Earned settlement: Decision time

The most contentious issue is whether the reforms should apply to people currently living in the UK on routes to settlement (defined as receiving ILR). The Home Office has argued that this is necessary because the proposals are designed to delay settlement – and access to benefits – for the large cohort of people who came to the UK following Brexit. But critics have warned that applying the reforms retrospectively would be unfair to those who made decisions to come to work in the UK on the understanding that they would be eligible for ILR after five years.

The greatest political focus has been on the recent arrival of large numbers of overseas care workers: the government has claimed that allowing them and their adult dependants to settle as originally planned would incur a net fiscal cost of around £10 billion over their lifetime, based on figures from the Migration Advisory Committee. Yet the prime minister has taken a strong stand on his respect for the care profession and unions have advocated hard for care workers to be protected.

In the run-up to the proposals being announced, there are three things to look out for.

First, what will happen to care workers? The latest report from the BBC suggests that the final set of reforms will exempt care workers, allowing them to claim settlement after five years rather than 15.

This would be a significant compromise, given that around 287,000 care workers and dependants already in the UK are expected to settle between 2026 and 2030. Such a move would help to protect from exploitation one of the largest and highest-risk groups affected by the original reforms. And crucially, it would support the prime minister’s vision for a new national care service with a respected and fairly treated workforce.

But while this would represent a major shift, it would be wrong to assume – based on the previous figures published by government – that there would be a £10 billion price tag.

This is because the original proposals were never in reality going to create a £10 billion long-term saving, given they were meant to delay care workers’ eligibility for ILR rather than prevent them from settling altogether. Delaying ILR would save money on welfare, whereas the £10 billion figure includes much broader long run costs once care workers enter retirement, claim the state pension, and make greater use of health and social care.

Moreover, the £10 billion figure should be put in wider context. New IPPR analysis suggests that, as a whole, the estimated net lifetime fiscal contribution of all skilled workers (including health and care workers) who were expected to settle in 2026-30, along with their adult dependants, is roughly £115 billion. This follows the same approach as the Home Office in calculating the £10 billion net cost for care workers and adult dependants (see methodology below for more details). The risk of deterring skilled workers who make a significant fiscal contribution should therefore be an important consideration for the final set of proposals.

Second, what will happen to other people (mainly skilled workers and their families) already living in the UK on routes to settlement who are not in the care sector? The government should also consider transitional arrangements for this cohort.

One option would be to exempt them too from the government’s plans and keep them on a five-year route. But the Home Office may see this as a compromise too far. A sensible alternative would be to grant them a new interim status after five years, as a bridge towards getting ILR later.

This bridging status would allow people to freely switch jobs and work for any employer without the requirements of sponsorship. It would also guarantee people a pathway to settlement, removing the fear that they may not reach the qualifying period of residence because they cannot find an employer willing to sponsor them for long enough. At the same time, it would not guarantee the full set of rights that come with ILR, including access to the welfare state. To help mitigate against the risk of this new status being undermined in future, the government could explore ways to entrench it in primary legislation when parliamentary time allows.

Third, for those not given a special exemption, how will the Home Office decide the precise qualifying period for ILR? Under the first iteration of the plans, the qualifying period depended on whether applicants could ‘earn’ a reduction – such as through a high income – or whether they would incur a penalty – for instance, if they claimed benefits or overstayed their visa for six months or more.

The BBC report suggests that at least some of these elements will make it into the final version. As we have previously argued, ministers should take care that the final design is clear and comprehensible, and that it does not undermine the government’s other ambitions – notably on child poverty.

Ahead of this week’s expected announcement, the signals are that a compromise is coming. The devil will ultimately be in the detail, but with the right design, there is scope for a credible compromise which reflects the principles of fairness, contribution and control.