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September 11, 2024
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Welcome to PerchPeek’s Global Mobility Guide To The UK Election Result. This guide is designed to help our GM and People community understand the impact on corporate relocation & immigration of the new Labour Government, drawn from their election manifesto.
It will quickly get you up to speed with the changes that could affect your corporate relocation and international talent processes and strategy.
In collaboration with Lewis Silkin!
Labour will aim to build upon Conservative measures put in place in April 2024 to curb net immigration from 650,000 down to “a couple of hundred thousand.”
Since Brexit, net migration to the UK has surged massively. Despite one of the key principles of Brexit being to reduce the number of people entering the UK, the lack of EU workers has highlighted the need for foreign workers to fill vacancies, which has been achieved through non-EU immigration to the UK. This has led to a more than doubling in total net migration to the UK compared to pre-Brexit levels. Last year, net migration—the number of people coming to the UK, minus the number leaving—was 685,000, figures from the Office for National Statistics (ONS) show.
The increase in immigration has led to an expansion in Mobility’s profile at many businesses. “Our clients have felt the uptick in immigration to the UK, and for many, it has been an engine for Global Mobility’s increased influence in their companies, despite the challenging workforce reductions we’ve seen in the industry in the past couple of years,” said Paul Bennett, CEO at PerchPeek.
“This increase in demand for international talent, whilst operating with smaller team sizes, has led to an adjustment in how many Mobility teams function, in order to maintain support quality. We’ve seen an increase in outsourcing and an increased use of tech to drive efficiencies in relocation programmes.”
The net migration surge has been a major point of contention for the Conservative government, leading to the introduction of the points-based system for visa applications being introduced in April 2024. This includes increasing the minimum salary threshold to £38,700, as well as salary minimum requirements for family members of settled UK residents, plus a near doubling in visa application fees. According to The Office for Budget Responsibility's most recent forecast from March 2024, these Conservative policies currently have net migration on course to decrease to 350,000 by 2029.
While Labour’s stated aim to "reduce net migration" is not tied to a target, it has been circulated that the Government expects its policies will reduce the number of people arriving in the UK to "a couple of hundred thousand a year."
Leader Sir Keir Starmer said:
"Mark my words, a future Labour government will bring down net migration."
Labour plans to align immigration policy with skills policy by targeting improved training of local talent in high-migration sectors to reduce the need for hiring overseas. While this is unlikely to impact corporate relocation in the short run, it could introduce onerous and expensive training requirements for major sponsors of visas, depending on how the law is drafted.
Yvette Cooper, the new Home Secretary, has outlined Labour's plans to reduce reliance on overseas workers by improving the training of British workers in sectors experiencing major labor shortages such as construction, IT, social care, health, and engineering.
The intention is to pass a new law that requires different government departments to create skills improvement plans specifically for these high-migration sectors, outlining how companies can train local workers and decrease dependence on foreign workers. In conjunction with enhanced training in these sectors, these plans will make it more challenging for companies in these industries to hire foreign workers in shortage roles if sufficient steps are not taken for workforce training.
Labour’s plans also include creating additional restrictions on visas and imposing longer bans on hiring foreign workers for companies that violate employment laws, such as paying below the minimum wage.
Graham Watts, the chief executive of the Construction Industry Council, expressed concerns about imposing limits on skilled immigration before allowing workforce plans to develop fully, as this could potentially hinder economic growth. Labour's approach aims to strike a balance between training British workers and managing the influx of foreign workers in key sectors, with flexibility built into the plan to accommodate well-performing companies.
Rather than capping worker visas, as the Conservatives had intended, Labour plans to reform the apprenticeship levy (a 0.5% tax on companies with a wage bill over £3 million to support apprenticeships) to focus on skilling or upskilling resident workers.
Sponsors of key occupations in industries such as construction, IT, engineering, and adult social care will be required to adhere to a government-determined workforce plan and fair pay agreement. If companies are deemed not to be meeting training requirements or investing in workforce training, individual companies may be disallowed from sponsoring workers.
Occupations may also be removed from the Immigration Salary List if a sector is not engaging with its workforce plan, although exemptions may be granted to companies showing strong compliance.
Beyond the above measures, Labour intends to strengthen the Migration Advisory Committee by linking it to skills bodies UK-wide, including the Industrial Strategy Council and the Department for Work and Pensions. They also plan to commission the Migration Advisory Committee to investigate the impact of the Conservatives' salary threshold increases and the prohibition on care workers being accompanied by their dependants in April and March 2024, respectively.
*The Immigration Salary List features occupations with a reduced salary threshold for Skilled Worker route applications. If a job is on this list, the general salary threshold is 80% of the usual minimum rate, making it more affordable for companies seeking to hire foreign talent for those roles.*
Where the Conservatives had planned to further increase immigration application fees for all visas, including increasing the fees for visitors, workers, and students by 25%, at the time of writing, Labour has not yet made any announcements on immigration fees.
