The cumulative monetized cost of the changes to the immigration system, which were put forward by the government in a May white paper, ranges from £2.2 billion to £10.8 billion
By Lucy White
The UK could face a £10.8 billion ($14.4 billion) hit due to the restrictions on legal immigration proposed by the government earlier this year, according to an impact assessment from the Home Office.
The cumulative monetized cost of the changes to the immigration system, which were put forward by the government in a May white paper, ranges from £2.2 billion to £10.8 billion over the next five years, the Home Office estimated in a paper published this week.
In May, Prime Minister Keir Starmer’s government proposed the UK should only allow graduate-level workers to apply for the Skilled Worker or Health and Care Worker visas, raise the salary threshold needed for workers to apply for visas, and ban the recruitment of overseas social care workers.
Most of those changes were implemented in July. It came after net migration to the UK hit almost 1 million in the year to June 2023, prompting concerns around the pressure on public services and housing. Since then, Nigel Farage’s anti-immigration Reform UK party has surged in the polls.
But the latest impact assessment, published more than six months after the government announced its clampdown on legal migration, could trigger criticism that Starmer’s efforts to bring down the legal immigration numbers are a knee-jerk reaction that could harm the UK economy over the long run.
The Home Office said the potential cost to the UK of the immigration system changes, estimated at a base case of £5.4 billion, would be balanced by “potentially significant 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,” according to the impact assessment.
It added that the “rationale for these changes is to incentivize upskilling of the domestic workforce,” and that “if these changes have an impact on productivity this effect is very important and likely to outweigh many or most other impacts.”
The knock to the UK would include a reduction of as much as £800 million in public sector revenue due to reduced intake from visa fees and the immigration health surcharge, as well as a reduction of £9.5 billion due to lower income tax take and a squeeze on public services.
“These figures portray a significant 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, a charity that helps migrants and disadvantaged Britons with employment issues.
She added that “losses are almost certain: older people and disabled people will find it harder to get care” and the UK government will lose out on billions in tax revenues.
The UK relaxed the visa restrictions for social care workers, who look after the elderly and disabled, to come to the country in 2022 after Covid-19 and Brexit caused massive staffing vacancies.
Abuse in the visa system prompted Starmer’s government to ban most foreign care workers from coming to the UK, but the Home Office conceded this could lead to “an impact on specific households” if care providers have to charge more.
Care firms would also be negatively affected, the Home Office said, as they would be forced to freeze recruitment or substitute overseas workers for more expensive domestic staff.
