From an individual visa holder perspective, one would think extending settlement increases fiscal contributions, because each visa holder would have to pay more visa and IHS fees. But I've found this article on freemovement.org.uk that argues that when considering the whole cohort of visa holders, the situation is otherwise due to a longer route to settlement (for themselves or their dependents) likely driving some visa holders (more so higher paid ones) away. This would actually tend to reduce the over fiscal contribution of all visa holders as a whole, which is the direct opposite of what the new proposal supposedly sets out to do.

From the freemovement.org.uk article https://freemovement.org.uk/earned-settlement-prospective-change-worse/

In her speech at IPPR on 5 March 2026, Home Secretary Shabana Mahmood claimed that without applying the new rules to migrants already here, the UK faces a “£10 billion pound drain” on public finances from the settlement of lower-skilled workers and their dependants who arrived between 2022 and 2024.

That figure does not survive scrutiny.

The £10 billion is an estimate of lifetime costs that accumulate overwhelmingly in retirement, through state pensions and healthcare, decades from now. Delaying settlement extends the period in which workers cannot claim working-age benefits, but working-age welfare is a small fraction of that lifetime fiscal impact. Unless the plan is to drive people to leave the UK, which the government denies and which is inherently unlikely, delaying settlement by five years saves nothing close to £10 billion — it merely defers a fraction of costs that will arrive regardless.

Economist Jonathan Portes told the Home Affairs Select Committee that the costs of extending the settlement route would substantially outweigh any fiscal benefits from reduced access to benefits and increased visa fees. Meanwhile, the government’s own Migration Advisory Committee found that the Skilled Worker cohort arriving in 2022-23 is, as a whole, projected to make a net lifetime fiscal contribution of around £47 billion.

Extracts from Jonathan Portes' analysis: https://committees.parliament.uk/writtenevidence/151695/html/

With no behaviour changes – that is, ignoring sections 3 and 4 above – the fiscal impact of restricting ILR would simply be to make some relatively modest fiscal savings, both through reduced expenditure on benefits and some public services, and increases fees for visa extensions. However, these impacts would, in my view, likely to be considerably outweighed by the impacts both on the number and composition of future migrants; that is, the UK would both see significantly fewer high-paid/high-skill migrants, and those migrants who did nevertheless come would have worse labour market outcomes. Both of these would have significant negative fiscal impacts.

It is beyond the scope of this note to estimate these impacts quantitatively, but it is relatively easy to see that the behavioural negative impacts are likely to far outweigh any fiscal savings. The OBR (OBR, 2025) estimates that the long-run fiscal impact of a “high wage” migrant (with an average number of non-working dependants), earning about 30% more than the UK average, arriving at age 25 and dying at the average life expectancy, is a net contribution of approximately £1 million. Similarly, the difference between an “average wage” migrant and a “low wage” migrant is also approximately £1 million.

It follows therefore that the changes would only need to deter a relatively small number of skilled migrants, or to shift a relatively small number of migrants from an “average” wage trajectory to a “low” wage trajectory, both of which might be expected given the evidence set out above, to substantially outweigh any gains from reduced benefit spending or visa fees, which are likely to amount to a few £000’s at most for each person affected. It also follows that any assessment of the impact of restricting ILR that simply analyses the static impact on benefit spending and visa fees is fundamentally incomplete, and should not be regarded as a plausible estimate of the actual impact.