UK immigration system reform and fees set to impact employers

Government plans to reform the UK immigration system, including increases to the cost of work visas, have been condemned due to concerns about the impact on the UK’s competition for global talent. 

On 13 July, John Glen, chief secretary to the Treasury, set out the plan which included a 15% increase in work and visit visas and at least a 20% hike on cost of study visas, certificates of sponsorship, settlement, citizenship, wider entry clearance, leave to remain and priority visas. 

A series of further immigration reforms were also proposed on 12 July,  including the introduction of the 'sponsor a worker' scheme set to replace current certificates of sponsorship. 

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A limited test of the sponsor a worker scheme will run in 2024, but no date has been given for when fee changes will be introduced. 

Joanna Hunt, head of immigration at law firm Fieldfisher, said the fees will put more pressure on firms looking to fill skills gaps with migrant workers. 

Speaking to HR magazine, Hunt said: “The costs of using the system were already exorbitant before this increase – employers face having to either shoulder the costs themselves or see if they can entice talented workers to the UK who are willing to cover some of the fees.  

“This will again place the UK employers at a disadvantage to their European counterparts, whose visa schemes are cheaper and less bureaucratic, in the war for talent.” 


Summary of proposed changes to UK immigration system relating to work, June 2023 

  • Work and visit visas to increase by 15% 

  • Student visas, certificates of sponsorship, entry clearance and leave to remain application fees to increase by a minimum of 20% 

  • The Immigration Health Surcharge (IHS), a levy paid by visas holders who come to the UK for six months or more, to be raised from £624 to £1,035 per year. For students, children and youth mobility visa holders: £470 to £776 per year
  •  A new 'sponsor a worker' scheme to replace the system of certificates of sponsorship. Maximum fee to be set at the same level as the certificate of sponsorship at £300. 


New additions to shortage occupation list   

Yesterday (18 July), the Home Office announced key construction workers, including bricklayers, roofers and joiners and fishing jobs, will be added to the UK’s shortage occupation list, lowering the barriers they face to entering the UK on a working visa. 

Hunt said it is unclear at present whether the same fee hikes will apply to roles on those lists. 

She added: “It is hoped some concessions are made to industries like construction and care whose roles feature on the shortage occupation list and are having to resort to using sponsorship visas to plug large-scale labour shortages.  

“Any benefits bestowed by the shortage occupation list will be undone if the visas are unaffordable to those employers.” 

The Home Office’s list of Skilled Worker visa: shortage occupations can be found here. 


What’s next? 

Vikki Wiberg, senior counsel in the mobility team at law firm Taylor Wessing, said the fees are likely to have a large impact on businesses, especially small companies, rather than individuals applying for visas. 

She said: “The new fee regime is unlikely to reduce the pool of available candidates, but it will mean supporting visas will become very expensive.  

“Companies are likely to find they are stuck between a rock and a hard place, whereby there are a limited number of skilled candidates in the UK, but it is too expensive to sponsor a visa to bring a specialist into the country.”  

Though no date has been set for fee hikes, Wiberg speculated that the new process could be introduced soon as the government is looking to use the money to offset public sector pay rises. 

For businesses continuing to support work visas, Hunt said she expects to see a rise in the addition of visa payback clauses to contracts. 

“These clauses are controversial,” she said. “The fear is that it places the worker in an indebted position where they do not have absolute freedom to leave employment.  

“However, employers are now left with little choice. Budgets will have to be hastily reassessed to cover these unforeseen costs and many employers will want some protection in case they are left out of pocket.”