It was the perfect storm: Brexit, a worldwide pandemic and war.
The impact of these events occurring in relatively short succession has ripped through many different business sectors. The construction industry, which accounts for around 6% of the total UK workforce, is one that has felt the effects most acutely. Rising inflation and the severe labour shortages stemming from the end of free movement have meant that the construction sector has struggled to deliver projects on time and within budget. With the Construction Industry Training Board’s startling prediction that, by 2027, the industry will require an additional 225,000 workers to meet UK demand, it is hard to see how these difficulties can be overcome without government level assistance.
So, in what ways can (or, indeed, should) the government help to ease the strain on the construction sector? To answer that question, the government reached out to the Migration Advisory Committee (“MAC”). The MAC is an advisory non-departmental public body, which provides independent advice to the government on immigration policy. The government commissioned the MAC in August 2022 to undertake a review of the Shortage Occupation List (“SOL”) and consider whether any further roles should be added to this list and whether changes should be implemented in terms of the minimum salary and skill level. In preparing its advice, MAC sought input from industry stakeholders as to whether or not their businesses had been negatively impacted by labour shortage.
On 15 March 2023, MAC suddenly halted this in-depth review of the SOL, at the government’s request, to provide an expedited interim report solely looking at the high vacancy levels in both the construction and hospitality sectors, these being the industries seemingly suffering most as a result of the labour shortages. It is important to note that the findings MAC presented as part of its interim report are unlikely to reflect the true picture of the recruitment issues facing the construction sector, due to the limited time industry stakeholders were allowed to submit evidence.
As part of its assessment, MAC considered whether:
Within its interim report, MAC found that vacancies in the construction sector are around 65% higher than the pre-pandemic level and migration would be a sensible and proportionate response to fill this shortage. On the back of this report, the Home Office, in its latest Statement of Changes published on 19 July 2023, has finally confirmed the following construction roles have been added to the SOL:
On first blush, this is positive news and certainly a move in the right direction. However, will including these roles on the SOL be the silver bullet needed to ease the recruitment drought faced by the construction industry?
The SOL – what does it actually mean?
Under the Skilled Worker visa route’s predecessor, the Tier 2 (General) route, sponsoring roles on the SOL list brought with it a list of benefits, including a lower salary requirement, reduced visa fees and a get out of jail free card when it came to the dreaded advertising requirement imposed by the Resident Labour Market Test.
However, under the Skilled Worker visa route, the benefits for the SOL are far less pronounced. Whilst SOL codes still carry a lower salary requirement and visa fees (a three year visa costs £479, as opposed to £625 entry clearance and £719 for in country applications), it does not impact on the other associated visa costs, such as the Immigration Skills Charge (ISC), which can soar up to an imposing £1,000 per year of sponsorship for medium and large organisations.
The Immigration Health Surcharge (IHS) is similarly unchanged, and is currently £624 per applicant, per year of sponsorship. However, in yet another painful blow, the main rate of IHS is set to soar to £1,035 in the near future.
Unfortunately, it seems that this exponential hike in the IHS fees may cancel out the latest measures to ease the recruitment deficit by introducing five new SOC codes to the SOL. This is set to disproportionately impact on smaller construction outfits, which statistical evidence already shows are more reluctant to engage in the sponsorship process.
However, and despite the disappointing figures, the UK immigration system should not be something that is shunned simply for fear of cost, due to the level of quantifiable benefit it can offer UK businesses with the opportunity to fish from a global workforce pool. We have recently drafted an article to dispel certain myths around the sponsorship process, which can be viewed here.
Scope to sponsor within the construction industry
The Federation of Small Businesses indicated that just 2% of all UK SMEs have utilised employee sponsorship to take on migrant staff in the last 12 months (and only 4% anticipate doing so in the next 12 months). Post-Brexit, the view, or at least hope, was that UK immigration would transition from being a luxury open only to big businesses, to more of a flexible and streamlined process, which would be accessible to all organisations, subject to the successful grant of a sponsor licence. Sadly, this is not reflected in the data.
A further important factor to consider here is employment status. It is reported that as of the first quarter of 2022 there were approximately 799,000 self-employed workers in the construction industry in the United Kingdom, the most of any industry. With an approximate 2.69 million people working in the UK construction industry, that means 30% of the industry’s workforce are self-employed, and around 5% of the workforce is either settled or pre-settled self-employed EU nationals. Therefore, it may be that, due to the high levels of self-employment in the industry, sponsorship is just not a viable option, irrespective of the changes to the SOL.
On review of the data, there appears to be three main sticking points in respect of the recruitment into certain construction roles, including skill level, cost and required standard of English.
Skill level requirement
Firstly, there are many vacant construction positions in the UK, which do not currently qualify for sponsorship as they carry a skill level of RQF level 2 and below. For example, plant operatives, a role set to be in high demand within the UK, is currently graded at RQF level 2 and therefore not eligible for sponsorship.
MAC can and have previously put forward roles to be added to the SOL with a lower RQF level, subject to them satisfying the above two-fold assessment, yet they have not done so here. Why? Well, there is an argument to be had that by lowering the skill level to RQF 2 (equivalent to GCSE) this could undermine the concept of skilled worker migration and, potentially, lead to the displacement of settled workers. Granted, this is a much less persuasive argument in the shadow of such stark figures for vacant roles in the industry.
