By Deborah Nnamdi
The UK government’s push to tighten immigration controls could cost the country up to £4.4 billion ($5.7 billion), according to its own internal assessment, casting doubt on Prime Minister Keir Starmer’s pledge to cut migration without harming the economy.
The Home Office report, released alongside Starmer’s sweeping immigration reforms, reveals significant economic risks tied to the Labour government’s plan to drastically reduce the number of foreign workers and students allowed to remain in Britain.
Key changes include shortening post-study visas for international graduates from two years to 18 months and raising English-language requirements for skilled-worker visas. Employers will also face a one-third increase in the immigration skills charge — a levy on firms hiring foreign talent.
While Starmer said the measures would “restore fairness” to the immigration system, the analysis suggests they could do the opposite economically. The Home Office projects the UK could be £1.2 billion worse off over five years, with losses potentially rising to £4.4 billion in a worst-case scenario. Even under the most optimistic forecast, gains would be limited to about £800 million.
Officials attributed much of the projected loss to declining tuition revenue from international students, lower income-tax receipts, and reduced visa-fee income.
University leaders have warned the reforms could hurt local economies dependent 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 foreign enrollment falls sharply. “The government would be making a very big mistake if it tries to fix migration by targeting students who bring billions into the economy,” he said.
Migration analysts have also criticised the political debate around immigration as “short-sighted.” Sunder Katwala, director of the British Future think tank, said politicians are “competing to promise the lowest migration numbers” without weighing the economic trade-offs.
Net migration has already dropped to about 431,000 in 2024 from a record 860,000 the previous year, following a post-pandemic surge and an influx of foreign students. Officials say a spike in study visas to lower-ranked universities contributed to the 2023 peak, with a 49% increase in such applications between 2021 and 2023.
Despite the warnings, the government insists the reforms will “restore confidence” in the immigration system and prevent what Starmer called the “incalculable damage” of unchecked migration. Critics, however, fear the measures could undermine one of Britain’s strongest export sectors — higher education.
