The Increased Cost of Visa Applications Could Affect Engineering Recruitment

There are set to be pay rises in the public sector, and the UK government has announced that this will be partly funded by an increase in the cost of visas and nationality fees, which came into effect on the 4th October 2023.

In July, the government announced a 15% increase in the cost of most work and visit visas, and an increase of at least 20% in the cost of priority visas, study visas, and certificates of sponsorship. This means that those coming to the UK to live, work, and study will now pay higher visa application fees and Immigration Health Surcharge (IHS) fees than before. 

The cost to migrants will apply to those who are intending to apply for a UK visa, as well as those who are already in the UK and applying for visa extensions. It is likely that this will have an impact on the engineering and high-tech sectors. 

Several figures in the R&D arena have reacted with indignation to the plans, and policy experts have warned that the increase in costs of visas and the immigration health surcharge could harm STEM recruitment and UK business growth due to the ability to attract foreign talent. For employers that employ and recruit foreign nationals, this means an increase in fees across a range of immigration and nationality ’routes’, including for people coming to the U.K. to live, work, and study.

Ben Moore, Head of Policy (international) at the Russell Group of research-intensive universities, said “The global market for international students and researchers is highly competitive and any significant increase in fees will have an impact on recruitment. Such a move would put the UK’s attractiveness to global talent at risk, and hamper efforts universities have been making to diversify international recruitment.”

The Impact of Visa Application Cost Increases

The biggest impact of the increased fees will be a larger financial burden on applications, especially those with dependents who are also planning to reside in the UK. The increased cost is also something that UK sponsor license holders need to consider. 
Increases include:

There is yet to be an announcement from the government as to the date IHS fees will be increased. For example, should the government increase IHS fees in line with the announcement made, this means that now, a migrant looking to apply for a 3-year Skilled Worker entry clearance visa (single applicant) will pay a total of £3,824, comprised of £3,105 for IHS in addition to a visa application fee of £719. This is in comparison to current fees of £2,497, comprised of £1,872 for IHS and a visa application fee of £625. This is a total increase of 53%.

For businesses, this increase will mean significantly higher costs associated with sponsoring migrant workers and accompanying dependants.

How Engineering Recruitment Could Be Affected by the Increased Cost of UK Visas

Businesses that are sponsor license holders need to consider how the increased cost of hiring individuals from outside of the UK will impact recruitment. Despite a wealth of talent being located overseas, there is a limit on how much a business can spend. A lot of popular visa routes - such as the Skilled Worker Visa and the Global Business Mobility Route - are likely to become less attractive, as not everyone can meet the increased cost.

As with the USA, Britain’s engineering and tech success is intimately tied to immigration. Nearly 40% of the UK’s fastest-growing start-ups have immigrant co-founders. The UK has become one of the best places in the world to start a tech business. In return, the UK has reaped the benefits. Not only has it gained some of the most exciting technologies, but it has also helped create numerous jobs and brought investment, and economic growth.

Businesses and founders often see the visa system – with its red tape and lengthy processes - as leaving a lot to be desired, but the UK’s start-up ecosystem faces a new risk. The increase in immigration costs could mean the loss of innovators that keep growing these sectors. 

International students who have been accepted to study at UK universities now face a 35% increase in their visa costs. Fees are also rising for visas popular with start-ups like the Global Talent visa, Graduate and High Potential Individual Visas, and the Scale Up Visa. The fees charged for these visas already far exceed the cost to the Home Office to process them.

Not only could the increased cost of visa applications deter talented individuals from applying to work in the UK, but employers may reconsider recruiting from abroad, knowing the increased costs involved in doing so.

Martin Smith, head of the Wellcome Trust’s Policy Lab, said that the UK’s plans to “massively” increase visa costs would mean that a researcher looking at a five-year Global Talent Visa, together with their partner and two children, would need to find £20,900, up from the current £13,400. “All up-front. A big ask.” he added.

“There is a competitive international market for researchers. A huge increase in the up-front cost of visas clearly undermines the government’s science superpower strategy since it compromises the attractiveness of the UK to international talent.”

Recouping the Costs of Overseas Hiring 

Businesses planning to extend their engineering recruitment efforts globally, need to consider that not all costs of overseas hiring can be recouped. A lot of the costs involved in visa applications are required before an employee joins the business. 

With the cost of visa applications rising, engineering recruitment is likely to change. Not only will engineering candidates find it more expensive to move to the UK to work, but businesses could also struggle to truly make the most of talented individuals from around the world, simply because of the costs involved in doing so. 

This will also affect British universities, which rely on overseas students, as well as British companies, which need to employ hard-to-find skillsets from outside the UK.

The Institution of Engineering and Technology (IET) estimates a shortfall of workers in the STEM sector which equates to an average of ten unfilled roles per business. There is no universally accepted definition of a labour or skills shortage and no one obvious flawless policy response. The increased cost of visas will discourage some international students from choosing the UK as their destination of 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, integration of migrants to the UK can be an issue, if they have not been to, or lived in, the UK before.

The advantage of hiring an individual who has studied in the UK is that they will already be familiar with the way of life, working practices, and other cultural norms and values. The new rules are likely to lead to a decrease in the pool of qualified candidates for positions and industries, potentially affecting the overall competitiveness of high-tech businesses.

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Get in touch today on info@RedlineGroup.com or 01582 450054 if you need guidance on securing talent for your team.