A recent report by the National Audit Office (NAO) has revealed that the UK Home Office made a net profit of £329 million from Skilled Worker visa applications in 2023-24. Despite this financial gain, the department has confirmed that it will not replace the outdated Sponsor Management System until the end of 2028.
The Skilled Worker visa, rebranded from the Tier 2 (General) visa in 2020, generated approximately £438 million in revenue, while the cost of operating the route was around £109 million. The Home Office has stated that this surplus fund broader immigration-related work, but the NAO report lacks details on specific allocations of this income.
Breakdown of Immigration Revenue
A substantial portion of the Home Office’s earnings from visa applications comes from additional charges levied on applicants and employers:
Immigration Health Surcharge (IHS) – Contributed £1.8 billion to NHS funding in 2023-24.
Immigration Skills Charge (ISC) – Raised £700 million to support the Department for Education (DfE), though the NAO notes that this income does not directly reach the DfE and instead is managed by HM Treasury.
Total visa and citizenship fee revenue – Generated £2.6 billion in 2023-24, with additional fee increases scheduled for April 2025.
Outdated IT System Raises Concerns
The Sponsor Management System (SMS)—a critical online portal for managing Skilled Worker visas—has been in use for nearly two decades, with no major upgrades planned until 2028. This prolonged delay raises concerns about efficiency and security, especially as the Home Office shifts toward a fully digital immigration system.
The report highlighted the following issues:
Lost Applications: Since 2021, approximately 85,500 Skilled Worker visa applications have disappeared from the casework system.
Compliance and Enforcement Shortfalls: Immigration audits have increased by nearly 50%, mostly through digital audits, yet the number of full-time compliance officers has dropped from 65 in 2021 to just 46 in 2024.
System Errors: In just six months of 2024, the Home Office issued £200,000 in ex-gratia payments and priority service refunds due to administrative and technical errors.
Key Findings from the NAO Report
Complex Application Process: Sponsor guidance remains complicated and difficult to navigate for both employers and applicants.
Processing Delays: Over 30% of applications were classified as ‘complex’ during the 2023 summer peak, meaning they could not be resolved within standard processing times.
Lack of Oversight: The Home Office has not conducted exit check analyses on Skilled Worker visa holders since 2020, raising concerns about how the visa route is being used and its impact on the UK economy.
Limited Data Sharing: While the Home Office and HMRC share some salary and working hours data, current collaboration is insufficient to effectively monitor non-compliance.
Unclear Economic Impact: The Home Office lacks a clear understanding of the Skilled Worker visa’s contribution to the UK economy and its role in addressing skill shortages across different sectors and regions.
Calls for Reform
The findings have sparked criticism over the Home Office’s handling of the Skilled Worker visa system, particularly regarding financial transparency, digital infrastructure, and compliance monitoring. Critics argue that the government must prioritize IT investments and policy reforms to ensure that visa applicants and sponsoring employers receive value for money.
With visa and citizenship fees set to increase again in April 2025, businesses and applicants will likely face even higher costs. The Home Office is now under pressure to clarify its spending priorities and improve the efficiency and reliability of the immigration system.
For further details, the full NAO report can be accessed at: National Audit Office – Immigration Skilled Worker Visas.
Source: LIIE IMMIGRATION
