Labour Migration and the UK’s Industrial Strategy: The Need for Coherence

In late June 2025, the UK announced its Industrial Strategy. It emphasised the twin goals of clean energy and decarbonisation, supporting a green transition that promises to increase energy security, reduce energy costs, and create jobs. It also, in a welcome turn, recognised the key bottleneck of skills and the urgent need for coherence in the government’s approach to workforce issues—including in immigration policy. In this recognition, it quietly forced a U-turn in a flagship policy announced just a month before.

This call for coherence has been building. The previous month, the House of Commons’ Energy Security and Net Zero (ESNZ) Committee concluded an ongoing inquiry into workforce planning for clean energy. The ESNZ Committee’s inquiry indicates that labour migration will need to play a crucial role in the UK’s green transition. The May Immigration White Paper announced major changes that endangered this necessary pressure valve; the Industrial Strategy quietly restored some visa discretion to the government.

This note tracks the importance of labour migration to several occupations key to the green transition in the UK. It considers how a loss of access to skilled labour migrants would increase domestic training pressures, exacerbating a situation of existing persistent shortages. It concludes by proposing four concrete policy recommendations for how the UK government could use labour migration policy to support their industrial goals.

The need for more skilled labour immigration

The UK is widely recognised to face skilled workforce shortages which are constraining the implementation of the green transition. In 2023, the Climate Change Committee forecast that between 135,000 and 725,000 net new jobs could be created by 2030 in low-carbon sectors. While the large variance indicates the degree of uncertainty involved—decarbonisation relies on market factors, policies, and supply chains—these are nonetheless big numbers. The offshore wind workforce, for example, is anticipated to need to grow by 330 percent between 2023 and 2030. In late 2024, the UK Government highlighted shortages in multiple key occupations; and the National Energy Systems Operator (NESO) has identified “workforce challenges across almost all technologies required to reach clean power by 2030.”

Responses to the ESNZ Committee’s inquiry indicate that almost all actors are enthused by the job creation potential of the green transition, but are already resigned to vast worker shortages. Due to demographic shifts, the industrial workforce is shrinking by 2.2 percent each year, rather than scaling up. A gap in the necessary energy workforce of between 25 and 33 percent is anticipated by 2028; E.ON, a large energy company, projects that the energy and utilities sector will need 312,000 additional workers by 2030. The Department for Energy Security and Net Zero (DESNZ), in its own submission, notes that one third of all construction workers are over 50, and that 250,000 are expected to leave the sector by 2030. Electrician apprenticeship numbers are roughly a third below where they need to be. The retrofitting sector is suggested to be unready to meet the 13 percent increase in workforce size required to meet targets. Multiple inquiry responses suggest that workforce shortages are already driving up costs, leading to project delays, and disincentivising investment.

To meet these workforce shortages, the UK government has committed to increasing domestic training. The Industrial Strategy pledged an extra £1.2 billion per year for skills by 2028-2029; the Immigration White Paper set out a prior raft of initiatives. This is necessary and praiseworthy. It is, however, likely to be insufficient. The UK skills system is akin to an oil tanker that must be turned sharply in very little time. The new measures may help, but they will not be enough. In multiple dimensions, the UK has long lagged behind. As the Industrial Strategy notes, only nine percent of secondary vocational learners are trained in engineering, manufacturing, and construction, versus an Organisation for Economic Co-operation and Development (OECD) average of 32 percent. UK employers invest less than half the European Union (EU) average on workforce training, and have not proportionately increased their spend on training since 2015. This is in part because the cost of training is considered prohibitive, especially for small and medium enterprises (SMEs): due to lack of state support, many small firms have given up attempting to take on apprentices at all. In surveys by Kingfisher, a home improvement company, 90 percent of UK tradespeople say that apprentices are vital to the industry’s future but only 18 percent have hired one. It is vital that this situation shifts, but it will not happen fast, and the timeframes for decarbonisation are very tight.

