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Sun January 17 2021

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Piling contractors warn on immigration levy

25 Jan 17 The Federation of Piling Specialists (FPS) has warned that payroll inflation is about to get worse with the imminent introduction of the immigration skills charge

FPS chair Alasdair Henderson
FPS chair Alasdair Henderson

Under a policy that predates the EU referendum and has nothing to do with Brexit, from April 2017 employers who sponsor a migrant worker for a Tier 2 visa will be required to pay a levy of £1,000 per migrant, per year, with a reduced rate of £364 applying to small businesses.

The measure was contained within the Immigration Bill 2015/16 in an attempt to encourage UK businesses to recruit and train UK workers.

FPS chair Alasdair Henderson has raised concerns about the charge, however. He said: “Most specialist businesses in the infrastructure sector aim for stability in employee numbers across their portfolio of projects and where necessary use international staff, often from within the same organisation, to supplement their core UK workforce and manage short-term peak demand for specific skills. To assume that the UK resident labour market can supply both the number and quality of employees required to replace international staff in the short term, is to deny the existing UK skills shortage and the long lead-time involved in training and developing the specific skills base. This new levy approach thus serves only to inflate payroll costs in an industry that is already under significant cost pressure and suffering from the uncertainty around the CITB and apprenticeship levies.

“The levy also has the potential to do more than push up costs through higher wages, it could delay projects through firms unwilling to pay a premium for the skilled overseas labour they require.”

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Mr Henderson added: “Skilled ground engineering employees are thin on the ground, as it is with many roles featuring on the shortage occupation list (for which there is no exemption proposed within the immigration levy). The shortage of suitable STEM trained school leavers and graduates exacerbates this skill short fall and the timeline for an enlarged future UK cohort entering the industry is well beyond the introduction threshold for this levy.” 

The FPS argues that there are better ways to tackle the issue without adding an extra financial burden on those companies already struggling under financial pressure and in most need of migrant labour.

Alasdair Henderson suggested: “Rather than increasing the cost of employment for specialist UK businesses, government and private customers would be well-served by working with specialist contractors and trade bodies, such as the FPS, to improve continuity and predictability of workload, which is often the biggest single barrier to employment growth and training investment. By updating project procurement practices to reward responsible specialist businesses, long-term direct employment will be promoted resulting in the desired outcome – sustainable growth of the UK ground engineering skill base.”

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