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Economic success is at risk as future skilled migration could be curtailed under proposals in government immigration white paper, finds IPPR

The government’s proposals for ending freedom of movement after Brexit put Bristol and the West of England’s economy at risk, according to a new IPPR report. Skills and salary thresholds proposed in the 2018 immigration white paper would severely limit future inward migration and hamper growth in crucial parts of the local economy.

IPPR found that if these proposed thresholds were applied to EU employees currently living in the region, around 75 per cent of them would be found ineligible to live and work in the UK. This has major implications for the future of immigration from the EU to the UK and puts business growth at major risk, according to the IPPR report.

Bristol is an economic success story with a number of flourishing high-skilled high growth-industries from advanced engineering and aerospace to the digital and creative industries. However, IPPR says further growth would be put at risk by the proposed immigration reforms.

Over the last decade the number of EU migrants in Bristol has risen and migrants now make up 16 per cent of the city’s population, working across all industries. IPPR found that many key employers rely on recruiting EU citizens without impediment, particularly given the city’s high employment rate of 77.6 per cent. Some sectors of the city’s economy – including hospitality and health and social care – are particularly reliant on migrant workers.

The IPPR report features interviews with key employers in the city and wider region who expressed deep concern over how they would adapt to the new restrictions, which includes an ‘unrealistic’ £30,000 salary threshold, skill level barriers and employer visa fees.

Creative

The creative industries contribute £500 million (gross value added) to the local economy and employ 17,000 people. The city is also a major producer of film and television and is the home of Wallace and Gromit studio – Aardman Animation.

David Sproxton, Founder and Executive Chairman of Aardman Animations Ltd, said:

“The VFX industry has grown much faster than other parts of the British workforce, and this has been in large part due to the ability of the UK to attract skilled and creative EU workers. They make up about 33% of the VFX workforce in the UK…European staff provide a unique asset, in part because of the longer and more vocational training they receive and in part because they bring a different cultural nuance, which adds to the creativity and innovation of our productions. Losing the pool of EU talent would put us at a disadvantage.”

Advanced engineering and Aerospace

This sector is credited for more than 28,000 jobs in the West of England and the region is home to major aerospace businesses such as Airbus, Rolls Royce, GKN and BAE systems.

Peter Marchbank, MD of Rotary Precision Instruments UK Ltd, said:

“The level of access to the EU labour market will have a big effect on the UK industry, since most aerospace companies are reliant on skilled EU labour to meet current demand. Most migrants are on the engineering rather than the manufacturing side. This is reflective of the fact that there is a shortage of local engineering graduates – to the extent that the UK is now too far behind to catch up”

Technology and Software

Bristol is the UK’s most productive tech hub and hosts the offices of major international technology companies such as Oracle. The West of England region’s technology sector specialises in software engineering, web and mobile development, system design, robotics and AI.

Charlotte Addison, HR and Operations Manager of Felinesoft, said:

“Felinesoft is a B2B software company with a turnover between £1–10 million. The ability to recruit workers from the EU has been important to our MO. We struggle to fill some of our technical roles from within the UK due to the shortage of relevant skills… The EU nationals that we employ are highly skilled, technical and hardworking people. They also tend to stay with the company for a long time, which is a big benefit for us and helps to foster a positive and diverse work culture. It could be damaging to our expansion plans if the current supply of skilled workers becomes more limited than it is already.”

Hospitality and Tourism

The industry employs around 60,000 people in the West of England region. This sector is particularly exposed to restrictions to freedom of movement, given it is one of the largest employers of EU workers. IPPR found that firms in hospitality have already reported significant recruitment challenges since the referendum.

Mark Payne, General Manager of The Bristol (Doyle Collection), said:

“We are one of Bristol’s premium hotels and part of a prestigious group of hotels. Our workforce comprises of 70 per cent non-UK, the vast majority of whom originate from the EU… Restrictions on the ability of the hospitality sector to operate cost-effectively will have knock on effects for the city and broader regional economy.”

