Responses to the MAC consultation on the impact on the UK labour market of the UK’s exit from the European Union.

Finance and Real Estate (SIC 64-66)

March 2018

Contents

Responses available via the MAC website 3

American Express 4

Chartered Association of Business Schools 10

Society of Lloyds 14

S and P Global 17

UK Finance 21

Responses available via the MAC website

1. British Property Federation 2. Chartered Management Institute 3. ICAEW 4. London Business School 5. London Market Group 6. Personal Investment Management and Finance 7. Virgin Money 8. Zurich Insurance

American Express

American Express is making this submission in response to the Migration Advisory Committee’s

(MAC) call for evidence on the economic and social impact of the UK’s exit from the European

Union.

American Express is a global services company. Our principal products and services include

charge and credit payment card products and travel-related services offered to consumers and

businesses around the world.

American Express has multiple sites in the UK (primarily in the south of England). While the

majority of our workers in the UK are UK nationals, we also employ a significant number of non-UK

EEA nationals (which we will henceforth refer to in our submission as our ‘EEA workers’). We also

engage additional EEA workers from time to time through temporary recruitment agencies. Some

of our EEA workers have obtained or are in the process of obtaining permanent UK residency.

The ability to recruit EEA workers is crucial to our ongoing operations in the UK. Access to a

diverse talent pool has enabled us to develop the UK as one of our key international hubs from

which we run a number of our wider EMEA operations.

EEA workers perform a variety of roles across the UK-based organisation. A number of these

individuals are in roles where fluency in a European language is required. In fact, a significant

proportion of our roles which have specific language requirements are filled by EEA workers at

present. We therefore see EEA workers as delivering a very valuable part of our UK-based

operations.

Annex A to this letter contains more detail on the questions posed in your call for evidence. The

key issues for your consideration are:

• While the majority of our workers in the UK are UK nationals, EEA workers make up a

significant portion of our overall talent pool. They make a very valuable contribution to the

success of American Express’s UK-based operations which would be difficult to replace.

• Global companies such as American Express need access to international talent. Any

restrictions on our ability to recruit and retain the best talent will challenge the ability of

companies like ours to expand the use of the UK as a key international hub.

• Fluency in European languages is a key requirement for a large number of our UK-based

roles and the required levels of fluency have been very difficult to find in UK workers to date.

We have a particular dependence on EEA workers for our international customer service

roles as they require specific language skills. These roles are critical for the organisation

despite the fact that they can fall below the current points-based system (PBS) salary

threshold and do not require a degree.

• While we recognise the future status for EEA workers in the UK is part of the Brexit

negotiations, we would urge the UK Government to act unilaterally to provide clarity where it

can by confirming companies in the UK will be able to easily recruit and retain EEA workers

well past 2019.

American Express invests in all its workers in the UK. We want to continue to expand the use of

the UK as one of our key international hubs and look forward to the MAC’s findings.

American Express

Annex A The ability to build multinational teams here in the UK has been an important factor in making the

UK our primary EMEA hub. American Express is particularly concerned that any changes to the

current immigration arrangements for EEA workers would impact its ability to expand language-

requirement roles in the UK in the longer-term.

1. Please provide evidence on the characteristics (e.g. types of jobs migrants

perform; skill levels, etc) of EEA migrants in your particular sector/local area/

region. How do these differ from UK workers? And from non-EEA workers?

Within American Express, a significant proportion of customer service roles are held by

EEA workers fulfilling international customer facing language requirement roles. There

are few UK workers employed in roles which require a European language. We have

always recruited for these roles primarily here in the UK, and recruit the best person for

the job regardless of nationality. The high proportion of EEA nationals doing such roles

likely indicates a shortage of UK talent able to provide similar capabilities at present.

EEA workers are also employed in many non-language specific roles across the

organisation at every level.

2. To what extent are EEA migrants seasonal; part-time; agency-workers;

temporary; short term assignments; intra-company transfers; self-employed?

What information do you have on their skill levels? To what extent do these differ

from UK workers and non-EEA workers?

In terms of skills, as highlighted above, language skill appears to be a key differentiator

between EEA and UK workers when we are recruiting for roles which have multilingual

requirements. However, these roles are not required to be at the graduate level and

the significant majority of employees in these roles are unlikely to meet the minimum

salary threshold required by the existing non-EEA visa scheme.

Where a European language is required in the role, it is most likely to be occupied by

an EEA worker. We have previously been unable to find the required level of fluency

within the UK workforce (C2/C1 native or near native based on CEFR assessment).

As with the UK workforce in general, most EEA nationals working in the organisation

are permanent employees, though in addition, the organisation also uses temporary

recruitment agencies to fill roles as needed.

Any EEA worker in a UK-based role will have been hired as the best candidate for the

role, and will be required to demonstrate the same or better skill level for the role as

any competing UK national considered in the recruitment process.

3. Are there any relevant sources of evidence, beyond the usual range of official

statistics, that would allow the MAC to get a more detailed view of the current

patterns of EEA migration, especially over the last year?

All data we are able to share at this time are included in this submission.

4. Have the patterns of EEA migration changed over time? What evidence do you

have showing your employment of EEA migrants since 2000? And after the Brexit

referendum? Are these trends different for UK workers and non-EEA workers?

In recent years American Express has increased the number of European language

roles based in the UK. This has reflected the UK’s growing role as a key international

hub for American Express. Each job helps to drive economic activity and boost tax

revenue here in the UK.

At this point we have not seen an impact on our ability to hire and retain EEA workers

in the UK, though we have seen a very small number of cases where a candidate has

declined a job offer citing Brexit. We are continuing to monitor this on a monthly basis.

5. Have you conducted any analysis on the future trends of EEA migration, in

particular in the absence of immigration controls?

American Express is committed to its current UK strategy, including the location of a

large number of language speaking roles in the UK. As evidenced above, it is expected

that these roles would continue to be filled by EEA workers as to date finding UK

workers with the required language skills has been very difficult. The organisation’s

research has shown that nearly all candidates applying for a language servicing role

are EEA workers and that nearly 90% of them make their application from within the

UK. This is in addition to any other EEA workers continuing to apply for non-language

requirement roles.

6. Have you made any assessment of the impact of a possible reduction in the

availability of EEA migrants (whether occurring naturally or through policy) as part

of your workforce? What impact would a reduction in EEA migration have on your

sector/local area/region? How will your business/sector/area/region cope? Would

the impacts be different if reductions in migration took place amongst non-EEA

migrants? Have you made any contingency plans?

Yes, we have done an assessment.

Ideally we will be able to continue to recruit EEA workers at all levels following Brexit. This

would enable us to continue to use the UK as a key international hub. We would see this

as delivering the most positive economic and social outcome as the current tax revenue

and community investment derived from American Express’ operations in the UK would be

secured and would continue to grow.

Were we to face restrictions on either (i) recruiting new EEA workers at all levels (e.g. due

a total cap being applied) or (ii) recruiting EEA workers to fill key roles requiring language

skills (e.g. due to overly high salary or qualification thresholds being applied) we would see

this as a challenge to the expansion our UK-based operations.