Beyond apprenticeships, major problems exist in vocational education via secondary colleges. Following longstanding underinvestment, colleges have faced difficulties retaining and recruiting teachers, in part due to earnings differentials between industry and further education. Vocational college lecturers are reported to be paid up to £9,000 less than secondary school teachers; 57 percent of colleges have waiting lists for full-time construction courses, but lack the capacity to provide training.

These challenges take money and time to address, and it is not clear that there is enough of either. The Industrial Strategy recognises that “changes to the skills system will take time to come to fruition”, and that in the meantime there will be a domestic shortfall. Industry and education sector responses highlight that most of the £1.2 billion pledged is targeted towards in-school education. This is despite the fact that the current 16-19 year old demographic will contribute only 20 percent of the 2035 workforce, and that (in the context of other funding cuts) the new pledges may not keep track with population growth.

The reliance of green industries on labour migrants

Investments in training, even where sufficient, will take time to pay off; some measure of skilled labour immigration will be needed in the interim to supplement the domestic workforce. This is a fact emphasised by numerous contributors to the ESNZ Committee’s inquiry: despite migration not being highlighted in the call for evidence, nearly a quarter mention its role (Figure 1).

Figure 1. Migration in responses to the ESNZ Committee’s inquiry

RenewableUK, the wind energy association, noted that “in the short term, immigration is likely to be part of the solution to labour shortages,” and urges the Migration Advisory Committee (MAC) to consider where this may be necessary. These are points echoed by the National Grid, ScottishPower, Fortescue, SSE, Siemens, and others.

Skilled immigration is already a key pressure valve against workforce shortages in sectors necessary for the green transition. In Figure 2, we show the extent to which immigrants contribute to new additions to the workforce in six high-importance occupations:

• Welders
• Roofers
• Technicians (broadly)
• Engineers (both graduate engineers and broader engineering professionals)
• Plumbers
• Electricians

We compare the number of visas issued to support these specific occupations, and the number of graduates through domestic training from 2022-2024 (the years for which UK Home Office visa statistics include occupation codes). We omit 2025 due to limited data. Importantly, we do not attempt to limit our analysis to visas granted to those who will directly support green transition-related sectors. This would be an incredibly difficult exercise, and likely unnecessary: an immigrant arriving with relevant skills may free up someone else to support the green transition. Occupation-level apprenticeship figures for Northern Ireland, Wales, and Scotland are extrapolated from England data proportional to populations. We only include apprenticeships at Levels 2 and 3, recognising that Levels 4 up are more frequently used for upskilling of existing workforce participants, and thus would capture workers who are not new additions to an occupation.[i]

Figure 2. Visas' contribution to new UK workforce additions, 2022-2024

As can be seen, not all of these occupations rely heavily on labour migration. The welding and roofing trades draw heavily on skilled migrants, whereas technicians and engineers are somewhat less reliant on international recruitment, and plumbers and electricians much less so. While the number of domestic new additions is rising for most occupations, immigration evidently remains important in meeting workforce shortages.

Implications of labour immigration policy reform

In May 2025, the government published its Immigration White Paper. The reforms included within it will make it more difficult for UK employers to recruit internationally, particularly under the Skilled Worker visa route. This is problematic for the green transition, as the majority of the workers analysed above migrated to the UK on Skilled Worker visas (Figure 3).

Figure 3. Use of Skilled Worker Visas by selected occupations, 2021-2024

So, what does the Immigration White Paper do? Note that the document contains the government’s intended immigration reforms over the course of the current parliamentary term. Some of the reforms will come into effect on 22 July, 2025, while others remain proposals and are subject to consultation.

Firstly, it raises the qualification threshold for access to the Skilled Worker visa route from Regulated Qualifications Framework (RQF) 3 (A level / high school level equivalent) to RQF 6 (degree level equivalent). This would make all of the occupations above, with the exception of graduate engineers, ineligible for international recruitment. It will still be possible to recruit into occupations below RQF 6 if they are listed to the Temporary Shortage List (TSL), but the use of the TSL was tightened (see below).

Secondly, it raises the immigration skills charge levied on employers hiring immigrants through the Skilled Worker visa route. In addition, there is a proposal to double the length of time immigrant workers must stay on this route through changes to qualification for permanent settlement (from five to 10 years). This has been estimated to impose an additional immigration health surcharge on international workers of £5,175 per person, and an additional cost to employers of approximately £2,980 through the immigration skills charge.

