I beg to move,
That the Committee has considered the draft Immigration Skills Charge (Amendment) Regulations 2025.
It is a pleasure to serve under your chairmanship, Mr Turner. The immigration skills charge was introduced in April 2017. Its aim is to incentivise UK-based employers, including the UK branches and subsidiaries of overseas businesses, to take a long-term view of investment and training. It is designed to address historical under-investment in training domestic workers by UK employers and to deter some from turning to immigration as a cheaper alternative.
The skills charge is paid by employers looking to sponsor skilled workers for visas lasting more than six months. It also applies if they wish to extend the employment for a further limited period. Senior and specialist workers also pay the charge, unless they are an EU national coming to work in the UK for less than three years. The increase will not prevent service supply by intra-corporate transferees from continuing, as it does now in line with our international trade commitments. The charge is paid up front when the employer assigns a certificate of sponsorship to a migrant worker and is calculated automatically based on dates provided by the employer as part of the sponsorship process.
The charge has raised approximately £2.7 billion since it was introduced. The income provides financial support to help maintain existing skills budgets across the United Kingdom, which is important for a range of reasons, such as ensuring that immigration is not seen as the sole solution to dealing with the skills needs in our economy. As education and skills are devolved, the income raised helps to maintain funding levels for each of the devolved nations. It is distributed between England, Scotland, Wales and Northern Ireland using the formula devised by Lord Barnett.
The draft regulations give effect to the commitment in the Government’s immigration White Paper, published on 12 May, to raise the cost of the immigration skills charge by 32% in line with inflation. From 16 December 2025, therefore, medium-sized and large employers will need to pay £1,320 per person they sponsor per year. There will continue to be a reduced rate for small and charitable organisations of £480 per person per year.