Monday 20 December 2021 5:02 pm | Updated: Monday 20 December 2021 5:04 pm

SMEs are being priced out of immigrant labour market, says study

Brits in 2022 had more positive attitudes towards immigration than at any time in two decades, a survey has found.

Small and medium sized firms are being put off taking on EU staff post-Brexit because of huge visa sponsorship costs researchers have said.

Since the end of the Brexit transition period last year UK companies have been required to bear sponsorship costs for visa applications for EU employees. While increasing numbers of companies are biting the bullet many are being priced out of the skilled immigrant labour market by huge fees, with a family of four costing as much as £20,000 to sponsor according to research from City law firm Bates Wells.

Chetal Patel, an immigration partner at Bates Wells said: “the post-Brexit immigration regime is a huge additional cost burden for businesses, effectively amounting to a tax on skills. For many SMEs, the cost is simply prohibitive, meaning they are losing out in the race for global talent.”

“The Government urgently needs to cut the cost of sponsoring skilled workers to come to the UK,” he added.

In comments to City PM the Home Office denied that sponsorship costs are unmanageable for UK businesses. A Home Office spokesperson said: “our new points-based immigration system has been designed to ensure business 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’s migration 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 noting that the immigration skills charge is £364 for small businesses.

The number of Europe Economic Area citizens applying for UK residency fell by 66 per cent in the 12 months to September, excluding applicants to the EU settlement scheme. While the Home Office is looking to introduce faster ‘super priority’ processing times for EU citizens, these will come at an even higher cost researchers warned.

With border controls tightening Bates Wells revealed that senior executives are finding it harder to enter the country as increasing numbers of EU citizens are pulled for questioning by Border Force. A total of 12,515 EU nationals have been stopped at the border since the UK left the EU, compared to just 1,150 in the same period last year creating a further friction point in the new immigration system.

It comes as research reveals that the tightening of the UK’s immigration system for ‘unskilled’ workers has exacerbated labour shortages across key industries. The IFS estimates that around 500,000 EU workers have left the UK following the Brexit referendum. EU migrants made up a disproportionately large share of professions which are now suffering shortages including storage workers, drivers and care workers.