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  • Brexit round up

Brexit round up

01 October 2018

Settled status pilot     

The Government has started a pilot exercise in the north-west of England for its settled status applications system by encouraging university students and NHS workers who are EU nationals to make applications.

Applications will cost £65 (£32.50 for under 16s) but the system will not open fully until 30 March 2019 – applications for EU nationals already living in the UK must be made by 30 June 2021.

Pensions on no-deal Brexit

The Government has started publishing briefings on how a no-deal Brexit may affect individuals and businesses. One of the first batch addresses the position of individuals living in the EU with UK-based pensions.

The Technical Note for the banking, insurance and financial services sector makes clear that the loss of “passporting” rights for financial services (the ability to provide services across the EU from the UK) will have a direct impact on the pensions they provide.

The main practical problem is that without passporting rights, UK-based firms will not be able to make payments into pensioners’ bank accounts in other EEA member states (a no-deal Brexit will mean leaving the EEA as well as the EU). There is also the problem that UK nationals in the EU may not be able to access their UK bank accounts – at least not without transactions costing more and taking longer. However, the Government has already announced that there will be a temporary permissions regime for EU-based financial services providers so that they can continue to pay pensions to UK residents. 

If there is a no-deal Brexit, employers will need to make sure that members of their pension schemes fully understand the potential implications – especially if the members are EU nationals or are already living in an EU member state.

Immigration policy

The Migration Advisory Committee (MAC) has now published its final report on EEA migration into the UK with recommendations on the future direction of the UK’s immigration policy. In this highly political policy area, despite a favourable reception from the Cabinet, it is unwise to assume that the MAC recommendations will be legislated en-masse by the Government; however, they do provide a useful insight on future developments.

On the labour market, the MAC found that EEA “migrants have no or little impact on the overall employment and unemployment outcomes of the UK-born workforce”. Similarly, it reports no significant effect on overall wage levels although for both measures it does say that UK-born lower skilled and lower paid workers may face negative impacts whereas higher skilled and paid workers may benefit.

The report explains that EEA migrants pay more in tax than they receive in benefits and their presence acts to increase house prices and reduce the cost of personal services. It also sets out that while migration has little overall impact on UK productivity and innovation, highly skilled migrants do have a positive impact.

One of the headline recommendations is that, unless migration rules are included in any Brexit deal, there is no reason for any new immigration policy to discriminate between EEA migrants and others. It also suggests that the Government should not create special relations for lower earning workers but should continue to follow the system for non-EU workers (where higher earning migrants are given greater priority).

The report recommends overhauling Tier 2 (general) to cover EEA workers and abolishing the current cap of 20,700 high-skilled workers as they have the greatest benefit to the UK economy. It also suggests extending Tier 2 to “medium-skilled” employees and making it easier for Tier 2 workers to change jobs whilst in the UK.

For low skill/lower paid workers, apart from possibly maintaining a special scheme for agricultural workers, the MAC does not recommend creating special schemes for any other sectors – including the NHS.

Read the full report.