New immigration scheme will do ‘little to change’ UK economy, think tank finds

Other economic factors are more important than migration, the Resolution Foundation says, but experts warn firms will continue to struggle to find skills

The government’s new immigration scheme is unlikely to have any major impact on the UK economy, a think tank has said, although experts warn firms will continue to struggle to find the skills they need.

A report from the Resolution Foundation found that while some industries were likely to face “significant change” following the introduction of a points-based immigration system last year, the new scheme would do little to change the UK’s “low investment, low productivity challenges”.

However, the report said the new scheme was also unlikely to have a detrimental impact on businesses, only causing a “pinch” among sectors which are reliant on workers who would be ineligible to come to the UK for work under the new rules.


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“Despite claims from both sides of the debate, the UK’s new migration regime will do little to change the UK’s economic trajectory,” said Kathleen Henehan, senior research and policy analyst at the Resolution Foundation.

The report said that under the new immigration scheme, which came into force in January 2021, some lower-paying industries reliant on migrant labour could have to change significantly or “shrink” because many of their roles are excluded from the new skilled worker visa.

But in general, the report argued that the impact of the new migration regime on the economy as a whole was “likely to be small” and that the prime minister’s claim that controlled migration was the key to a “new high wage economic strategy” was “overdone”.


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However, Jonathan Beech, managing director of Migrate UK, said businesses of all sizes had been scrambling to attract and retain talent after the change last year, and argued the problems were unlikely to end soon.

“I can’t see this situation changing in the long term unless key skill shortages are identified earlier, visa and sponsorship concessions are made for certain job categories and there is more investment into upskilling resident workers,” he said. 

This was echoed by Matthew James, associate at Bates Wells, who said the report’s longer term positive message was “unlikely to be comforting” to businesses navigating the sponsor licence system for the first time, or to firms unable to fill key roles that were not covered by the skilled worker route.

He added that the increase in firms applying for sponsor licences was also contributing to longer processing times, “preventing the ability to recruit overseas staff quickly”.

Aisha Choudhry, also an associate at Bates Wells, added that as the immigration climate changed, businesses needed to “act quickly to ensure that their HR systems are robust”. She suggested firms carry out internal audits of existing employees to ensure they are compliant with the current migration rules, and advised firms who think they might need skills from outside the UK to apply for a sponsor licence.