7. Please provide evidence on the methods of recruitment used to employ EEA

migrants. Do these methods differ from those used to employ UK and non-EEA

workers? What impact does this have on UK workers? Have these methods

changed following the Brexit referendum?

Please see our answer to Question 8.

8. Do recruitment practices differ by skill-type and occupation?

Analysis has shown that the majority of EEA hires come from candidates with a UK

address at point of application. Considering language roles, where most role holders

are EEA workers, all language requirement roles are advertised first in the UK. Where

applications are not received or do not meet the skills and experience requirements the

vacancy may be advertised in the language’s home country. The roles proactively

advertised for outside of the UK most often are the more scarce language skills

requirements, and this approach is taken in order to attract candidates considering

relocation. The majority are advertised in the UK only.

Other than ensuring language fluency, the recruitment process for EEA workers in

language requirement roles is the same as for UK workers and the process used will

be determined by the role being hired for.

9. What are the advantages and disadvantages of employing EEA workers? Have

these changed following the Brexit referendum result?

American Express views EEA workers as an important and valuable part of the overall

UK employee community. The employment of EEA workers in the UK allows the

organisation to locate a large number of language-speaking roles in the UK and more

broadly, EEA workers add to our diverse talent base.

10. To what extent has EEA and non-EEA migration affected the skills and training of

the UK workers?

The employment of EEA and non-EEA workers has not negatively impacted the skills

and training of UK workers. The ability to locate a significant number of language

servicing roles (permanent + temporary) in the UK adds significant volume to the UK

footprint, which provides focus, attention and investment on the UK location, overall

benefiting UK, EEA and non-EEA workers across the board.

11. How involved are universities and training providers in ensuring that the UK

workforce has the skills needed to fill key roles/roles in high demand in your

sector? Do you have plans to increase this involvement in the future?

We would consider working with UK colleges, language schools and universities to

create an additional/new pipeline of UK workers fluent in European languages.

However, American Express recognises that given the current level of language

speaking abilities in UK nationals, especially in the languages required, this is unlikely

to provide the size of talent pool required to fill the volume of language speaking roles

located in the UK in the short to medium term.

As a separate activity, we are also reviewing how we utilise the Apprentice Levy and

are currently looking for opportunities to use this as part of a solution for providing

language talent in the future. However, again, it is not clear that this would provide a

suitable solution for the volume of language roles required in terms of upskilling UK

workers with the required level of language skills. In addition, the requirement to have

lived in the UK for at least three years prior to starting an apprenticeship may prevent

the organisation from using this as an opportunity to attract EEA workers to the

organisation.

12. How well aware are you of current UK migration policies for non-EEA migrants? If

new immigration policies restrict the numbers of low-skilled migrants who can

come to work in the UK, which forms of migration into low-skilled work should be

prioritised? For example, the current shortage occupation list2 applies to high

skilled occupations; do you think this should be expanded to cover lower skill

levels?

The organisation is familiar with the immigration policy for non-EEA workers, and it

sponsors a number of Tier 2 General and ICT workers. As outlined in the responses

above, the ability to recruit EEA nationals to fulfil entry-level roles requiring fluency in a

number of European languages is a top priority for the organisation.

Chartered Association of Business Schools

The Chartered Association of Business Schools is pleased to respond to the Migration

Advisory Committee’s call for evidence on EEA-workers in the UK labour market.

INTRODUCTION

The Chartered ABS is the voice of the UK’s business and management education sector.

More students study business and management in universities in the UK than any other

subject and contribute £3.25bn to the UK economy. One in three international students

studying in the UK are studying in business schools. Its management students go on to

lead global businesses and its entrepreneurs contribute to our dynamic economy. Its

research has an impact across society and helps to turn our capacity for invention into

viable businesses. While MBAs may enjoy the highest profile of all business school

programmes, they make up a very small proportion of what business schools do. In terms

of student numbers, MBAs make up less than 5% of the over 325,000 students studying in

business schools in the UK, and this doesn’t take in to account short programmes, often

offered under the umbrella of Executive Education, which caters for an increasing number

of open and bespoke programmes delivered to employees in both large and small firms.

Our members consist of 120 business schools and higher education providers across all of

the UK, as well as affiliate stakeholders, corporate members and international partners.

KEY POINTS

1. According to HESA statistics, programmes offered in business schools attract the

largest number of student registrations within the UK’s universities.

2. The UK’s business schools rank second only to the US in terms of global

reputation. The US have 29 in the top 100, with the UK on 15. Australia, which is

making policy efforts to be attractive to international students and academics, is

catching up with 10. https://www.topuniversities.com/university-rankings/university-

subject-rankings/2017/business-management-studies

3. More international students study in a business school than any other subject area,

creating a rich international dimension to all classes. This makes business

education a crucial and successful export for the UK economy.

https://charteredabs.org/wp-content/uploads/2016/03/Chartered-ABS-International-

Student-Recruitment-2016.pdf

4. Business schools teach and conduct research about large and small businesses in

the UK and globally. This requires academics with first-hand experience of living

and working in other countries.

EEA Migration Trends

5. According to HESA data, approximately 10% of business school academics come

from the EEA. A similar percentage come from other countries outside the EEA.

6. The pattern of recruitment from EEA nationals has remained fairly consistent over

many years. As far back as 2004/05, the percentage of EEA nationals working as

academics in business schools has been about 10% of the workforce.

7. Data from our own survey shows that there are an increasing number of EEA

faculty already leaving the UK to work elsewhere in Europe (7% of schools have

seen this already happen), where an international approach is welcomed and they

have greater security. There is already a belief amongst non-UK academics that

immigration rules will make it more difficult for them to stay in the UK.

8. The same survey showed that more institutions (a further 27%) expect to lose

additional staff in the future for the same reason.

9. The survey further showed that recruiting faculty from the EEA and elsewhere

outside the UK is becoming more difficult (12%) and this is expected to become

even more of an issue as European Universities and beyond are intensifying their

effort to ‘poach’ UK based academics (reported by a further 40%).

10. In the absence of any consistently positive message from the Government on

encouraging academics from outside the UK to work in the UK, the perception that

EEA faculty are no longer welcome in the UK has a clear knock-on effect on people

from outside the region as well.

11. As a result, there is a clear risk to the reputation of the UK’s business schools on

the global stage.

12. This is even more imminent given that an increasing number of business schools on

the continent are now teaching business and management courses in English and

are more actively recruiting internationally.

13. The concentration on the short-term economic impact of EEA workers does not take

in to account the educational benefits derived for UK students from the ease with

which international faculty are able to work in the UK.

14. This is especially relevant in regions where there is currently low cultural diversity.

Recruitment Practices, Training and Skills

15. Business school academics are highly skilled and likely to have postgraduate

qualifications.

16. They will typically be employed full-time, and primarily on contracts including both

teaching and research responsibilities.

17. Such workers are permanent in the sense that they are not here for a

predetermined length of time, but equally the majority are likely to return home at

some point in their careers.

