Yahoo Finance Why weaning Britain off foreign workers could come at a high price
Voters heading to the polls in July will have immigration at the front of their minds.
Some 40pc currently say it is among the biggest issues facing the country, just behind the economy (44pc) and health (49pc), YouGov polling shows.
It marks a stark change from the last election when only one in five cited it as a major concern.
It is therefore no surprise that both Rishi Sunak and Sir Keir Starmer are talking tough on the issue.
“Immigration is finally coming down and we are stopping the boats with our Rwanda partnership,” the Prime Minister said last week.
The Labour leader, meanwhile, has made securing Britain’s borders one of his key pledges, promising to set up a new border command that would crackdown on illegal migration.
The backdrop to this posturing is the latest bruising set of net migration numbers from the Office for National Statistics (ONS). The figures showed a record 764,000 net arrivals in 2022 – an upward revision of 18,000.
The numbers fell only marginally to 685,000 in 2023, still more than three times the pre-Covid average.
It means migration has added two million people to the population during this parliament, think tank Centre for Policy Studies was quick to point out, equivalent to growth of 3pc.
Sunak is far from the first politician to have presided over soaring migration figures while promising big falls. Lord Cameron pledged to “control and reduce immigration” as prime minister, only for the figures to rise by 82,000 to 336,000 a year later.
Net migration also leapt under the Labour governments of the late 1990s and early 2000s.
Successive governments have failed to get a grip – and Britain’s economy has become hooked on migrant labour along the way.
“It has been a godsend that we have had foreign staff coming over,” says Paul De Savary, the managing director of Home From Home Care, which runs 11 specialist care homes in Lincolnshire for adults with highly complex needs.
Asked if he could run his business without any immigrants, De Savary says: “No, we couldn’t now. [Immigration] has become a chunk of the sector.”
Earlier this week Work and Pensions Secretary Mel Stride promised a “new economic model based on British talent”.
He could also have promised to draw “on the talents of all to create British jobs for British workers” or to give “British people the skills to do the jobs Britain needs”.
The former was promised by Gordon Brown in 2007, the latter by Lord Cameron in May 2015.
Despite repeated promises, the share of foreign-born workers in the UK labour force has risen threefold from 7pc in 1997 to 21pc in the first three months of the year.
The immigration figure has become a politically toxic number but, says Ashley Webb from Capital Economics, increases in foreign nationals coming to the UK often benefit the government of the day.
Without the influx of workers from countries like Nigeria, India and Zimbabwe, companies would have struggled to fill jobs. That, in turn, would curtail growth.
“Migration has been quite crucial to supporting labour supply,” Webb says.
The rise in immigration has been “quietly helpful” in getting the economy returning to strong growth in the first three months of the year, Webb says. Rishi Sunak has celebrated this expansion and has made it central to his election campaign.
The wrinkle is that, on a per person basis, growth was still 0.7pc below where it was a year earlier.
While immigration may deliver some economic benefits, it is no longer enough.
Labour wants to cut net migration down to the “normal” level of “a couple of hundred thousand a year”. Meanwhile, the Government has been taking steps to curb arrivals – such as cracking down on student and spouse visas as well as raising the minimum salary threshold.
The impact is already being felt in sectors such as the care industry.
Some 315,000 work visas for the health and care sectors were granted in the year to March, up 5pc on the year before and more than double the figure before the pandemic in 2019.
The increase was overwhelmingly driven by care workers, according to the Home Office.
Yet the tide is turning, with tighter rules prompting a 76pc decrease in the first four months of the year compared with the same time in 2023.
De Savary says stricter rules and the politics of immigration around the election fill him with dread.
“We have an election coming up. As a result of that they will end up recruiting more for the NHS. It will probably be care assistants and people like that. All that is going to happen is that they will rob the social care sector [of staff] again.”
Hiring foreigners is neither cheap nor problem-free, De Savary says. The fees are high and it takes some cultural mediation to ensure staff from different backgrounds get along.
But they are resilient, he says. Many of his younger British staff continually get signed off sick and complain of anxiety and depression, he says wearily.
“There is far less resilience. Younger people coming through… there is an expectation that you are going to be helped with everything. It’s all going to be handed on a plate to you,” he says.
“We have staff who go to the doctor, and the doctor just signs them off, willy-nilly. It’s a massive issue. It’s getting pretty ridiculous. That wouldn’t have been the case, three, four or five years ago.
“It’s become incredibly easy to get your doctor to do whatever you want him to do, which then impacts our ability to staff very complex services.”
Stride has suggested that people like De Savary should be hiring British workers on benefits rather than foreigners.
De Savary thinks Stride is “almost naive” to think this could solve his staffing issues completely.
“It’s almost saying that anybody can do this job, which is not the case. There’s generally a total lack of understanding about what it actually takes to work in the sector.”
Weaning Britain off immigrant workers will come at a price, bosses warn.
Rose Carey, a partner at high-end law firm Charles Russell Speechlys, says changes to the salary threshold for most skilled workers, which rose from around £26,000 to £38,700 in April, may have forced some companies she works with to move operations to Poland.
One of her clients is an international manufacturing company with factories in the North of England, the US and Poland. It pays £14 an hour. Staff need to be trained on full pay for a year to be left alone with the machinery.
“They’re really struggling to recruit [for UK jobs],” Carey says. “They don’t get that many applications from local workers and the ones that do apply don’t stay.
“They are looking at whether they need to start making more things in the Polish factory instead.”
Many of the current staff are Poles and Romanians with engineering backgrounds, but that pool is dwindling after Brexit.
Current salaries are £2 an hour below the new work visa salary threshold. However, bringing pay into line with the new threshold would be a significant cost as the company would also need to increase salaries for British staff to avoid employment law issues.
Another client – a smokery with several UK sites – risks moving operations to Poland if salary thresholds don’t come down. If both these clients relocate, around 1,000 jobs – including many held by British workers – would be lost.
Work visas often become a focus of debates around immigration because of the perception that foreign workers are taking jobs that would otherwise be available to Britons.
However, Madeleine Sumption at the Migration Observatory in Oxford says: “What we know from the research, the most likely outcome is that there will just be fewer of those jobs.”
Sumption adds: “Whilst some of the biggest policy issues on migration are about visa policy, legal migration towards students and workers and so forth, we don’t see massive differences between Labour and the Conservatives on those issues.”
Both parties want to call time on the era of seemingly unfettered immigration.
But after decades of large numbers of new arrivals, and with an economy hooked on immigration, dealing with the economic fallout from such a crackdown may prove a difficult pill to swallow for both Starmer and Sunak.
