Why the new UK visa rules could be bad for business

Last updated: 04 March 2024 Views: 1308
Why the new UK visa rules could be bad for business

The current UK government has made a show of being tough on immigration. Its latest announcement extends this rhetoric towards some seemingly unlikely sources. As well as skilled workers and the families of care workers, family members of British citizens will find it harder to get a visa, with the wage requirement for the latter increasing.

While the family wage cap has been lowered following a U-turn, this latest in a line of moves to reduce immigration figures could have unintended economic consequences. The limits - and the feeling of a more hostile climate towards migrants - could stop talented individuals from entering the country, and even encourage more people to move away.

The new visa rules

Three new visa measures were announced as part of a five point plan by Home Secretary James Cleverly. Foreign care workers will no longer be able to bring any family members to the UK as a rule, unless they qualify through another visa route. Perhaps most notably, the salary threshold for a skilled worker visa will rise by almost 50% from £26,200 to £38,700. Most exceptions for areas with skills shortages will be scrapped, with only health and care visas continuing to benefit from a 20% discount.

At home, it was the family visa rules which raised the most questions. Current rules require that any British citizen bringing their family to live with them in the UK must be able to financially support them. The salary requirement for this is a gross income of £18,600, equal to the minimum wage for 18 to 20-year-olds in a full time job. This requirement rises for each child brought to the UK, increasing by £3,800 for the first child and £2,400 for each subsequent child. Cash savings above £16,00 are also taken into account.

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Under the new rules, the salary requirement for a family visa was initially set to more than double to £38,700 - the same threshold applied to skilled worker visas, and more than the current average median salary in the UK. However, a U-turn has seen this lowered to £29,000. The £38,700 cap is still thought to be planned for the future however - and the salary of a spouse will still not be considered unless their job is in the UK. This is also not thought to include further cap increases for any children brought to the UK.

The salary requirement for both visas has not risen since 2012, meaning that they were due to be adjusted, but the adjustment far exceeds the rate of inflation. The national minimum wage for context is set to rise to £11.44 an hour for people aged 21 and over from April 2024, equating to a gross salary of £23,795. The London Living Wage is £13.15 an hour, equating to a gross salary of £27,352; however, this is an elective scheme and not a mandatory minimum wage.

The potential impact on businesses

One of the precursors to this decision was a change to student visas, with only government-sponsored students and postgraduates now allowed to bring dependents, and only if they can support themselves financially. The new rules are part of a swathe of immigration-based policies, apparently designed to win votes ahead of the next General Election, which must be held by January 2025.

The risks of this strategy are obvious. The loss of visas for care workers dependents threatens an already understaffed sector, but the threat of the other two changes may be more pointed. The raising of the salary threshold for family visas risks British nationals simply leaving the country to join their partners, losing both their contribution to the UK economy and that of their partner. Despite the fact that their partner could be earning more than they are - and above the UK salary cap - this only contributes to the visa if they already have a job in the UK.

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More pertinent to UK businesses is the rise in the skilled worker visa salary threshold. The new threshold not only cuts off many students from continuing to live and work in the UK after they graduate, but also realistically prevents foreign hires in many sectors, with the required salary being above the national median wage. This is on top of the other costs involved in sponsoring someone for a foreign worker visa, and the added risk of not necessarily being able to interview them in person.

The decision is obviously one calculated for the short term. The government will hope that the decision plays well with its base, while the effects will likely not be keenly felt until after the election. At this point, they can either ease the restrictions if the economic impact is obvious; or they will not be in government, and they can use the economic downturn as a stick to beat the opposition with. For businesses, however, this seems like a lose-lose situation - particularly in the absence of EU workers after Brexit.

However, there is one change in the visa rules which might help employers. Sponsor licenses will no longer have to be renewed every four years but will be automatically extended by ten years, eliminating the need for so many renewals and also reducing the expense for employers (a hefty fee from between £536 and £1,476 depending on their size and charity status).

Related article: Guide to doing business in Europe

The coda on all of this is the potential change of government in the next year. These new rules aren’t set to come into law until April 2024, and the family visa rule has already been amended. It may be that further changes are made before then - and if they aren’t, an election is due within the next year.

While this doesn’t guarantee a change, it does raise the likelihood of one. A better relationship with France could help to address the issue of migrants crossing the English Channel, and mitigate any concerns about visa numbers. The hope is that a new government - or a change of heart - brings a visa and immigration system that accepts talented workers and entrepreneurs, instead of chasing political capital.

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