18. Universities recruit the most skilled people for the role, and if there is to be a

geographical restriction on recruitment, there will be a detrimental impact of the

average quality of faculty, leading to an overall decline in academic quality in the

UK.

19. They are employed across the full range of business school subjects including,

finance, business development, marketing, entrepreneurship, as well as many

others. They typically bring with them a different perspective from locally qualified

academics. These are not different skills, but new perspectives.

20. A course in international business, without any international academics, would be a

poor course indeed. This scenario is a distinct possibility if EEA and non-EEA

academics are not actively encouraged to work in the UK.

Economic, Social and Fiscal Impacts

21. The number of UK business and management students choosing to progress to

academia is small, therefore academics from elsewhere are needed to fill vacant

positions that would otherwise go unfilled. The UK has a relatively poor record in

attracting UK domiciled students to study at post-graduate level, and therefore there

is always demand for good quality faculty, from whichever country they come from.

22. To reverse this trend of low take up of academic routes for UK students would

require a concerted and well-funded campaign, which it is unlikely the Government

has the appetite for, at the moment.

23. A further reduction in the availability of EEA, and for that matter non-EEA as a result

of policy restricting or making difficult access to work visas would have a

disproportionately larger impact in regional institutions relative to larger cities, which

find it easier to attract faculty from abroad.

24. It would put at risk the global appeal of our business schools and reduce the

efficacy of our institutions to prepare students to operate in a global business

environment.

25. A significant amount of recruitment is via word of mouth, but for senior level

positions, business schools employ recruitment agencies. For more junior level

positions, use is made of websites to attract potential employees.

26. It is worth noting that within subject specialisms, there is a close-knit global

community, which facilitates exchanges, collaborative working, and visiting

lectureships. Closing, or making more rigid, the UK’s borders to this type of global

collaboration puts this at risk.

27. The advantages of employing EEA workers in business schools remains the same;

they bring a different perspective, real understanding of how business works in

other countries, access to a body of knowledge that makes the learning of UK

students richer, and it reinforces that international students are equally welcome.

28. It is worth reiterating the typical characteristics of EEA academics, as well as non-

EEA academics, coming to the UK to work. They are typically of normal working

age, very well educated, and relatively comfortably remunerated, posing no

substantial burden to the Exchequer.

29. It is vital for the health of the UK business schools, and therefore Higher Education

institutions, that EEA academics are not only welcomed, but encouraged to come to

the UK, and for the path to be made smooth for them to do so.

Society of Lloyds

I am responding to this call for evidence on behalf of the Society of Lloyd’s (“Lloyd’s”).

Lloyd’s is a society or corporation of members constituted under the Lloyd’s Acts 1871 –

1982. It operates as an international insurance and reinsurance market, based in London.

Lloyd’s is regulated in the UK by the Prudential Regulation Authority (PRA) and the

Financial Conduct Authority (FCA), in accordance with the Financial Services and Markets

Act (FSMA).

The Lloyd’s members who underwrite insurance and reinsurance business are organised

into syndicates, which are managed by Lloyd’s managing agents. Currently there are 83

syndicates and 53 managing agents in the Lloyd’s market. In 2016, the Lloyd’s market’s

aggregate gross written premiums amounted to £29.9bn, on which it made a profit of

£2.1bn before tax.

We appreciate the opportunity to provide our comments on your initial thinking on the

impact of the UK’s exit from the EU on the UK’s immigration policy.

Our responses to the questions in the consultation document are set out below.

EEA migration trends

The Lloyd’s market’s talent base remains one of its key differentiators; it continues to grow

in strength and in diversity. The focus on enhancing and developing this critical asset

remains at the heart of the talent strategy for both the Corporation and the market.1

Lloyd’s is an international market that calls for specific skills. Big, complex risks from

around the world are underwritten at Lloyd’s, requiring specialist knowledge and

experience. As the Lloyd’s market is a leading international insurance centre, it attracts

talented and experienced insurance professionals of all nationalities to work there. This

wide range of international knowledge and experience in turn helps to attract business

globally - a virtuous circle which Lloyd’s would like to perpetuate.

This arises in part through the clustering benefits of the London insurance market. The

whole market has an interest in ensuring that relevant skills, capabilities and knowledge

are acquired and developed in order to reinforce this differentiator.

The Lloyd’s market wants to continue to draw on a vast pool of talent from varied

backgrounds, to ensure that it remains a centre of excellence. Diversity and inclusion is

good for business and remains a priority. Lloyd’s and its market work in partnership, to

embrace and embed diversity by widening perspectives and sharing best practice.

1 Lloyd’s Annual Report 2016, available at www.lloyds.com

Lloyd’s is proud to employ people from across Europe and the rest of the world and it is a

strategic priority to attract and retain the best talent to the market from around the globe.

Lloyd’s has obligations, as an employer, to check that all employees are eligible to work in

the UK when they join and to check, verify and copy their documents. Non-UK EU

nationals are not tracked in a different way from UK employees, as to date there has been

no reason or requirement to do so.

We do not believe that the characteristics of EEA migrants working in the London

insurance market differ materially from those of UK workers. Most of them are full-time

employees on long-term contracts, although the details of their employment can vary, as it

does for UK nationals.

The London insurance market consists of insurers, reinsurers, Lloyd’s syndicates and

managing agents, P&I clubs, brokers and other insurance intermediaries. The London

market ecosystem extends to a wide range of affiliate professional services, including

claims handlers and adjusters, actuarial consultants, asset managers, accountants,

lawyers, IT service providers and other ancillary services.

It will therefore be appreciated that it requires a wide range of specialist skills, not all of

which are easily available in the UK, at any rate in the numbers required by the market.

We believe that most EEA nationals in the London market are insurance professionals, or

have related professional skills and have been recruited because they most closely meet

the specific role profiles of employers. On occasion EEA nationals have particular skills,

such as languages, which are not widely available in the UK workforce, but are essential

for an international market.

We therefore believe that the profile of EEA migrants in the London insurance market is

quite different from that in some other economic sectors, such as agriculture, hospitality or

construction. Nor do we think that growth in the number of EEA migrants employed in the

market in recent years has reduced job opportunities for UK nationals. In fact quite the

reverse – EEA migrants have facilitated the London insurance market’s international

success, leading to growth in employment of UK nationals as well.

According to the London Market Group (“LMG”) report “London Matters 2017”, around

11% of London Market employees are non-UK nationals (for comparison, 9.5% of the

overall UK workforce is non-UK). We understand that the proportion of non-UK nationals in

some other financial services sectors with a strong London presence, such as investment

banking, is rather higher, although the structure of the work force in such sectors is

different to that in insurance.

We are keen to ensure that, going forward, Lloyd’s will be able to attract the best talent

and will be a diverse and inclusive market where its people will increasingly mirror the

geographic origin of the market’s business and capital.

Lloyd’s therefore urges the UK Government to consider very carefully before imposing

restrictions on the ability of UK businesses to recruit EEA nationals after Brexit. We believe

that an international insurance market needs an international, professionally-qualified work

force. If insurance entities are unable to recruit the necessary staff in London there is a risk

that they will be encouraged to redeploy operations outside the UK altogether.

