British companies are bypassing the government's cap on skilled migrants by bringing in staff from their plants and offices overseas, an official report has found.
Figures from the Home Office's migration advisory committee show that the numbers coming to Britain under the "intra-company transfer" scheme have surged in the past two years and now outnumber those coming into Britain on work visas by three to one. The rise has rendered the cap on skilled overseas migrants redundant, with fewer than half the work visas available under the annual limit being used.
The latest figures show that transfers of company staff, especially from IT firms in India, have risen from 22,000 in 2009 to 29,700 in the 12 months to September last year. David Cameron exempted these staff transfers from the immigration cap after strong lobbying by the business secretary, Vince Cable, and representations from the Indian government.
An official estimate shows that as few as 10,000 tier-2 work visas will be issued to skilled workers in the 12 months to April 2012. This is less than half the limit of 21,700 skilled work visas set by the home secretary, Theresa May, in the drive to reduce net annual migration from 250,000 to "tens of thousands" by the next election.
Migration chart, Intra-company transfers
The committee said in a report published on Tuesday that in this situation it was not necessary to change the 21,700 limit on work visas that applies to skilled migrants from outside the European Economic Area for the next financial year.
The government's migration advisers say they do not think changes should be made to curb intra-company transfers but the route should be kept under review, especially where transfers involve third-party contractors.
The committee chair, Professor David Metcalf, said that although the limit was undersubscribed it should not be lowered because that would affect the perception that Britain was an attractive place to do business.
"The tier-2 limit system is set up to prevent the displacement of UK workers but intra-company transfers are not part of that limit and account for the lion's share of visas," he said.
"The government has put a cap in but it is not biting, so pro tem it is not relevant," said Metcalf.
The intra-company transfer route allows companies to bring in staff from overseas branches to work for up to six months if they are in jobs earning more than £24,000 a year. Those earning more than £40,000 can stay longer than a year.
Metcalf said that some of the transfers were vital to the British economy – such as Japanese automotive engineers testing cylinder heads made in Japan and training British workers to do such testing.
"Other types of intra-company transfers have evolved over time, particularly those used for third-party contracting in the information technology sector, where it is possible that the UK economy is benefiting in aggregate terms while at the same time some displacement of British workers is occurring," said Metcalf.
"They are doing absolutely nothing wrong here, but it is consultancy companies bringing workers in, typically IT workers, typically from India."
He said the committee wanted to keep this rapidly growing group under review. Often they were contracted to carry out work in India and then came to the UK to work at the client's base before returning to India to complete the project.
Metcalf suggested that if ministers wanted to limit the numbers coming through this route they could raise the £40,000 income threshold, raise the skill level from NVQ level 4, or limit the numbers any one company could transfer.
The committee also recommends that some highly paid jobs at £70,000 and above and PhD-level jobs should be exempt from the resident market labour test that offers vacancies to British workers first. The migration experts found that advertising such vacancies in jobcentres only led to frivolous applications to companies.
A further 7,200 overseas skilled migrants were recruited last year to jobs for which no suitable British candidates applied. Under the resident labour market test, they must be advertised in the UK for one month first.
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