Important updates on the Government’s Earned Settlement proposals

The Government issued a statement and accompanying consultation on earned settlement proposals. In it the Government stated that settlement grants were expected to significantly increase over the next five years to around 1.6 million people between 2026 and 2030, which was driven by increased record immigration in 2022-2024, especially of those on health and care visas. The Home Secretary raised concerns about the potential fiscal impact of an increase in settlement grants since settlement then permits access to public funds and benefits. Changes would be retrospective and therefore affect those already living in the UK.

The four core main pillars of the scheme would be character, integration, contribution to British society and residence.

The new system would increase the English language minimum requirement to B2 (similar to A level) with a reduction of one year to the qualifying period for settlement for competency at C1 level. It would also require migrants to have had earnings of at least £12,570 for a minimum period of three to five years in line with the current thresholds for paying income tax and national insurance contributions. In order to meet the suitability requirements, migrants would need to have no current litigation, NHS, tax or other Government debt. As now, a migrant would need to pass the Life in the UK test.

Standard waiting times before a migrant becomes eligible for settlement would increase from five to 10 years with important exceptions. Family members of British citizens would still be eligible for settlement after five years as would British National (Overseas) known as BN(O) visa holders. EU citizens and those holding status under the EU Settlement Scheme would not be affected. Innovator Founder and Global talent visa holders would continue to benefit from settlement after three years. High earners earning £125,140 and over for three years immediately before they apply for settlement would be eligible after three years. Those earning over £50,270 per year for three years immediately prior to settlement would effectively remain on the five-year route to settlement. This would include many skilled worker visa holders in roles considered highly skilled at RQF level 6 and above. There would be a five-year reduction for those who had been employed for five years in specified public service occupations such as medical and teaching professionals, where earnings are based on national pay scales and which may not meet the proposed threshold for an income-based reduction in the qualifying period. It is however envisaged that this reduction in the qualifying period for public service roles would only apply to those working in skilled occupations at RQF level 6 and above.

Other migrants would face longer standard waiting times for settlement. It is proposed that migrants on the skilled worker route in low or middle skilled occupations (below RQF 6) would have to wait 15 years before applying for settlement. Refugees would have a baseline of 20 years, with a possibility of switching into a separate work and study protection route. The long residence rules which allow a person with 10 years’ continuous legal residence in most visa categories would be abolished.

On 23 June 2026, The House of Lords Justice and Home Affairs Committee published its report on settlement, citizenship and migration. The Committee strongly opposes many of the proposed reforms and has made various detailed recommendations.

Extending the route to settlement

The Committee did not support the Government’s proposals to extend the baseline qualifying time for Indefinite Leave to Remain (ILR) to 10 years, to 15 years for those on work visas below RQF level 6 and to 20 years for refugees on the core protection route.

The Committee found that extending the qualifying time risks undermining integration by reducing migrants’ status, limiting their ability to make long-term employment, family and housing decisions. The high cost of immigration application fees and immigration healthcare surcharge for migrants risks increasing poverty for some low-income migrants.

The Committee recommended exploring the option to retain the five-year baseline while separating ILR from access to public funds. Migrants with ILR would remain subject to the no recourse to public funds condition until they had resided in the UK for 10 years or obtained British citizenship.

Earning settlement and citizenship, and promoting integration

The Committee acknowledged that to a certain extent, settlement and citizenship have always been earned such as through language, financial and conduct requirements. Their concern was not with the concept of earning settlement but with the details of the government’s proposals.

The Committee agreed that eligibility for ILR (with appropriate exemptions) should still be dependent on meeting minimum requirements such as no criminal convictions, certain financial criteria and English language proficiency.

The Committee has made many recommendations, a non-exhaustive list of which is set out below:

1. The Government is exploring ways to combine reductions and additions to the settlement qualifying period. They should clarify how additions and reductions can be combined and what “additions taking precedence” means.
2. The income levels which lead to a reduction to ILR pathways should not be set according to income tax thresholds but should be set on the advice of the Migration Advisory Committee (MAC). It should be asked to consider the impact of migration on the public finances and on regional labour markets when setting these thresholds.
3. Government should explore mechanisms whereby migrants with dependent visas should be able to qualify for ILR as the work visa holder if the income is sufficiently high that the household places no burden on the state.
4. The Government should provide opportunities for migrants to learn English. The Government should increase English for Speakers of Other Languages (ESOL) provision so that supply meets demand.
5. The Committee supported the recommendation of the Home Affairs Committee that children who arrive in the UK at a young age should usually be granted settled status by the age of 18 and that children who arrive at a later age should have clear and accessible pathways to settlement.
6. Visas should be tied to sectors and not to sponsors. To mitigate the risk to sponsors paying sponsorship fees, those switching companies would be required to pay back sponsorship costs, prorated over the year.
7. The Committee noted that there is no up-to-date national integration strategy and no timetable has been published for the development of one. Integration policy is largely a matter for the devolved administrations of Scotland, Wales and Northern Ireland and in England is devolved to local authorities. Responsibility for social cohesion sits with the Ministry of Housing, Communities and Local Government (MHCLG). Scotland, Wales and Northern Ireland have already developed their own national strategies on integration however England has not. The Committee recommended that the Government should publish its integration strategy for England by no later than the end of 2026. It should set clear and achievable measures and targets for migrant integration and provide them with the structures to do so to enable them to actively integrate.

Settlement and citizenship

The Committee described the current immigration rules as a “farrago”. A system that confuses experts in the field and is “systematically unworkable” resulting in delay, additional cost, poor decision making and miscarriages of justice. The Committee proposed that the Government urgently simplify both the immigration rules and legislation fully implementing the recommendations of the Windrush Lessons Learned Review, including that the Law Commission’s remit should be expanded to simplify the immigration rules.

The Committee raised concerns that elevated visa fees put the UK at a competitive disadvantage in encouraging global talent to invest and settle in the UK. Profts made through above cost immigration fees should be reinvested into the system to expand the availability of fee waivers particularly at the point of applying for ILR and citizenship. The Government should cap immigration fees at 150% of costs to ensure the UK remains a competitive option for highly skilled workers and ensure fees are reasonable for migrants.

The Committee recommended that the Life in the UK test should refocus the test on British values and practical aspects of living in the UK and not be multiple choice. It should involve more open-ended questions that more accurately demonstrate knowledge and engagement with life in the UK. Alongside reform to the test, the Home Office should introduce courses that can be completed as an alternative to the test.

The Committee recommended that citizenship should be promoted and greater value placed on it to encourage long term migrant residents who have chosen to settle in the UK to obtain citizenship. The Government should take steps to give citizenship ceremonies a higher profile with ceremonies taking place at more significant locations with greater involvement of the wider community, such as at cultural and sporting events.

As far as deprivation of citizenship orders are concerned, the Committee recommended that the “ conducive to the public good” test should be replaced with a test directly related to acts or conduct that is seriously prejudicial to the vital interest of the United Kingdon, any of the Islands or any British Overseas territory. All decisions to deprive individuals of citizenship on the grounds that this would be conducive to the public good should be reviewed by the Independent Reviewer for Terrorism Legislation, under expanded powers.

What next?

The Government is required to respond to the report in two months however it is unclear if this deadline will be met bearing in mind the recent resignation of Sir Keir Starmer as Prime Minister. The Government is yet to publish its final policy statement following analysis of the responses to the public consultation or an accompanying impact assessment.

It remains to be seen whether the Committee’s opposition to many core elements in the Government’s earned settlement proposals will influence the content and progress of the proposed reforms which were due to be implemented later this year.

For a reminder of the May 2026 update to the sponsor licence guidance see our previous article here.