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According to the government’s impact assessment, tightening UK visa rules for skilled workers and care workers would have a direct cost of up to £10.8 billion on public finances.
Higher skills and salary requirements for work-related visas were part of wider changes made to the UK immigration regime earlier this year, aimed at cutting net migration from record highs following 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 also restrict skilled work visas to graduate-level jobs, except for some middle-skilled occupations where time-limited visas will still be available. These changes also include closing the visa route for low-skilled care workers.
a home office impact assessment Prepared in July, but published only this week, it found that the cumulative monetized cost of these changes over five years would range from £2.2 billion to £10.8 billion, with the central estimate being £5.4 billion. This results from a loss of approximately £500mn to £800mn in visa fees and between £1.4bn and £9.5bn in foregone tax revenue.
It was assumed that the rule change would result in net migration to the UK falling overall by around 214,000 over the five years from 2025/26 to 2029/30.
The figure for foregone tax revenue already includes the pressure that additional immigrants would have placed on public services over a five-year period, although the Home Office noted that its calculations did not match the methodology of the UK’s official fiscal forecaster, the Office for Budget Responsibility.
Economists generally view that the fiscal impact of immigrants should be assessed over their lifetime, rather than during the initial period spent in the UK, as new arrivals are generally of working age but will ultimately have a larger impact on the state if they have a family and live into retirement.
The assessment also said the changes would have a greater negative impact on businesses that need to adapt, whether by automating, hiring locally, reducing production or offshoring production.
“If (economic) growth was really your priority, you wouldn’t be doing this,” said Professor Jonathan Portes of King’s College London.
But the government argues that these costs should be set against “potentially significant undeniable benefits” if the changes induce employers to train and invest in the skills of the UK-born workforce.
Polling shows that the majority of British people believe that immigration is too much. The regulatory impact assessment suggested that cutting net migration – the government’s main goal – would, however, bring “negligible” benefits for social and community cohesion.
Since there is also no evidence that migration has affected crime, “it is therefore uncertain whether there will be any material impact on social and community cohesion”, the assessment found.
