New government curbs on immigration will damage key elements of London’s economy by worsening labour shortages and adversely affecting around half a million non-UK nationals already employed in the capital, according to City Hall analysts.
Economists with the Greater London Authority say the changes, announced earlier this month and aimed at reducing net migration into the country, will have particular ill effects on the capital’s hospitality and construction businesses, on its arts, entertainment and recreation sectors, and on health and social care provision in the city.
The measures to further deter legal migration from overseas, announced by Home Secretary James Cleverly, a former London Assembly member, earlier this month will come into effect in the spring.
They will seek to reduce the number of people from other countries coming to work in the UK by using salary requirements to exclude greater numbers of them and by reducing or removing their ability to bring family members with them. In addition, migrant workers, including those already here, will be surcharged more to use the National Health Service.
Government figures show that at this time last year an overall 39 per cent of payrolled London workers living in the capital were not UK nationals. Within that total, 58 per cent of workers in London’s hospitality businesses were not UK nationals, and 43 per cent of those in construction and in health and social care were not.
The City Hall report says the number of vacancies advertised in hospitality – such as for restaurant, hotel, pub and bar staff – is, at over 24,000 as of September, greater than it was before the Covid-19 pandemic. It judges that “restricting the entry of migrants is likely to exacerbate this” in a sector “worth at least £25 billion annually to London’s economy” in its own right and whose fortunes are connected to other industries.
At present, people from overseas can qualify for the UK work visa they need if the job they are offered pays £26,200 a year, £10,75 per hour or whatever if defined as the going rate for a particular job, whichever is the higher.
From the spring, this threshold will rise to £38,700 a year with the significant exception of health and care workers, along with groups paid according to national pay scales, such as teachers.
There will also be higher income requirements for people, including Britons, who wish to be joined by family members or dependants. The health surcharge will go up from £624 a year to £1,035 a year.
The City Hall report estimates that these changes are “likely to impact approximately 250,000 hospitality workers in London” to varying degrees. Oxford University’s Migration Observatory has said the principal effect of the new income requirement will be on medium-skilled jobs such as chefs, who tend to be paid less than £30,000 a year.
Close to 40 per cent of London jobs in the arts, entertainment and recreation are held by people born outside the UK, according to the City Hall report. This compares to just 17 per cent in the rest of the UK and amounts to roughly 40,000 people.
There are just under 13,000 London jobs being advertised in these fields, where average pay is around £24,000 a year. As that is considerably below the incoming higher government threshold for overseas workers, these look set to become more difficult to fill.
The City Hall report says the “incredibly tight” labour market in the London construction industry is “likely to be exacerbated by the reduced flow of foreign workers”, to an occupation for which the median income is just below £25,000 a year. It also says the changes as a whole will affect approximately 60,000 construction workers currently in the capital.
There are “at least 200,000 non-UK nationals working in London’s health and social care,” the report says, with a median salary of £32,134. Although exempt from the forthcoming higher income threshold, Home Office data hints that the accompanying new ban on bringing partners or children with them could put off many people from other countries who might otherwise take up the roughly 11,000 vacancies currently open in the capital.
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