MAC in its Shortage Methodology report (2023) states its decision to recommend RQF level 2 care roles to the SOL “is based on a very high bar of evidence, including the important social value of the occupation“. So, whilst in its own words the bar is very high, there could still be hope that MAC will recommend lower skilled construction roles to the SOL as part of its final report, subject to the outcome of its ongoing consultations.
English language requirement
Skilled Worker visa holders must be able to read, write, speak and understand English language at level B1 or above of the Common European Framework Refence (CEFR), which translates to an ‘intermediate’ level. There are strong arguments for there to be an English language requirement at this level, particularly in respect of helping to prevent the exploitation of migrant workers, and to assist with their integration within the community.
Nevertheless, in certain industries, such as those focused on manual labour, where English language skills are not such a requirement for the role, perhaps a more rudimentary level would suffice. Undoubtedly, during the individual’s stay in the UK, they would integrate and improve on their language skills over time. So, is there scope to lower the level B1 CEFR for certain roles?
The final point, of course, is the financial impact. The UK’s visa application process is already one of the highest priced in Europe and is reported to generate a healthy profit for the UK government.
Alongside the announced increase to IHS rates, there are rumbles that this will be followed by further increases to visa fees. As set out earlier, the ISC is a significant financial levy, which could present a barrier to sponsorship for many UK businesses. Could the Home Office consider exempting certain codes from paying the skills charge, to incentivise SMEs to engage with the sponsor process?
So far, this article has solely focused on the issues and obstacles faced by the construction sector in respect of sponsored immigration routes, however, there are potentially other avenues outside of the sponsorship system that might help to resolve the issues.
Youth Mobility visa
Migrant workers applying via this route do not require a UK sponsor, nor do they need to show evidence of job prospects in the UK. They do not require a minimum salary (but do need evidence of savings to meet the financial maintenance requirement), skill level or evidence of their English language ability. The cost of this visa is also significantly less (£259), and they are eligible for a lower rate of IHS (£470 per year, although this too is set to rise in the near future).
However, as it stands, this route is only open to 18-30 year olds (or 18-35 for New Zealanders) and a select group of countries, with whom the UK holds reciprocal agreements: New Zealand, Australia, Canada, Monaco, San Marino, Iceland, Hong Kong, Japan, South Korea and Taiwan. Another limitation of this route is an individual may only be granted a visa for up to 24 months, with no scope to extend, or to use the time spent on this route towards settlement. Therefore, whilst it is certainly a more flexible and cost-effective route when compared to the Skilled Worker visa, there are significant downsides, particularly for an individual who wishes to permanently remain in the UK.
On a brighter note, certain media outlets recently reported that the Home Office has entered into early discussions with some other countries, to broaden the current list of countries from which individuals can apply under the Youth Mobility route. The hope is this could boost the low levels of recruitment in hospitality, construction, production and fishery. This has already led to the introduction of the India Young Professional Scheme, which operates similarly to the Youth Mobility Scheme.
It will be interesting to see how these negotiations progress and, should any deals be struck, what further countries will be included.
Another possible, but narrow, avenue for certain overseas workers in the construction industry is under a rather niche subparagraph of the Visitor visa rules (PA 7, Immigration Rules).
Pursuant to this paragraph, employees of an overseas company may come to the UK to “install, dismantle, repair, service or advise on machinery, equipment, computer software or hardware (or train UK based workers to provide these services)”, provided there is a contract of purchase, supply or lease with the UK company and either:
(a) the overseas company is the manufacturer or supplier; or
(b) the overseas company is part of a contractual arrangement for after sales services agreed at the time of the sale or lease, including in a warranty or other service contract incidental to the sale or lease.
Very specific. But, it may be a useful way to access overseas employees for certain short-term, UK based projects, where the above criteria applies. Further, provided the relevant workforce are non-visa nationals, such as EU, US and Canadian individuals, they will not require a visa to enter the UK. There are some very strict additional considerations for utilising this part of the visit visa rules so please do seek immigration legal advice before pursuing this avenue.
Given the current trend of everything going up and current political narrative around lowering net migration figures, it is unlikely that we will see the government lowering or scraping any associated fees, or even the skill and English language level, anytime soon.
However, there may still be hope on the horizon in the shape of MAC’s final report. The government put MAC in a difficult position by pulling the brakes on its consultation period with the construction industry, which MAC has made this clear in its interim report. Once MAC has had the opportunity to finalise its review of the available data from stakeholders in the industry, it may find that there is sufficient evidence to introduce the lower skilled construction roles to the SOL. Further developments in this area are awaited with bated breath.
As it stands, the most positive update for the struggling construction sector is the potential expansion of the list of countries from where overseas workers can apply for a Youth Mobility visa. With no sponsorship, skill, salary or English language requirement, and a grant of leave of up to two years, it is certainly a good way for overseas nationals to get a foot in the door, and also provides a great resource to those industries, such as construction, that have been downtrodden by recent global events.