Thirdly, it proposes to raise the salary threshold above which an employer can recruit through the Skilled Worker visa route, from £38,700 to an unspecified higher amount, later confirmed to be £41,700. Many occupations relevant to the green transition, such as roofers and welders, may fall beneath the new threshold. (The salary of an employed and experienced roofer, for example, goes up to around £36,000 per year, according to the National Careers Service.)

Fourthly, it proposed that the new TSL will not include any salary discounts (previously, inclusion allowed employers to pay 80 percent of the usual minimum salary). Occupations may be included on the TSL if they are “key to the industrial strategy or delivering critical infrastructure”, with the advice of the MAC.

If UK employers are unable to recruit internationally, it may lead to workforce shortages that exacerbate project delays; drive up costs for consumers (if increased fees and salaries are passed on); and increase the amount of subsidies necessary for installations.

It would also require an increase in domestic training. In Table 1 below, we show how the domestic pipeline will need to compensate for the loss of skilled migrants. We assume that all Skilled Worker visas are inaccessible following reforms: this is simplistic but, given the reforms noted above to the RQF and salary levels, likely not to be far from the actual situation. We take the average number of Skilled Worker visas used annually by each occupation across 2022-2024, and the average number of apprenticeships started and completed. For engineers, we successively assume that all Skilled Worker visas are either technicians and engineering professionals (requiring apprenticeships to fill the gap) or graduate engineers (degrees).

Table 1. Effect of Skilled Worker visa route reforms on domestic training needs

Note: These increases in annual apprenticeship needs are due only to the loss of visas, and are additional to both increased needs due to retirement and increased needs due to increased demand.

Rowing back immigration policy changes

Interestingly, just a month later, the Industrial Strategy announced a new degree of discretion, opening its range of options shortly after the Immigration White Paper closed them. “Acknowledging that changes to the skills system will take time to come to fruition”, shortage occupations key to the ‘IS-8’ set of sectors prioritised by the strategy (such as welders) will be temporarily exempted from the planned increase to the pay threshold of the Skilled Worker visa.[ii] Occupations were determined by the Department for Business and Trade (DBT) in coordination with the Treasury.

On 1 July, the government announced the composition of the new ‘interim’ TSL. It included numerous roles relevant to decarbonisation, such as welders; pipefitters; metal workers; air-conditioning installers; plumbers and heating and ventilation installers; electrical workers; and multiple other construction professions. These roles will be eligible for international recruitment if their salary exceeds both £33,400 per year and the ‘going rate’ for their occupation code. In some cases, the ‘going rate’ is equal to or not far above £33,400 (such as for welders, for which it is £34,900), allowing significantly easier international recruitment than at the new £41,700 threshold for Skilled Worker visas.

One day later, the MAC’s commission to review the TSL was published. The commission included instructions to consider:

• Which occupations are key to the Industrial Strategy and should therefore be included;
• Whether there should be time limits and caps on the number of visas; and
• Whether relevant sectors have adequate workforce strategies for domestic recruitment.

The MAC will report on the TSL in Spring 2026, supported by members of the new Labour Market Evidence Group to account for projected skills gaps.[iii] For occupations to be included on the TSL, “an appropriate plan” —possibly to the extent of a formal sector workforce strategy—will be required from employers for developing domestic skills and increasing local recruitment. If they do not meet this threshold, they will fall out of eligibility.

These amendments are welcome and necessary, but the rapid chopping and changing highlights a self-defeating lack of cross-governmental organisation. Such rapid changes make it difficult for employers to confidently make investments based on a predictable pipeline of skilled workers, and make it difficult for training institutions to know where to invest. The Industrial Strategy proclaims that “every department has a critical growth role: areas from defence spending to clean energy deployment, from migration to public procurement, are now linked to our Industrial Strategy.” This must be demonstrated through continued policy coherence.

Recommendations

If the UK is to meet its green transition goals, it will need to use immigration policy. How can it do this? Below, we suggest four non-mutually exclusive options.