Social Care

Against the backdrop of a projected national funding gap of £3.6 billion, adult social care is a core priority for Bristol City Council. Around 8 per cent of the current workforce in England are EU nationals - a proportion which has risen in recent years. IPPR found that the ability to recruit migrant workers in social care was critically important to the sector.

Barry Edwards, MD of Maria Care (social care provider in Weston-Super-Mare), said:

“If I could find the staff I would be able to double the size of the company, meaning that people who need care would not be left behind on waiting lists. [If there is a further restriction in the labour market] then we would be competing for the same staff as other companies, when in fact we need to be growing the net number of staff in the sector.”

International Sales

Business West’s survey of businesses in the West of England found that around 42 per cent of exporting businesses foresaw experiencing staffing difficulties as a result of Brexit. The firms we interviewed explained that migrants’ foreign language skills are critical for exporting.

Roger Proctor, MD of Proctor and Stevenson, said:

“We export around 75 per cent - to Europe, the US and Far East. Currently being part of the single market makes it easy for everyone to deal with each other and gives certainty. We face skills shortages, especially in digital, which is having a 'strangle' effect on expansion. We employ 12 different nationalities because the talent we need is global and they bring vital language skills, and we face severe digital skills shortages in the UK.”

The IPPR report makes a series of recommendations for the Home Office and Bristol City Council:

The Home Office

Provide a forum for local and combined authorities to directly input into immigration policy making - with a formalised process for local areas to feed into policymaking and determine variations in the immigration system depending on local needs.
Lower the salary threshold – with exemptions for critical sectors to support regional industrial strategies.
Tackle poverty and inequality – incentivise better employment practices by providing visa benefits to employers who pay the Real Living Wage.

Bristol City Council

Support existing residents to fill skills shortages in the local economy – to prepare for potential skills shortages after Brexit, the council should enhance careers provision, link up schools and FE colleges with employers, and ensure apprenticeships align with skills shortages which are most likely to occur.

Encourage labour market integration for existing migrants – help match skills to the right jobs to increase productivity. Expanding English language provision can help achieve this.
Improve the working conditions of employees in low-paid sectors currently reliant on EU migrants – help maintain the attractiveness of these jobs for local residents after the end of freedom of movement, for instance by making sectors such as hospitality the focus of efforts to guarantee a Real Living Wage across the city.

Marvin Rees, Mayor of Bristol, said:

“This report highlights the ongoing failure of national government to meaningfully engage with cities on Brexit and the future of the immigration system. Our EU residents are a huge asset to Bristol, and we need a system that enables them to continue to contribute to our future success. Instead what has been proposed would severely undercut our ability to deliver inclusive economic growth, a key theme of our Local Industrial Strategy and our One City Plan.”

Marley Morris, IPPR Associate Director, said:

“Bristol is an important case study for understanding the consequences of the government’s immigration proposals across the country. Despite its high skills base, our research finds that it will be hit hard by the government’s proposed reforms. Growth in critical sectors – ranging from aerospace to the creative industries to social care – could be seriously curtailed. Employers are unprepared for the new rules and are sounding the alarm about skills shortages. The government needs to urgently take on board these local concerns as it develops its proposals for an Australian-style immigration system.”

ENDS

CONTACT

Robin Harvey, Digital and Media Officer, r.harvey@ippr.org

NOTES TO EDITORS

The IPPR paper, Go West: Bristol and the post-Brexit immigration system by Marley Morris is available for download at: http://www.ippr.org/research/publications/migration-in-bristol
Case studies available – please contact for further details
Our estimates are based on IPPR analysis of the three-year Annual Population Survey (2015-2017). We identify EU migrants who are occupied in a medium- or high-skilled job (as defined by the Home Office’s codes of practice for skilled work) and who are also earning at least £30,000 per annum. EU migrants who meet these two criteria are defined as eligible. This is a simplified version of the proposals, as it does not factor in the lower salary threshold for new labour market entrants, the individual occupational salary thresholds, the exemptions for certain public sector workers such as nurses, and other nuances in the current system. For these reasons, our calculations should be viewed as illustrative of the effects of the government’s proposed changes to the immigration rules.
Thanks to Business West and Bristol City Council for their support in providing the case studies for this project.
IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence.