UK Immigration and Labour Market Reform 2025: What the White Paper Means for Employers & Sponsors

Government Proposed Policy Changes 

1. Skilled Worker Route: Major Changes

• Eligibility tightened to RQF Level 6+ (graduate level) roles. Currently the skill level is at RQF Level 3 or above.

• Review of workforce dependency on migration in RQF Level 6+ sectors.

• Abolition of Immigration Salary List; replaced by a Temporary Shortage List for RQF Levels 3–5, subject to:

  • Justification from MAC.

  • Evidence of workforce strategy.

  • Domestic recruitment commitments by sponsors of these roles.

• Dependants not permitted where the main applicant will be working in a role on the Temporary Shortage List.

• Care sector:

  • Carers and senior carers excluded from new Skilled Worker entries.

  • In-country extensions and switches allowed until 2028 (subject to review).

• Salary thresholds to rise, aligned with removal of lower-skilled roles.

• Sector-specific conditions (sectors where there is greater reliance on overseas workers) for ongoing sponsorship use. Sponsors may have to commit to take specific steps which could include skills plans, training, working conditions, activation of inactive UK workers.

• Refugee access allowing UNHCR recognised refugees to apply under the Skilled Worker route.

• Higher English proficiency required (details below).

2. Immigration Skills Charge (ISC)

• ISC to increase by 32%:

  • Medium/large sponsors: £1,000 → £1,320/year.

  • Small/charitable sponsors: £364 → £480/year.

• Proceeds to be ring-fenced for domestic skills development in priority sectors.

3. Graduate Route Reform

• Permission period reduced to 18 months for all graduates (including PhD).

• Graduate visa users will face higher thresholds to transition into the Skilled Worker route.

4. Labour Market Evidence Group (LMEG)

• New cross-departmental advisory body including:

  • Industrial Strategy Council, skills bodies, DWP, and MAC.

• Tasked with advising on sectoral workforce strategies.

5. Sponsorship System Reform

• Make it Easier for sponsored workers to move between sponsors to reduce exploitation.

• Consideration of financial penalties and sanctions for non-compliant sponsors in tackling illegal working.

6. Illegal Working Regime

• Ongoing legislative expansion to strengthen enforcement (see separate updates).

7. High-Talent & Business Routes Review

• Targeted improvements across underutilised routes:

  • Innovator Founder: clearer university-to-startup pathway.

  • UK Expansion Worker: increase sponsorship cap (5 → 10 workers).

  • Global Talent: simplify science/design applications.

  • High Potential Individual: more eligible universities, capped volume.

  • GAE Research Interns: expansion, particularly in AI.

• Likely limited impact due to small migrant numbers in these categories.

8. English Language Requirements

• Main applicants: minimum raised from CEFR B1 → B2 across most work routes.

• Settlement stage: proposed increase to B2.

• Adult dependants: new tiered requirements:

  • Initial: A1

  • Extension: A2

  • Settlement: B2

9. Earned Settlement Reform

• Standard qualifying period extended to 10 years for most routes.

• Accelerated paths retained for high-contribution migrants (details pending).

• Exemption for family members of British citizens (5-year eligibility remains).

• Consultation planned later in 2025, with transitional provisions likely.

10. Earned Citizenship

• Will align with new settlement framework.

• Faster eligibility for individuals demonstrating significant contributions.

• Life in the UK Test to be reviewed and updated.

• Lower citizenship fees under consideration for UK-raised young adults.

11. Students: Responsible Recruitment – Compliance Reforms

• Stronger Compliance Metrics for Sponsors:

  • Raise pass thresholds for Basic Compliance Assessment (BCA) metrics by 5 percentage points:

    • Course enrolment rate therefore proposed to be at least 95%.

    • Course completion rate proposed to be at least 90%.

• Red-Amber-Green (RAG) Banding System:

  • New public rating system introduced to assess and display each institution’s BCA compliance level.

• New Compliance Interventions:

  • Sponsors close to failing compliance metrics will:

    • Be subject to bespoke action plans to improve performance.

    • Face caps on new international student recruitment during the intervention period.

• Agent Quality Framework Requirement:

  • All sponsors using international student recruitment agents must:

    • Sign up to the Agent Quality Framework, ensuring sponsors retain responsibility for student vetting and visa compliance.

• Institutional Accountability for Recruitment Impact:

  • Sponsors must demonstrate consideration of local impacts (e.g., on infrastructure and accommodation) when requesting higher student quotas.

• Potential Levy on International Students: Government is considering a levy on income received by HEIs from international students, with further details expected in the Autumn Budget.

12. Short-Term Study (STS) Route – Reform Measures

• STS Route Overview:

  • For individuals aged 16+ studying English language courses (6–11 months) at accredited institutions.

  • Route is unsponsored and limited to English language study.

• Current Issues:

  • High refusal rate (approx. 48% in 2024), indicating misuse by applicants not genuinely intending to study.

  • Concerns are that many applicants seek to enter the asylum system via this route.

• Planned Reforms:

  • Review and strengthen accreditation body standards.

  • Enhance pre-accreditation and renewal checks to ensure institutional integrity.

  • Reinforce student screening to confirm genuine study intentions.

• Ongoing Monitoring and Enforcement:

  • Government will continue to assess the impact of these changes and take further action if misuse persists.

  • Institutions failing in compliance may be removed from the sector.

Conclusion

The White Paper having now been presented to Parliament does nonetheless lack clarity on when the reforms will be implemented. The document states that initial changes are expected “in the coming weeks.” On other proposals, the Labour Market Evidence Group (LMEG) will inform some measures.

Anticipated Immediate Market Effects:

• Surge in settlement and citizenship applications before new rules take effect.

• Increased Skilled Worker and Global Business Mobility applications ahead of higher thresholds and Immigration Skills Charge rise.

• Decline in student route uptake due to reduced Graduate route duration and higher transition thresholds to work routes.

It will be important to keep an eye on whether the LMEG or any of the Bodies that make up this Group, such as the MAC, will open a consultation on the proposed changes and in particular representations from industry on matters such as which low-skilled occupations under RQF 6 should be on the Temporary Shortage List and how businesses will address mid and long term recruitment from within the resident market. We would advise businesses to respond to such consultations both separately and as part of their sector representative bodies.

Similar representations might also be considered to specific government departments that have an interest in your sector, for example, DEFRA, if you operate in the food sector. The Government has stated in the paper that it will consult with the Higher Education sector on some of its proposals.

🛑 The law applicable in this article is correct as of 13 May 2025. Immigration rules frequently change, and the information here may not reflect the latest legal position. For advice tailored to your specific circumstances, please contact us to arrange a consultation with our legal team.