Monthly Finance News Magazine dedicated to reporting the key financial stories of the day from across the globe for an international corporate readership.

Your Thoughts: UK-EU Free Movement to End March 2019

0

The government announced a few weeks back that a new immigration system will be in place by March 2019 when the free movement of people between the EU and the UK ends.

Immigration Minister Brandon Lewis was speaking as the government commissioned a “detailed assessment” of the costs and benefits of EU migrants, and publicised the closing time for free movement post-Brexit.

As this would have a serious impact on social, economic and political agendas, Finance Monthly has below heard form a number of sources with their thoughts on the prospect of closed immigration.

Ian Robinson, Partner, Fragomen:

It just won’t be possible to get everything ready and Ministers need to think seriously about letting free movement continue for a limited period after we exit the EU. A full labour market review is absolutely essential and it is only fair that employers get a say over immigration policy. Labour and skills shortages won’t go away after Brexit; if anything they could be exacerbated. Immigration has an important role in plugging the gaps. But a year long review doesn’t leave very long for implementation. You have to ask whether six months to write the law, create the technology, recruit and train Home Office staff and then get business ready will be enough time.

Paul Taplin, head of change, Voyager Solutions:

It is widely accepted that Brexit will have a major impact on our UK workforce – regardless of any labour agreements that are made. The good news is that companies protect against this risk – by capitalising on the fast accelerating world of Robotic Process Automation (RPA). Skills gaps should be examined in areas where it will take longer to develop and replace people, and areas where a human workforce can be supplemented (or replaced) by a robotic workforce.

For example, in shared service centre operations, now is the perfect opportunity for UK organisations to review their workforce from a number of perspectives. For those that have off-shored / outsourced to an EU country, there may be a change in the economics, levies or exchange rates which impact the business case. For organisations that have significant non UK EU nationals performing key roles in a UK shared service centre, now might be the best time to look at the economics of outsourcing.

In both scenarios, organisations should accelerate any plans to review the business case for RPA – it will be significantly cheaper than full time equivalent human workers, so could solve the problem of covering key shared services roles. Activity areas to be considered for automation could include; data entry, payroll / T&A, expenses administration, personnel administration and recruitment admin in HR.  Other business process candidates for automation include; P2P, order to cash, record to report, procurement operations, collections, cash management in finance and many others.

Ultimately, it’s important for organisations to remember that any workforce planning efforts will not be wasted if Brexit doesn’t have the expected impact – this should be done anyway – and will provide greater resource efficiencies across operations.

Bertrand Lavayssière, Partner & Managing Director UK, zeb:

Over the years, we have worked regularly with our European clients to find locations for their centralising European operations such as back-offices (for example for FX, credit lines, Trade Finance), institutional sales, risk and/or compliance functions. A key part of this is to compare the various locations. The usual criteria we will look at are costs, notably real estate, taxes, cultural proximity, accessibility, political environment, availability of professional support resources such as lawyers, consultants, etc. and, of course, availability of resources. The comparison is between major European cities (e.g. London, Paris, Frankfurt, Amsterdam, Dublin, Brussels, Krakow) or nearshore/offshore cities/locations (e.g. Mumbai, Porto, Casablanca, Mauritius).

As a location, London is second to none as it offers a unique mix of skills depth (different levels of expertise/management levels) and scope in terms of the number of financial activities covered and the multitude of languages spoken by employees. For example, we were working for a major European Corporate lender, which had more than 40 subsidiaries/branches across Europe. For efficiency and effectiveness reasons, we decided to centralise the accounting/general ledger, credit, cash management, trade finance, and foreign exchange back office activities of each of their European sites into one place, leaving notably the management, regulatory and sales activities locally. London was identified as the most suitable place for this central hub, owing to the fact that the majority of the staffing was to be sourced locally. As already mentioned no other city can provide the breadth and depth needed in terms of languages spoken.

London is and will continue to be attractive for banks and other FIs because of the critical mass created and the variety of resources available.  This critical mass generates numerous ripple effects such as the availability of numerous FS specific professional services such lawyers, tax experts, consultants, etc. As this is widely known in the European banking community, many bankers/insurers come in London to find a job without a contract yet manage to find a position relatively quickly. The new immigration laws may unbalance this de facto and well-oiled eco-system, however the appeal of London should still see it withstand such changes.

Beenu Rudki, Immigration Director, Lewis Silkin:

The ‘fair and serious offer’ on the future rights of EU citizens, laid out on 22 June 2017 by Theresa May, offered EU nationals arriving before Brexit the chance to acquire the same rights to work, healthcare, and benefits as UK citizens. The proposition entailed giving ‘settled status’ to three million EU citizens and agreeing a cut-off point for freedom of movement between the UK and the EU between 29 March 2017 and 28 March 2019, the date at which Article 50 Brexit negotiations are expected to end.

This announcement has major implications for EU nationals and their family members, a significant number of whom work in the UK’s financial services industry. In 2016, the London Assembly Economic Committee produced a report outlining the impact of Brexit on London’s financial and professional services sector. The report highlighted how crucial the industry is to London’s economy and reiterated the UK’s importance as a hub for both domestic and overseas talent following exit from the EU.

Over a year after the Brexit referendum result, the government has now commissioned the Migration Advisory Committee (MAC) to provide a detailed assessment of the role EU citizens play in the UK economy. The commissioning letter asks the MAC to advise on an immigration system aligned with modern industrial policy. The MAC will need to consider different sectors, regions, and skill levels to provide insight into the sort of immigration policy that will be needed in the years to come.

Before the final MAC report is delivered in September 2018, UK financial sector firms should review what options are open to them in order to avoid potential disruption to their business in the future. Organisations should also be prepared to provide data and case studies to the MAC to avoid being left behind in the new immigration system.

Russ Shaw, Founder, Tech London Advocates:

Continued uncertainty around immigration policy in the UK is damaging the country’s reputation as a destination for fast-growth tech companies. The cabinet is intensifying this issue by failing to present a united front, and using consultations as a means to delay its decision rather than inform it. The Home Secretary’s welcome news that there would not be a “cliff edge” in 2019 was refuted days later by the latest statement from the Prime Minister, saying Freedom of Movement would end abruptly. This confused messaging does little to reassure the UK’s tech companies and entrepreneurs, who have remained on edge since the Brexit vote and waiting for clarity on their ability to access world-class talent.

Access to global talent is a top priority for tech companies, and the government needs to ensure that immigration policy meets this pressing need. The Cabinet needs to resolve its differences and ensure that the UK tech sector can prosper, ultimately bringing economic growth to the whole economy. The sooner the government can clarify its position on immigration the better, as that will eliminate uncertainty and allow for investment and talent to continue flowing into London.

We would also love to hear more of Your Thoughts on this, so feel free to comment below and tell us what you think!

Comments
Loading...