Home Secretary Shabana Mahmood’s immigration announcement on November 2, 2026, introduced significant reforms to the United Kingdom’s Indefinite Leave to Remain system, unveiling a new “Earned Settlement” model. This shake-up threatens manufacturing talent.
The revised framework links the path to permanent residency to an individual’s earnings, employment history, and overall contribution to the UK economy. While the government frames these adjustments as ensuring migrants earn their right to settle, manufacturers fear the new rules will exacerbate existing labour shortages and drive valuable expertise to more welcoming international markets.
Shabana Mahmood’s immigration: New ‘Earned Settlement’ Model
Under the “Earned Settlement” model unveiled by Home Secretary Shabana Mahmood, the qualifying period for Indefinite Leave to Remain will now vary considerably. Most migrants earning below £50,271 face a new standard period of 10 years before they can apply for permanent residency. This marks a substantial increase from the traditional five-year route many entered the UK expecting.
A shorter five-year path remains available for those earning above £50,271, alongside eligible public service professionals such as doctors, nurses, and teachers. Care workers who earned at least £25,000 annually, met their visa conditions, and arrived before May 2025 also fall into this five-year category.
Only exceptional high earners, those making over £125,141, and individuals on specific high-talent immigration routes will qualify for settlement in just three years.
Conversely, individuals who have breached immigration rules or whose circumstances prevent them from qualifying through earlier routes may face a 20-year wait. The Home Secretary justified these changes by stating, “From today, those who contribute more will qualify for settlement sooner.
Those who fail to follow the rules will be refused or made to wait much longer.” These reforms are expected to roll out throughout 2027, with further detailed guidance to follow.
Industry Leaders Warn of Compounding Skills Crisis
The manufacturing sector has voiced strong objections to the new immigration framework, arguing it fails to accommodate its critical needs. Jamie Cater, Senior Policy Manager at Make UK, an organisation representing UK manufacturers, expressed deep disappointment. He highlighted that the government had disregarded the industry’s clear warnings about the detrimental effects of extending the ILR qualifying period, especially with retrospective application.
Cater stated that these changes will make it significantly harder for businesses to fill vacancies from overseas, and crucially, to retain the skilled individuals already working in the country. “We will undoubtedly lose talent to countries that welcome skilled workers rather than moving the goalposts,” he cautioned.
This comes at a time when UK manufacturing already grapples with nearly 50,000 unfilled vacancies, with technical skills shortages representing the primary barrier to successful hiring.
Make UK’s report, titled “Manufacturing Priorities for the Temporary Shortage List, Earned Settlement, and the UK’s Points-Based Immigration System,” underlines these concerns. It warns that increasingly restrictive immigration rules risk worsening skills shortages and undermining growth across the sector.
Longer settlement periods will also increase visa sponsorship costs for employers and create greater uncertainty for workers and their families, potentially driving them towards countries offering more accessible routes to permanent residency. The report argues that the government’s vision of reindustrialisation remains an “empty political slogan” without the necessary skilled workforce to deliver it.
The absence of specific accommodations for the engineering and manufacturing sectors within the new ILR pathways stands out as a particular point of contention. While public service professionals and care workers have specific, shorter routes, those vital to industrial output face the same extended timelines as many other migrants. This oversight, industry leaders contend, will directly hinder the productive capacity of the UK economy.
Firms engaged in advanced factory automation, intricate design, and complex production processes rely heavily on a consistent influx of specialised skills. Disruptions to this talent pipeline force manufacturers to reconsider investment and operational strategies within the UK. The retrospective nature of the changes is especially problematic, affecting individuals who made long-term career and life decisions based on previous immigration rules.
Economic Implications and Global Parallels
The revised immigration policies are poised to bring about significant economic repercussions for UK manufacturers. Increased visa sponsorship costs, coupled with the greater uncertainty for workers, will likely reduce the UK’s attractiveness as a destination for global engineering and manufacturing talent. This could have a ripple effect, impacting the sector’s ability to innovate and compete on an international stage.
This situation mirrors challenges seen in other major industrial economies. In the United States, for instance, the manufacturing sector faces a projected workforce shortfall of 1.9 million by 2033, with over 400,000 manufacturing jobs currently unfilled. Foreign-born workers play a critical role there, constituting 19.2% of all US employees in 2024, and specifically 19.2% in durable goods manufacturing and 22.3% in nondurable goods manufacturing.
Similar policy shifts in the US have already demonstrated their impact. Changes in federal immigration policy and practice since January 2025 led to a national foreign-born labour force contraction of over one million workers by June 2025.
Manufacturing is among the ten most impacted industries, potentially losing as many as 105,700 immigrant workers due to new policies. The equipment manufacturing industry alone faces over 85,000 unfilled jobs.
