The hidden costs of the visa fee increase for the UK’s hospitality industry

In July 2023, the government announced a visa fee increase across both work and travel visas. These came into effect at the beginning of October, which included a 15% increase to most work and visitor fees, a 35% increase to the student visa fee for people applying from overseas, and at least a 20% increase to fees for settlement and British citizenship. In August, John Dickie, chief executive of BusinessLDN, which represents more than 175 London-based employers, sent a letter to the Prime Minister highlighting the concern that the United Kingdom already contends with among the most elevated expenses globally in the context of work visas. Presently, the application fee for a Skilled Worker Visa lasting more than three years stands at £1,235. However, under the new changes, this fee is set to increase to approximately £1,480. While this increment may not seem significant at first glance, it is only a fraction of the overall expenses a skilled worker must bear. Prior to the fee increase, in some places, these fees remained competitive within the open market, particularly when compared to agency fees for local recruitment. Their value was further highlighted when considering the extended duration of these employment relationships, often spanning multiple years. However, a pertinent concern emerges — the potential for rate increases to jeopardise the stability of this recruitment avenue, which has proven to be a reliable and lasting solution for the industry. As John Dickie explained in his letter to the Prime Minister, the Immigration Health Surcharge, a vital component of a migrant worker's financial commitments, is also set to increase from £624 to £1,035 per adult per year. When combined with other expenses like the Immigration Skills Charge, the cumulative cost of bringing in a single skilled worker will rise to nearly £10,000. This increase is a big concern for the UK’s hospitality industry, with the figure being a substantial financial burden that employers in the sector will now have to contend with. The hospitality industry has long been struggling with labour shortages, exacerbated by Brexit and the COVID-19 pandemic. UKHospitality recently reported that its member businesses are currently grappling with a job vacancy rate of 11%. Similarly, data from the Office for National Statistics (ONS) reveals a staggering 132,000 unfilled positions within the industry, marking a significant 48% increase compared to pre-pandemic levels. The impending visa fee rise will only make these challenges more difficult. The higher costs could deter potential skilled workers from considering the UK as a viable employment destination, leading to further scarcity in an already depleted workforce. It’s likely that skilled workers may opt for countries with more favourable immigration policies and lower financial hurdles. Independent hotels, being smaller in scale compared to their chain counterparts, tend to operate with tighter budgets. The substantial increase in visa fees will put a significant financial strain on these establishments. They may struggle to absorb the higher costs associated with hiring skilled workers, particularly those from abroad, and this may potentially impact their ability to provide a quality service. The hospitality industry has persistently advocated for revisions to the government's immigration policy, shaped in the wake of our departure from the European Union. This plea stems from a belief that the current policy is ill-suited for a post-Covid world. Despite ongoing appeals to amend the 'Shortage Occupation List,' these calls have been met with resistance. Consequently, this stance hampers organisations' capacity to effectively address the persistent workforce shortages plaguing the sector. Furthermore, diversity in the hospitality industry has long been celebrated as a driving force behind creativity, innovation, and excellence in food and service. However, these changes leave a growing concern that this vital source of diversity may be at risk. From language proficiency and culinary innovation to inclusivity and cultural sensitivity, the benefits of a diverse workforce are crucial to our industry. To ensure the ongoing improvement of our industry, stakeholders within the hospitality sector should actively support immigration policies that welcome and acknowledge the contributions of international employees. For instance, by engaging with local MPs and presenting evidence-based challenges to oppose visa fee hikes, we can encourage policymakers to recognise the significant role immigrants play in the industry's prosperity and overall guest satisfaction.

The hidden costs of the visa fee increase for the UK’s hospitality industry

By Michael Clitheroe, general manager of Balmer Lawn Hotel and Spa

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