti-immigration rhetoric. “There’s no coherent immigration policy because immigration per se isn’t the problem. It’s really a question of livelihoods: falling real wages, a shrinking economy (in per capita terms) and falling productivity, all of which are leaving people worse off. These are the consequences of structural defects in the British economy, not migration.”

Note: owing to a decision by the sponsors of the Telegraph’s SME pages, the article is no longer available on the Daily Telegraph site

Short URL: http://www.ianfraser.org/?p=11234

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