UK's migrant settlement overhaul risks £22bn Treasury shortfall, experts warn
A proposed overhaul of migrant settlement rules by Home Secretary Shabana Mahmood could cost the Treasury billions, rather than save the £10 billion initially claimed. The plan, which extends the wait for care workers to gain permanent residency from five to 15 years, has faced sharp criticism from Labour MPs and economic analysts.
The Institute for Public Policy Research (IPPR) warned in a private briefing that the policy might cost between £11 billion and £22 billion over the lifetimes of migrants granted visas last year. Their analysis suggests that delaying settlement would not significantly reduce the long-term fiscal impact of migration.
Labour MP Tony Vaughan, a vocal opponent of the plan, argued that the changes would burden the UK financially for decades. He claimed the proposals 'dismantle' Mahmood's financial reasoning and should be scrapped entirely. Other Labour MPs are now using the IPPR's findings to push for a policy rethink. Encouraging care workers to leave the UK could also create short-term fiscal challenges for the Treasury. Trapping them in lower-paid roles for longer may reduce their tax contributions, cancelling out any potential savings. The government currently has no official estimate for the annual health and social care costs of the 196,000 care migrants and their dependents who arrived post-Brexit. While ministers are reportedly considering softening the proposals, Vaughan insists that any compromises would fall short. The IPPR further argues that extending settlement waits does little to alter the overall lifetime cost of migrants to public finances.
The proposed rule change now faces growing opposition within Labour and from economic experts. If implemented, it could increase long-term costs for the Treasury while failing to deliver the promised savings. The government's next steps remain uncertain as pressure to revise the policy mounts.
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