The UK government’s drive to curb immigration could cost the country as much as £4.4 billion ($5.7 billion), according to its own internal analysis, raising questions about Prime Minister Keir Starmer’s promise to bring migration “under control” without damaging the economy.
The Home Office assessment, released alongside Starmer’s sweeping immigration reforms, lays bare the potential financial risks of the Labour government’s plan to sharply reduce the number of foreign workers and students allowed to remain in Britain.
Significant changes
Among the most significant changes are proposals to shorten the period international graduates can stay in the U.K. after completing their studies from two years to 18 months and to tighten English-language requirements for skilled-worker visas.
- Employers sponsoring foreign workers will also face a one-third increase in the immigration skills charge, a fee levied on companies hiring from abroad.
While Starmer framed the reforms as restoring fairness to Britain’s immigration system, the Home Office’s own projections show the policy could backfire economically.
- The department estimates the U.K. could be £1.2 billion worse off over five years, with losses potentially ballooning to £4.4 billion in a worst-case scenario. Even under the most optimistic model, the gains would be modest, about £800 million.
The report attributes much of the projected loss to a fall in tuition revenue from international students and reduced income-tax receipts as fewer graduates stay on to work. The analysis also anticipates lower visa-fee collections.
What University leaders said
University leaders say the findings confirm their fears that the crackdown could hurt communities that rely heavily on international education.
“This assessment shows the real-world consequences for growth and prosperity,” said Jamie Arrowsmith, director of Universities U.K. International. “Any benefit from higher tuition fees will be wiped out by other policy changes.”
- Former education secretary Alan Johnson cautioned that the policy could “close universities” if international enrollment falls. “The government would be making a very big mistake,” he said, “if it tries to fix migration by targeting students who bring billions into the economy.”
Migration advocates have criticized the political debate around immigration as short-sighted. Sunder Katwala, head of the British Future think tank, said policymakers are “competing to promise the lowest migration numbers” without considering the broader trade-offs. “Yes, migration can strain housing and services,” he said. “But it also fuels the economy through taxes, university fees, and spending.”
What you should know
Net migration has already begun to decline, dropping to about 431,000 in 2024 from a record 860,000 the previous year following pandemic-era surges and a spike in foreign student enrollments. Officials say the sharp rise in study visas issued to lower-ranked universities helped drive the 2023 record, with a 49% increase in such applications between 2021 and 2023.
The government insists the new rules will “restore confidence” in the immigration system and prevent what Starmer called the “incalculable damage” caused by years of unchecked migration. But critics, including some within the Labour Party, warn the plan risks undercutting one of Britain’s most lucrative exports: higher education.