Currently, there is a financial requirement for couples where a foreign spouse is seeking to settle in the UK with their British partner via a Spouse visa to earn a combined income of at least £29,000. This financial threshold plays a crucial role in determining the eligibility of foreign spouses to live in the UK with their partners.
Labour does not plan to impose formal caps on the number of visas issued via any of the UK’s immigration routes, including the Spouse visa. Unlike the Conservatives, who had planned to cap family visas, Labour generally supports increases to the minimum income requirement for UK settlement visas. The Conservatives had planned to raise the minimum income requirement for the Partner route to £34,500 in 2024 and further to £38,700 by 2025, and Labour was broadly in support of these changes.
This new UK Labour government could have significant implications for Global Mobility teams, particularly those working in the aforementioned key skill-shortage sectors like construction, IT, engineering, and adult social care.
With the rapid rise of immigration to the UK in recent years, Global Mobility’s influence has already been increasing for companies with UK workforces. With Labour's focus on aligning immigration and skills policies, there is an exciting case for Global Mobility to further its importance as a strategic and consultative function for these organizations. If companies are forced to adhere to tighter requirements in terms of training and hiring local talent in order to continue relocating people from abroad, Global Mobility leaders may find themselves associated to a lesser degree with the employee benefits umbrella and more closely linked with Talent teams and L&D teams, as People functions shift to a more integrated workforce planning and training approach.
With respect to the closer aligning of Global Mobility to other core segments of the broader People function, Paul Bennett, CEO at PerchPeek, believes these changes can represent an opportunity for Mobility professionals:
"For Global Mobility leaders with the ambition of obtaining a 'seat at the table,' the Labour policies could be a big win, as it will make GM strategy even more integral to an organization's broader Talent approach. On top of already surging levels in the sourcing of international talent, GM Leaders will be relied upon by both People leaders and wider business teams for their expertise in immigration policy in relation to L&D and Talent objectives. Global Mobility is becoming ever less of a service-delivery function and ever more strategic for UK workforces and beyond."
Given that Labour has stated that they will not impose specific caps on immigration routes, it is challenging to determine how their commitment to reducing net immigration from 650,000 to "a couple of hundred thousand" will materialize for companies, and what the timelines for these measures will be. Labour said they will impose "appropriate restrictions on visas" – and it will be essential for companies that rely on foreign talent to stay close to changes in this area and not to fall short of requirements, either in workforce planning initiatives or in the visa application processes themselves.
In the scenario where immigration is going to be reduced by well over 50% by government measures, it may become a more essential capability for Global Mobility and Talent teams to demonstrate the strong business justifications for hiring foreign workers, depending on the severity of Labour's measures. At an extreme level, we might see requirements similar to those in the USA, where companies must show a shortage of local candidates to obtain a H1B visa. Such changes could impact the costs associated with relocating talent (beyond any visa application cost increases), as well as minimum salary thresholds, potentially affecting the recruitment and retention of international talent.
Immigration experts expect the earliest for any changes being implemented to be 6 months’ time, and that any plans for immigration reforms will not take effect until 2025.
In a broader context, the planned reductions in net migration in the UK are looking increasingly likely to follow a global pattern. Similar shifts in immigration policies have been observed in other countries such as the United States, where stringent visa policies were put in place during the Trump administration, and in France, where the ongoing elections are seeing right-wing, anti-immigration groups in the ascendancy, which could deeply affect international hiring strategies of organizations based there.
Given the elections in the US and France in 2024, Global Mobility leaders may find themselves reacting to immigration policy changes made in the UK as part of a broader global adjustment.
As Mobility professionals navigate these changes, they may need to consider aligning more closely with talent management, learning and development functions, and workforce planning to effectively support their organizations' talent needs in a shifting regulatory landscape.
Labour has claimed to have plans to reduce net immigration to the UK to a greater degree than current forecasts anticipated following the Conservative actions taken in April 2024. In response to Labour’s alignment of immigration policy more closely with national skills policy, there may be an argument for companies to align their Global Mobility strategy more closely with their workforce training and L&D strategy, as part of a more integrated People and Talent function.
On top of this, given that Labour claims to be planning "appropriate restrictions on visas," Global Mobility and Talent teams may face a harder battle to justify visa sponsorship for international talent hires. However, how this manifests is unlikely to be meaningfully understood until 2025 and beyond.
Given Labour’s general support for previous Conservative increases in visa application prices, further increases in these costs are definitely not off the table.
As has been the case for the last five years of Global Mobility, the value and activity of the function continue to grow with every passing year.
If you have any concerns or questions about the measures you might need to take, please do not hesitate to reach out to the PerchPeek team.
Thanks for reading – we hope you found this guide useful!
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