Sam Lowe is a senior research fellow at the Centre for European Reform.
The U.K. is a genuine services superpower. But it needs to find an approach to immigration that can meet the needs of a modern trading nation.
Britain doesn’t only specialize in high finance: it’s also world-leading in consulting, accountancy, law, music, TV and film production, and advertising. British politicians risk undermining its position if they don’t find a way to make it cheaper and easier for U.K. firms to attract talent.
Trade in services and the movement of people are intrinsically linked. Worldwide, despite advances in telecommunications technology, services are still predominantly sold in person by people familiar with local customs and rules. Face-to-face interaction is crucial for a sector reliant on trust and human interaction.
Brexit, and the decision to end the free movement of people, threaten the U.K.’s position as a hub for multinational services firms looking to sell to clients across the continent. Musicians, fashion models and actors have started to wake up to the new reality, but for many the new barriers aren’t yet apparent as coronavirus restrictions keep everyone at home.
Later in the year, once European economies start to open up again, British services exporters will enter a world in which there are significant new restrictions on their ability to work across Europe, and the activities they are allowed to carry out once they step off the Eurostar.
And despite the U.K.’s immigration rules for the rest of the world being loosened under its new ‘points based’ system, the ending of freedom of movement has left Britain less open to foreign workers than before.
This will make it more difficult for British services firms to attract and retain the best and brightest. Before Brexit, an EU national could apply for and take a job with a British creative agency without a second thought. Now they will have to factor in visa costs and applications, legal fees, and a surcharge to use Britain’s health service. In order to keep Britain as an attractive destination for multinational services firms and international talent, it must rethink its broad approach to labor mobility and immigration. The U.K. should re-open negotiations with the EU on temporary labour mobility.
The EU had offered to discuss broad provisions that could have seen EU and U.K. nationals in a variety of sectors able to engage in visa-free, temporary paid work in each other’s territory for 90 days out of 180. But the U.K. negotiators rejected this approach because they feared it sounded too much like free movement of people.
This underestimated the intelligence of the British public, who take a more nuanced view of labour migration than politicians realize, and are unlikely to be bothered by skilled workers who would make use of a temporary migration allowance.
Provisions that allow for traveling bands, consultants and fashion models to take on occasional paid work are not the same as the right to live in Britain. Such an arrangement could also form the basis of future labor mobility discussions with new trade partners such as Australia, New Zealand, and (assuming the government is serious about its ‘Global Britain’ agenda) India.
The U.K. should also prioritize cutting the cost and bureaucracy of getting a U.K. work visa. Acquiring U.K. visas for a family of five can costs tens of thousands of pounds — and employers are on the hook for license fees of up to £1,476 per worker. Here, the U.K. should waive, or at the very least reduce, all application fees to avoid deterring workers from the EU or elsewhere.
While British ministers might claim visa fees are a necessary fund raiser, any lost revenue would easily be offset by the higher economic output and taxes generated by the workers coming to the U.K.
To retain its global standing in high-value services, Britain’s political discussion on labor mobility needs to become less crude, and politicians will need to test the limits of what the public will accept.
They may find that Brits are more welcoming to foreign workers than they imagine.
