The government has delayed a planned review of shortages in the workforce after net migration to the UK reached its highest level on record.
Last year, the Home Office commissioned the Migration Advisory Committee to carry out fresh research into the shortage occupation list.
The list, which forms a key part of the government's post-Brexit immigration system, sets out the jobs deemed by ministers to face a short supply of workers in the domestic labour market and makes it easier for employers to recruit people from abroad to do them.
The government had been under growing pressure to commission a new report, with numerous sectors including food, construction and tourism experiencing chronic labour shortages, driven by the pandemic and a post-Brexit fall in workers from the EU. The MAC last reviewed the list in 2020, and the then-home secretary Priti Patel rejected most of its recommendations.
The MAC was due to complete its work this year but the Home Office, now led by Suella Braverman, has asked the independent body to pause its work until further notice, CSW's sister title PoliticsHome has learned, casting doubt over its plan to complete a new review of the shortage occupation list in 2023.
The expected completion date of the review had already been pushed back due to an issue with how data was collected, CSW reported in September.
The government took the decision to pause the work late last year after the Office for National Statistics published its most recent estimates of net migration.
The ONS said its November findings showed that net migration to the UK in the year leading up to June 2022 was the highest on record, driven by immigration from outside the EU and humanitarian schemes established for people fleeing Ukraine and Hong Kong.
Jane Gratton, head of people policy at the British Chambers of Commerce, said the current shortage occupation list was "out of date" and needed to be expanded to make it easier for companies to recruit workers from abroad.
"As the UK looks to shift to a high skilled, high wage economy, businesses will need time to adjust, and the immigration system has a key role to play," she told PoliticsHome.
"Right now, an ongoing shortage of skills and labour is damaging the economy, with four out of five firms telling us they are unable to fill job vacancies.
“That’s why we need a fast, efficient and affordable system to access skills from outside the UK when we can’t recruit and train locally. The shortage occupation list is a key tool to do this, but it is out of date and does not reflect the needs of SMEs. It’s high time the government got on with reforming and updating the shortage occupation list criteria to reflect the reality on ground.”
Nick Allen, chief executive of the British Meat Processors Association, said ministers were pausing the MAC review "just at the time when the UK labour crisis is at its most acute".
"The current skills and labour shortage we’re experiencing in the meat industry has forced some companies to move part of their production to the continent," he said.
"It’s meant that a portion of the UK’s productive GDP and tax revenue has been shifted offshore because the right workers are simply not available in the UK."
Caroline Keohane, head of international growth at the Food and Drink Federation, said the decision was "disappointing" given the "urgency" of the labour shortages problem.
"We have long called for the scope of the shortage occupation list review to include acute shortages at all skills levels and greater flexibility on the salary thresholds to ease immediate workforce pressures," she told PoliticsHome.
"Food and drink is the UK’s largest manufacturing sector, employing nearly half a million people in every nation and region of the country. However the industry faces severe and sustained labour and skills shortages, across a range of roles, from production and warehouse operators to engineers. These shortages are forcing some production to be suspended, hampering growth and contributing to regional disparities and rising costs."
Work and pensions secretary Mel Stride this month told The House magazine that relaxing rules for foreign workers was a "relatively quick and easy lever to pull" to help tackle labour shortages, but did not believe this was the correct solution to the issue.
The government is instead focused on getting millions of jobless Brits into the workforce, in plans expected to be published in the form of a white paper in the coming weeks. Addressing workforce inactivity is a key part of prime minister Rishi Sunak and chancellor Jeremy Hunt's economic agenda.
Business groups like the Confederation of British Industry have said that while they support plans to tackle economic inactivity, it will take time for the impact to be felt, while relaxing immigration rules would help businesses tackle labour shortages in the short term. CBI chief Tony Danker last month urged ministers to take a more "pragmatic" approach to immigration.
Adam Payne is political editor at CSW's sister title PoliticsHome, where this story first appeared