I guess in effect what they're doing is setting an income threshold that represents what you need to live on without requiring a taxpayer subsidy to live here.
The factors that led to this state of affairs are miserable, namely that this is a rentier economy, with housing and energy costs being so high that the state has to subsidise every person on minimum wage. It's perverse.
Ironically, despite this, there are still lots of advantages here compared to other countries, including a very open lightly regulated market economy and an open job market.
However, each family on average wages costs more money to support than they pay in taxes, because of the free health service, free education, very different to most places that are similarly open.
In reality it's unsustainable. We can't keep importing people that are a net drain on the country's finances, when they are in such terrible shape. Housing shortages alone mean there just isn't the capacity to house people.
Employers will have to pay a living wage that allows people to pay for their own housing costs rather than import cheap labour from abroad. It's all a terrible imbalance anyway, with a lot of jobs needing the subsidy of council housing to make them viable.
Sad state of affairs but this country is now apparently 20% poorer than it was 15 years ago, a legacy of the financial crash followed by austerity then Brexit then COVID. We need a new government with some better ideas.