Mixed and unclear post-Brexit deal effects on key London business sectors and employment, Assembly hears

Mixed and unclear post-Brexit deal effects on key London business sectors and employment, Assembly hears

The capital’s finance, construction, health service and other key sectors are striving to adjust to new trading and employment realities created by the Brexit deal since it came into effect, London Assembly Members were told today, with uncertainties about the future outside of the EU often entangled with the effects of the pandemic.

At a remote meeting the Assembly’s EU Exit Working Group, Catherine McGuinness, policy chair of the City of London Corporation, repeated her view that the capital’s financial and related professional services sector should form a collaborative and normalised new relationship with the EU despite having become its competitor, though she acknowledged that this will “take some time, given the process that we’ve been through.”

Emphasising that the “goods-led” trade and co-operation agreement, which came into effect on 1 January, was nonetheless welcomed in the City, she explained that working with EU businesses will now involve “all sorts of negotiations from now on in, just as we have with other countries that we deal with”. McGuinness said the City and EU share “many areas of common interest”, listing the challenge of tackling climate change and the pace of digitalisation as two major ones. “It’s really important that we work together on these,” she said.

One important outstanding area is the establishment of “equivalence” in the regulation of financial services. “The City is very committed to maintaining open markets and upholding the highest regulatory standards,’ McGuinness stressed. “These are key aspects of our global competitiveness. So concerns that we might want to turn into some Singapore on Thames, to use that unfortunate expression, I think need to be laid to rest.”

Earlier in the session, Maddy Thimont-Jack of the Institute for Government had drawn attention to the implications of end of freedom of movement for many businesses, which means many “are going to have to get their head around the new immigration rules applying to EU citizens as well as the rest of the world”. She picked out health and social care and a variety of small firms that have become used to relying on EU labour if it was needed. “They are going to have to spend money trying to ensure that they can get the right skills into their firms,” she said.

London NHS chiefs were able to give more reassuring news, with London Region chief nurse Martin Machray saying, “We have seen very little immediate impact from leaving the EU in terms of our ability to continue” in terms of supply chains. Acknowledging the risk that a proportion of the country’s approximately 30,000 EU nationals working in the NHS would leave, he said, “that hasn’t transpired”. Good forward planning has ensured that “the worst has not materialised.”

Asked by Labour AM Leonie Cooper if new immigration rules might alter the situation over time, especially for NHS staff designated unskilled, Machray said he needed to answer “with the overlay of Covid” in mind, as many staff at all levels, British nationals included, might take stock of their situation once the pandemic has passed. Anticipating a “leaking of staff away from the NHS” might be mistaken he said, as the service might be seen by many people as a place to apply for work, especially in the context of rising job losses as a whole.

Elaborating, he said he is now “fairly confident” that professional staff will be able to continue in their roles under the settlement scheme and with “mutual recognition of qualifications” which is “a massive relief”. If nursing qualifications from Italy and Spain and Portugal for example had not been recognised either now or in the immediate future, that would give us a big problem.” However, for auxiliary workers, some of them employed through agencies, the future is presently “less clear”. This is an area where “in the longer term, we may struggle,” Machray said.

Graham Watts, chief executive of the Construction Industry Council, told AMs that in his sector too, “many of the post-Brexit problems are now wrapped up with the issue concerned with Covid-19” and named the availability of labour and of construction products as the “two fundamental issues” for his industry in London. There is no doubt that many workers have left the capital, he said, exacerbating a skills shortage and he cited “anecdotal reports” of sites across the city working up to “20% under capacity”, which could be due to Brexit or Covid, because of illness the need for self-isolation and also child care responsibilities.

Responding to a question from Liberal Democrat AM Caroline Pidgeon about the effects of immigration rule changes, he described the guidance available about the new points-based system as “complex” and process of dealing with it as “expensive”, which is likely to put off a number of the many small firms in the construction business. However, Watts said he was “quite optimistic” about the prospect of recruiting more young Londoners to the construction trade.

Watch the whole of the EU Exit Working Group meeting here.

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