London hospitality forecast to be most negatively impacted by James Cleverly’s immigration policy.
Analysis by *GLA Economics forecasts hospitality businesses in London will be the most negatively impacted sector and region of the UK as a consequence of Home Secretary James Cleverly’s recent changes to UK immigration policy.
The changes come into force in Spring 2024 and are predicted to impact approximately 250,000 people working in London hospitality and catering businesses.
Changes announced
At the beginning of this month the ‘latest’ Home Secretary announced a series of changes to the UK’s immigration policy. These changes are intended to reduce net migration into the UK, which the most recent immigration statistics (according to the Office for National Statistics) show has reached 745,000 people in 2022.
- Increasing the salary threshold for skilled migrants coming to the UK for work from £26,200 to £38,700. Those coming on the Health and Care visa route will be exempted from this increase, and so will those on national pay scales.
- Ending the 20% going rate salary discount for shortage occupations and replacing the Shortage Occupation List with a new Immigration Salary List, which will retain a general threshold discount.
- Increasing the minimum income required (to £38,700 from £18,600) for British citizens and those settled in the UK to bring in dependants to join them.
- Increasing the Immigration Health Surcharge (IHS) by 66% – from £624 to £1,035 per annum per migrant.
- Preventing overseas care workers from bringing their dependants to the UK.
Overall impact on London in brief
Some of these changes (notably increasing the skilled worker salary threshold and ending the 20% going rate salary discount) are likely to hit sectors that are very important to London’s economy – including Hospitality and Construction – as these have a higher share of non-UK national payrolled employees.
Health and Social Care also has a higher share of non-UK national payrolled employees, although the impact may be softened by the exemption to the salary threshold on the Health and Care visa route.
Data from the 2021 Annual Population Survey would suggest that women, younger job holders, and workers from BAME communities will be disproportionately impacted by these changes.
For example:
- In London’s Hospitality sector, 38% of workers are aged 16-29, with 48% of them being women and 43% from BAME backgrounds.
- In London’s Health and Social Care sector, 71% of job holders are women, 30% are over 50 years old, and nearly half (47%) are from BAME backgrounds.
- London’s Construction sector, meanwhile, is less diverse (only 21% of job holders are from BAME backgrounds).
Overall, there are over 1,000,000 jobs in these sectors in London, of which around 47% (at least 500,000) are held by non-UK nationals.
Hospitality and Catering
The number of newly posted online job advertisements for the hospitality industry continues to be at an elevated level relative to pre-pandemic levels. Restricting the entry of migrants is likely to exacerbate this, for a sector that is worth at least £25 billion annually to London’s economy and one that is inextricably linked to other sectors with an even larger economic size such as wholesale and retail trade.
Non-UK nationals comprise 58% of London’s hospitality workforce. This indicates the importance of these workers to employment in a sector that already experiences substantial labour tightness. Raising the salary threshold, increasing the Health Surcharge, and making it difficult for UK nationals to bring their non-UK spouses to the country is likely to impact approximately 250,000 hospitality workers in London.
*GLA Economics provides expert advice and analysis on London’s economy and the economic issues facing the capital. Data and analysis from GLA Economics form a basis for the policy and investment decisions facing the Mayor of London and the GLA group. GLA Economics comprises a team of 12 economists from a variety of backgrounds ranging from academia to The City.
A copy of the full report with further details of the impact can be accessed here at GLA Economics.
