Shaking up the landscape
Mandie Sewa, Head of Immigration at Brevis Law, says the new student visa rules will potentially shake up the landscape for employers seeking international talent. These rules could affect the availability and accessibility of international students as potential employees.
“From January 2024, the rules will make it impossible for international students to bring their dependents with them unless they are studying on postgraduate programmes with a research focus, such as research-based PhDs and research-based Masters programmes,” she adds.
Subject to final confirmation and the passing of the necessary legislation, the main rate will increase to £1,035 and the concessionary rate for students, their dependants, those on Youth Mobility Schemes and under 18s will increase to £776. The cost of work and visitor visas will increase by 15% and the cost of study, sponsorship, settlement, citizenship, extended entry, leave to remain and priority visas will increase by at least 20%.
Burden on workers
Karendeep Kaur, legal director at Migrate UK, says the increased visa fees will put a burden on employers. However, if they are prepared to pay these application fees, they will be less likely to lose out on overseas talent, especially to competitors who are willing and able to pay these fees. She also acknowledges that it is the smaller organisations that will be more affected.
“It is worth noting that those coming to the UK for a shortage occupation will benefit from lower UKVI (UK Visas and Immigration) fees and will be able to pay less. However, this does not affect the HIS (Immigration Health Surcharge) fees payable. As a result, forward planning is key.
“As a result of these increases, overseas candidates will certainly be encouraged to seek employment elsewhere than in the UK. It’s therefore something for the UK government to consider, with a view to allocating higher fees to other sectors where there is no shortage or for those roles that tend to offer higher salaries,” she says.
Juliana Lobo, a Brazilian national living in the UK on a work visa with her husband and two children, says the increased fees will affect British universities that rely on overseas students, as well as British companies that need to recruit hard-to-find skills from outside the UK.
“A recent study showed that international students starting their studies in 2020/21 would generate up to £41.9 billion for the UK economy. This is compared to the estimated £4.4 billion it costs the UK to host them and their dependents, giving a net benefit to the UK economy of £37.4 billion,” she adds.
Less talent, more cost
Skills shortages are problematic. There is no universally accepted definition of a labour or skills shortage, and no single, obvious, perfect policy response. Sewa goes on to say that visas will deter many international students from choosing the UK as a place to study. As a result, employers may face challenges in recruiting and retaining international talent.
“The government has stated that the current skilled worker route will remain an option for overseas migrants to come and work here. However, as many employers are aware, the integration of migrants into the UK can be an issue if they haven’t been to or lived in the UK before.
“The advantage of hiring someone who has studied in the UK is that they are already familiar with the way of life, working practices and other cultural norms and values,” she adds.
The new rules could lead to a reduction in the pool of qualified candidates for certain roles and industries, potentially affecting the overall competitiveness of certain companies. In addition, employers may have to adapt their recruitment strategies and explore alternative ways of attracting international talent, which will lead to increased costs for already overstretched businesses, according to Sewa.
Method behind the madness
The government claims that only foreigners will be affected by the significant increases. However, with the exception of work visas, the main impact will be on British families. Even for non-British families, the reforms will have a detrimental effect on British businesses, which may be forced to choose between sacking an employee or helping them with visa costs.
A Home Office spokesman said: “It is right and fair to increase the Immigration Health Surcharge and visa application fees so that we can fund vital public services and allow more funding to contribute to public sector pay”.
This will allow more funding to be prioritised elsewhere in the Home Office, including paying for vital services and supporting public sector pay rises. But what does this mean for talent?
Losing talent
UK businesses should focus on prioritising and investing in their talent. Hiring, upskilling and empowering people is the linchpin to delivering strategic priorities and giving an organisation the best chance of thriving in an uncertain future.
Dr Sarion Bowers, Head of Policy at the Wellcome Sanger Institute, said: “We have staff from over 70 countries around the world working on Sanger’s transformative science. Our work has helped the UK become a world leader in genomics. It costs around £10,000 in visa costs for a family of four to move to the UK, and now those who want to bring their talent to the UK are being asked to pay £1,035 per person per year for the NHS, on top of what they already pay in income tax. We are finding it increasingly difficult to recruit, and any loss of talent will not only affect our science, but also the UK economy”.
Ripple effect
The increase in visa fees could have a negative impact on the UK economy. Higher visa fees are likely to deter international students, workers and businesses from choosing the UK as a destination, according to Sewa.
“This could lead to a reduction in the number of international students enrolling in UK universities, a reduction in foreign workers filling skills gaps, and a reduction in foreign investment and business expansion in the country.
“These factors can have a detrimental impact on various sectors of the economy, such as education, healthcare, technology and finance, which rely on international talent and investment. In addition, a decline in international students and workers can lead to a loss of revenue for universities, businesses and the government, affecting future economic growth and development,” she adds.
According to Kaur, there has been an increase in sponsor licence applications, with statistics showing that over 6,000 sponsor licences were approved in the last 3-month reporting period. This is a strong indicator that the UK is still very dependent on overseas labour.
“The next reporting period following the fee increases will determine whether these increases prove to be detrimental. If overseas talent does not fill the shortage gap in the UK, employers in certain sectors may be forced to close their doors, which would have a huge impact on the UK economy as a whole,” she warns.
Managing the impact
There are a number of steps the UK can take to reduce the barriers faced by foreign talent and attract international people to work and study in the country. SEWA outlines some potential actions:
Streamlining visa processes
Offer attractive visa options, including expanding the range of visa options that meet the needs of international talent. For example, creating specific visas for skilled workers, entrepreneurs and graduates to attract people with the desired skills and qualifications, increasing the number of designated bodies and providing clear published criteria for existing visas such as the Innovator Founder.
Provide incentives to employers
Provide incentives to employers who hire foreign talent, such as tax breaks or grants, to encourage them to actively seek international candidates and invest in their recruitment and integration.
Improve support services by providing comprehensive integration support services for foreign talent, such as language training and cultural integration programmes to improve intercultural communication, awareness and understanding to help ease the transition and make the UK a more attractive destination while improving business operations.
Promoting Diversity and Inclusion
Emphasise the value of diversity and inclusion in the workforce to create a welcoming environment for foreign talent. Encouraging employers to adopt inclusive recruitment practices and fostering a culture of acceptance would make the UK more attractive to international individuals. Research has shown the many benefits of a diverse and inclusive workplace, including higher revenue growth, a greater willingness to innovate, an increased ability to recruit from a diverse talent pool and a 5.4 times higher retention rate.
Alternative responses
Lobo recommends that instead of increasing fees, the government should consider the amount that overseas workers are already paying and apply a reasonable/fair proportionate rate, as they are contributing to the development of the UK and helping UK businesses to grow.
“Foreign talent will start to consider other countries when thinking about living abroad, as the UK makes it increasingly difficult for these people to afford to live here. Ultimately, the extortionate fees will become a barrier to the talent that wants to come here,” she warns.
Kaur agrees that a freeze on fee increases would be the obvious answer. Alternatively, the UK government should add current shortage sectors to the shortage occupation list to lower salary requirements and visa application fees.
“The key to success, however, is for the UK to implement an effective immigration system that is responsive to economic needs,” she advises.
Despite increasing barriers around immigration laws, foreigners continue to see the UK as a desirable alternative. With its high-spending consumer market, multicultural population and innovative companies, as well as its language, location and financial climate for start-ups and new businesses, the UK continues to attract top talent. But will transnational workers still choose the UK? Let’s hope so, otherwise it will damage an already fragile economy.