Recruitment practices, training and skills

On 7th April 2017, Lloyd's hosted an event for EU nationals employed across the

Corporation to provide further guidance on their current options. Lloyd’s uses all the

communication channels available to inform its staff likely to be impacted by new

immigration policies as details from the negotiations between the UK and the EU27 start to

emerge.

We appreciate that there is uncertainty for EEA citizens and their families currently working

in the UK. Lloyd’s greatly values the contribution of all employees, both UK and non-UK

nationals, and is available to provide whatever support is needed to them until a decision

about their future rights to live and work in the UK becomes clearer.

Economic, social and fiscal impacts

We do not think that we are best-placed to respond to the questions raised in this section,

in view of the data and information available to us.

S and P Global

Q: Please provide evidence on the characteristics (e.g. types of jobs migrants perform; skill levels, etc.) of EEA migrants in your particular sector/local area/ region. How do these differ from UK workers? And from non-EEA workers? S&P global employ multiple nationalities across divisions, roles and levels within the organisation. There is no distinction between the level, role or work conducted by EEA, UK and Non EU employees. The table below indicates the employing division and the nationality of those employed split into permanent, temporary, expatriate, EU, Non EU, UK and unavailable data. The type of role covered ranges across the divisions

Count of Employee ID

Row Labels Blank EU Non EU UK

Grand Total

CORPORATE 2 10 10 66 88

Regular 2 10 10 66 88

PLATTS 4 79 44 226 353

Expatriate 2 1 3

Regular 4 79 42 225 350

S&P DOW JONES INDICES 16 14 49 79

Regular 16 14 49 79

S&P GLOBAL MARKET INTELLIGENCE 1 90 35 149 275

Regular 1 90 35 149 275

S&P RATINGS SERVICES 1 154 76 238 469

Expatriate 2 2

Intern 2 2

Regular 1 152 74 238 465

Grand Total 8 349 179 728 1264

*effective October 2017

Below, please find the definition of the responsibilities of the division:

- S&P Global Ratings: The world’s leading provider of credit ratings; our credit risk

analyses, research and insights support the growth of transparent, liquid debt

markets worldwide. The broad type of work undertaken covers: credit analysis,

enabling functions (compliance, risk, IT, operations, finance, HR), sales, marketing

- S&P Global Platts: The leading provider of energy and commodity market data,

delivering information and analytics across more markets and more countries than

anyone else. The broad type of work undertaken covers: price assessment, price

reporting, price analysis/forecasting, enabling functions (compliance, risk, IT,

operations, finance, HR)

- S&P Global Market Intelligence: Providing data, analytics, and sector intelligence to

gain unrivalled insight into the markets. The broad type of work undertaken covers:

Product, content operations, credit intellectual property, the commercial org

including sales and marketing and the enabling functions (compliance, risk, IT,

operations, finance, HR)

- S&P Dow jones Indices: The world’s largest resource for iconic and innovative

indices, we help investors identify, measure and capitalize on global investment

opportunities.

Q: To what extent are EEA migrants seasonal; part-time; agency-workers; temporary; short-term assignments; intra-company transfers; self-employed? What information do you have on their skill levels? To what extent do these differ from UK workers and non-EEA workers? The table above addresses the nationality and employment type of all workers across the divisions. As contractors or temporary staff are not employed by S&P their information is not centrally managed through the HR system so we assume this is captured elsewhere by their employer. As mentioned before, the skill level is across the grades within the organisation and not confined to a specific area, segment or role type. There are currently 62 employees on Tier 2 general visas. Q: Are there any relevant sources of evidence, beyond the usual range of official statistics that would allow the MAC to get a more detailed view of the current patterns of EEA migration, especially over the last year? Unknown

Q: Have the patterns of EEA migration changed over time? What evidence do you have showing your employment of EEA migrants since 2000? And after the Brexit referendum? Are these trends different for UK workers and non-EEA workers? S&P Global have, and will continue to employ, a wide and diverse workforce from across

the globe. There has been no discernible change in this approach since 2000 nor post the

Brexit referendum. The UK still remains an attractive place to work for both UK & EEA

nationals.

Q: Have you conducted any analysis on the future trends of EEA migration, in particular in the absence of immigration controls? Analysis has been undertaken on current numbers of various nationalities employed by each division, looking at the percentage population of UK, EU and Non-EU workers in our current model, assessing the volume and expertise of employees required to sustain it in line with potential scenarios based on government legislation. We are currently exploring opportunities across the region in line with business and regulatory requirements however no decision has nor can be made without clearer guidance from the UK Government Q: Have you made any assessment of the impact of a possible reduction in the availability of EEA migrants (whether occurring naturally or through policy) as part of your workforce? What impact would a reduction in EEA migration have on your sector/local area/region? How will your business/sector/area/region cope? Would the impacts be different if reductions in migration took place amongst non-EEA migrants? Have you made any contingency plans? As yet, Brexit is yet to have an impact on the talent strategy and the Workforce at S&P Global. However, the impact could be:

• There will be tougher competition for well-qualified talent

• There will need to be greater development of existing employees

• Increased difficulty in recruiting senior and skilled workers

Communications and FAQ’s have been created and circulated on the S&P Global intranet

and the message to our employees states no immediate impact for our staff in the UK in

the short term. As always, we are committed to ensuring our employees are engaged and

productive and working together to grow our businesses and serve our customers.

Recruitment Practices, Training & Skills

Q: Please provide evidence on the methods of recruitment used to employ EEA migrants. Do these methods differ from those used to employ UK and non-EEA workers? What impact does this have on UK workers? Have these methods changed following the Brexit referendum? Methods of recruitment do not differ from those used to employ UK and non-EEA workers and therefor no impact is made on UK workers. At a high level, S&P Global’s recruitment process for all employees: Q: Do recruitment practices differ by skill-type and occupation? Depending on skill level and division there could be additional steps in the recruitment process such as tests and assessments relevant to the particular role. These assessments could be company policy for specific roles or through hiring manager discretion. Q: What are the advantages and disadvantages of employing EEA workers? Have these changed following the Brexit referendum result?

Advantages:

• Filling skills gaps with the most qualified and suitable candidates

• Sharing international knowledge and practices, increasing access to other EEC countries and supporting the upskilling of co-workers; sharing cross country and cultural practices

• Expansion into new markets, strengthening contacts in international markets and local networks through new language skills and cultural awareness.

• Enrichment from different cultures, creating a more diverse workforce with varied experience and ways of working.

• Source from a larger talent pool Disadvantages: we see no disadvantages employing a diverse workforce

The above haven’t changed following the result of the referendum. Q: To what extent has EEA and non-EEA migration affected the skills and training of the UK workers? Talent remains the biggest asset within S&P Global and we will continue to invest in all our employees through the various training courses and opportunities we provide. There is scope for our UK employees, as with all employees regardless of their nationality, to continue to deepen their knowledge and experience of policies and procedures relevant to their roles and the markets within which we operate. All employees are encouraged to take responsibility for their continued professional development whilst employed at S&P Global. Q: How involved are universities and training providers in ensuring that the UK workforce has the skills needed to fill key roles/roles in high demand in your sector? Do you have plans to increase this involvement in the future?

