Q&A: The UK’s new points-based immigration system after Brexit

By Peter William Walsh

In February 2020, Boris Johnson’s Conservative government published a Policy Statement outlining its post-Brexit immigration policy: the “UK’s points-based system” (PBS). This followed the publication of a report by the Migration Advisory Committee (MAC), on salary thresholds and points-based systems.

This commentary answers some frequently asked questions about the planned immigration system and its potential implications:

• When will the post-Brexit immigration policy be implemented? What about coronavirus? More…
• What is the government planning? More…
• Is this an Australian-style points system? More…
• What about nurses and other NHS workers who might not meet the new salary thresholds? More…
• Where does this leave workers who do not meet the skill or salary requirements? More…
• Why is the general salary threshold set at £25,600? More…
• Which occupations pay £25,600 or more? More…
• Which occupations will get lower salary requirements via the Shortage Occupation List? More…
• What impact will this new policy have on the economy? More…
• Will the new system reduce immigration? More…

When will the post-Brexit immigration policy be implemented? What about coronavirus?

The new system is currently set to take effect after the end of the Brexit transition period, so from 1 January 2021. This assumes no extension to the negotiations on the future of the UK’s relationship with the EU, which could happen due to the coronavirus crisis. If the transition period is extended, free movement will continue for longer and the implementation of the new system will be pushed back.

At the time of writing, the government’s position is that the UK will not request an extension to the post-Brexit transition. If this changes, any decision to do so must be agreed with the EU before 1 July 2020.

So far, the government has also indicated that it does not plan to change either the timing or the content of its future system as a result of the disruptions caused by COVID-19.

What is the government planning?

Under the proposed immigration system, freedom of movement – by which EU citizens have since 1992 been able to move freely to the UK to live, work, or study – will end. In its place will be a system which treats EU citizens the same as those from the rest of the world.

This means that, for EU citizens, the new policy will be much more restrictive and expensive than freedom of movement. By contrast, the system represents a liberalisation for workers from the rest of the world.

The full details of the new system have yet to be revealed. But we do know that all applicants for a general work visa must:

1. have a job offer from an approved employer
2. for a middle-skilled job or higher
3. speak English at the required level (this level has not been specified but for Tier 2 work visas currently it is B1 or ‘intermediate’), and
4. be paid the higher of the specific salary threshold for their occupation – known as the ‘going rate’ – or the general salary threshold for experienced workers, set at £25,600.

The applicant would be able to get in on a lower salary if the job is in a shortage occupation, or they have a PhD in a subject relevant to the job. Thus, if the person’s salary offer is below £25,600 they would still be eligible on lower salaries of:

• £23,040–£25,599, provided they also have a relevant PhD; or
• £20,480–£23,039, provided they also have a relevant PhD in a STEM subject (science, technology, engineering, or maths), or the job is in a shortage occupation.

There are exceptions for some occupations that work on published pay scales, such as NHS staff, and also for ‘new entrants’, currently defined as non-EU workers under the age of 26 on the date of their visa application, or a person of any nationality switching from a study visa to a work visa.

Changes to the skill and salary thresholds follow the MAC’s recommendations to lower the skill threshold, from graduate-level job to those requiring A-level or equivalent education, and to lower the salary threshold from the £30,000 that currently applies to non-EU citizens applying for long-term work visas.

EU citizens coming to the UK to join British citizens or settled people will need to meet the same requirements as apply to non-EU citizens, including a £18,600 minimum income requirement.

Is this an Australian-style points system?

Although advertised as an ‘Australian-style’ system, the proposed policy differs in important respects from Australia’s PBS. Most notably, in Australia, PBS migrant workers do not require a job offer (though many do have one), and are not tied to a specific job. The Australian system is also more complicated and allows for greater flexibility in how points are accrued, across a larger number of attributes.

By contrast, the UK PBS requires applicants to score 70 points to be eligible for a general work visa, with points awarded for speaking English at the required level (10 points) and having a job offer by an approved sponsor (20 points) at the right skill level (20 points). That is 50 points. However, these points are not ‘tradeable’. Therefore, these criteria function more like tick boxes, which simply must be met to qualify for the visa.

The system is perhaps more easily understood without counting points, by instead looking at the conditions under which applicants can qualify. This reveals that the proposed system is a fairly conventional employer-led scheme, in which most workers will have to earn at least £25,600, but people with PhDs or who will work in shortage occupations can get in earning 10% or 20% less.

What about nurses and other NHS workers who might not meet the new salary thresholds?

At present, not all non-EU citizens on Tier 2 visas have to meet the current £30,000 salary threshold (as we noted in a previous commentary). This is because there is an exemption for “public service occupations”, which includes, for example, nurses and secondary school teachers of certain subjects.

In its recent report, the MAC recommended that this should continue to be the case, and that a longer list of NHS and education jobs should be exempt from the main threshold and instead be paid according to national pay scales. The government’s policy statement does not say explicitly whether it will accept or reject that advice. However, it seems plausible that the government will accept the MAC’s advice, given that not doing so could significantly restrict the availability of work visas to NHS staff (among other important occupations).

Where does this leave workers who do not meet the skill or salary requirements?

What is especially striking about the proposed system is that there is no dedicated route for occupations that the government deems to be low-skilled.

The term ‘low-skilled’ is controversial. Many low-wage jobs are in fact quite difficult and require a range of skills. Some have received significant attention during the current coronavirus crisis as they are classified as key workers, such as retail assistants and people involved in food production.

