Licenced visa sponsors

Introduction

Since the end of the UK’s participation in EU freedom of movement on 31 December 2020, most new migrants coming from overseas to work require a visa. Although more restrictive than freedom of movement, the UK’s work permit system is quite liberal compared to those in other countries; no quotas or labour market tests, a wide range of occupations are eligible, and salary thresholds are typically below average earnings. It has been estimated that 60% of UK employees are working jobs that would be eligible for a work visa.

However, work visas can only be applied for by prospective migrants with a ‘Certificate of Sponsorship’ from a licensed visa sponsor. To become a licenced sponsor, employers must demonstrate their capacity to comply with programme rules and pay fees. It is possible that the costs of becoming a sponsor, in terms of time and money, are a big barrier to employers hiring migrants into eligible jobs. OECD reviews of labour migration policy from high-income countries have found that small and medium-sized enterprises often struggle with the bureaucracy associated with work-permit applications (e.g., OECD, 2016).

This note provides information on the number of sponsors, how it has changed over time and the types of employers who are more likely to be sponsors using data from the UK register of licenced visa sponsors from March 2014 to December 2023.

The type of licence required depends on the type of workers firms wish to hire. The majority of licences (82% on 4 December 2023) are for Skilled Workers. The next largest category (11% on 4 December 2023) is Global Business Mobility licences, used by multinational companies to transfer established employees to the UK. Other visa sponsor licences are for Ministers of Religion, International Sportspersons, and a range of Temporary Worker licences. Figure 1 shows how the number of licensed sponsors has changed since 2014.

Figure 1

From 2014 until the end of free movement, there was an 18% rise in the number of sponsor licences. But since free movement ended, the number has more than doubled (130% increase). Almost all of the rise has been in sponsors for the Skilled Worker Visa. There are two likely reasons for this: employers who previously employed only EU migrants now need to engage with the work visa system, and a wider range of jobs are now eligible for work visas.

The rest of this commentary will focus on Skilled Worker licences, as this is the main labour migration route and the type of licence that has seen the greatest increase in use since the end of free movement (Figure 1).

What types of organisations are licenced sponsors for Skilled Worker visas?

We matched the names of licensed sponsors to other lists of organisations, e.g., the Companies House Register or Charities Register. We are able to match over 90% of sponsors in this way. Table 1 shows that, on 4 December 2023, the majority (89%) of skilled worker licence holders were private companies. The next largest category of licence holders is educational institutions, which include schools, universities, and colleges. A small proportion of sponsors are related to the NHS, government, or other non-profits (charities, research, religious institutions).

The growth in Skilled Worker visa licences has been driven by a growing number of private companies becoming visa sponsors, which has more than tripled since 2016. The number of sponsors in the other categories is more stable. The NHS, for example, comprises large employers who were already users of the visa sponsorship system before the end of EU freedom of movement (MAC, 2016).

Table 1

The characteristics of private companies who are licenced sponsors for Skilled Worker visas

To further explore the changing characteristics of private companies that sponsor Skilled Workers, company names from the visa register are linked to Orbis (a private entity database). This allows registered visa sponsors to be compared with the total population of active companies in the UK, defined by those in the UK Companies House register.

The percentage of private companies that are licensed sponsors is small, though rising: 0.6% in December 2016 to 1.9% in December 2023. But larger employers are more likely to be licenced sponsors, so a more relevant statistic may be the percentage of all workers employed by a company with a sponsor licence. This is much higher – 31% in December 2023, up from 13% in December 2016, though these numbers still imply a much smaller percentage of jobs could sponsor a migrant compared to other estimates.

Firm Size

Figure 2 shows the percentage of workers employed in licensed sponsors by size of employer.

Figure 2

Figure 2 shows that large firms are more likely to be licenced sponsors for a Skilled Worker Visa. Although large firms have to pay more for the licence (which costs £536 for a small or charitable organisation and £1,476 for a medium or large business), a larger part of the costs are likely to be legal fees and the administrative costs of completing immigration paperwork and complying with the rules. In interviews conducted by the Migration Advisory Committee, small and micro employers voiced concerns that inadvertent non-compliance with rules on monitoring employees could mean they lose their licenses (MAC, 2022).

The costs of becoming a licensed sponsor are also fixed costs, independent of how many migrants are likely to be hired. Large firms, likely to hire more migrants, can spread the sponsor licence over more workers, reducing the cost per migrant.

