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Immigration keeps London business afloat

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Twenty years of unprecedented migration to London from overseas has boosted the London economy and made it more flexible and resilient - but boroughs need responsive financing policy to address the tensions that arise from rapid change, says a report by academics at LSE released today (3 July). 

The Impact of Recent Immigration on the London Economy, prepared for the City of London Corporation by Professor Ian Gordon|, Tony Travers| and Professor Christine Whitehead| of LSE's London research centre|, is a capital-wide study into how and where London's 200,000 annual in-migrants work and live. It has found their abilities employed in both high-skill City jobs and lower paid work in construction, hospitality and catering.

The City of London Corporation-LSE report found that most immigrants make better use of London's housing. Immigrants live in fewer households and in higher densities than Britons. The rental market, much favoured by immigrants, has so far expanded to cope with demand, allowing rents to remain stable.

The report found three main types of London immigrant among a very diverse range, which have brought the UK capital level with New York as a global 'melting pot':

  1. Highly-skilled workers, often in the financial and business services who come from a rich country such as the USA or Australia, stay several years for career reasons, and whose prized skill-set helps sustain the City as a world-leading international business centre. These represent about one third of the inflow.
  2. Migrants (typically from poorer countries such as Poland or African countries) who stay for a longer period, working (at least initially) in poorly-remunerated jobs, below their qualification level, where they tend to further depress wage levels. These represent just over half of those arriving.
  3. Asylum-seekers from countries suffering economic and political breakdown, who are not initially available for work. These accounted for about one in eight of all immigrants to London since the late 1990s, though the proportion has been cut back to one in thirty in the last few years.

The report dispels negative historic attitudes to immigration, finding Londoners in a 'confident and expansive mood', coping well with the radical changes in community and workforce makeup that now see 29 per cent of London jobs filled by people born outside the UK.

The majority of new migrants now arrive from a set of 15 countries, including Pakistan, France and Poland, compared with just six main feeder countries 20 years ago (Ireland, India, Kenya, Jamaica, Cyprus and Bangladesh). Many of the immigrants are young (50 per cent are aged between 20-30), over 50 per cent were white and 20 per cent were non-Christian including 10 per cent Muslim. They share characteristics of relative youth, above-average qualifications and positive employer-ratings.

Michael Snyder, policy chairman of the City of London, said maintaining London's openness was vital to on-going economic success: 'Walk down a city street and you will hear five different languages in 50 paces. London's welcoming, multi-cultural attitude is attracting the crème of international talent. Many of the world's young professionals aspire to work in London at some point during their career,

'London has the best markets, the best job prospects and, with some important exceptions such as transport and housing costs, the best quality of life, especially in its cultural offerings. Business is booming in part due to the inputs of migrants, London must guard its reputation and sense of openness fiercely,' he said.

However planning for migration must be more responsive to the needs of both migrants and established households. Pressure on the Greater London housing market will continue to increase over time as migrants become more established. The report finds that much of the need for additional housing, especially social housing, will come from migrants, who will require an extra 36,000 households during the next 14 years.

Christine Whitehead, LSE, said current pressure on the housing market, especially at the top end comes from international investment as much as migrants. The report finds that to maintain competitiveness and house London's growing population, housing output must increase.

'Government funding needs to reflect both present and future demands on services. At present, the Treasury enjoys the substantial benefit - in terms of higher tax revenues - that derive from new migrants. However, any costs - such as the need for schools, social housing and homelessness provision - have to be funded by the boroughs', she said.

The report makes clear that central government funding of London boroughs is often based on imprecise or out-of-date statistics, resulting in a potential mismatch between the needs of new populations and the resources available.

In contrast to New York's local authorities, London boroughs and the GLA have no capacity to share in the growth in tax base associated with migration. The risk is that service pressures will build up in some areas forcing authorities to divert resources from elsewhere. Because public finance in Britain is highly centralised, Whitehall will often have to provide the resources needed for new or additional services. In New York, by contrast, the city's tax base increases as a result of growth resulting from migrants' economic activity.

Click here to download the full report| (PDF)


For further information please contact: Cubby Fox, City of London Press Office, tel 020 7332 3451

Notes to editors

The Impact of Recent Immigration on the London Economy was prepared for the City of London by Ian Gordon, Tony Travers and Christine Whitehead of LSE London, a research centre established in 1998 at LSE to examine the economic and social issues of the London region, as well as the problems and possibilities of other urban and metropolitan regions. See LSE London| 

The City of London provides local government services for the Square Mile, the financial and commercial heart of Britain, and is committed to maintaining and enhancing the status of the business City as the world's leading international financial and business centre through its policies and services. Its responsibilities also extend far beyond the City boundaries and include management of the Barbican Centre, Central Criminal Court at the Old Bailey, 10,000 acres of open space including Hampstead Heath and Epping Forest, three wholesale food markets, as well as acting as the London Port Health Authority. 

Press cuttings

Xpress Digest
Finances rather than status likely to cause more acute housing need among migrants (11 July)

Inside Housing
Finances rather than status likely to cause more acute housing need among migrants  (9 July)
Migrant poverty rather than immigration status will put increased pressure on social housing in the capital a study by leading housing academics has claimed. The London School of Economics report says that new migrants to London are less likely than the established population to need or access social housing. Co-author Christine Whitehead, professor of housing economics at LSE, told Inside Housing that migrants' long-term housing needs were due to economic circumstances rather than migration status.

Daily Mail
The changing face of the city
(3 July)
The days of the City being dominated by bowler-hatted Englishmen are well and truly over, a study has revealed. A quarter of all the employees in financial services across central London are now foreign-born, according the London School of Economics. Overall, the migrant population in the capital has grown from 1m to 2m over the past 20 years alone. This has been good news for employers, who have access to a growing body of highly skilled workers. But London authorities aren't getting enough support from the Treasury to cope with strains on social housing and other services, the report warns. 
Source: Lexis Nexis News

Tonight with Trevor MacDonald (2 July)
Professor Christine Whitehead appeared on last night's programme discussing housing and immigration.

3 July 2007