The long-awaited government white paper on immigration offered some respite for cities which rely on high skilled European workers - but it wasn't all good news, especially for the lower-skilled.
Yesterday the Government set out its proposals for a new immigration system to regulate the movement of people – Europeans and non-Europeans alike – after Brexit.
Immigration has been one of the key issues over which the referendum campaign was fought, and it is used by the Government as a way to signal ‘the UK is taking back control’. But what does this really mean for the economic performance of our cities?
First, let’s talk about the good news: the Government will remove the cap on skilled workers, both high-skilled and crucially those with intermediate skills, bringing a sigh of relief for cities, particularly those in the Greater South East.
Earlier this year the Migration Advisory Committee (MAC) report advised the Government to follow this route, highlighting the importance these migrants play to the UK economy. As we pointed out in our report, this is particularly true for the most successful cities: Cambridge, Oxford and London are among the cities with the highest share of migrants and these migrants tend to work in high- and intermediate-skilled occupations, such as professional services and the construction industry.
Treating these workers the same and scrapping the cap on skilled workers altogether will help prevent places from facing serious labour shortages that the end of free movement of EU nationals implies.
It is also welcome that the Government has seemingly scrapped the idea of a sectoral approach to the new migration system. The industries in which EU migrants work reflects the local industrial structure of different places: in Cambridge 20 per cent of EU migrants work in professional services, in Telford, almost half work in agriculture or manufacturing. This shows that a sectoral approach would have only benefitted some places, ignoring the different roles EU workers play in different cities.
However, the plan announced yesterday is by no means all good news: cities, particularly those in the Greater South East, are heading towards shortages of low-skilled workers. Back when the MAC report was first published, we warned the Government not to overlook the vital role low-skilled workers play in many low-skilled sectors.
Irrespective of their qualifications, the majority of EU workers are employed in low-skilled occupations such as in hospitality and retail. And It should not be assumed that these jobs will easily be filled by British workers. Demand for low-skilled workers is highest in cities in the Greater South East, but these places also have the highest living costs. Unless issues around housing affordability and transport are addressed, low-skilled British people are unlikely to be drawn into those labour markets. And this doesn’t take into account whether or not low-skilled Brits would want to move to these cities from other parts of the country.
The Government appears to have acknowledged these difficulties and has proposed a temporary visa scheme that firms could use to employ low-skilled workers in the short term. However, how this will work is unclear and subject to consultation.
While the white paper brings limited clarity on some of the most burning issues for cities and businesses up and down the country, it also serves to highlight areas of continued uncertainty –about the functioning of city economies, the application of the minimum wage, the administrative burden on firms, skills shortages and, more widely, the exact nature of the UK’s future relationship with the EU.
And, it’s worth remembering the biggest uncertainty of all. The white paper follows the Government’s ramping up of no deal preparations, under which there would be no time to implement its proposals. In this scenario, the UK ought to extend freedom of movement to EU nationals temporarily to avoid a cliff-edge.
This white paper was long-awaited and it is good, in parts, for cities. But as with all things Brexit, its main message is ‘wait and see.’
Leave a comment
Have you done any work in relations to Wales on this please?