Location

Figure 3 shows the percentage of all workers employed by a licensed sponsor by region.

Figure 3

The percentage of all workers employed by a company holding a visa sponsor licence is highest in London. High-paid jobs in London, where median gross weekly earnings are around £165 higher than the rest of the nation (ONS, 2022), are more likely to be eligible for Skilled Worker visa sponsorship. London has also historically been an appealing destination for skilled migrants due to established migrant networks and awareness of job opportunities amongst prospective migrants. Hence, London employers have had more experience sponsoring overseas workers. Employers who are more familiar with the visa system may be less deterred by the financial and administrative burden of sponsorship. But London has not had the biggest percentage increase in the number of licensed sponsors; the percentage increase has been larger in Scotland, the North West, and Northern Ireland.

Industry

Figure 4 shows the percentage of workers employed in licensed sponsors by broad industry.

Figure 4

Licenced sponsors cover a larger share of employment in the manufacturing and health sectors, whereas the fraction is lowest in real estate and construction. This difference can partly be explained by differences in the share of employment eligible for a Skilled Worker visa. In some industries, such as accommodation and food services, the fraction of visa-sponsoring employers may be low because many jobs are low-wage and thus not eligible for a Skilled Worker visa.

However, even where jobs are eligible, there can be low rates of sponsorship. Another possible reason for this is that some sectors are more heavily dominated by small and micro firms. Consider the case of construction. As detailed in the Migration Observatory report How is the End of Free Movement Affecting the Low-wage Labour Force in the UK?, just under 8% of workers in the skilled construction and building trades were EU-born in 2018-2020 (82,000 EU migrants), but employers sponsored only 123 people in this occupation group in 2021. 93% of firms in this sector are micro businesses (compared to 88% in the economy as a whole).

The Care Sector

Health and social work saw the largest percentage point increase in workers employed by a company with a visa sponsor licence (27 percentage points) between December 2016 and December 2023. Within this sector, the largest increases have been in residential care and social work activities without accommodation for the elderly and disabled. This reflects challenges in recruiting and retaining staff in the residential and domiciliary care sectors. In February 2022, the “Shortage Occupation List”, a list of jobs with more relaxed visa requirements, expanded to include social care worker, care assistant, and home care worker roles.

The number of residential care (SIC07 Division 87) firms in the December 2023 visa sponsor register is around 3,000, approximately 10% of all residential care companies. This is a 10-fold increase from December 2016 levels of about 300. The share of workers in the residential care sector employed by a firm with a visa sponsor licence has been increasing rapidly, from 10% to 42% in the period February 2022 to December 2023. In social work activities without accommodation for the elderly and disabled (SIC Group 88.1), which includes domiciliary care, we’re able to match around 2,500 firms to the visa register, around a third of all companies and 51% of employment in this smaller sector.

Visa sponsors in these care sectors (SIC Division 87 and SIC group 88.1) are more evenly spread in terms of geography and firm size. The share of workers employed by a visa sponsor in the care sectors is above a quarter in all regions.

Figure 5

Figure 6

Discussion

Although the number of licensed sponsors in the private sector is increasing at quite a fast rate, visa sponsorship is still concentrated in a minority of jobs, and these are not spread evenly across employer size, sector, or region. This likely means that the ability to hire migrants (which is what ultimately matters) is not spread evenly either, though we do not have the data to know what fraction of sponsors apply for work visas. If there is a problem with unequal access, there are a number of ideas about reducing it, e.g., reducing the reporting requirements or allowing ‘umbrella’ sponsors to take on sponsorship duties on behalf of smaller businesses that cannot handle the paperwork (APPG on Migration, 2021).

References

• Migration Advisory Committee (MAC). 2016. Migration Advisory Committee (MAC) partial review: shortage occupation list and nursing. London: MAC.
• Migration Advisory Committee (MAC). 2022. Migration Advisory Committee Research Paper: skills shortages and employers of migrant workers. London: MAC.
• 2016. Recruiting Immigrant Workers: Netherlands.
• Office for National Statistics (ONS). 2022. Average weekly earnings in Great Britain: December 2022.
• APPG on Migration. (2021). The Impact of the New Immigration Rules on Employers in the UK. London: APPG on Migration.