1. Use the visa discretion provided by the Industrial Strategy

The new provision for the TSL allows for reduced salaries for key ‘IS-8’ sectors, in consultation with the MAC and the wider Labour Market Evidence Group. The MAC should consult widely with industry and DESNZ in its assessment of the occupations currently in shortage. It should also work with industry to project shortages according to project bid timelines, so that international recruitment is accessible when needed, before workforce lags cause delays and increase costs. Shortages are likely to fluctuate—multiple responses to the ESNZ Committee’s inquiry emphasise that hiring and training do not start until projects start, resulting in challenging workforce lags—so frequent adjustments to the list will be needed.

2. Facilitate international recruitment for SMEs

SMEs currently struggle both to take on apprentices and to recruit internationally. More could be done to help with both. On the latter, interventions that assist SMEs with risk aversion are particularly necessary: with tight margins and limited predictability in their pipeline of projects, SMEs cannot afford to recruit a worker who turns out to be a poor fit, making engagement with immigration hard. A pipeline of workers into a pooling system, providing associations of SMEs with access to a vetted international workforce without obliging any individual SME to commit to hiring far in advance, has facilitated recruitment elsewhere. In the UK, a similar model has been used successfully by the National Health Service (NHS). Interventions to facilitate access to insurance against recruitment failures—both for prospective migrants and SMEs—may also help.

3. Develop bilateral partnerships

As the Member of Parliament Melanie Onn noted during Committee hearings, the UK will need to identify where there is a surplus of trained workers internationally and target recruitment towards them. Yet the global competition for skilled workers is rising rapidly; many other countries will be seeking to do the same. The UK can go beyond mere recruitment by partnering with countries of origin to train a reliable pipeline of workers, signing bilateral agreements to offer both training support and an international recruitment pathway. Training and migration partnerships can mitigate challenges related to recognition of qualifications, while also equitably ensuring that the country of origin is not left without workers. A similar idea was put forward in a submission to the ESNZ Committee’s inquiry by the Norwegian energy multinational Equinor and by the Institution of Mechanical Engineers, while SSE’s submission suggests that it may be doing something similar already.

In Figure 4, we show the supply of international workers into selected occupations relevant to the green transition by country of origin. Historical recruitment patterns give an indication of the countries from which employers have experience recruiting and providing integration support: partnerships with these countries may be worth seeking. More work is needed to design and implement such partnerships, but the foundations are there.

Figure 4. Immigration into selected occupations by country of origin, 2022-2024

4. Use the new Displaced Talent visa

The Immigration White Paper also announced the creation of a new Displaced Talent visa, following the trial of the Displaced Talent Mobility pilot which saw a limited number of refugees migrate to the UK using Skilled Worker visas. So far, there are few details about this new visa. It could be prioritised for ‘IS-8’ sectors (see footnote 2); removing the cap and requiring a reduced salary for these key shortage roles could incentivise employers to offer transformative pathways to refugees while also ensuring the UK has the workers it needs. In this way, the Displaced Talent visa would become an instrument for ethical workforce planning and transformation that could be targeted towards the green skills agenda while addressing increasing displacement globally. Many refugees already have the skills needed to contribute, and the ‘train-to-hire’ model could be used to support the training and migration of others before movement.

Many thanks to Charles Kenny, Gemma Hyslop, and Holly Asquith for their suggestions.

[i] In the UK, apprenticeships are categorised by level of study. Intermediate (level 2) is the equivalent of 16+ qualifications; Advanced (level 3) is the equivalent of 18+ qualifications; Higher (levels 4-7) are each equivalent to a year of degree-level study; levels 6 and 7 are equivalent to advanced bachelor’s study or to a master’s degree.

[ii] The ‘IS-8’ sectors prioritised by the Industrial Strategy are: Advanced Manufacturing; Clean Energy Industries; Creative Industries; Defence; Digital and Technologies; Financial Services; Life Services; and Professional and Business Services.

[iii] The Labour Market Evidence Group will comprise the Industrial Strategy Advisory Council; the MAC; Skills England; and the Department for Work and Pensions (DWP).