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S&P Global has a dedicated Campus Recruitment Team affiliated with top UK and EU universities. We have internship programmes ensuring we develop talent at the grass-roots level to become long standing employees. We partner with universities in promoting our brand and attracting top-level graduates to fill the positions available with the right talent. All employees have the same access to learning and training opportunities which are often driven by market requirements, and therefore, where appropriate, the Company will ensure employees have the relevant skills to successfully conduct their roles. Q: How well aware are you of current UK migration policies for non-EEA migrants? If new immigration policies restrict the numbers of low-skilled migrants who can come to work in the UK, which forms of migration into low-skilled work should be prioritised? For example, the current shortage occupation list2 applies to high skilled occupations; do you think this should be expanded to cover lower skill levels? No comment Economic, Social and Fiscal Impacts

S&P Global has no comment at this time on the below questions. Q: What are the economic, social and fiscal costs and benefits of EEA migration to the UK economy? What are the impacts of EEA migrants on the labour market, prices, public services, net fiscal impacts (e.g. taxes paid by migrants; benefits they receive), productivity, investment, innovation and general competitiveness of Q: Do these differ from the impact of non-EEA migrants? Q: Do these impacts differ at national, regional or local level? Q: Do these impacts vary by sector and occupation? Q: Do these impacts vary by skill level (high-skilled, medium-skilled, and low-skilled workers)?

UK Finance

Introduction 1. UK Finance welcomes the opportunity to provide views and evidence to the Migration

Advisory Committee (MAC) as it seeks, through a Commission, to advise on the economic and social impacts of the UK’s exit from the European Union (EU) and on how the UK’s immigration system should be aligned with a modern industrial strategy.

2. Established on July 1st, 2017, UK Finance is a trade association representing 300 of the

leading firms providing finance, banking and payments-related services in or from the UK. UK Finance has been created by combining most of the activities of the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Our members cover the full breadth of the financial sector. Our members are large and small, national and regional, domestic and international, corporate and mutual, retail and wholesale, physical and virtual, banks and non-banks. Our members' customers are individuals, corporates, charities, clubs, associations and government bodies, served domestically and cross-border. These customers access a wide range of financial and advisory products and services, essential to their day-to-day activities, from our members. The interests of our members’ customers are at the heart of our work.

Executive Summary

3. The UK has a world leading financial sector and makes a tremendous contribution to the UK economy, both directly through the level of taxation the sector pays to the Exchequer and the number of people employed by the sector, but also by supporting growth, innovation and UK businesses.

4. It is not possible to easily quantify the numbers of EEA nationals working in the sector, not least because whilst employers would normally need to identify, check and retain records on the right to work of non-EEA employees, and as Tier 2 sponsors would have to demonstrate that they are complying with sponsorship requirements, this is not something that they have had to do for EEA nationals because of the fact there was previously no need to separate EEA nationals from UK nationals.

5. However, we note and would agree with estimates that 7% of those working in the

financial sector are from the EU.2 Whilst estimates these figures are not out of kilter with the view or experience of members.

6. The strong view of members is that EEA migrants make a vital contribution to the sector

bringing innovative practices and skills and contribute to the UK being a global leader in financial services. EEA workers are often highly skilled and bring with them specific skills sets, industry knowledge, experience and client relationships, and are often the best fit for specific roles within the business, such as roles servicing international clients.

7. EEA nationals are also important in filling lower skilled but important roles such as

support functions and customer facing roles, where the level of language ability, which is not traditionally a consideration of the MAC, has allowed banks to provide customer and business support functions within the UK that serve other locations in the EU and

2 House of Commons Briefing Paper Number 8069, 3 August 2017

globally. That is something the MAC will need to consider as part of assessing the value of EEA migrants to the UK economy.

8. Our members strongly believe that the position on EEA nationals already here should be

clarified swiftly. Outside of the policy decision, given the low risk any ratification or registration process for EEA nationals already here exercising Treaty rights should be as light touch as possible.

9. In the same way, any future immigration framework for EEA nationals is as light touch

as possible in terms of delivering its objectives, and has one eye to achieving a positive implementation and transition deal with the EEA.

10. That flexibility needs to cover skilled EEA migrants working long-term as well as the

ability to create the pipeline of future talent and leaders. The importance of EEA nationals filling contracts, or in short term roles, often as an Intra-Company Transfer (ICT) should not be forgotten. There is a need to preserve the ability of bring over EEA nationals for short term roles and the ease of bringing ICTs to the UK. Ideally any future policy framework would make it more straightforward for members to bring over third party contractors to carry out skilled work.

11. There is a wider ask for a future immigration system that allows the financial sector to

easily recruit and retain the high skilled talent required for the UK to remain a world leading financial centre. The financial sector is a vital industry to the UK and immigration policy should support that.

12. There is a strong case for reforms to the sponsorship system and that the financial sector

should, as a highly trusted sector, be one of those that are given greater flexibility on immigration policy, particularly around sponsorship requirements. Given banks help administer the immigration system it seems perverse to treat them in the same way as higher risk sectors.

13. The current proxy for assessing skill (salary and education level) remains the right one

and the public and private sector remain on an equitable footing. However, as part of this we need to ensure FinTech and the technology sector can recruit the skills they need given the common use of equity in lieu of salary.

14. In a world where every country is competing for the ‘brightest and the best’ the UK needs

to help promote growth and promote the UK is open for business by ensuring the immigration system is easier to understand, and easier and quicker for applicants.

15. Members would welcome the opportunity to engage further and in more detail with the

MAC on this issue. As part of that UK Finance would to offer to arrange any meetings and visits that the MAC would find beneficial at a time suitable for your convenience.

Considerations

16. Many recognise the important role that banks play in supporting the UK’s economy – with this year’s Total Tax Contribution (TTC) report for the UK banking industry estimating that the 511,000 people employed in banking across the country are responsible for contributing over £35 billion in tax.3 The shape of immigration policy for

3 2017 Total Tac Contribution of the UK banking sector, prepared by PwC for UK Finance, October 2107 citing ONS data from UK level

employment by 2 digit SIC 2007 for “64-Financial services activities; except insurance and pension funding”.

both EEA and non-EEA workers post the UK leaving the EU is very important to members. We will as such be responding, on behalf of members, to the forthcoming White Paper on immigration to set out the need for any future immigration system to support the financial sector being able to easily recruit and retain the high skilled talent required for the UK to remain a world leading financial centre. The financial sector is a vital industry to the UK and so Government policy, including immigration policy, should support that, particularly given the need to support the UK retaining its position as a world leading financial sector post exit.

17. In response to this tranche of the MAC Commission we have been mindful of your

briefing note on EEA-workers in the UK labour market accompanying the call for

evidence. As this sets out, in making recommendations about migration policy the MAC

generally assumes that the objective is to maximise the total welfare of the resident

population focusing upon the welfare of people and how migration affects the lives of

individuals.

