The government has made it clear that companies should be looking to the domestic job market, not to hires from overseas, to plug skills gaps. But on top of other burdens on businesses, achieving success will be challenging, write Kelvin Tanner and Adam Kyte at Charles Russell Speechlys.
In his speech on 28 November, commenting on record net migration levels, prime minister Keir Starmer announced that his government would be introducing plans to reduce net migration. Further details will be announced in a white paper, but he made clear that the government would be cracking down on abuses within the immigration system, reforming the points-based immigration system and creating an expectation that those businesses that utilise the Skilled Worker visa route should fully commit to training the resident workforce. Businesses must brace for these changes and anticipate a stricter approach to immigration compliance and changes to how they recruit and retain international talent.
There will only be a meaningful reduction in the number of skilled workers entering the UK when the government have found a way of addressing the ongoing skills shortages”
A recent amendment to the pending Employment Rights Bill has already laid out that employers found flouting the rules will face a potential two-year ban on hiring overseas workers. There will also be a quadrupling in the length of “sponsor action plans” from three to 12 months for sponsor licence holders who have breached their compliance responsibilities.
The latest migration statistics have shown a post-Brexit, post-Covid rise in net migration to the UK from 224,000 in 2019 to 906,000 in the year to June 2023. A commitment from a new prime minister to reduce net migration is nothing new and it is worth noting that observers expect net migration to fall in the year to 2025 as a result of stricter rules on salaries and student dependants. However, the record figures, together with political and media pressures, appear to be behind the desired shift to a more robust and strictly enforced immigration system.
Migrant worker visas
Care firms granted sponsor licences despite labour violations
Although we must await the government’s white paper, the Home Office appears to have already shifted its focus to immigration compliance and this is being felt by sponsor licence holders found to have committed compliance breaches. The latest migration figures and work visa statistics show that sponsor licence revocations more than doubled between Q1 and Q2 2024. Suspensions were also up 69% in the same period. We shall await the Q3 figures to see if this trajectory has been maintained since the election. However, this enforcement uptick appears to be a harbinger for the stricter immigration compliance environment outlined in the prime minister’s speech.
But what does this mean for UK businesses, especially those reliant on the global talent pool? In return for the privilege of being able to sponsor migrant workers, sponsor licence holders are already subject to a number of immigration compliance responsibilities, including a requirement to comply with UK immigration and employment laws. This focus on compliance should come as a wake-up call to sponsor licence holders, who should ensure careful adherence to these responsibilities.
We recommend that they undertake an urgent review of their existing immigration and employment policies and procedures to ensure that these are sufficient. They may also wish to conduct internal or external audits to assess the extent to which they are being properly adhered to and identify and address any weaknesses before these are identified by the Home Office. In some cases, businesses will need to receive training to ensure that those involved in immigration matters on a day-to-day basis are upskilled and have a proper understanding of their sponsor compliance responsibilities and internal policies and procedures.
In an environment of stricter immigration compliance and with the government suggesting that they will impose an expectation to train resident workers in return for the ability to sponsor Skilled Worker visas, companies should consider planning ahead to develop talent pipelines domestically, upskill resident workers and reduce their reliance on migrant workers. This will reduce their exposure to the uncertainty of the announced “new expectations” on training resident workers. This could manifest as a reimagined Resident Labour Market Test (RLMT) or mandatory training schemes. Either way, it is likely to add additional administrative burden and costs to the already expensive process of sponsoring work visas. The new body set to be given oversight of domestic upskilling, Skills England, has long been announced but the extent of its powers still remains a mystery.
There will only be a meaningful reduction in the number of skilled workers entering the UK when the government have found a way of addressing the ongoing skills shortages”
The Migration Observatory at the University of Oxford provides a broader context, noting that although net migration figures have been high, they are in line with other high-income countries and are tapering off as a result of late changes brought in by the previous government. The focus, therefore, should not solely be on numbers but on the quality of and compliance with the immigration system.
The prime minister acknowledges that there have been skills shortages across the country, which have led to record increases in net migration. We hope this means that ministers’ plans to address this go beyond stricter immigration compliance and imposing greater costs and burden on businesses that are already struggling to fill vacancies. There will only be a meaningful reduction in the number of skilled workers entering the UK when the government have found a way of addressing the ongoing skills shortages.
If the government can accept these realities and employers can partner with them to help with the training and upskilling of resident workers then there is hope that we can move towards a more symbiotic relationship between immigration and the domestic job market.
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