PM leaves employers in dark on staff shortages

Although businesses want immigration policies relaxed, this is politically risky. Oliver Gill reports

Liz Truss has staked her future on growth, with plans to cut taxes and regulation to get business moving. But industry leaders attending the Tory conference in Birmingham couldn’t help but notice a policy vacuum on a key issue for the economy: immigration.

Britain’s job market has 1.3m vacancies, roughly twice the average number seen during the last decade, while the unemployment rate is at its lowest level since 1974.

If the country is effectively at full employment, how does Truss propose going for growth without flinging open the borders, bosses wondered?

“We are a bit in the dark at the moment,” one FTSE 250 chief executive told The Sunday Telegraph on the sidelines of the conference.

Shortages in the labour market were brought to the foreground this time last year. Lorries serving everything from petrol forecourts to fast food chains were not turning up. The reason? A chronic lack of HGV drivers.

In the days, weeks and months that followed, ministers intervened. Some 5,000 overseas workers temporary visas were issued to fill the void, providing breathing space while new domestic drivers completed fast-tracked HGV training.

The driver shortages may now have largely abated. One sector’s gain has been another’s loss.

“The people they have trained as lorry drivers used to work in warehouses, which means companies are now short of people working in the warehouse,” says one senior leader. “So we have this rather comical situation of going from having a lorry that was loaded with no driver, to an empty lorry with a driver sitting in the cab.”

Such is the problem of a land of full employment and more tightly controlled borders. Bosses are hoping the Government will find a solution to one of their most pressing problems, but have so far been left wanting.

Although a no-brainer to businesses, relaxing immigration policies is fraught with political difficulty. The Prime Minister could not only inflame tensions with her backbenchers, but also put herself on a collision course with her own Cabinet colleagues.

Suella Braverman, the Home Secretary, has vowed to reduce net migration, suggesting that the tough stance taken by predecessor Priti Patel will continue or get tougher still.

“She [Truss] is going to run into a problem about immigration, because she clearly thinks that immigration can bring growth, and of course, technically that’s true,” former Tory leadership hopeful Rory Stewart said last week. “But of course, she has a Home Secretary who doesn’t want immigration.” It emerged last week that No10 is considering a Us-style policy to make it easier for British companies to bring overseas staff here on secondment, but this is only likely to have an impact on the margins.

This week, the Office for National Statistics (ONS) will publish the latest UK labour market figures. Many within government will be paying close attention to the number of “inactive” Britons in the data.

In June, the latest available figures, 9m people aged between 18 and 64 fell into this bracket. The Government believes getting many of these people back into the labour force could be the solution to Britain’s woes. Many of these people, reliant on out-of-work benefits, could be among those Truss referenced as lacking “skill and application” and need to show “more graft” in leaked recordings while she was chief secretary to the Treasury in 2019.

Rather than relax immigration policy, so-called supply-side reform should focus on making millions of “inactive” Britons active again, the argument goes. But critics suggest that this effort will yield limited results. The 9m includes 2.4m students, 1.2m who have retired, 2.5m who are long-term sick and 1.7m carers looking after family.

The ONS found that just 1.7m people classified as inactive actually want a job. Of these, 580,000 are long-term sick, 360,000 have caring responsibilities and 360,000 are students.

Putting a precise number on how many out of work can be brought back into employment is difficult. But most experts agree it is more likely to be in the hundreds of thousands rather than the several million some have claimed.

“Achieving the Government’s 2.5pc growth target will be more about going further and faster on business investment-backed productivity than boosting the number of workers,” says Louise Hellem, director of economic policy at the CBI. “Tackling labour and skill shortages will be a fundamental element in ensuring investment plans can succeed, but will also require more investment in innovation and long overdue supply-side reforms on planning and regulation.”

Behind the scenes a review of immigration policies is being performed in Whitehall. Less than two weeks before Boris Johnson handed over to Truss, Kevin Foster, then Home Office minister, instructed Prof Brian Bell of the Migration Advisory Committee to carry out a review of the Shortage Occupation List (SOL) – an official register of roles where migrant visas can be more easily granted.

The SOL is not a long-term fix. “No occupation should be on the SOL forever if migration is part of a successful plan to address shortage of a particular role in the UK labour market,” Foster said.

Many sectors will hope the updated SOL, due to be completed by March, will work in their favour. The aviation industry, for instance, has been repeatedly knocked back when asking for an exemption for overseas baggage handlers and airport staff to help mitigate the chaos at airports this summer. Grant Shapps, transport secretary at the time, insisted that “we cannot always reach for the lever marked ‘more immigration’”.

Government sources say this overarching approach will not change under Truss. Jacob Rees-mogg is understood to have ordered Department of Business officials to conduct a line-by-line assessment of the skills Britain’s labour market is lacking and why. This will then drive shortterm migration policy and labour market investment, sources say.

Furthermore, migration cannot be looked at in isolation. A Whitehall source adds: “We really need to address the cost of housing and people’s inability to easily move around the country for work before deciding the answer is migration.”

Perhaps ironically, housebuilders are among the most frustrated by the current labour market.

“The UK training and education system simply is not producing enough new recruits with the right knowledge and skills, it poses a real threat to the industry’s ability to deliver the homes the country needs,” says Steve Turner of the Home Builders Federation.

“The process for employers sponsoring foreign workers is not working for industry. Housebuilders are not using the system at all because it is too complex, time-consuming and costly.”

‘Truss is going to run into a problem about immigration’

‘We really need to address the cost of housing’