The UK government made new rules to control the number of international students and overseas workers. These changes could cost businesses over £40 billion, says the Financial Times.
The changes were first started by the Conservative government and are now being continued by the Labour government under Prime Minister Sir Keir Starmer. The Home Office, which handles immigration, did a study and found these new rules will cost the UK economy a lot of money.
In April, the rules about visa sponsorship for skilled workers changed. This change alone will cost businesses £37.4 billion in the next 10 years. The main reason for this high cost is that businesses will have to pay higher salaries to attract workers.
Economic Impact of New Rules
According to the study, the government will save some money on public services because fewer people will be using them. But this saving is very small compared to the huge economic losses.
So, the money saved from spending less on public services does not cover the big financial losses caused by the new immigration rules.
The total extra cost to society is about £26.5 billion over the same 10 years. A new rule stopping international students from bringing family members will also mean a loss of nearly £5 billion in tuition fees. It could also mean £15 billion less in tax money from these students and their families.
Some changes might help a little. For example, stopping care workers from bringing their families might save some money. The government thinks care workers will still come to fill job openings even if they can’t bring their families, reducing the need for more public services.
Political Stance and Future Policies
The Conservative government started these changes to cope with high net migration, which was 764,000 people in 2022. Since becoming Prime Minister, Starmer has kept these changes and wants to reduce immigration more, especially for high-skilled workers.
Starmer assured business leaders he won’t suddenly end visa options but was not happy with businesses relying on foreign workers instead of training local people for these jobs.
Reactions from Business Groups
Businesses are worried about the new visa rules. They think the rules will make financial problems worse for schools and make it harder to hire people for important jobs.
The Home Office said there are still many unknowns about how businesses and people will react to the new rules. The overall effect on public money might be small over 10 years, but things could change in different ways.
Trends in Skilled Worker Migration
The Home Office data shows skilled workers coming to the UK stayed the same since the rules changed, but fewer care workers are coming.
The government said they are still committed to lowering net migration. They believe fixing skill shortages within the UK is better than relying on immigration.
Going forward, the Home Office wants to link immigration policies with skill-building efforts within the country. This way, businesses won’t need to depend as much on international workers.
The Financial Times notes that as the Labour government works on its immigration policies, the economic impact remains a big worry for businesses that need international talent. Different groups are still talking about finding a balance between controlling immigration and supporting economic growth.