Towards a pragmatic Brexit

Following the momentous result of the 23 June 2016 LCCI has published two reports specifically on Brexit – London Business and Brexit, published in October 2016 and Moving Towards Brexit, published in June 2017. Both reports highlighted the absence of panic in the wake of the result. However, the latest LCCI research, published in July in conjunction with London Councils after the June General Election, shows that, unsurprisingly, Brexit remains the foremost concern for the business community, with a number of firms citing it would have a negative impact on their ability to recruit and retain staff. This is a sign that uncertainty is starting to have a real impact following the Brexit vote, which politicians of all stripes would do well to monitor closely.

Surge

The past 12 months following the Referendum has seen a surge of activity. Article 50 has been triggered, outlining the government’s initial position on exiting the EU. In addition, the government unveiled the European Union (Withdrawal) Bill that set a process for transferring EU law into UK law, with a view to determining which laws stay and which laws go. In July Brexit Secretary David Davis commenced round two of the negotiations with his EU counterpart Michel Barnier, which discussed UK-Ireland relations and citizens’ rights.

Through extensive consultation with members both before and after the vote the Chamber is able to present a strong case to government on business wants and needs. Latest findings, detailed in the Moving Towards Brexit report, highlighted several key priorities including minimising insecurity for London business, avoiding additional non-tariff barriers, enabling firms to access migrant labour, and curtailing actual tariffs. Whilst minimising tariffs is clearly important, a chief concern remains the prospect of new non-tariff barriers, such as customs procedures, documentation, and quotas, in addition to divergence of products and regulations.

Disruption

Further asks from LCCI members include a ‘Brexit help desk’ as resource for London firms, an enhanced system for clearing customs that allows pre-clearance away from the ports or points of entry, a grandfathering approach towards existing EU free trade agreements and access to the EU single aviation market. Avoiding a ‘cliff-edge’ scenario is vital to limit disruption to businesses that have existing relationships in the EU. This would be achieved by implementing a suitable interim arrangement that allows time for a final deal to be negotiated.

Also critical is the issue of migrant labour which London businesses rely heavily on to run their day-to-day operations. Further restrictions on labour will only impede London’s ability to compete on the world stage, as the capital moves towards ‘megacity’ status. We must ensure that employers can continue to hire workers from the EU – not just ‘the best and brightest’ – but those required to plug the capital’s ongoing skills gaps.

Skills

The Chamber’s most recent report – Permits, Points and Visas (PPV) – reiterated these concerns and gave five recommendations on how to address London’s two main challenges related to skills and EU migrants. Firstly, how to treat the 771,000 migrants currently employed by London firms, and secondly, how to ensure the capital’s firms have access to skilled migrant workers going forward.

At the heart of the PPV report was a proposal for a ‘London Work Visa’ granting ‘indefinite leave to remain’ to current EU national employees. To ensure a flexible migration system in the future, the Chamber advocated a separate Shortage Occupation List for London – similar to that of Scotland – and a new, regionalised, ‘Capital Work Permit’ where allocation is based on the capital’s assessed skills needs.

“There is a considerable amount that could and should be done domestically to present London as a place that is truly open for business.”

Open

Although the direction and ultimate outcome of Brexit negotiations may not solely be in the gift of this government, there is a considerable amount that could and should be done domestically to present London as a place that is truly open for business, including building a new runaway at Heathrow and Gatwick, getting on with Crossrail 2, and tackling once and for all the capital’s housing crisis – both in terms of affordability and supply. LCCI will continue to work with members throughout the Brexit process to ensure that there is a Brexit that works for the capital but that, at the same time, these pressing domestic priorities are not ignored.