Laura Devine
Laura Devine Immigration, London
laura.devine@lauradevine.com

Phoebe Warren
Laura Devine Immigration, London
phoebe.warren@lauradevine.com

Introduction

The UK Home Office has recently implemented policies to reduce legal migration, following the latest statistics showing record net migration figures for 2023. On 4 December 2023, Home Secretary James Cleverly announced a five-point plan to cut immigration numbers, promising to reduce net migration figures by approximately 300,000 people. One significant pillar of this plan is a substantial increase in the salary thresholds that skilled workers must meet to be eligible for UK immigration permission, a measure which came into force on 4 April 2024.

Context

Home Office statistics indicate that the number of ‘Worker’ immigration applications granted increased by 26 per cent in the year ending December 2023 compared with the previous year, primarily due to a significant increase in ‘Skilled Worker – Health and Care’ visas granted. These statistics provide the policy rationale for the Home Secretary’s plan to reduce net migration, including the new salary threshold increases for skilled workers outlined below.

Changes to the ‘Skilled Worker’ route

The ‘Skilled Worker’ route is the primary work-based immigration route for foreign national workers to relocate to the UK. From 4 April 2024 changes to this route include the following provisions aimed at reducing applicant numbers and cutting net migration, among other reforms:

• raising the general salary threshold from £26,200 to £38,700 per year for initial applicants;
• increasing the minimum required ‘going rate’ salary thresholds (which apply to specific individual occupations) in line with the same ratio as the general threshold (ie, from the current 25th percentile of UK earnings in eligible occupations up to the 50th percentile or median of UK earnings);
• keeping existing skilled worker salary discounts in certain circumstances (relating to holders of relevant PhD qualifications, new entrants to the labour market, and specific health, care and educational occupations) but increasing the relevant salary thresholds for these concessions based on the latest UK earnings data; and
• removing the Shortage Occupation List (SOL) and replacing it with the Immigration Salary List (ISL). The SOL previously allowed for reduced salary thresholds to encourage recruitment of overseas workers into occupations with labour shortages in the UK. Roles on the new ISL will instead be those the government considers sensible to offer a discounted salary threshold. Far fewer roles are included on this list, raising concerns that occupations experiencing labour shortages will struggle to fill roles. Roles listed on the ISL will no longer have discounts to the going-rate salary thresholds specific to each occupation.

Elsewhere, employment restrictions for skilled workers are being slightly relaxed. Skilled workers could previously undertake limited supplementary employment in addition to their primary employment for which they are sponsored (but restricted to work in the same occupation as their main job or in an occupation experiencing labour shortages). The new provisions widen the range of supplementary employment which skilled workers can undertake to include any eligible role under the category.

Statistical nuances

As stated above, the increase in Worker immigration approvals in the year ending December 2023 has provided the UK government with the policy rationale to ‘crack down’ on skilled migration by increasing salary thresholds. A detailed look at the statistics, however, shows a more nuanced picture:

• the vast majority of this increase in ‘Skilled Worker’ approvals results from an increase in the number of Health and Care applications granted. Health and Care applicants, however, will be exempt from the new general salary threshold of £38,700 and, therefore, their numbers may be unaffected by the implementation of this threshold, casting doubt on the new threshold as a tool for reducing skilled immigration;
• the most recent Home Office immigration statistics for the year to December 2023 indicate that, overall, non-Health and Care skilled work (including under ‘Skilled Worker’ and ‘Global Business Mobility: Senior or Specialist Worker’ routes) fell by 6 per cent;
• a proportion of the increase to December 2023 will, in part, be a result of the fact that European Economic Area (EEA) workers who would previously have worked in the UK without the need for immigration permission (prior to Brexit) are now required to apply for ‘Skilled Worker’ permission, indicating an artificial increase in worker applications which may not be a result of an actual increase in immigration of EEA workers; and
• individuals who were prevented from relocating to the UK for work during and in the wake of the Covid-19 pandemic can now do so, creating an artificial surge in applications as immigration numbers recover from that period. This increase may, therefore, be temporary in nature and need not be addressed by the introduction of restrictions on skilled migration.

Potential impact

These changes to the UK economic migration regime will substantially increase the costs to employers who wish to sponsor overseas workers and, as of 4 April 2024, make many prospective workers seeking to relocate to the UK ineligible to do so.

Measures such as increasing the salary threshold to £38,700 will likely disproportionately reduce immigration of highly skilled, younger migrants who would contribute the most to the UK in terms of tax revenue. In the context of an ageing UK working population, decreasing immigration in such categories may have negative fiscal consequences in the future.

These restrictive measures may additionally exacerbate labour shortages in critical sectors, particularly in regions outside London and the Southeast where average incomes are significantly below the £38,700 threshold.

A significant increase in minimum salary requirements in key industries will increase company running costs, which may, in turn, cause inflationary pressures to be passed on to consumers. Such a policy may, accordingly, have negative downstream impacts during high inflation in the broader economy.