Yesterday, the Home Secretary announced a number of key measures with the aim of reducing current legal migration numbers to the UK.

Background

Following the recent announcement by the Office for National Statistics (ONS) of revised net migration figures reaching 745,000 in 2022, the government has faced increasing pressure to implement an emergency plan to bring down legal migration figures. The ONS's initial projection was that legal migration added 606,000 to the UK's population in 2022 – however, this was recently upgraded to a more realistic estimate of 745,000. To add some context, net migration in 2018 and 2019 (pre-pandemic and pre-Brexit) were 248,000 and 219,000, respectively. Following an 88% decrease in 2020 to only 34,000 people immigrating than emigrating, the current figures represent a record high.

The increase has largely been driven by non-EU nationals coming to the UK for work reasons (33%), to study (39%) or for humanitarian causes (9%). The addition of the Health and Care route has also contributed significantly to the number of work visas issued (120,000 to YE June 2023), a 157% increase on last year compared with a smaller 34% increase in Skilled Worker visas in the same period. There has also been concern around the number of dependants accompanying migrants to the UK, who currently represent 40% of all work visas granted. In contrast, the number of EU nationals coming and staying in the UK this year continues to decline, with 86,000 negative net migration.

The government is under pressure to bring net migration down to more sustainable levels, whilst trying to balance the needs of the UK health and care system and economy in the face of severe skills and talent shortages.

Skilled Worker minimum salary threshold

The minimum salary for a Skilled Worker visa is currently £26,200 per annum. The minimum salary that needs to be paid to a migrant also depends on the type of role they will be performing and the "going rate" for the job. Today, the government confirmed the Skilled Worker threshold will rise to at least £38,700 per year, a significant increase. A migrant will therefore need to be paid at least the minimum salary for the job they are doing, as well as the new threshold for the visa itself. The change will be implemented in spring 2024.

Shortage Occupation List

Migrants who occupy a role on the Shortage Occupation List currently benefit from a 20% reduction in the going rate for the job. The government intends to remove this 20% reduction, so that all migrants are expected to earn the minimum going rate for the job as resident workers in the UK. The Shortage Occupation List will not be scrapped completely, but the Migration Advisory Committee (MAC) will be instructed to review it in full. Currently, migrants in Shortage Occupation List roles pay a smaller visa fee, which it seems will remain in place.

Dependant visas

Whilst the government has already banned dependants of students from January 2024 and of health and care workers from spring 2024, there was no announcement to restrict the number of dependants that Skilled Workers or Global Business Mobility (GBM) migrants can bring to the UK. However, it will raise the minimum income threshold for those coming on family visas under Appendix FM (Partners of British and other Settled Persons) from £18,600 to £38,700.

Graduate visas

Following the scrapping of the two-year Tier 1 Post-Study Work visa in 2012, the government later replaced it with the Graduate visa in 2021. This allows international graduates of UK universities to stay in the UK for a further two years following completion of their studies and to work if they get a job. Today, the government announced that it would be asking the MAC to review the route in full, following concerns it may be open to abuse.

Conclusion

Since the introduction of the new UK points-based system in 2020, the criteria to apply for a work visa and stay in the UK longer term are less stringent than before. This was a welcome change for many UK businesses that have been able to access more overseas workers in a much broader range of jobs, despite the soaring costs of sponsorship. The increase in salary threshold will undoubtedly have an impact on many UK businesses and will be felt more acutely in the regions. This will include companies that sponsor graduates and talent within shortage occupation roles. The changes will not come into effect until at least spring 2024 and we will see further changes to immigration policy as we approach the next general election. In the short term, clients may wish to consider how these current proposals will impact their ability to sponsor existing and new candidates and take any pre-emptive action to mitigate the immediate as well as longer-term impact on sourcing skills.