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The UK’s tightening of visa rules for skilled workers and care staff will carry a direct cost to the public finances of up to £10.8bn, according to the government’s impact assessment.
Higher skill and salary requirements for work-related visas formed part of a sweeping set of changes to the UK’s immigration regime set out earlier this year, intended to cut net migration from record highs reached in the aftermath of Brexit and Covid-19.
While the government is still consulting on some elements of its reforms, the changes to work visas were largely implemented in July. They restrict skilled work visas to graduate-level jobs, except in a few mid-skilled occupations where time-limited visas will still be available. The changes also include the closure of a visa route for low-skilled care workers.
A Home Office impact assessment drawn up in July, but published only this week, found the cumulative monetised cost of these changes over five years would range from £2.2bn to £10.8bn, with a central estimate of £5.4bn. This stems from a loss of visa fees of about £500mn to £800mn, and a loss of between £1.4bn and £9.5bn in foregone tax revenues.
It assumed that net migration to the UK would be about 214,000 lower in total over the five years from 2025/26 to 2029/30 as a result of the rule changes.
The figure for foregone tax revenues already included the pressure that additional migrants would have placed on public services over the five-year period, although the Home Office noted that its calculations did not match the methodology of the Office for Budget Responsibility, the UK’s official fiscal forecaster.
Economists generally take the view that migrants’ fiscal impact should be assessed over their lifetime, not the initial period spent in the UK, as new arrivals are generally of working age but will eventually make bigger calls on the state if they have a family and stay into retirement.
The assessment also noted that the changes would have further negative effects on businesses that needed to adapt, whether by automating, hiring locally, scaling back production or offshoring production.
“If [economic] growth was actually your priority, you would not be doing this,” said Jonathan Portes, a professor at King’s College London.
But the government argues that these costs should be set against “potentially significant unquantifiable benefits” if the changes prompt employers to train and invest in the skills of the UK-born workforce.
Polling shows that most British people believe immigration is too high. The regulatory impact assessment suggested that cutting net migration — the government’s main goal — would bring “negligible” benefits to social and community cohesion, however.
Since there is also no evidence migration has affected crime, “it is therefore uncertain whether there will be material impacts on social and community cohesion”, the assessment found.