Soaring UK sponsorship licence fees are pricing SMEs out of access to immigrant labour. A new study found that small and medium firms are reluctant to hire EU staff in the post-Brexit era because of the costs associated with taking them on.
Following Britain’s exit from the European Union, UK companies have been required to bear the burden of sponsorship costs for UK visa applicants from the EU. While most larger companies are able to absorb the additional costs, smaller enterprises are forced to miss out on skilled overseas talent because the fees are too high.
To bring an EU employee with a spouse and two children (a family of four) to the UK can cost as much as £20,000 in sponsorship fees. Such costs are a huge burden for smaller companies, which many say are effectively a ‘tax on skills’.
Cut sponsorship licence costs
The Home Office is now being urged to cut the cost of sponsoring skilled workers to come to the UK.
However, the Home Office has refuted that the costs are too high for businesses to manage. A spokesperson for the government department said: “Our new points-based immigration system has been designed to ensure businesses can access the talent they need on a global basis but employers should also be offering rewarding packages to UK based jobseekers.”
“Those who benefit from using the UK Immigration system, including employers who use it to recruit, should contribute towards the costs of operating it, reducing the burden on the UK taxpayer. We already offer concessions for smaller businesses, who pay less for the Immigration Skills Charge than larger ones, and we keep fees under review,” the spokesperson added.
The Immigration Skills Charge for small businesses is currently £364, while medium to large companies are charged £1,000 per foreign worker.
UK residency applications dropping
Meanwhile, the number of European Economic Area (EEA) citizens applying for UK residency has slumped significantly over the past 12 months, dropping by 66% - this excludes applicants for the EU Settlement Scheme (EUSS).
The Home Office has said that it is looking to introduce a fast-track, super-priority system for EU citizens. However, researchers have warned that applicants will face higher costs for such a service.
Senior executive struggles
With UK border controls tightening, there have been widespread reports that EU citizens are facing ‘increased interrogation’ from UK Border Force staff. In some cases, even senior executives of companies are finding it harder to enter the UK.
According to official figures, 12,515 EU nationals have been stopped at the border by UK immigration personnel since Britain left the EU. In 2020, just 1,150 were stopped. The EU has accused Britain of creating ‘further friction points’ with the new immigration system.
The research into SMEs and sponsorship licence fees comes following news that delays in sponsorship licence and skilled worker visa processing have exacerbated labour shortages across key industry sectors in the UK.
The Institute for Fiscal Studies (IFS) estimates that approximately 500,000 EU workers have left Britain following Brexit. With EU migrants having made up a disproportionate amount of the labour force across certain professions, many sectors are now suffering from chronic shortages, including healthcare, logistics and storage.
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