The skill classification the government uses is based broadly on how much training most people in the job require, so that a job which requires only short-term on-the-job training, such as many of those in retail and hospitality, would generally be classified as low-skilled, whereas jobs that require more substantial vocational training, such as the skilled trades, would be classified as middle-skilled.

The government says employers of migrant workers who do not meet the skills or pay requirements will have to adjust, such as by investing in labour saving technologies like automation. It also points to the more than three million EU citizens already in the UK, many working in lower-skilled jobs, who will remain eligible to live and work in the UK.

Employers of low-wage workers have a couple of options if they are not able to recruit from the existing UK labour force. They could hire new foreign workers via non-work routes. This includes people coming to the UK with their family members or joining family who are already here.

Alternatively, employers might use strictly temporary, short-term visa schemes that do not have any skills or salary requirements. This includes the two-year Youth Mobility Scheme (Tier 5) visa – the ‘backpacker visa’ – which is currently open to eight countries, including Australia, New Zealand and Canada, and attracts around 20,000 people a year, but may in future be extended to EU countries. There will also be a dedicated work visa programme for seasonal agricultural workers.

Why is the general salary threshold set at £25,600?

This was the salary threshold recommended by the MAC in its report of 28 January 2020. The threshold is set at the ‘25^th percentile’: the level that 25% of full-time workers in skilled jobs earn less than per year, based on 2019 data. Put differently, this is the threshold that 75% of workers in skilled jobs would meet.

High-paying occupations will typically face a salary threshold that is higher than £25,600 because of the additional, occupation-specific threshold. For example, non-EU civil engineers must currently meet a salary threshold of £33,300, and airline pilots £69,600.

Part of the rationale for salary thresholds is to discourage employers from using the visa system to bring in workers on salaries that are significantly lower than what they would pay British or other already-resident workers. The MAC argued that a much lower general threshold would be bad for public finances, because more migrants admitted under these work visas would cost the state more than they pay in taxes, especially if they have children or a non-working partner.

Which occupations pay £25,600 or more?

In general, the more highly skilled the occupation, the less likely it is that the general £25,600 threshold will affect it. For example, more than 90% of full-time civil engineers and programmers earned at least this amount in 2019 (Table 1). Recall, however, that high-paying occupations face a higher, occupation-specific threshold based on the 25^th percentile of earnings in the occupation.

For middle-skilled jobs that are expected to become eligible for long-term work visas after Brexit, the picture is more mixed. More than three quarters of full-time plumbers, for example, were earning at least £25,600 in 2019, compared to only 25–30% of laboratory technicians. These figures do not include the self-employed.

Table 1

Which occupations will get lower salary requirements via the Shortage Occupation List?

One big unknown in the policy proposals is which occupations will face lower salaries because they are deemed to be in shortage. For middle-skilled positions that will become newly eligible for long-term work visas, there is currently no Shortage Occupation List (SOL) in place. The Migration Advisory Committee has been asked to produce a new SOL, covering these jobs, by September 2020.

The lower salary requirements for shortage occupations is the main area in which the government has departed from the MAC’s recommendations in its January 2020 report. Indeed, the MAC’s then Chair, Professor Alan Manning, advised in a letter to the Home Secretary, Priti Patel:

“We do not believe that occupations on the SOL should have lower salary thresholds, as it exempts them from pressure to increase wages, or improve conditions, which could exacerbate any existing shortages. […] We do not feel this is the right time to review the SOL and it may be that it has no place in the future immigration system…”

What impact will this new policy have on the economy?

Broadly speaking, the available research suggests that the aggregate economic impacts of immigration are small. The MAC has consistently found that while migration has slightly increased the size of the UK economy, it has had little impact upon gross domestic product per person, wages, or employment.

Ending free movement is expected to make recruiting skilled EU workers more difficult, even though they will be eligible for long-term work visas. This is because they and their employers may be put off by the increased expense and bureaucracy – including a £624 per year NHS surcharge and an employer ‘immigration skills charge’ of £1,000 a year. This is expected to have a negative economic impact by reducing the number of skilled workers migrating to the UK, although the magnitude of this impact is difficult to measure.

With regard to workers who do not meet the skills and pay requirements, the available evidence suggests that the overall impacts of reducing their numbers would be relatively small. There could be some fiscal benefits, though these are hard to measure.

However, there are some occupations in which restrictions are controversial, mostly notably social care, which relies heavily on migrant workers. Most social care positions do not require substantial training and are low paid, making them ineligible for work visas under the proposed immigration system.

Will the new system reduce immigration?

The government has said that the new policy will lead to less immigration. This is not implausible, but it is impossible to guarantee because numbers can fluctuate for reasons unrelated to policy – such as the strength of the economy in the UK or in countries of origin.

If the government goes ahead with the new immigration system in January 2021, it may be difficult to differentiate the impact of policy from the impacts of the coronavirus crisis, which may be expected to reduce immigration in the medium term as a result of economic disruption and increased unemployment. For example, EU migration fell sharply after the financial crisis of 2007–08.

With that caveat, relative to what we would otherwise have seen if free movement had continued, it is reasonable to expect lower EU work migration, and an increase in non-EU workers coming to the UK. The overall long-term impact of the proposed policies on numbers, however, is very hard to predict.

The Migration Observatory’s work on post-Brexit immigration policy is supported by the Joseph Rowntree Charitable Trust