iVM Channels
Think tank says skilled workers and adult dependants could contribute £115bn more to the UK public finances than they cost over their lifetimes.
Skilled migrants and their adult dependants who are expected to settle in the United Kingdom under the country’s existing immigration rules could make a net lifetime contribution of around £115 billion to the UK public finances, according to new analysis by the Institute for Public Policy Research (IPPR).
The findings have injected fresh economic arguments into the increasingly heated national debate over the Government’s proposed reforms to indefinite leave to remain (ILR), particularly at a time when ministers are considering whether to make migrants wait considerably longer before gaining permanent residence.
The IPPR published its analysis on Monday, November 2, as the Government prepared to finalise its plans for an “earned settlement” system.
Under the current rules, many eligible migrants on the Skilled Worker route can apply for ILR after five years, subject to meeting the relevant requirements. The Government has been considering reforms that could increase the standard qualifying period to 10 years, with some workers potentially facing a 15-year wait.
A £115bn contribution
According to the IPPR, skilled workers and their adult dependants expected to settle between 2026 and 2030 under the existing five-year settlement rules are estimated to make a combined net lifetime fiscal contribution of approximately £115 billion.
The analysis covers skilled workers generally, as well as workers in the health and care sectors.
The IPPR says its calculations use the same broad methodology employed by the Government when assessing the lifetime fiscal impact of care workers and their adult dependants.
Its estimate is based on projected numbers of migrants expected to obtain settlement between 2026 and 2030 and Migration Advisory Committee estimates of the lifetime fiscal contribution associated with different migrant groups.
The figures are expressed in 2022/23 prices.
The IPPR estimates that the £115 billion total comprises approximately:
£113 billion from skilled-worker main applicants outside health and care;
£10 billion from health and care worker main applicants;
negligible net contribution from skilled-worker adult dependants outside health and care; and
approximately £9 billion net cost associated with adult dependants of health and care workers.
Taken together, the estimated balance is approximately £115 billion in net lifetime fiscal contribution.
A challenge to the £10bn care-worker argument
The findings are particularly significant because they provide a different perspective on the Government’s previous argument about the fiscal impact of migrant care workers.
The Government has previously cited an estimated £10 billion net lifetime fiscal cost associated with overseas care workers and their adult dependants.
The IPPR argues that this figure should not be viewed in isolation from the wider contribution made by skilled migration.
Its analysis suggests that, when skilled migration across the economy is considered as a whole, the migrants expected to settle between 2026 and 2030 would make a substantial positive contribution to the public finances.
The think tank therefore argues that immigration policy should take account not only of the costs associated with migrants accessing public services, but also of the taxes and economic contribution they make during their working lives.
Care workers at the centre of the debate
The issue is particularly important for the UK’s social care sector, which has become heavily dependent on overseas workers.
The IPPR estimates that around 287,000 care workers and dependants already in the UK could be expected to settle between 2026 and 2030 under existing arrangements.
The organisation has welcomed reports that the Government may reconsider proposals that would have required some care workers to wait as long as 15 years before obtaining settlement.
IPPR argues that protecting care workers who are already in the UK would help reduce their vulnerability to exploitation and would also support efforts to build a stable workforce for the country’s social care system.
The issue comes at a critical moment for the sector, which continues to experience recruitment and retention difficulties.
The controversy over retrospective changes
One of the most contentious elements of the proposed immigration reforms is whether new settlement rules should apply to migrants who are already living and working in Britain.
Many Skilled Workers came to the UK on the understanding that, subject to meeting the requirements, they could seek settlement after five years.
The possibility of changing the rules retrospectively has therefore generated significant concern among migrant workers, employers and organisations representing the care sector.
The IPPR says ministers should consider transitional arrangements for people already in the UK who are on routes leading to settlement.
One option, it suggests, would be to allow existing migrants to remain on the five-year settlement route.
Another proposal would be to introduce an interim status after five years. Such a status could provide migrants with a secure pathway towards permanent residence while allowing them to change employers without being tied to sponsorship.
‘Honour The Rules People Came Here Under’
Marley Morris, Associate Director for Migration, Trade and Communities at IPPR, said the public debate had concentrated heavily on the costs of migration while failing to give sufficient attention to migrants’ fiscal contributions.
He argued that the new analysis demonstrates the wider economic value of skilled migrants.
Morris also called on the Government to respect the settlement expectations under which migrants originally came to Britain or provide a fair transitional arrangement.
His argument is that migrants who have already made significant personal and financial decisions based on the existing rules should not suddenly find themselves facing substantially different conditions for settlement.
Government Faces Difficult Balancing Act
The IPPR intervention comes as ministers face a difficult balancing act between two competing political pressures.
On one side, the Government has promised to reduce migration and introduce a tougher settlement system in response to public concern over immigration levels and pressure on public services.
On the other, businesses and public-service sectors—including health and social care—continue to depend heavily on migrant workers.
The Government’s proposed “earned settlement” model is intended to make permanent residence more closely linked to factors such as contribution, earnings, occupation and conduct.
The proposals have generated more than 200,000 responses during the consultation process, highlighting the sensitivity of the issue.
Omen Fedinard Xtrays What the £115bn Figure Does — and Does Not — Mean
The IPPR figure should not be interpreted as meaning that migrants will immediately hand £115 billion to the Treasury.
It is a forecast of net lifetime fiscal contribution—an estimate of the taxes and other fiscal contributions expected over migrants’ lifetimes, balanced against the public expenditure associated with them.
The same way critics and the opposition has also estimated that more than 200,000 immigrants arriving on Health and Care visas would be eligible for British citizenship before the next election and claimed this would cost the taxpayer £50bn over their lifetimes.
Juxtaposing the two analysis the UK economy will experience a double boost than less.
The calculation is also based on applying Migration Advisory Committee estimates from an earlier migrant cohort to people expected to settle between 2026 and 2030.
The IPPR acknowledges limitations to the methodology, including differences between the migrant population assessed by the Migration Advisory Committee and the cohort expected to settle in the coming years.
It also stresses that its calculation is based on settlement patterns under the existing five-year rules, rather than modelling the effects of the proposed new earned-settlement system.
A significant message for Britain’s migration debate
The new analysis nevertheless adds a significant economic dimension to the political argument over immigration.
Rather than treating settlement simply as a future cost to the taxpayer, the IPPR argues that migrants who work, pay taxes and remain economically active can make a substantial contribution to the UK’s public finances.
With the Government preparing to make final decisions on settlement reform, the central question is increasingly becoming not simply how many migrants should be allowed to remain in Britain, but also what economic value Britain stands to gain or lose from the people already working in the country.
For thousands of Skilled Workers and their families who came to Britain under the existing rules, the outcome could determine not only when they can secure permanent residence, but also whether the five-year expectation on which many based their decision to move to the UK will ultimately be honoured.
The IPPR’s £115 billion estimate has therefore placed a powerful economic figure at the heart of one of Britain’s most politically sensitive immigration debates.
