Immigration Skills Charge (Amendment) Regulations 2025

Lord Sandhurst Excerpts

Thursday 4th December 2025 Grand Committee

While the rate increases achieve inflation alignment, the Government must prove that this financial burden translates into substantive behavioural change among employers, especially since the projected reduction in net migration is slight. From the evidence provided, it seems that that will be negligible.

[Lord Sandhurst (Con)]

My Lords, I am grateful to the Minister for introducing these regulations and setting out their purpose. These regulations increase the immigration skills charge, or ISC, for the first time since its introduction eight years ago in 2017, and they align it with inflation. This is a sensible measure, and we are pleased to support it.

As has been noted, the ISC raises revenue to support skills funding, and, in the words of the Migration Advisory Committee, it also encourages employers to invest in the development of domestic workers rather than relying on migrant labour. We welcome the Government’s recognition that the charge should reflect the rising cost of living and their continued focus on linking skills, migration and wider labour market policies. By increasing the charge by 32%, it is estimated that the ISC could raise an additional £180 million. This could contribute to funding skills development in priority sectors and, over the medium term, reduce reliance on migration.

We also observe that, while this measure is straightforward and proportionate, it is important to consider its impact on businesses. We recognise that the charge is lower for certain sponsors, such as charities and small businesses, which helps to mitigate any disproportionate effect. None the less, we encourage the Government to continue monitoring the balance between supporting skills investment and avoiding undue burdens on employers.

We also take the opportunity to underline that the original purpose of the ISC is to support skills development in the United Kingdom. While the income raised is not hypothecated, it does contribute to maintaining the Department for Education’s skills budgets, which, in turn, supports apprenticeships and workforce development. We hope that the Government will continue to ensure that this connection between the charge and skills investment remains robust and effective.

In conclusion, we welcome the increase in the immigration skills charge. We recognise its potential to help upskill the domestic workforce and encourage employers to invest in British talent, while also contributing to the broader objective of aligning skills and migration policy.

[Lord Hanson of Flint (Lab)]

My Lords, I am grateful to the noble Lord, Lord Sandhurst, for his broad support for the measure before the Committee. I am also grateful for his questions, which I hope to answer in line with the questions from the noble Lord, Lord German.

As noble Lords will be aware, the immigration skills charge has not been increased since it was introduced in 2017. The noble Lord, Lord German, asked me why that was the case. Had I been the Minister then, it would have been increased on an annual basis, but that was not the case. Now that I am the Minister, it is being increased. I hope that that is helpful.

The charge has risen by 32% because that is the rise in the consumer prices index between 2017 and March 2025. That is a fair increase to make in these times, in order to achieve the Government’s objectives, which remain to invest in training and to ensure that we reduce net migration.

Both noble Lords asked whether this will be kept under regular review. The answer is yes. I am responsible overall for examining budget matters with the Home Secretary in the Home Office. I will make sure that, as part of our annual reviews, this charge is looked at—along with a range of other charges for a range of other services. It is important that we undertake that.

Noble Lords asked whether there was consultation on this matter. The skills package, which was welcomed by the noble Lord, Lord Sandhurst, and the measures on raising the charge price were trailed in the immigration White Paper, which was subject to widespread consultation; it has also had much debate and discussion in both Houses, as well as among the public at large. I accept that there has been no specific consultation on the immigration charge itself, but the trail was put in the immigration White Paper. As noble Lords know, the Explanatory Memorandum says that, when the immigration White Paper was published, the devolved Governments were invited to discuss and contribute to it. It is a tax, and therefore a full regulatory impact assessment is not required.

The noble Lord, Lord German, asked about the National Health Service. First—this also goes to the concerns raised by the noble Lord, Lord Sandhurst—the Home Office is the point of collection for money, but that money is given to the Treasury, which disburses it elsewhere. As ever, the Treasury remains all-seeing and all-powerful in all matters; we are simply the conduit for such funds to be passed on in due course.

Following another question from by the noble Lord, Lord German, it is difficult to give a figure on the costs to the National Health Service because of a range of factors. They include: which organisations sponsor a worker; whether they are large or small organisations, in the health service context; whether the people being recruited are exempt, such as those with PhD roles and students; and how many people are ultimately recruited. Again, I have overview of this, so I will look at that and at the impact on the health service as a whole.

We keep all immigration routes under regular review, including charges. We also keep under review—in answer to the question from the noble Lord, Lord Sandhurst—the impact on businesses.

As I hope both noble Lords have recognised, the broad purpose of this instrument is to encourage businesses, first and foremost, to look at training a UK-based workforce, recruiting a UK-based workforce, and recruiting workers from overseas only if they have a shortfall or feel that such workers bring specific skills. If they bring a set of specific skills or are on the exempt list, there will be no charge. If they are not on the exempt list and do not bring specific skills, there will be a cost to the employer, but, again, the employer must decide whether that is a cost worth bearing because they are recruiting individuals who help make them productive and efficient.

I hope that, with those remarks, I have answered both noble Lords’ concerns; I welcome their views. I commend these regulations to the Grand Committee.