Britain’s growth ambitions will hit the buffers without the people able to make them happen. But will a planned revamp of the UK skills shortage list improve the situation?
3 June 2025 | By Alex Schulte
After years of underinvestment and economic stagnation, Britain knows it needs to get its mojo back.
Since winning power last year, the Labour government has committed to a series of mega-targets and capital investment projects intended to bring the UK back up to speed with its peers. These include:
- Building 1.5 million new homes in England by 2029
- Decarbonising the electricity supply by 2030 by doubling onshore wind, tripling solar power and quadrupling offshore wind generation
- Improving rail connectivity
- Building £1.5 billion worth of gigafactories to manufacture electric vehicles
All these schemes are welcome correctives after decades of neglect left the country’s infrastructure creaking. They should also deliver a permanent improvement to the nation’s growth potential.
But realising these ambitions will require large numbers of workers with specific capabilities. This is where the danger lies.
The Great UK Skills Shortage
For many years, UK firms have struggled with a dearth of skilled workers. In its 2025 report, staffing giant ManpowerGroup estimates that 76% of UK employers are facing difficulty filling roles due to a lack of skilled talent. While this marks a slight improvement from the 80% registered in 2024, it is clear that skills shortages remain the overwhelming norm for British companies, not the exception.
Even more worryingly, these shortages are particularly acute in the sectors viewed as critical for the country’s economic prospects. The Government’s upcoming, long-trailed industrial strategy will prioritise eight sectors in particular:
- Advanced manufacturing
- Clean energy industries
- Creative industries
- Defence
- Digital and technologies
- Financial services
- Life sciences
- Professional and business services
As our own analysis has made clear, all these fields are suffering severe recruitment problems. The clean energy sector alone is facing a shortfall of over 184,000 workers, a figure that puts the Government’s Net Zero targets in serious jeopardy.
This doesn’t even factor in the full extent of shortages in intertwined sectors like construction. According to the Construction Industry Training Board (CITB), for the country to build infrastructure and housing on the scale targeted will require 252,000 workers by 2028.
So what’s standing in the way?
Decades of Underinvestment in Training and Skills
For 20 years, the UK has simply not invested enough in developing its homegrown skills base. This complacency is now catching up with the country through shortages of qualified workers in many sectors.
The facts of the matter are stark. Public funding for adult skills has fallen by 31% in real terms from its peak in 2003–04. Spending dropped from £6.3 billion (2003–04) to £4.3 billion in 2023–24.
The number of publicly funded qualifications started by adults has dropped by 70%, while average employer spending on training per trainee has decreased by 27% since 2011.
Apprenticeships, once touted as the great hope for reskilling Britain, have suffered persistently low completion rates.
The combined effect of this sustained underinvestment is bearing down on the health of industries tied to the Government’s headline ambitions for kickstarting growth. Between 2019 and 2021, the number of employers in construction providing skills training dropped from 67% to 42%. Four years on, the lag effect means fewer staff able to build homes at scale or carry out the mass retrofitting of existing housing stock to support environmental goals.
Only 8,620 apprenticeships were completed in 2022/23 against an industry need of over 96,000 new staff annually.
In civil engineering, the situation is graver still. Only 19% of the workforce is under the age of 25. As current staff enter retirement, they won’t be replaced in sufficient numbers to maintain this critical sector’s headcount.
Surely, in the face of shortfalls in skilled trades that take years to remedy, the UK government gives employers leeway to hire foreign workers?
Well, it’s not quite so simple anymore.
How UK Immigration Rules Add Extra Complexity
The UK’s visa rules discriminate against the lower-paid (but vital) roles typical in these sectors.
Under current rules, to qualify for the Skilled Worker route, one must earn a minimum of £38,700. This is significantly above what a junior roofer would likely be paid. Recently, the Government has signalled its intention to raise these salary minimums further still, while also raising the qualification threshold to the equivalent of a bachelor’s degree. This will mean only the most highly skilled workers are able to emigrate to the UK at all.
There are ways around these restrictions. The Immigration Salary List, which replaced the previous Shortage Occupation List, is designed to make it easier for employers in lower-paying sectors to plug skills gaps. It offers lower minimum salary thresholds for a defined set of occupations judged to be in genuinely short domestic supply.
The current list allows foreign construction workers, roofers, stonemasons and bricklayers to be paid a minimum salary of £30,090 – about £5,000 below the UK median salary. But the future of this scheme has been thrown into doubt by proposed reforms in the Government’s new immigration white paper.
The Immigration White Paper and the New UK Skills Shortage List
Last month, the Government published its much-awaited set of proposals for reforming UK border and immigration policy.
