New analysis of UK government data has raised serious questions about the financial impact of proposed migration reforms led by Home Secretary Shabana Mahmood, suggesting the expected savings may be significantly lower than initially claimed.
The proposed changes include extending the pathway to settlement (indefinite leave to remain) from five years to ten years for most migrants. The Government previously argued that this measure could prevent a Β£10 billion burden on public finances by delaying access to benefits and public services.
However, data from the Migration Advisory Committee indicates that the actual savings could be closer to Β£600 million over a ten-year period-approximately 6% of the original estimate.
The analysis, conducted by Jonathan Portes, suggests that migrants-particularly care workers and their dependantsβtend to contribute positively to public finances for the first two decades after arriving in the UK. According to the data, migrants typically only become net contributors to public spending much later in life, largely due to pension and social care costs.
The findings also highlight that migrantsβ tax contributions generally exceed the cost of benefits during their early and mid-years in the UK. As a result, delaying settlement may produce only modest direct savings, estimated at around Β£2,000 per care worker and Β£4,000 per dependant over the extended period.
Using Home Office projections, the total savings from delaying settlement eligibility are estimated to reach approximately Β£600 million over ten years. However, experts warn that this figure does not account for several key factors, including child benefit costs and potential behavioural changes among migrants.
Critics argue that the policy could have unintended economic consequences. Longer settlement routes may discourage high-skilled migrants from choosing the UK or lead to existing workers leaving the country. Additionally, keeping migrants tied to lower-skilled visa roles for longer could reduce overall tax contributions by limiting career progression.
Think tanks and policymakers have also questioned the Governmentβs Β£10 billion figure. The Institute for Public Policy Research (IPPR) suggested that such savings would only be achievable if a large number of migrants left the UK entirely, which could itself create workforce shortages and economic costs-particularly in sectors like social care.
Political criticism has also emerged from across Parliament. Labour MP Stella Creasy described the Β£10 billion claim as unsustainable and called for greater parliamentary scrutiny of the proposals. Meanwhile, Sunder Katwala of British Future noted that the actual fiscal impact appears to be far smaller than headline figures suggest.
Opposition voices, including Liberal Democrat representatives, have warned that extending settlement timelines could leave migrants in prolonged uncertainty, while potentially reducing tax revenues and harming public services.
In response, the Home Office clarified that the Β£10 billion figure was not intended to represent direct savings but rather an estimate of the long-term fiscal cost of a specific group of migrants over their lifetime. Officials maintain that the reforms are necessary to ensure that settlement in the UK is earned and to better manage migration pressures.
The Government is currently consulting on the proposed changes, and they are not expected to be subject to a full parliamentary vote at this stage.
LawSentis Viewpoint
At LawSentis, this development highlights the growing gap between policy messaging and economic reality in UK immigration reform. While controlling public spending is a valid objective, the data suggests that migrantsβparticularly in essential sectors like care-are net contributors in the short to medium term.
Extending the route to settlement may create uncertainty for migrants and employers alike, potentially affecting workforce stability and long-term economic growth. It also reinforces the need for applicants to carefully plan their immigration strategy under evolving rules.
LawSentis is a UK-based immigration firm regulated by the IAA (Level 3), offering expert advice on work visas, settlement routes, and complex immigration matters. Contact us today.