18. We agree with this objective and in turn how this focuses the issue onto increases in

GDP per capita, as opposed to simply increases in GDP. However, we think this lens

should also consider the importance of a thriving business sector and the outcomes this

delivers in terms of better services and products, lower costs, and employment

opportunities. This is where, as set below, friction and barriers put into recruiting EEA

nationals that the sector requires could lead to higher costs and less efficient services

for UK customers and business.

19. Previous studies, including those by the MAC, have noted the different impacts upon

GDP per capita and public services from different types of migrants, including if the

migrant is in high or low skilled work, and whether a migrant is a complement or a

substitute to residents.

20. This issue clearly also has wider links to the Government focus on productivity as

migrants are thought to be complementary if they raise the productivity of resident

workers by working with them, enabling them to be more productive and raising demand

for their labour. This suggests that migrants are more likely to have beneficial economic

effects when they are highly skilled and/or have different skills from the resident worker

population, which is most notably demonstrated in the importance of the Shortage

Occupation List.

21. The studies highlight that migration influences the welfare of the resident population and

can provide benefits if for instance:

• the presence of migrants in the labour market leads to lower prices or greater

availability of some goods and services; or

• they pay more in taxes than they receive in benefits and consume in public services

i.e. their net fiscal contribution is positive.

22. We would say that the importance of both EEA and non-EEA migrants to the financial

sector, and in turn the importance of the financial sector to the UK economy, fulfils both

these criteria.

23. The MAC Commission requests evidence on the question of whether migrants,

especially high-skilled migrants, lead to greater entrepreneurial activity, trade, innovation

and, ultimately, productivity growth. We believe that our members can demonstrate

benefits from their EEA workforce in all these areas and would like to invite the MAC to

meet with our members either collectively and/or individually to discuss this in more

depth to provide further qualitative evidence on this issue.

24. There is also a call for evidence on whether access to a large supply of migrant labour

can be said to dis-incentivise employers from making production more capital-intensive.

Whilst the financial sector is reliant on global talent, including from the EEA, we do not

believe that there is any disincentive on capital and technology investment. Indeed, quite

the reverse, there is a big focus on digital innovation across our membership, and EEA

talent is playing a significant role in helping support that. Again, we would welcome the

opportunity to facilitate the MAC meeting with, and visit our members, to see evidence

of this for themselves.

25. We have set out below our response to the Call for Evidence structured around the broad

themes requested: EEA migration trends; recruitment practices, training and skills; and

on economic, social and fiscal impacts.

EEA Migration Trends

26. We are aware of the existing range of surveys and reports in this area, and the ONS

article “International immigration and the labour market 2016”4 estimates that 8% of

those working in the UK in the financial and business services are EU nationals. Whilst

broader than just financial services, that figure is broadly aligned to the House of

Commons Briefing Paper “Employment of other EU nationals in the UK” which delves

further into the ONS figures and estimates that 7% of those working in the financial sector

are from the EU.5 Whilst estimates these figures are not out of kilter with the view or

experience of members.

27. Equally, it should be recognised that there are areas of the sector and the country where

there will be greater reliance on EEA nationals. Here we would draw attention to the

PwC and London First analysis which estimated that in 15% of those employed in the

financial services in London are EU nationals. Again, this is not surprising given the

importance of the City of London as a global financial centre and the need for the

brightest and the best.

28. For example, an international wholesale bank (with the majority of their UK presence in

London) has provided evidence that EEA nationals make up a significant proportion of

their workforce, over 20% of their total employees. That proportion varies across

functions with EEA nationals accounting for more than 33% of revenue generating

functions, and more than 50% of their banking function.

29. However, in terms of wider data on EEA migration, it is sadly difficult to definitively

provide further qualitative evidence across the entire sector or segmented by type of

financial institution. That is because whilst employers would normally need to identify,

check and retain records on the right to work of non-EEA employees, and as Tier 2

sponsors would have to demonstrate that they are complying with sponsorship

requirements, this is not something that they have had to do for EEA nationals. Indeed,

legal requirements around ensuring community preference requires that EU nationals

4https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/articles/migrationandthelabourm

arketuk/2016#how-skilled-were-non-uk-nationals-living-in-the-uk

5 House of Commons Briefing Paper Number 8069, 3 August 2017

(with exceptions of roles which have professional qualification requirements around

English language) must be treated, for employment purposes, in the same way as UK

nationals.

30. That requirement has routinely translated into record keeping where for reasons of

efficiency and cost, employment details have been broken down into checking right to

work and separate requirements put in place to recruit and fulfil sponsorship

requirements for non-EEA records.

31. As explained to us by a medium-sized organisation, in common with most UK

businesses, they have only recorded whether their employees have the legal right to live

and work in Europe, in keeping with their legal obligations. There has been no

requirement to capture whether the individual is from the UK, or from an EU or EEA

country with unrestricted access rights, and as a result they are unable to say definitively

how many European nationals they employ. Even if they did, they have no visibility of

their marital status and as such, short of engaging in dialogue with each employee

individually, they are unable to assess confidently those that might acquire the right to

remain in the UK versus those that might not.

32. Another major UK bank has provided evidence that supported this, stating based on their

own analysis, around 50% of their non-UK EEA nationals working for them had under 3

years’ service so it possible that they would not have the required 5 years permanent

residence to gain permanent right to remain by the time Brexit has been implemented.

However, they acknowledge that this is an estimate as they do not have full sight of their

employees previous residence in the UK or other factors that may lead to them being

able to stay. However, it would require a lot of effort to be able to do this further analysis

notwithstanding any other concerns of such an approach.

33. This view is echoed by many of our large and small members who say that they could

not produce an accurate figure without incurring significant cost and time to do so. A

large institution has said it would have to employ extra staff simply to produce a

breakdown of EEA staff if this were to be required by the Government. We note that this

is not an issue unique to the financial sector - indeed this is an area where parts of the

public sector have also historically struggled to identify numbers of EEA nationals in

employment.

34. In terms of trends, a larger organisation - also explaining that it does not capture

nationality for employees as standard - has intimated that it has already seen the indirect

impact since the referendum vote in favour of the UK leaving the EU in the lower

availability of entry level staff for many of their roles. The more recent difficulties of

attracting EEA staff has been noted by other members, and indeed is also reflected in

the latest ONS IPS figures.

35. There is no single piece of evidence that explains this trend, but our members have noted

the changes in exchange rates and the value of sterling relative to other European

countries. Some members have assessed that the fall-off in availability of migrant

workers in other industries has pushed those organisations to attract employees from

other labour pools. They are concerned about the potential impact on their ability to retain

the services of highly valued EEA employees.

36. There is also a concern about the perception of the UK to EEA nationals or employees with EEA family members working here which may have an impact on their decision to remain in the UK. Many our members have informed us of concerns raised by EEA

employees to them, including uncertainty about their future status. A major UK bank has provided evidence that whilst they have not yet seen a slowing of hiring of EEA nationals or of greater attrition the longer the period of uncertainty around EEA national’s status in the UK and around the post-Brexit regime around right to work, the greater the likelihood that both attraction and retention of EEA nationals will become an issue for us and across the sector. This is a view that has been expressed to us by a number of our members.

