Skilled migrants could contribute £115bn to public finances, think tank says

Home Secretary Shabana Mahmood is expected to announce her final decision on immigration restrictions for legal migrants, after considering more than 200,000 responses to a nearly year-long consultation.

She will make a statement in the House of Commons on Monday, a Home Office source confirmed.

Speculation has mounted that the most controversial proposals – including increasing the five-year wait for claiming indefinite leave to remain (ILR) by up to 10 years for foreign care workers – could be watered down in the wake of criticism from senior Labour figures.

Tensions in the Cabinet over the policy surfaced when Housing Secretary Angela Rayner earlier this year publicly attacked the prospect of backdating the plans.

Then Energy Secretary Miatta Fahnbulleh repeatedly refused to say she backed proposals to prolong the qualifying period for settlement.

Prime Minister Andy Burnham last week said he strongly supported that ILR was a “right to be earned,” but stopped short of committing to bringing in all of Ms Mahmood’s reforms.

Ahead of the Home Secretary’s response to the consultation, the Institute for Public Policy Research (IPPR) said skilled migrants and their adult dependants due to settle in the UK under current rules are expected to make a net lifetime contribution of around £115 billion through the taxes they pay.

The think tank, which has been influential in Labour policy-making, said its findings offered a counterpoint to Government estimates that allowing overseas care workers and their adult dependants to settle in the UK would cost taxpayers £10 billion over their lifetimes.

It said its analysis, using the same methodology as the Home Office, suggests skilled workers and their adult dependants expected to gain ILR between 2026 and 2030 under existing five-year ILR rules would make substantial contribution to the UK public finances.

The figures include health and care workers, as well as those on other skilled worker visas.

The IPPR said it welcomed reports that Ms Mahmood could scale back plans to lengthen the wait for settlement to 15 years for some lower-paid workers, exempting social care workers already in the UK.

It said the move would be a “significant compromise”, given around 287,000 care workers and dependants are expected to settle between 2026 and 2030.

But it praised the step for protecting a group vulnerable to exploitation and supporting Mr Burnham’s vision for a new national care service.

And the think tank called for ministers to find a compromise for other workers already in Britain, either by retaining their existing five-year route or introducing an interim status after five years providing a pathway to permanent residency and allowing them to change jobs without employer sponsorship.

IPPR associate director for migration Marley Morris said: “Public debate has focused heavily on the costs of recent migration, but this is not the whole story.

“Our analysis suggests that over their lifetimes skilled migrants are estimated to make a net contribution of billions to the public finances.

“We welcome signs that the Government is planning a compromise for its settlement reforms.

“Ministers should honour the rules people came here under or offer a fair compromise that gives them a secure pathway to settlement and freedom to change jobs after five years.”

Conservative shadow home secretary Chris Philp said Ms Mahmood “appears to have capitulated control of immigration policy”.

He wrote on X: “Tomorrow the Government will announce their U-turn on ILR, or Indefinite Leave to Remain.

“It’s clear Shabana Mahmood has been forced to surrender to Angela Rayner and the open-borders Labour left. She will now allow hundreds of thousands of low-wage and no-wage migrants to stay in the UK forever and claim benefits.”

Reform UK leader Nigel Farage said: “The Labour Party is at war with itself over indefinite leave to remain, with Home Secretary Shabana Mahmood losing a fight to the far left of her own party. Tomorrow, she’s expected to cave on plans to even tinker with the ILR numbers.”

Reform would “scrap ILR in its entirety and indeed rescind existing awards”, Mr Farage added.

ILR is an immigration status that allows a person to live, work and study in the UK indefinitely and apply for benefits if they are eligible.