UK’s tightened immigration policies impact businesses and universities

Shara Pledger of Pinsent Masons was commenting after the UK government issued its long-trailed white paper on immigration (82-page / 2.2MB PDF) on Monday. The paper sets out its plans to reduce net migration and better link the country’s immigration system to the skills and training requirements in the UK economy, warning that uncontrolled migration poses a risk to UK productivity and economic growth. The plans include a stiffening of English language requirements for foreign workers, students and others seeking to settle in the UK under a family visa.

“This government wants to see net migration come down further and faster over time to sustainable levels,” the government said. “We will do so by making clear and informed choices about who comes to the UK, how long they are allowed to stay for, and the acceptable pathways to settlement, both to restore control and place much greater value on the different contributions that people bring.”

The government intends to apply a staged approach to immigration reform, beginning by making changes intended to curb lower skilled migration.

A new Labour Market Evidence Group (LME Group) is to be established to review sectors with particularly high levels of overseas recruitment. Employers in these sectors will need to create a workforce strategy to show their commitment to skills and training in the UK, as well as engaging with the domestic labour force for recruitment. No concrete information is available at present as to how this will operate.  

The LME will comprise of the Industrial Strategy Advisory Council, the Department for Work and Pensions, Skills England and equivalent bodies in Scotland, Wales and Northern Ireland, and the Migration Advisory Committee (MAC).

Qualification requirements and salary thresholds relevant to the Skilled Work visa will also be altered. This change, which includes requiring prospective foreign workers in the UK to have degree-level qualifications, will result in the Skilled Work visa route no longer being open to those with qualifications below this level.

A new temporary shortages list is to operate in tandem with this, which will give employers in sectors where long term shortages in labour have arisen some scope to recruit lower-skilled foreign workers to fill vacancies – but the process will be subject to MAC scrutiny and will require employers to have a workforce strategy in place and be “committed to playing their part in increasing recruitment from the domestic workforce”.

In the immediate term, a version of the new temporary shortages list will operate based on occupations that the MAC has recently considered to be in shortage, or which are crucial to the delivery of the UK’s industrial strategy.

“It is likely those sponsored under the temporary shortage list will not be able to bring dependants to the UK or face severe restrictions on the dependants who can enter the country,” said Pledger. “This list will be reviewed and amended regularly based on the needs of the labour market.”  

In relation to adult social care, where a special visa can currently be obtained by employers seeking to recruit foreign workers, the government has pledged to “end overseas recruitment for social care visas” by 2028. In the transition period up until then, existing visas will be able to be extended or switched – though this is to be kept under review.

A significant increase in the immigration skills charge (ISC) was also announced, which Pledger said will add costs for large employers.

The ISC is currently levied at £1,000 per annum per worker for a large employer. Under the government’s proposals, the ISC will rise by 32%. “This is likely to have a significant impact on financial planning by employers,” said Pledger. The government said it intends to use the money received from the ISC “to support skills funding for priority sectors to upskill the domestic workforce and reduce reliance on migration over the medium term”. More details are expected at next month's spending review.

Pledger said: “As the Home Office has made very clear in recent guidance, these costs cannot be passed on to workers themselves and must be covered by employers.”

In addition to reducing lower skilled migration, the government’s immigration proposals include plans to attract global talent, including for the UK’s “strategic industries”, with it to be made easier for businesses to recruit foreign research interns in AI as well as design and scientific talent.

The plans also envisage a doubling of the number of workers that an overseas business can send to the UK with the aim of establishing a presence in the UK, as well as a possible “targeted and capped” expansion of the number of institutions eligible to recruit talented graduates under the UK High Potential Individual (HPI) visa scheme.

In relation to foreign students, the government recognised the contribution they make to the UK economy but said the student visa system cannot be used “simply as a vehicle to move themselves and their dependants to a new life in Britain”. Aside from certain Masters research students, foreign students haven’t been able to bring dependants with them to the UK since 2024.

Under the government’s plans, university sponsors will face stricter compliance tests for sponsoring foreign students – including that they maintain a course enrolment rate of at least 95% and a course completion rate of 90%. Failure to meet the revised tests, which will be assessed annually, could lead to the revocation of their sponsorship licence. The stiffer tests will also be accompanied by a red, amber, green review system for compliance which will be publicly available, showing how institutions are performing. Sponsors close to failing will be placed on action plans.

The government also said it will reduce the ability for foreign graduates to remain in the UK after their studies to a period of 18 months, down from the current two year period. In addition, it said it is considering introducing a levy on higher education provider income from international students, the money from which would be “reinvested into the higher education and skills system”. It plans to set out more details on this in its autumn budget.

UK prime minister Sir Keir Starmer said: “Migration is part of Britain’s national story and an essential element of a strong economy. But if people want to come to Britain to start a new life, they must contribute, learn our language and integrate. And if employers want to bring workers from overseas, then they must also invest in the skills of workers already in Britain.”

“We know that thousands of British businesses already do this – our strategy will back them. But this white paper also signals a new era. We will still be competitive in attracting the world’s best talent. At the same time, we will wean our national economy off its reliance on cheap labour from overseas. The end result will be a reformed immigration system that no longer ignores the millions of people who want the opportunity to train and contribute. And that backs our young people with the hope of good, well-paid jobs in their community,” he added.