37. That is why a key ask of our members is that the position on EEA nationals already here,

and those arriving ahead of the UK withdrawal from the EU, to be clarified swiftly and

clearly. We also believe that outside of the policy decision, given the low risk of abuse,

any ratification or registration process for EEA nationals already here should be as light

touch as possible, especially as the Government already holds data on these individuals.

38. We can add that a number of domestic retail banks describing themselves as not

employing significant numbers of EU or EEA nationals – estimating that they make up

less than 5% of their workforce – have emphasised the critical role that highly skilled EU

and EEA nationals have through customer facing roles. These members set out that

they would face difficulties in the delivery of their future strategy and the operational,

administrative and financial challenges should the UK introduce a migration regime

prohibiting the free movement of labour. Therefore, members would request that in the

same way as for those already here, any future immigration framework for EU and EEA

nationals is as light touch as possible in delivering its objectives, and has one eye to

achieving a positive implementation and transition deal with the EU.

Recruitment Practices, Training and Skills

39. We would discount the thought that EEA (and non-EEA) recruitment into banking and financial services takes place at the detriment of UK nationals. Investing in the future, the industry champions apprenticeships, creating over 3,700 opportunities across the country between 2014 and Q1 2016. For every banking apprenticeship in London, three more are created outside the capital, reflecting the sector’s vital contribution to the UK’s labour market.6

40. The general view from the sector was that, given the fast paced and competitive nature of this sector, and the position of the UK as a global hub there was a tremendous need to fill resourcing needs with the best talent and there is considerable resource is invested in upskilling and developing current and future talent.

41. This was a wider point made by many members, that the focus is not just on recruiting suitably skilled talent for current roles, but also creating a pipeline of future talent and leaders, where the ability to recruit EEA nationals has been important to graduate and development programmes.

42. One major International Wholesale Bank states that EEA hires account for 38% of all hired across the Campus recruitment function and 19% of those recruited as experienced hires. They invest significantly in upskilling the local workforce and offering opportunities to the brightest and best young talent including through programmes such as:

• Summer Internships;

• Work Experience;

• Industrial Placement;

6 6 BBA Factsheet “Jobs in Banking” https://www.bba.org.uk/wp-content/uploads/2017/02/Jobs-factsheet-FINAL.pdf

• Return to Work;

• Associate Programmes for new recruits and those promoted;

• Analyst Programmes (both permanent and summer placements)

• Associate Promotion Programmes 43. These training programmes across this company are normally between 2-12 weeks, and

there is considerable investment into them. For example, each year, the costs incurred in running the Analyst Programme amounts to £1.5million for training and an additional £1.65 million for investment into continued development. The Summer Analysts and Industrial Placement programmes typically cost £130,000 to operate, whilst the Associate programmes (which covers new hires, promotions and interns) cost around £170,000. The company has noted that if they were unable to easily fill these programmes due to lack of available EEA national participants, these programmes may not be operated and therefore this would have a detrimental impact on the UK participants.

44. The general view is that where recruitment is necessary it instead takes place against a

backdrop of a shortfall of suitably skilled individuals within the domestic labour market. Recruitment from EEA countries is filling this gap and should be viewed as a catalyst to business activity and domestic employment that would be impaired should impediments be put in the way of this source of employment. This is not just long-term roles but also short-term assignments or intra-company transfers.

45. One firm noted that if they were unable to recruit or retain EEA nationals for specific

roles, it would take considerable time and investment in hiring and retraining UK

nationals where there is a lack of skills or expertise which would need to be supported

by the Government. Even then there is a risk that roles would need to be relocated

outside of the UK if the company was unable to access the breadth and depth of skills to

maintain business with international clients.

46. While modern apprenticeships and other policies may reduce some skills shortages over

the medium to longer term, the MAC and Government should not underestimate the

damage that could be done to the UK economy and the interests of the UK resident

population because of undue restrictions placed on the retention and recruitment of EEA

employees.

47. Members are keen that we underline that the need for the MAC and Government to

appreciate the impacts and the detriment that would be caused if an equivalent to the

non-EEA immigration processes were deemed necessary. One member has estimated

the legal and application costs of a standard application for non-EU nationals is

estimated at £16,500. There is a wide view that the process is cumbersome and the 20-

week timeline is far from ideal. While the timeline can be shortened through the payment

of a fee for a premium service, several members have commented that they do not

consider the non-EEA process sufficiently agile for current recruitment needs let alone

as a starting point for a system for recruiting from neighbouring European countries.

They highlight also the ongoing monitoring of immigration documents and changes to

conditions within the firm (such as salary change, or promotion) needed to comply with

Home Office rules.

48. Members consider the lack of clarity concerning the immigration status of EEA nationals

currently employed in various functions across their business as having a detrimental

effect on retention which may in turn create operational challenges that could significantly

impact their service delivery to customers within the UK marketplace.

49. They are also concerned that any move towards an immigration system that prohibits or

unduly impedes the free movement of labour has the potential to quadruple the

administrative burden associated with recruiting EEA nationals and increase

considerably the time it takes to fill business critical roles. Many members have

highlighted they would need to recruit additional staff to manage this, and the costs would

have to be passed onto business and customers. At its most extreme, an onerous

system could, all other things being equal, be a disincentive for investment in the UK as

opposed to other European hubs.

50. Others noted that for some type of roles there is a limited talent pool, especially for very

specialised roles (such as some in the FinTech industry) so even if companies could deal

with increased administrative burdens and the extra costs, which is more difficult for

smaller companies and start-ups, competition for these people is fierce and global. This

needs to be reflected in the UK’s approach if the financial sector is to remain world

leading.

51. We would also wish to draw attention to the fact that when considering future immigration

reforms, our members recognise the idea of salary and qualification as a proxy for highly

skilled. We would support that continuing as opposed to a system of the UK Government

‘picking winners’.

52. However, we would emphasise the need to manage impacts on labour flows by not

creating a cliff edge where there is a sudden block on access to EU nationals filling

important but lower skilled roles such as customer facing roles. Equally we would also

highlight that previously the MAC has not had to give widespread consideration to the

necessity of being able to target recruitment of individuals with specific language skills,

particularly for businesses who have established customer service hubs serving the rest

of Europe within the UK. That is because within the wider EU labour pool it was relatively

easy to find employees who could speak the necessary languages. Post exit, and

depending on any future immigration system, the MAC will need to consider how UK

businesses can recruit individuals with the language skills they may need.

53. For example, one medium sized international bank has a business contact centre within

the UK which deals with business accounts across Europe where there is a very high

reliance on EU nationals to ensure the bank can serve their customers. It would not be

as easy to fill those roles without being able to rely on EU nationals and so the bank

would have to consider where this function is based.

