London growth ‘hit’ under sweeping migration changes

London will face lower economic growth and a drop in the inflow of foreign workers under sweeping migration changes unveiled today by government advisers. 

The Home Office’s Migration Advisory Committee said that its blueprint would focus migration on the recruitment of skilled workers who would pay higher taxes. 

But despite a series of concessions to employers worried about filling labour gaps, the committee warned that growth would fall nationwide, with the biggest impact on the capital. The committee also admitted that employers who used “lots of Europeans in low-skilled jobs are … not going to be happy.” 

The minimum salary for employing skilled workers from abroad should be cut by a sixth to £25,600, the advisers said. There should also be special lower salary thresholds for the recruitment of workers under the age of 26 and for teachers and “skilled” NHS staff to ensure that labour gaps could be filled, they said. 

The changes are expected to lead to a drop in the overall levels of migration into both the capital and the rest of the country. Other key changes proposed include allowing some “talented individuals” to come to Britain without a job offer. 

Businesses leaders are likely to be alarmed, however, by the absence of plans for the admission of lower skilled workers, who are not covered in today’s proposals. 

The committee also ruled out a “London visa” backed by some businesses in the capital. 

Announcing the proposed reforms today, Professor Alan Manning said: “Our recommendations are likely to reduce future growth of the UK population and economy compared to freedom of movement, by using skill and salary thresholds.  

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“We estimate very small increases in GDP per capita and productivity, slightly improved public finances, slightly reduced pressures on the NHS, schools and on social housing, though slightly increased pressure on social care. No perfect system exists and there are unavoidable, difficult trade-offs. The largest impacts will be in low-wage sectors and the Government needs to be clear about its plans for lower-skilled work migration.”

On London, the report said that if the proposals in it had been implemented in 2004, when Poland and other Eastern European countries joined the EU, it would have led to a 3.3 per cent drop in London’s GDP over that period.

 It declined to give specific predictions but confirmed that growth in the capital will be lower because of the planned new curbs. 

The report adds: “The estimated impacts of our recommendations also vary across the regions … with the largest predicted impacts in London, driven by the larger share of migrants living and working there.”

The report was commissioned by ministers to help them design a new “points-based” system after Brexit. 

A Home Office spokesman said: “We will deliver on the people’s priorities by introducing a points-based immigration system from 2021 to attract the brightest and best talent from around the world, while reducing low-skilled migration and bringing overall numbers down.”

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