London plays a significant role in the UK's economy, representing almost half of its service exports. But it is far more reliant on the EU than the rest of the country — over one in nine London workers were born in EU countries.
To sustain the contribution that London makes to the UK's economy and tax base, the country needs a Brexit that works for London. It is important that London remains open, liveable and affordable in order to mitigate any challenges that Brexit poses. Centre for London's Brexit manifesto sets out five ways to do this.
1. Childcare and skills
With 13% of London's workers coming from other European countries, Brexit poses a huge skills challenge for London, even assuming all current workers are allowed to stay. Unemployment in London is low, but concentrated in some groups. For example, the high cost of childcare in London is preventing many women with children from working, so the government should commit to devolving responsibility for childcare and early years education to London and other cities. London should also be provided with greater control over its apprenticeships and skills funding as national programmes are not offering Londoners the skills needed by London's growth sectors.
2. Retain London's talent by devolving skills and regionally managing migration
Europeans work at all skills levels and in all sectors across London, from bankers to bakers, and barristers to baristas. A similar proportion of London's students come from other European countries. Losing access to this talent would damage London's businesses and its universities, and diminish the city's character.
More employment support for Londoners will help, but London also needs to remain open to European talent, through a regionally managed migration system, that would enable migration policy to be tailored to regional needs across the country. London's regional visas should include 'city maker' visas, to allow European citizens to visit the city to look for work; working holiday visas to allow easy access for young people from the EU, and a post study visa to allow EU graduates to stay on after university.
3. Clarity on transitional arrangements for trade agreements
Service sector exports — from financial services to film and TV — have been central to the growth of London's businesses, and access to the single market has allowed them to flourish and grow with relative ease.
New trade agreements need to minimise the impact of regulatory barriers — trade in goods may be hampered if the UK has to fall back on WTO rules, but services trade could simply dry up — or rather move overseas — if new regulatory agreements are not in place. Renegotiating trade agreements will be a long and complex process, leaving businesses to make contingency plans on the basis of a 'worst case scenario'. So we will need transitional agreements to be clear as soon as possible. We suggest membership of the European Free Trade Association ('the Norway model') would be an appropriate temporary model.
4. Devolved property taxes
Unaffordable housing exacerbated the social divisions that led to the Brexit vote. While Brexit didn’t cause these issues, it has sharpened awareness of these problems — without confronting them, the city will struggle to thrive and to attract and retain the talent it needs. Devolving property taxes to the Mayor of London, to allow him to experiment with reforms, would be a step towards tackling the affordable housing crisis.
5. Building a city alliance for a better Brexit
Many of the UK's leading cities also voted to remain, and like London need to remain connected to the EU. London and the 10 core cities account for nearly half of the UK's economy, so it is vital that their needs are considered in any Brexit negotiations.
The Mayor of London needs to work with the newly elected metro mayors to argue for a Brexit deal that reflects their interests. By forming a coalition with other cities, such as Liverpool, Bristol, Birmingham and Manchester, London will have a stronger hand in negotiations and its needs are more likely to be met.
By Joanna Thom for Centre for London. Read the full Centre for London Brexit manifesto here.