Visa curbs could cost UK up to £10.8bn over five years, shows govt data

A new Home Office assessment shows the UK risks losing up to £10.8 billion after tightening legal migration routes, raising fresh questions about economic impact

The UK could take a £10.8 billion blow from the legal migration restrictions introduced earlier this year, according to a new impact assessment released by the Home Office.

 

The paper, published this week, sets out the cumulative monetised cost of the changes proposed in the government’s May white paper. Over the next five years, the projected cost ranges from £2.2 billion to £10.8 billion, with a base estimate of £5.4 billion.

 

Prime Minister Starmer’s plans

 

In May, the government proposed that only graduate-level workers should be able to apply for the Skilled Worker or Health and Care Worker visas. The plans also raised the salary threshold for visa applicants and stopped most overseas recruitment for social care roles.

 

Most of these measures took effect in July. They followed a sharp rise in net migration, which reached almost 1 million in the year to June 2023. The increase fuelled concerns about pressures on housing and public services and coincided with a rise in support for Nigel Farage’s Reform UK party.

 

What does the impact assessment say?

 

The new impact assessment arrives more than six months after the policy shift and may reopen debate over whether the government has acted too quickly in tightening legal migration.

 

The Home Office said the expected cost would be offset by what it described as “potentially unquantifiable benefits”.

 

“The measures set out in the white paper, part of which are enacted in these immigration rules, form part of a broader government policy to get people back into work,” the assessment said.

 

It also noted that the “rationale for these changes is to incentivise upskilling of the domestic workforce,” adding that “if these changes have an impact on productivity this effect is very important and likely to outweigh many or most other impacts.”

 

Where will the projected losses come from?

 

The hit to the UK economy includes:

 

• Reduced public sector revenue of up to £800 million from visa fees and the immigration health surcharge

• An estimated £9.5 billion drop due to lower income tax receipts

• Added pressure on already stretched public services

 

“These figures portray a loss to the UK’s workforce, with domestic workers somehow expected to fill in the gaps ASAP,” said Dora Olivia Vicol, chief executive of the Work Rights Centre, in a press release.

 

She added that “losses are almost certain: Older people and disabled people will find it harder to get care,” and warned that the government will miss out on billions in tax revenue.

 

How will the social care sector be affected?

 

Recruitment rules for social care workers were loosened in 2022 after Covid-19 and Brexit left the sector struggling with vacancies.

 

Abuse within the visa system later prompted the government to introduce a ban on most foreign care workers coming to the UK. The Home Office acknowledged that the move could affect “specific households” if care providers pass on higher costs.

 

Care firms, it said, may have to freeze recruitment or replace overseas staff with costlier domestic workers, adding further strain to a sector already short of labour.