UK immigration policy faces a summer 2023 dilemma
Published on 4th Jul 2023
The UK government is trying to tackle a number of problems that are linked to immigration, but require contradictory solutions – inflation in food prices, increase in net migration and a shortage of skilled workers.
Inflation and immigration are not normally subjects easily joined, but the International Monetary Fund's deputy managing director, Gita Gopinath, commenting recently on the UK economy, said that "with inflation as high as it is... there are benefits to having workers come in."
Ms Gopinath added: "In this context, with inflation as high as it is, having workers who can fill the shortages in some of the sectors that we're seeing right now will help with bringing inflation down."
The latest government statistics showed that the UK still had more than 1 million vacancies in the three months to April 2023. The industries with the highest vacancy ratios were accommodation and food (5.5%), health and social work (4.5%) and professional scientific jobs (4%). Economists have identified the UK's tight labour market, exacerbated by the impact of Brexit on flows of European Union workers and the impact of the Covid-19 pandemic, as one of the main contributory factors to high domestic inflation.
One of the obvious impacts of Brexit was the end of freedom of movement which has meant not only that new EU nationals coming to the UK need work permits but also, under the work permit regime, there are minimum salary and academic criteria that need to be met.
In a statement HM Treasury said the UK had "moved away from the old model of unlimited, unskilled migration.
"We now have a points-based immigration system, giving the British people full control of the country's borders, which is designed to flex to the needs of the economy to ensure we have the skills we need.
"We want businesses to invest in our domestic workforce to fill labour shortages, but where there's an acute need for staff, we have also been flexible, including putting care homes and the seafood industry on the shortage occupation list."
This does not however address the costs that companies have to spend on government fees when making a work permit application. A five-year visa can cost £10,000 just in visa fees. This needs to be absorbed by the company, or recovered by way of higher prices.
Since Brexit, the government has had total control over the numbers of international workers it can allow into the UK, but has to balance public opinion on the increasing numbers coming in and a number of significant industries that cannot operate without overseas workers – and the impacts of higher prices.
