Elevating the UK northern economy: Harnessing UK Immigration to accelerate economic growth.

25th March 2024

By Laxmi Limbani, Senior Manager, Henry Thourgood-Marshall, Apprentice Paralegal , and Naureen Malik, Associate, Fragomen

It’s no secret there is a significant difference in the GDP between the north and south of the UK.

Why is this a burgeoning problem?

As the north produces limited GDP, it is more attractive for entrepreneurs to set sail to the south. This leads to a decreasing number of well-paid jobs in the north, as well as a disassociated socio-economic culture and climate.

A new report, published by the Invest North project outlined specific recommendations aimed at the capitalisation of the north’s specialisms to develop its economic position, specifically focusing on the ‘place-based industrial investment strategy’ which is tailored towards developing a place’s existing advantages, specialisms, and capabilities. For the north, this includes advanced manufacturing, life sciences, digital, energy and business services.

The report highlights the ever-growing need for innovation in the north, whilst attracting the right talent for the right jobs. However, considering that 60% of northern expertise required to fulfil the objectives of the report fall within a shortage occupation this initiative may prove difficult.

As noted in the report, “The North, like the wider UK, has a deficit in the number of people with even ‘adequate digital skills’” -- clearly illustrated in the current Shortage Occupation List, which lists a number of roles as being shortage occupations, including in the technology sector.,

The Invest North report also highlights the urgent need for advanced manufacturing and engineering in the north, as seen by the comment from the COO of Groupe Atlantic regarding the reskilling issue for meeting the challenge of Net Zero: “ They’ve got an aspiration of 600,000 installs by 2028. Who on earth is going to install them?” This illustrates how a shortage of skilled employees in the manufacturing and engineering sector can decelerate the speed at which a project can be completed.

Businesses must ask themselves, what is one of the key factors driving innovation?

Diverse and highly trained minds from different walks of life can help to solve a variety of problems and create innovative ways to develop the northern economy. With increased diversity also comes increased recognition from global investors. As only 10% of employees in engineering are from minority ethnic backgrounds, it is limiting the region’s perspective and the ability to create new ways to deal with the engineering issues raised in the report.

Using immigration routes to drive investment in the north

Businesses that are struggling to find enough skilled workers in the north should consider the global talent pool to source highly trained workers and fill skills gaps. By taking advantage of the number of immigration routes available for short and long-term employment in the UK, companies can help accelerate northern economic development.

Sponsoring workers from abroad

UK businesses that wish to recruit skilled workers from abroad must obtain a sponsor licence, which allows companies to sponsor individuals from overseas to work in the UK. Once they have done so, the licence is valid indefinitely – a welcome change from the previous rule which mandated renewal every four years.

Sponsorship provides long-term benefits for businesses by enabling them to tap into a highly skilled global talent pool to not only fill skills gaps, but also help nurture  future specialists. This results in a win-win for both the businesses and the northern economy.

However, for businesses planning to explore immigration routes to fill roles, especially those considering sponsorship under the Skilled Worker route, they will need to take into account that the general salary threshold for sponsored employees is increasing from £26,200 to £38,700, effective  4th of April 2024. At the same time, the going rate is also increasing to the median. As a result, employers will have to pay whichever is the highest of the increased general salary threshold or the increased ‘going rate’ for the specific occupation.

Further, there are currently multiple occupation codes which attract a salary discount as roles aligned to these codes are classified as shortage occupations. These occupations are noted in the new Immigration Salary List, which replaces the Shortage Occupation List in April. The Migration Advisory Committee, an independent body that advises the government on immigration matters, has recommended that a number of occupation codes on the Shortage Occupation List are removed from the new Immigration Salary List. If the recommendations are accepted by the government, this change will lead to a much shorter list and undoubtedly impact multiple sectors in the north. Although roles in the technology sector, highlighted in the report, may not be greatly impacted by these changes due to the higher salaries found within the sector, other sectors mentioned in the report such as engineering, manufacturing and health and social care will likely feel a significant adverse impact, as the benefit of the current 20% discount to the ‘going rate’ minimum salary will no longer be available to employers. Regional businesses should therefore plan to move forward carefully.

One discount that is anticipated to remain is the new entrant rate, which as the name suggests is the route for those at the beginning of their careers, such as students or young people under the age of 26. Currently New Entrants may be sponsored as Skilled Workers for up to four years with a 30% discount on the occupation-specific threshold and a 20% discount on the general salary threshold, the higher of which must be paid. Therefore, employers who are concerned about the increased salary thresholds, may wish to explore hiring employees that can benefit from the new entrant provisions under the Skilled Worker route, so that they can benefit from the expected salary discount.

Attracting international students to stay post-graduation.

As recommended in the report, there is no doubt that businesses should look to fill skills gaps through local and national labour markets, before looking to other countries for new talent. What better option than to look to university graduates and offering them a reason to stay in the UK when they graduate.

Currently, only 7% of international students are employed in the UK after graduation. There may be several reasons for this, but it may also be that they’re overlooked by employers because the visa process, initially, seems daunting. The most popular courses among international students include, engineering, technology, and computing, all of which are occupations and sectors highlighted by Invest North as lacking from the current talent pool. If northern employers were to utilise a fraction of the 93% of international students graduating from top northern universities in cities such as Sheffield, Leeds, and Manchester, it would go some way to resolve the shortage of specialist workers in the north. The key benefit from a business perspective is that students that are graduating in the UK do not need sponsorship for the first two years if they apply under the Graduate visa route.

Businesses have a number of immigration options at their disposal which they can use to attract and retain overseas talent to fill skills gaps and help lift the northern economy.

Need help for your business?

As immigration specialists, Fragomen LLP can fully support you and your business to navigate the UK immigration system, so that it is less daunting and help you attract and retain the right overseas talent to fill skills gaps. You can focus on other areas of your business growth and product development and these steps can help to move forward with the Invest North’s vision and objectives.

If you and your business need assistance, please feel free to contact us at Sheffieldinfo@fragomen.com

 

 

 

 

 

 

 

 

 

 

 

 

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