54. Members have also requested that we impart:

• That they believe there is a need for the MAC and Government to appreciate that

salary levels may not always be a sufficient measure of ‘value added’. This is

particularly true of start-up businesses, and FinTech and the technology sector given

the common use of equity stakes in lieu of salary. We would ask that given the focus

of the Government on making the UK a global hub for digital innovation and FinTech

that further thought is given to how equity can be used in lieu of salary.

• The possible case for EEA employment in respect of trusted sectors to be managed

on a trusted partner basis, with a cut back in bureaucracy for all concerned. One way

of doing this would be to entrust a tier of very highly trusted sponsors to issue and

manage permits.

• The need, in any case, for reforms to the sponsorship system as the current ‘one size

fits all’ approach that treats all companies and all sectors as the same does not work.

This is something in need of reform in order to better align responsibilities and

requirements with factors such as risk. Given that banks are heavily and effectively

regulated, and are trusted and indeed required by the Government to help support

administration of the immigration system through the Immigration Act, there is a case

for the financial sector to be one of the sectors that benefit from a lighter touch

sponsorship system.

Economic, Social and Fiscal Impacts

55. We believe that the MAC and Government should conclude, with relative ease, that there

are very significant economic, social and fiscal benefits from EEA migration to the UK

economy, particularly in the case of financial services, and that these outweigh any

counterbalancing costs. Whether at a leadership or senior executive level, or in highly

specialised niche roles, EEA employees do contribute significantly to the ability of our

members to provide services upon which the UK resident population rely. This includes

people working in highly specialised, niche roles on investment projects aimed at

innovating service delivery. These projects, in particular, are the means by which a

growing number of small-to-medium sized companies are seeking to bring services to

the marketplace and in doing so, enhance competition to the benefit of UK consumers.

56. Examples of strategically important EEA recruitment provided to us include:

• The recruitment of an executive leadership team where the majority of individuals

concerned are British citizens, and a minority drawn from EEA and non-EEA sources.

The experience has led this organisation to conclude that the free movement of

labour within the EEA is integral to its ability to attract executive talent and that any

inhibition would impair its ability to grow its retail and commercial services.

• An organisation related to us that, whilst they have on EEA workforce of less than 2%

and only limited presence in London, they have corporate functions that require

technical and specialised skill sets which are often sourced from outside of the UK -

Treasury and Corporate Development are two examples cited. They would be

concerned if circumstances arise where it became difficult to recruit, attract or retain

talented individuals in such areas. They would be equally concerned should the UK

adopt an immigration policy that sees existing talent that they have nurtured in these

fields having to return home and believe that this would work against UK business

investment.

• An organisation, also estimating that its employment of EEA nationals amounts to

less than 2% of its overall workforce, related concerns about the development of their

digital platform should they be unable to rely on the retention of EEA nationals. They

describe the platform as being customer-centric, data-driven, with cutting edge

analytical capability and see its development as core to their ability to grow the

business by meeting customer need in a modern, efficient way. Of the small

dedicated design team, 6 out of 26 – 23% - are EEA nationals and 5 of the 6 are

described as having critical domain knowledge. The organisation has emphasised

the extent to which they believe that their ability to develop a contemporary digital

experience for current and future customers is reliant upon the focus and continuity

of this team. They consider that any short-term insecurity or medium to long term

restrictions on eligibility of the EEA members of the team to work in the UK will have

a negative impact on the organisations ability to deliver for customers and

shareholders.

• A medium-sized domestic bank estimates that only 1.5% of their overall workforce is

made up by EU nationals. Of these, they believe 35% to be Irish, 17% Polish and

46% from other Member States. Of the ‘other’ population, approximately 70% are

from countries that joined the European Union before 2004 (for example Spain, Italy,

Germany) and the remaining 30% after 2004 (including Latvia and Romania). What

they are seeking to illustrate is the diverse nature of even their small number of EEA

employees and the extent to which they arise from the UK’s longstanding

relationships with neighbouring countries.

57. It is also relevant to note that UK Finance commissions an annual survey of the Total

Tax Contribution (TTC) made by the UK banking industry and has just published its latest

version. While this has not been devised with an EEA migrant sub-division in mind, the

survey distinguishes between domestic and overseas firms and, based on the differing

nature of their activity (or concentrations of activity), inferences may be drawn about the

extent to which certain business areas employ a higher proportion of non-UK nationals.

Businesses such as corporate and investment banking, where non-UK nationals

concentrate, provide high value jobs that make a positive net fiscal contribution and as

a result benefit the welfare of the UK resident population.

58. The survey provides arguably the most detailed source of information about employment

and other taxes paid by UK and overseas banks. This year’s survey, published this week,

estimates the TTC of the banking industry at £35.4bn, breaking this down as £18.1bn

being paid by UK banks and £17.3bn by foreign banks. The survey shows the average

amount paid into public finances in employment taxes per employ to stand at £34,981 -

which approximates to six times the national average of £5,856. It should be appreciated,

however, that this overall figure is lifted to a very considerable degree by the salary levels

enjoyed by EEA and non-EEA nationals working within the industry, in particular, in

corporate and investment banking roles.

59. The survey is based upon a granular information gathering exercise spanning 36

organisations that represent 78.9% of the employment taxes paid by the sector. If the

MAC would find it helpful, we would be happy to explain the survey findings in more

detail.

Policy imperatives

60. Immigration is seen by our members as contributing to innovation and is a positive,

dynamic factor in opening up competition in the provision of financial and other services.

EEA (and non-EEA) labour within financial services is unambiguously a net contributor

to the UK economy and public finances.

61. Members have been clear in expressing to us their concern about the detrimental effect

on their business – and hence the welfare of the UK resident population – if they are

unable to attract talent from neighbouring European countries through a seamless

immigration process.

62. They see this as a matter not only of the numbers of people that they are permitted to

employ, but the need to avoid the administrative burden associated with non-EEA

immigration and ongoing compliance requirements. They have asked us to ensure that

the MAC and Government are fully aware of the detriment that would arise for UK

interests should the future regime not retain lighter controls for employment by the

financial services sector.

63. They therefore believe that MAC and Government should find the means of

administrating EEA immigration within trusted sectors on a ‘trusted partner’ basis as part

of wider reforms of the sponsorship system.

64. Notwithstanding the current state of UK-EU negotiations, they have serious concerns

relating to the retention of existing EEA employees and stress the need for the position

of EEA nationals already here being clarified with a minimum of further delay and with

as light touch a process as is possible. This extends not only to employees but their

families.

65. There is also a wider point that in a world where every country is competing for the

‘brightest and the best’ the UK needs to help promote growth and promote that the UK

is open for business by ensuring the EEA and non-EEA immigration system is easy to

understand, and easy and quicker for applicants. There are good precedents for reforms

elsewhere to the immigration system, such as the visitor routes, which provide a good

example to build upon.

66. We hope this submission is helpful, and stand ready to assist the MAC in their important

role where we can. We are happy to be contacted with further queries, and would like

to invite the MAC to meet with ourselves and our members to provide more depth and

qualitative evidence. We would also be happy to help facilitate visits by the MAC to

members to see the importance of EEA nationals to the sector first hand.