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Immigration policy impact on London landscape

Rosalia Wood, ICAEW’s Regional Industrial Strategy Manager, explores the likely impact on the capital of the government’s most recent announcements around immigration policy in the wake of the UK’s departure from the EU.

April 2020

During the EU Referendum, the Leave campaign’s major sell was to restore the UK’s ability to control its borders. Whatever your position on the in/out debate, the government now has the opportunity to capitalise on this new-found freedom.

A few weeks ago, the government set out its idea for a new points-based system for those hoping to come to live and work in the UK, but what does this mean for business in London?

The new proposals suggest a system similar to the one already in place for non-EU nationals seeking to live and work in Britain. It will require applicants to have a total of 70 points, with 50 awarded for those that have a job offer from an ‘approved employer’ and that are able to speak English.

This renewed focus on skilled occupations, particularly in the digital sector, will doubtless help to plug skills gaps in the London economy, and develop sectors distinctive to it.

In its proposals, the government also suggests offering easier entry routes to those with a background in STEM, and an additional 20 points for those with a PhD in the field. For some time, the UK has languished behind much of the OECD in terms of its R&D output, creating a considerable drag on productivity.

This effort to fix this trend could see the London economy become more innovative and a melting pot for ideas.

It is undeniable, however, that a number of industries could be severely and adversely affected by these changes.

Over recent months, I have been conducting research for ICAEW’s coming publication on skills gaps in the UK economy. In this, there been a distinct and universal cry from ICAEW members in the London hospitality, tourism and retail sectors that are reliant on non-skilled labour from Europe that they will be unable to fill vacant posts in their businesses.

While there is an argument that physical retail is becoming increasingly side-lined in favour of online shopping, options for the digitisation and automation for service-based industries like hostelry and restaurants are undoubtedly limited.

It is clear that while we now have an opportunity to plug gaps in London’s skills mix with renewed control over immigration from Europe, there are sectors and regions that will get left behind as a result of the government’s focus on attracting highly-paid and skilled employees to the UK.

ICAEW is clear that to thrive as a whole, the UK economy requires a sufficient supply of skills, and it is for this reason that we are authoring a publication on filling the skills gaps in the UK economy, due for release in May.

However, the fact remains that it is very much down to the government to adapt its policy to the needs and wants of the sectors that make up the British economy as a whole.

Rosalia Wood is ICAEW’s Regional Industrial Strategy Manager

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