Olly sold her tourism business in Botswana after Covid-19 struck and paid almost £8,000 for visas and flights to take a job as a carer in the UK. The work was stressful enough, involving long miles between clients around rural Somerset in an unfamiliar manual car.

But in August, just weeks after her family joined her, her employer folded. She swiftly found another job in a care home willing to sponsor her visa, but is only allowed to work part-time while the Home Office processes the paperwork — and risks deportation from next week if the delay continues. “It is very difficult financially, because the savings I had got finished,” Olly said. “Right now we don’t know . . . if the Home Office will tell us to pack our bags and go.” Olly is one of hundreds of migrant care workers who have sought help over the past year from Unison, the largest UK union, after the job they had pinned their hopes on left them in acute difficulties. 

This is the group of workers ministers have in their sights as they seek ways to cut record immigration. Home secretary James Cleverly, under pressure from the right wing of the Conservative party, is reviewing options to reduce work-related migration that include higher salary thresholds and limits on the number of dependants care workers can bring.  Immigration through all channels — study, work-related and humanitarian — has surged since the pandemic, partly reflecting international trends that affect many advanced economies, and partly because of the design of the UK’s post-Brexit visa system. 

Other inflows are now slowing, but visa applications for care workers are still rocketing; more than 100,000 were granted in the year to September, according to official data, almost half the total of all skilled worker visas.  Unions and employers, however, argue that a clampdown on migrants and their families will achieve nothing and that ministers need to boost funding so that the care sector can pay enough to recruit and retain UK workers.  “The care system would implode without migrant care staff,” said Christina McAnea, Unison’s general secretary. “The government needs to reform immigration rules, not make them more draconian.” In a report published on Tuesday, the union detailed the experience of many other migrant workers who had taken care jobs in the UK only to find themselves underpaid, overworked, charged thousands in dubious fees, or stranded with big debts as their employer went bust. 

“We didn’t expect this kind of work. It is far better in my country,” said Nimesha, who sold her house in Sri Lanka and spent £12,000 on agents’ fees, visas and flights to come to the UK, with a further £2,000 loan for the car needed to cover the long distances between clients. The reality of the job has been crushing: she leaves home at 7am and is often on the road until 11pm, stumbling around in the dark trying to find the homes of clients for late-night calls. UK staff at the same agency work on much more flexible terms, she noted, and rarely at night. 

But with rent of £1,000 a month for a house shared with another family, it will take her years to earn enough to repay her debts and return home. Like the other workers interviewed by the Financial Times, she spoke under an assumed name because she could not risk antagonising her employer. The government’s Migration Advisory Committee recommended opening up entry-level care jobs to migrants in 2022 only reluctantly. It worried that workers in effect tied to their employer by the terms of their visa would be vulnerable to this type of exploitation.  Last month, MAC chair Brian Bell told ministers he was “increasingly concerned about the serious exploitation issues being reported within the care sector”. But he said employers should retain the ability to hire overseas for now, because the government had not addressed the underfunding that made it impossible to recruit at home.  Sir Julian Hartley, chief executive of NHS Providers, which represents health organisations across England, said the latest migration data showed how urgent it was to fund a plan to resolve the workforce crisis. 

An understaffed care system could not “keep relying on international recruitment to plug these huge gaps”, he said — but at present, overseas staff were essential “to keep it going”.  If ministers pressed ahead with proposals designed to cut migrant numbers — in particular, restrictions on bringing family — they would make workers’ lives harder without solving the sector’s problems, Unison said.  The union said their priority should be to vet recruitment agencies more effectively and make it easier for care workers to move job if their employer is exploitative or goes out of business. Those made redundant have just 60 days to find a new visa sponsor, and can only work 20 hours a week while they are waiting for an application to go through. 

Many migrant workers recently made redundant by another provider are keeping afloat only because they came to the UK with a partner who can also work, according to Patricia. The senior care assistant from the Philippines, whose earnings help her father pay for the medication he needs at home, also lost her job when her employer went into liquidation this month. She said her work began smoothly in 2021 but worsened over time, with staff often underpaid and asked to travel farther.  “I love domiciliary care, having conversations with clients . . . but I am traumatised now,” she said, describing 12-hour days in which she often drove more than 100 miles. She hopes a new job, with clients closer to home, will work out, if the Home Office approves the visa.  “I am lucky I found this company, because they care also about the carers, Without carers, who is doing the care?”

Source : Financial Times

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As the temperature rises and attention turns towards holidays, what is the latest picture for the UK economy? Our Deputy Director for Macroeconomic Modelling and Forecasting, Professor Stephen Millard, spoke to Associate Economists Paula Bejarano Carbo and Hailey Low to get their thoughts.

