Truss to review visa schemes in bid to ease UK labour shortages

Liz Truss is set to launch a major review of Britain’s visa system to tackle acute labour shortages in key industries in a move that was welcomed by business leaders.

The prime minister is set to defy some of her anti-immigration cabinet colleagues by making changes to the “shortage occupation list”, allowing certain industries to bring in more staff — such as broadband engineers — from overseas.

The review could also endorse a loosening of the requirement to speak English in some sectors to enable more foreign workers into the country.

Inclusion on the Home Office list allows migrants from outside the EU simpler entry to Britain due to lower visa fees and a waiving of employers’ usual duty to prove that there is no suitable local worker for the role. In the longer term, migrants do not have to meet the £35,800 salary threshold required to settle in the UK after five years.

Truss is also set to lift the cap on foreign labourers working in British seasonal agriculture. The visa scheme, which was introduced to plug taps in the agricultural workforce, has enabled 38,000 visas to be issued to farm workers — but the sector has warned that this is not high enough to tackle severe labour shortages.

The review was welcomed by business groups which have been pushing a review of the shortage occupation list to tackle labour shortages in certain industries which have been exacerbated by Brexit and the Covid-19 pandemic.

A survey this summer by the British Chambers of Commerce of 5,700 businesses said that more than 60 per cent of companies needed to find more staff in the UK — but more than three-quarters were struggling to hire. In the construction sector, for example, 83 per cent of companies were reporting hiring difficulties.

The CBI employers group said: “Guarding against skills and labour shortages can simultaneously help keep inflation in check while ensuring firms have the people they need to grow, benefiting everyone.”

One business figure described the move as a “real signal” that the government was serious about encouraging economic growth.

A Downing Street official said that the review would not necessarily lead to a net increase in immigration.

“We need to put measures in place so that we have the right skills that the economy, including the rural economy, needs to stimulate growth,” the official said. “That will involve increasing numbers in some areas and decreasing in others.”

Allies of Truss said that the new prime minister was committed to ensuring the UK would remain a world leader in attracting and retaining talented workers.

But Truss’s review of the immigration system is likely to run into opposition from some Brexiters in her cabinet, given anti-immigration sentiment was a key driver of the vote to leave the EU in 2016.

Truss is already facing a backlash from many Conservative MPs over Friday’s “mini-Budget”, which launched the biggest set of tax cuts for half a century.

The fiscal announcement from Kwasi Kwarteng, the chancellor, saw sterling plunge against the dollar as markets reacted negatively to the £45bn debt-financed package.

Many Conservative MPs were openly critical of the Budget, including former chief whip Julian Smith who said it was morally “wrong” to give tax cuts to the highest earners at a time of “fear and anxiety” among low-income workers.

Truss has also angered many colleagues by refusing to give ministerial jobs to more than a handful of MPs who supported Rishi Sunak, her rival for the leadership.

Keir Starmer, Labour leader, said on Sunday that if he became prime minister he would reverse Kwarteng’s removal of the 45p top rate of income tax.

“The effect of that decision was that if you earned £1mn you got £55,000 in tax cuts as a result of that, that’s more than enough to employ a nurse,” he said. “It’s hugely risky and hugely divisive.”

However Starmer said that a Labour government would not reverse Kwarteng’s cut in the basic rate of income tax from 20p to 19p.

Government officials described as “speculative” a report in the Sunday Telegraph that Truss would cut income tax again in a New Year Budget which would also change the lifetime and annual allowances on pension pots.

But Kwarteng told the BBC on Sunday that over the next year he wanted people to keep “more” of their income through further tax cuts.

Asked about the sharp sell-off in financial markets after his Budget announcement on Friday, Kwarteng said: “As chancellor of the exchequer I don’t comment on market movements.”

Treasury officials said they did not recognise a separate claim that the government could set up a UK sovereign wealth fund with the proceeds of fracking.