In Canada, the manufacturing sector has grown heavily reliant on immigrant labour, with immigrants accounting for 84% of the growth in the country’s workforce over the past decade. Between 2010 and 2021, the Canadian manufacturing sector lost 159,000 Canadian-born workers, a gap partially filled by 46,000 new immigrants. These global examples underscore the vital role international talent plays in sustaining industrial output.
The increase in costs extends beyond just sponsorship fees. In the US, a new presidential proclamation imposed a $100,000 annual fee for H-1B work visa applications from outside the country, a significant hike from $215. Such financial barriers make it unaffordable for smaller businesses to sponsor skilled foreign talent, leading to delays and production line gaps as employers struggle to fill positions.
This global trend highlights a fundamental truth: robust manufacturing sectors thrive on a diverse and skilled workforce. When policies impede the natural flow of talent, it creates competitive disadvantages. When the US tightened skilled immigration rules in 2017, many high-skilled migrants relocated to Canada, which boosted Canadian firms’ production and exports.
This directly increased competitive pressure on US firms, demonstrating the tangible impact of immigration policy on industrial strength.
Policy Recommendations for Industrial Stability
In response to the government’s immigration reforms, industry groups are advancing specific recommendations aimed at mitigating the negative effects on manufacturing.
Make UK urges the government to accept the Migration Advisory Committee’s (MAC) recommendations on the Temporary Shortage List (TSL), boost apprenticeship funding for critical roles, and exempt these manufacturing roles from the new ILR changes. The MAC, an independent advisory body, published Stage 2 of its TSL review on July 23, 2026.
The MAC recommended that 28 occupations be included on the future TSL, encompassing advanced manufacturing, clean energy, digital and technology, construction, and critical infrastructure. These recommendations specifically included engineering and manufacturing technician roles, as well as construction and manufacturing trades. Crucially, all recommended occupations were for an initial period of 18 months, as the submitted “Jobs Plans” were deemed insufficient for a standard three-year inclusion.
In the United States, industry bodies like the National Association of Manufacturers (NAM) advocate for a secure, merit-based legal immigration system to close the workforce gap and safeguard America’s industrial future. NAM supports legislation such as H.R. 4393 (The Dignity Act) and H.R.
5494 (Essential Workers for Economic Advancement Act), which aim to provide legal pathways for workers. Their recommendations also include increasing visa caps for sectors with labour shortages, updating the list of professionals eligible for TN visas, and simplifying visa acquisition in critical industries.
Revitalising American manufacturing, argues Kip Eideberg, AEM Senior Vice President of Government & Industry Relations, requires modernising the immigration system to ensure jobs are filled.
Canadian manufacturers also face similar talent demands. The Canadian Manufacturers & Exporters association has suggested doubling the target for economic class immigrants by 2030 to directly address persistent labour shortages in their manufacturing sector. These coordinated calls from industry underscore a shared understanding: global manufacturing resilience hinges on accessible and predictable immigration policies that recognise industrial needs.
The proposals from these influential bodies highlight the need for a more nuanced approach to immigration policy, one that considers the specific, measurable impacts on vital sectors. Blanket policies risk unintended consequences, especially for industries with unique skill requirements and significant economic contributions. Supporting initiatives like increased EV assembly overhaul and smart label production requires a sustained supply of engineering and technical professionals.
Sustaining UK’s Manufacturing Ambitions
The UK government’s pursuit of reindustrialisation, a policy frequently articulated, demands a strategic alignment of immigration laws with industrial requirements. Jamie Cater’s assertion that “it will remain an empty political slogan unless we have the skills and people needed to deliver it” serves as a potent reminder.
For a nation aiming to bolster its manufacturing base and enhance its global competitiveness, ensuring a stable and skilled labour pool is not merely an economic preference, but an operational necessity.
Home Secretary Shabana Mahmood has consistently emphasised a more stringent approach to immigration, focusing on the principle that the “privilege of living in this country forever is earned, and not automatic.”
While this stance aims to foster a sense of contribution among migrants, critics argue it overlooks the immediate and tangible contributions already being made by skilled workers in sectors like manufacturing and engineering. Their presence underpins daily operations and future growth.
Ultimately, the effectiveness of the UK’s new immigration framework will be measured by its real-world impact on economic productivity and industrial capacity. If the policies result in a net outflow of talent or persistent inability to fill crucial roles, the broader ambitions for the UK manufacturing sector could face significant headwinds.
Balancing immigration control with the imperative of industrial growth remains a complex, but critical, challenge for policymakers as 2027 approaches.
Looking ahead, the UK’s choices in immigration policy could also influence its standing in global industrial partnerships, including those with African nations seeking to develop their own manufacturing capabilities. A robust and predictable talent pipeline in the UK can facilitate technology transfer, shared expertise, and collaborative ventures, fostering mutual industrial growth.
Conversely, policies that create uncertainty could deter such valuable international engagement, impacting not just domestic production but also broader global engineering and trade relationships.
