Will the Budget’s immigration reforms help with labour shortages?

Joanna Hunt is head of immigration at law firm Fieldfisher

It is no surprise to learn that the construction sector is still impacted by labour shortages. A recent survey of construction companies found that 68 per cent have vacancies.

The pandemic and the end of free movement have buffeted the industry, resulting in workers returning home, searching for new careers or entering early retirement. EU contractors who undertake short-term construction projects in the UK are also still coming to terms with the impact of Brexit. Many are struggling to find suitable visa options to bring their overseas-based workers into the UK.

“The addition of the jobs on to the SOL is a sign of progress but is unlikely to be the game changer the construction industry badly needs”

Attention has turned to what solutions are offered by the UK’s immigration system to plug this labour gap. The construction industry has been badly served by the UK’s immigration system, as its high costs and skill level requirements have shut out many employers.

However, the chancellor’s announcement in the Budget that certain construction roles will be added to the Shortage Occupation List (SOL) – the list of jobs that the government accepts are in demand in the UK – does offer some hope. The key question is whether this will make a meaningful difference to construction businesses that are struggling to recruit workers.

The pros and cons of the Shortage Occupation List

For construction companies wanting to recruit overseas workers to fill vacancies in the UK, the main visa option available is the skilled worker visa. This is a “sponsorship” visa, meaning it is linked to an employer. To obtain this visa, a UK company must obtain a skilled worker sponsor licence, then offer a role to an overseas worker that meets the requisite skill and salary thresholds. The worker can then secure a visa by submitting a valid application and supportive documentation.

The sponsorship system favours highly skilled occupations so has not, until recently, been an option for construction companies wanting to bring in labour. In early 2021, the skill level for the visa route was lowered to RQF level 3, or school-leaver level. Despite this, many key construction roles still do not qualify for the visa.

The solution that is now being proposed is to move key construction jobs, where shortages are particularly acute, onto the SOL. The proposals suggest that jobs such as bricklayers, roofers and plasterers will be added to the list to enable them to benefit from a degree of preferential treatment during the visa application process.

But just how much of an impact will this make to construction companies wanting to source labour quickly and cheaply?

The SOL does confer some advantages for employers. For jobs on the list, the salary limits for a role are reduced, so an applicant need only be paid 80 per cent of the going rate for that particular job or at least £20,480, whichever is the lowest. Application fees are reduced for jobs on the SOL, from £625 to £479 for up to a three-year visa. There is also a beneficial regime for individuals who want to apply for settlement after five years, as lower salary limits will apply.

But that is pretty much it. The other associated visa fees such as the immigration skills charge (£1,000 per year for a visa for a medium to large company) and immigration health surcharge (£624 per year of a visa) are still payable, meaning costs are still several thousand pounds per worker.

Most importantly, there is an English language requirement attached to this visa route that requires all applicants who are not from a majority English-speaking country to pass an English language test if they do not have a degree taught in English. Skilled worker visas are certainly going to be easier to obtain for construction workers, but the costs involved and the requirement to speak English to a required level simply make it unworkable as a sustainable and long-term solution to labour shortages.

Skilled worker sponsorship is also out of reach for EU contractors who need to get workers onsite for short-term projects in the UK. The visa category requires there to be a UK company that can act as a sponsor, and many EU contractors do not have a UK presence.

In this case, the visa options are limited. They can either consider if the workers can enter as visitors, relying on the fact that they come within the limited business activities that are permitted, or hope that the UK customer is willing to act as a sponsor to unlock the potential of other sponsorship routes designed for service suppliers.

The chancellor has suggested in the Budget that there will be a review of the permitted activities that a visitor can do in the UK. If it recommends the inclusion of construction jobs, it would go some way to alleviating the problem.

The addition of the jobs on to the SOL is a sign of progress but is unlikely to be the game changer the construction industry badly needs. If fees remain high and the English language requirement stays in place, it is hard to see how this will make a significant impact. The review of the visitor category is more promising but we do not know yet what this will entail. More lobbying is required to ensure more meaningful reforms are put in place.