A sharp fall in skilled worker and health visas, combined with surging emigration among under‑45s, is testing Rachel Reeves’ fiscal plans and stoking fears of a looming labour and tax base crunch.
Visa rules tighten, applications collapse
Skilled worker visa applications have dropped to 2,500 in December, down from a peak of 10,100 in April 2024, marking a steep reversal since Labour entered Downing Street. Applications had averaged around 6,000 in the year leading up to the 2024 general election, but have steadily fallen, with just 2,000 recorded in November.
The decline follows a series of tougher rules driven by home secretary Shabana Mahmood, who has been tasked with cutting immigration to reassure voters and prioritise British workers. The minimum salary threshold for skilled visas was raised to £41,700 last year, and ministers are weighing plans to double the qualifying period for settled status to ten years for most workers who can show they are not reliant on state support.
Health and student routes hit hard
The health and social care route, once a major driver of net migration, has seen an especially dramatic fall. Health worker visas have plunged to about 900 ahead of the route’s abolition, after previously peaking at 18,300, raising alarms for already stretched NHS and care providers.
Student migration is also feeling the squeeze, with applications for dependants now far below levels seen in recent years. The shift reflects a broader push to clamp down on what ministers view as “backdoor” routes into long‑term settlement, but universities and business groups warn it may dent the UK’s attractiveness as a global education hub.
Young Britons leaving in growing numbers
At the same time as fewer migrants are coming in, more Britons—especially younger workers—are heading out. Office for National Statistics figures show that three quarters of the 232,000 British nationals who left the country in the year to June 2025 were aged 25 to 44, while pensioners accounted for only a tiny share of departures.
Business leaders fear an emerging “brain drain” as highly mobile professionals take their skills and tax contributions abroad. Employers warn that the combination of stricter visa rules and rising emigration is tightening labour markets in key sectors such as hospitality, health, and high‑skilled services.
Fiscal alarm bells for Reeves
The shift in migration patterns is rapidly becoming a headache for chancellor Rachel Reeves and the Office for Budget Responsibility. Warwick University’s James Bowes has suggested net migration could fall towards 50,000 in the year to June 2026, far below the OBR’s forecast of 262,000 for the same period, with obvious implications for growth and tax revenues.
The left‑leaning Resolution Foundation has warned that negative net migration could blow a £20bn hole in the public finances by 2030, forcing Reeves to choose between deeper spending cuts or fresh tax rises. Yet the OBR has so far declined to build the government’s evolving immigration clampdown into its formal forecasts, noting that the policy mix remains in flux.
Balancing welfare savings against growth
Supporters of tighter controls argue that lower migration could ease pressure on welfare, housing and public services over the long term. Conservative policy chief Neil O’Brien and other researchers highlight that some migrants draw heavily on state support, and suggest that reducing these inflows could trim the welfare bill across people’s lifetimes.
But economists such as Stephen Millard at the National Institute of Economic and Social Research counter that the tougher criteria risk undermining the UK’s growth prospects, with hospitality among the sectors most exposed. With fewer workers arriving, more young Britons leaving, and the fiscal watchdog braced for weaker population growth than previously assumed, the government now faces a stark test of whether its migration reset can coexist with its promises on prosperity and public services.
Source: Mauricio Alencar, “Migrant visa applications plummet in test to Reeves”, City AM
