Why immigration is key to meeting the UK’s housebuilding targets

The UK government’s ambitious plans to boost the country’s housing and infrastructure includes building another 1.5 million homes. With Labour vowing to make this plan a reality, many construction companies are wondering where they will find the necessary workers. Given the ongoing domestic labour shortages, there is no doubt that businesses will need to rely on overseas workers to meet demands in the coming years. However, many within the sector express concern that current rules are too restrictive, calling on the government to do more to address the hurdle of access to labour.

Under the UK’s points-based system, businesses can be licensed to sponsor international employees under the Skilled Worker visa route, provided they meet criteria related to their skills, qualifications, salary and English language proficiency.

After Brexit and the end of free movement from 2021, the points-based system was expanded to cater to the needs of businesses who no longer had unlimited access to workers from the European Union. However, many construction firms have not been able to rely on the new system due to its strict eligibility requirements and eye-watering costs which have become more restrictive during the last four years with further increases on the horizon.

Salary thresholds

The construction industry relies on a diverse workforce, from bricklayers to electricians and engineers. A significant portion of these skilled workers come from abroad. In order to legally work in the UK, they must be sponsored by a UK-based company. However, depending on the type of job, salary thresholds to qualify for the Skilled Worker visa can be as high as £53,500, which is simply too prohibitive for many businesses for a number of reasons, such as the nature of the role or business, regional variations, or working patterns specific to the industry.

In 2023, the Migration Advisory Committee (MAC) reviewed labour shortages in the construction sector and made recommendations to the government to support access to overseas workers for businesses. Following the MAC’s recommendations, in April 2024 the government introduced the Immigration Salary List (ISL) which replaced the Shortage Occupation List (SOL). Key construction roles with recognised labour shortages, including bricklayers, stonemasons, roofers, roof tilers and slaters, carpenters and joiners, were added to this new list. Roles on the ISL benefit from a reduced salary threshold (the higher of £30,960 per year or the occupation-specific threshold, known as ‘going rate’), with the intent to ease restrictions enabling businesses to hire for these roles.

However, a number of key construction roles such as plumbers, electricians and engineers were not included on the ISL. In fact, many engineering roles which were previously on the SOL were removed with the introduction of the ISL, which resulted in a massive and sudden rise to salary thresholds. Construction businesses continue to struggle to recruit locally and, in many cases now also struggle to attract overseas talent.

Visa costs

The cost of a Skilled Worker visa varies depending on the duration of sponsorship. A medium or large company sponsoring a five-year Skilled Worker visa will likely incur close to £12,000 in government fees. The UK has some of the highest visa fees in the world and they are likely to continue to rise.

A portion of this cost is attributed to the Immigration Skills Charge (ISC) payable at £1,000 per year of sponsorship for medium or large companies and £364 per year for small companies or charitable sponsors. For a five-year visa, which is usually the maximum initial duration, the ISC can amount to £5,000 which must be paid at the time the Certificate of Sponsorship is assigned to the applicant. The burden of these fees falls to the company and cannot be passed on to an employee or clawed back.

The ISC was introduced to incentivise employers to upskill the domestic workforce and reduce reliance on overseas workers. For the year ending 31 March 2024, the Home Office annual report confirmed receipt of £667,798 in ISC payments. Since its introduction in 2017, over £1.4 billion has been paid into this fund by employers. 

“Closing the skills gap will take time… In the meantime, the UK’s immigration rules should ensure that sponsored visa routes remain accessible to address immediate workforce needs”

The income from the ISC has the potential to contribute to training the additional 250,000 additional workers the construction sector will need by 2028. Businesses have requested transparency on the fund’s use, as it should be decreasing to support domestic labour growth and reduce reliance on international workers.

A balanced approach to growth

The construction industry faces a critical labour shortage that threatens the ability to meet the country’s housing demand in the coming years. While ISC revenue could help fund essential training of the domestic workforce, closing the skills gap will take time. In the meantime, the UK’s immigration rules should ensure that sponsored visa routes remain accessible to address immediate workforce needs.

To truly support the sector, the government will need to go further beyond the ISL and adopt policies that enable businesses to hire international employees across all roles. This may require shifting the focus away from prohibitive salary requirements to a system that better aligns with the UK’s economic growth priorities.