Shabana Mahmood’s proposed immigration reforms are projected to yield savings of only £600 million, a mere 6% of the £10 billion figure claimed by the Home Secretary, as indicated by government data.
Under the proposed changes, individuals will now have to wait a decade to achieve settled status instead of the current five years. The Home Secretary argues that this extended waiting period will help reduce expenditures on public services.
However, data obtained from the Migration Advisory Committee through a freedom of information request suggests that the anticipated savings are significantly lower than what the Home Secretary has indicated. Jonathan Portes, a professor of economics and public policy at King’s College London, who accessed this data, noted that any financial benefits from the reforms could be negated by the costs associated with migrants departing the UK and high earners being discouraged from relocating to the country.
Last month, Mahmood stated that in the next five years, approximately 350,000 low-skilled workers and their families would be eligible for settlement, granting them access to welfare, healthcare, and social housing. She claimed that without these reforms, there would be a “£10 billion drain” on public finances, exacerbating the strain on already pressured services such as housing and healthcare.
According to her, this unprecedented influx of low-skilled migration has led to significant fiscal burdens on taxpayers, projected at £10 billion over the lifetime of this demographic, which, she argues, will be borne by working individuals in the UK.
The figure cited by Mahmood is derived from the Migration Advisory Committee’s lifetime fiscal impact estimates. Portes, however, highlighted that these estimates are heavily influenced by age, and that net negative fiscal contributions typically arise later in life due to factors like pensions and social care needs.
Recent findings from the Migration Advisory Committee indicate that migrants are generally net contributors for the first two decades post-arrival, with negative contributions only appearing after about 40 years. Furthermore, the data reveals that benefit expenditures are considerably lower than tax contributions. Portes’ analysis estimates that the direct savings from extending the wait time for indefinite leave to remain would amount to approximately £2,000 per care worker and £4,000 per dependent throughout the full 10-year delay, suggesting a total saving of roughly £600 million over that period.
However, Portes cautioned that this analysis had limitations, as child benefits were not included in the data, and there were varying estimates regarding the number of migrants who would ultimately seek long-term settlement in the UK. He also noted that longer settlement periods could lead to reduced tax revenues, as individuals might remain in lower-skilled jobs associated with their visas instead of advancing to higher-paying roles.
Portes commented, “The Home Secretary’s assertion that her proposals are essential to save £10 billion has been thoroughly disproven by the government’s own data. In reality, care workers and their dependents contribute positively to public finances for at least the first two decades after their arrival, and any savings from limiting their access to benefits are likely to be minimal compared to the costs incurred from making the UK a less appealing destination for immigrants.”
Last month, The Guardian reported that Labour leader Keir Starmer was considering whether to exclude public sector workers and those nearing settlement status from the proposed changes.
The Labour-aligned thinktank IPPR has also raised concerns about the £10 billion figure, arguing that it could only be achieved if a significant number of care workers and their families left the UK entirely, rather than simply waiting longer for settlement as proposed by Mahmood. The IPPR suggested that the departure of many skilled care workers could incur substantial costs for the Treasury, outweighing any potential savings.
Opponents within Labour are advocating for exemptions for those who have already settled in the UK, a proposal supported by former Deputy Prime Minister Angela Rayner and others. While the Home Office is currently consulting on the proposed changes, they are not anticipated to undergo a parliamentary vote.
Labour MP Stella Creasy, who opposes the changes, criticized the claim of £10 billion in savings from extending the waiting period for care workers to settle, calling it “unsustainable.” She emphasized the need for the Home Secretary to face parliamentary scrutiny regarding her proposals and their implications.
Sunder Katwala, director of the British Future thinktank and collaborator on the research, remarked, “These significant findings indicate that any fiscal impacts resulting from the draft reforms will be a fraction of what the initial headlines suggested. By revealing their calculations, the government would provide MPs with a clearer understanding of how the final proposals could be adjusted, especially since the Prime Minister has indicated a willingness to compromise on fairness issues.”
Max Wilkinson, the Liberal Democrat spokesperson for home affairs, stated, “These figures reveal the government’s £10 billion claim as a fiscal fantasy that fails to recognize the immense contributions that care workers and their families make to our communities and economy. By subjecting those who care for our loved ones to a decade of uncertainty, ministers are prioritizing cruelty over common sense, while also jeopardizing essential tax revenues that support public services. We require an immigration system that benefits our economy and public services, rather than one that unfairly traps individuals in a state of perpetual insecurity. The government must transparently disclose the complete figures related to this issue.”
The Home Office clarified that the £10 billion figure was not meant to reflect potential savings but rather to illustrate the lifetime costs associated with the cohort of care workers and their dependents who are set to become eligible for settlement.