You can read our extended analysis of the changes here. But to boil it down quickly, the system is set to become much more selective. If the legislation passes, qualification requirements will rise to degree-level, minimum salary thresholds will be hiked and a swath of lower-skilled occupations will no longer be eligible for visas.
In the context of the grave skills shortages we’ve just analysed, readers might ask whether this will exacerbate the situation in sectors that don’t require their workforce to have completed higher education. Surely, such policies will place national missions further out of reach?
But read further into the white paper’s rubric and a more balanced picture emerges. While the core Skilled Worker visa will be largely reserved for highly-qualified talent, the proposals specify a new arrangement for employers with hard-to-fill vacancies that fall below the new thresholds. The white paper states:
‘For occupations with a skills requirement of RQF 3-5 (below degree level) where there have been long term shortages, we will only permit use of the Points-Based immigration system on a time limited basis where the MAC [Migration Advisory Committee] has advised it is justified, where there is a workforce strategy in place, and where employers seeking to recruit from abroad are committed to playing their part in increasing recruitment from the domestic workforce.’
The document then goes on to specify that this arrangement will rest upon a new skills shortage list, rechristened once again as the Temporary Shortage List.
Occupations will only be included on this list if they are ‘key to the industrial strategy or delivering critical infrastructure’, and after an evaluation from the MAC of their skill shortages.
Roles on this list will be restricted from bringing dependants, and the MAC will consult on time limits and caps.
What the New UK Skills Shortage List Will Mean for Employers
These plans, provisional though they are, signal that UK businesses will still have a lifeline to recruit from overseas at lower salary thresholds.
But what’s new is the prerequisite for companies to draw up a ‘workforce strategy’ in order to use the system in this way.
Before they can hire foreign workers, employers will have to point to a plan of action to train British nationals to eventually carry out the roles they’re hiring for. Each strategy will have to be verified through real agreements with organisations like Skills England and the Devolved Governments.
The logic behind this change
The Government has determined that nothing less than a national program of upskilling will be sufficient to mend the British labour market and wean it off a reliance on overseas workers.
Their solution is to treat private sector employers as strategic partners in this mission. The privilege of hiring from overseas will come with the responsibility to actively train up British nationals.
What employers need to do now
At present, there is nothing employers can do to adapt to this coming change. The proposals in the white paper will not become law until a full legislative bill has passed through the Houses of Parliament. This process will likely entail various modifications of the white paper’s prospectus and more actionable details on exact compliance requirements.
However, the direction of travel is clear. In order to sponsor foreign workers to fill vacancies, firms will have to make meaningful moves to nurture homegrown talent. It is possible that the Government will provide some subsidies to ease companies’ transitions from hands-off employers to active talent incubators. But these new responsibilities are unlikely to be expense-free.
In addition, employers should expect a 32% increase in the Immigration Skills Charge, payable by all firms that sponsor skilled workers. This is earmarked for funding these training initiatives.
If the Government’s grand plan to rebalance the UK labour market works, then the long-term benefits for employers may outweigh the front-loaded costs. Companies would have easier access to a pipeline of homegrown talent without the expense of using the immigration system.
Will These Changes Spark a British Skills Renaissance?
The measures to boost training have been cautiously welcomed by industry bodies.
Growing the country’s skills base should, in theory, drive up productivity growth in the medium-to-long term. But some more immediate risks remain.
As our own analysis made clear, the previous round of minimum salary hikes for the Skilled Worker visa had a damaging impact on important British businesses. A fresh increase may well make the route non-viable for some employers in low-margin sectors like construction, with no conveyor belt of qualified homegrown personnel to make up for it.
Those companies will soon have two options. The first is to use the new Temporary Shortage List to keep hiring from abroad while committing to develop local talent pools. The second is to leave roles unfilled and limit their operations.
Ministers will hope that firms simply won’t countenance the second option. If they are correct, we might cautiously expect a positive story of skills development to unfold across the UK in the coming years. If they are wrong, and companies opt to simply freeze their recruitment drives, the country will pay the cost in the form of yet more economic stagnation.
How to Plan Your Workforce Strategy
For now, British employers must wait to see how the Government’s policy proposals will translate into binding legislation. But if you think you will need to use the new UK skills shortage list, it’s time to start thinking about the shape of your workforce strategy.
Centuro Global’s immigration experts have decades of combined experience advising companies on their UK visa compliance needs. Whatever the coming regulations have in store, we are ready to help employers leverage the immigration system cost-effectively.
Get in touch for a consultation.
