The City Hall and the representatives of major UK businesses are working closely together on proposals for London’s own work permit system to reassure EU nationals currently working in London of their secure future in the capital.
In the post-Referendum landscape tighter immigration controls will be put in place. However, uniform immigration laws may not reflect the crucial needs of London, as it is highly reliant upon foreign labour (EU nationals make up 15% of London’s employees). Specifically in construction, financial and insurance industry sectors the existing skills-shortage in London is expected to grow drastically if EU nationals working in these sectors would have to leave the UK following Brexit (EU workers currently make up 30% of London’s construction and 14% of its financial workforce). The departure of EU workers will have a significant negative impact on both London and UK economic growth. According to a study published by a Centre for Economics and Business Research (Cebr) in November 2016, EU migrant workers add £26 billion to London’s GVA (gross value added measures economic output generated per worker) annually, spend about £29 billion per year and paid an estimated £7 billion in taxes in 2015.
Although the UK Government has not yet confirmed what immigration rules will apply to EU migrant workers following Brexit, it has been suggested that EU immigrants will have to enter the UK under the same system that is currently applicable to non-EU nationals (particularly the Tier 2 route). If the EU workforce were subject to the Tier 2 restrictions it is estimated that London would lose access to 160,000 migrant workers by 2020 specifically due to the minimum salary requirements under the Tier 2 route that are set to increase to £30,000 in 2017. The effect of this would be to squeeze many industries that are already under pressure. Such restrictions to the EU workforce would lead to an estimated £6.9 billion GVA loss for London annually, and lost taxation would be over £2 billion per year by 2020.
The London Chamber of Commerce and Industry (LCCI) together with City Hall propose instead to introduce a ‘Capital Work Visa’ system. In order to obtain the ‘Capital Work Permit’ an applicant would be required to have a job offer by a London employer with a valid ‘London Certificate of Sponsorship’ (LCoS) granted by the Work Permit Sponsorship Body for the London Region. The Work Permit Sponsorship Body is likely to be formed by the Mayor of London’s office and established business organisations and would be licensed by UKVI to issue LCoS and ‘Capital Work Permits’ under the specified Home Office immigration criteria.
Once approved, the ‘Capital Work Permit’ holders would be required to work within London and to live in the London region. The permit itself would be granted for a minimum of 6 months and a maximum 5-year period. After 5 years, the work permit holder would be eligible to apply for permanent residency under the current system with no restrictions on the location of their work or settlement in the UK. In the case where a permit holder’s employment is terminated, further 60 days of stay would be granted to a work permit holder to seek employment with another London employer before facing deportation. At the present time it is still unclear whether the applicant would be required to seek employment in the same industry in which he has originally been employed.
Although the proposals for the new London-only immigration system have not yet been considered in depth by the UK Government, this analysis shows that extending existing immigration restrictions to EU nationals would negatively impact key industries, weaken London’s position as an international financial centre, and place more pressure on public funds. Now with the Brexit vote the UK has re-secured its power to govern itself and has obtained a great opportunity to shape the immigration policy that suits best its current needs and ambitions. Implementing the ‘Capital work permit’ proposal would be the first step in this direction.