As the Bank of England (and NIESR for that matter) move into their Quarterly Forecast Round, what are the key issues for the UK economy that they need to think hardest about?

HL: The UK economy is under pressure from a number of complex and interconnected issues. These challenges, which include inflation, the ongoing war in Ukraine, and stagnation in living standards, inter alia, have coalesced into a fragile economy which policymakers are finding extremely difficult to manage. The Bank Rate is now at its highest level since 2008, and the MPC has signalled that there could be further rate hikes to come given the persistence of inflation. This all raises a number of key issues that should be considered as we think about the outlook for the UK economy.

Firstly, the MPC needs to strike a balance between their fight against inflation and raising rates too high as doing so might trigger a recession. It will take time for the full impact of the 13 consecutive increases in interest rates to be felt by consumers, given both the delays in the pass-through of changes to the policy rate into other interest rates and the cumulative nature of the change in rates. The economy has seen a cost-of-living crisis and has now been struck by the increased cost of borrowing. Higher rates mean that bad debts are expected to increase amidst the economic downturn as consumers and businesses struggle to repay loans at higher rates. This has negative implications for banks as risks to capital returns and asset quality intensify. Risks to the housing sector are also possible, as higher mortgage rates could mean seeing mortgagers having difficulties in housing repayments.

Secondly, as the NHS celebrates its 75th anniversary, the government needs to increase investment in the NHS so as to enable access to timely and proper healthcare. I cannot emphasise this enough as the labour market is suffering from a severe labour shortage and long-term sick are driving the high economic inactivity rate. Enabling this large group of people to return to the workforce would alleviate some pressure in the hot labour market, a point NIESR made in our Spring Budget Response.

CPI Inflation failed to fall in May, remaining at 8.7 per cent. What is driving this high inflation? What are we expecting inflation to be in June and over the next few months?

PBC: The annual rate of CPI inflation in May largely reflects energy price decreases being offset by price increases in both food as well as services such as travel, and recreational and cultural goods and services. This latest figure of 8.7 per cent represents a positive surprise in that many expected energy price decreases to drive a significant decrease in inflation in the second quarter of 2023. What we’ve seen, however, is that price rises in food (which makes up around 10 per cent of the consumer expenditure basket which the CPI inflation rate is based on) and services have contributed heavily to keeping the CPI inflation rate elevated.

The annual rate of food inflation was 18.3 per cent in May. This elevated figure is partly a consequence of Russia’s invasion of Ukraine, since Ukraine is a big exporter of essential food like sunflower oil and wheat. For example, in May, the annual rate of inflation for flours and cereals was 23.6 per cent, whereas prior to the invasion (January 2021), the inflation rate for this sub-category was -3.3 per cent. At the same time, survey data, such as the S&P Global/CIPS UK Services Purchasing Manager’s Index tell us that price rises in the services sector partially reflect businesses passing on rising input costs like increased wages and still-high energy prices onto customers.

Looking at measures of underlying inflation can give us an idea of the nature of current inflation and where it may be headed. Core inflation rose to 7.1 per cent in May, its highest rate since March 1992. This measure indicates that, as a result of the original shock to energy and food prices caused by the Russian invasion of Ukraine, inflationary pressures have permeated indirectly (sometimes referred to as ‘second round inflation effects’) to other areas of the economy, such as services via increased input costs (like wages). At the same time, NIESR’s measure of underlying inflation, which excludes 5 per cent of the highest and lowest price changes, fell to 9.9 per cent from 10.2 per cent in April. Trimmed-mean inflation being higher than headline inflation indicates that the energy price fall which has driven headline CPI down is a rather volatile price movement.

Taken together, the latest data suggest that, though inflation will fall gradually over the coming months, this may be slower than expected and we can expect inflation to exhibit persistence in the third quarter of 2023.

The Bank of England recently raised rates to 5 per cent. Should we be bracing for further increases and where do we see interest rates heading over the medium term?

PBC: Against a backdrop of 8.7 per cent inflation, the MPC opted to raise interest rates at its June meeting. The MPC now expects that, given the available data, this interest rate level is sufficiently high to bring inflation back to its target rate of 2 per cent.

That said, as I mentioned earlier, the data indicate that inflation may continue to be stubbornly high in the coming months. Thus, it is possible that the next CPI data release contains another positive surprise. If that is the case, the MPC might deem it necessary to raise interest rates further to return to an inflation path that gets us back target in the medium term.

But, it’s not all about the CPI data. Interest rates at 5 per cent are quite high, and the effects of this on the economy (like households having to cut spending in order to afford elevated mortgage repayments) are definitely being felt and will continue to be felt over the coming months. With the consequences of higher borrowing rates being passed on slowly throughout the economy, it’s true that the MPC has already done much of the ‘heavy lifting’ needed to bring inflation back down. In fact, two members of the MPC felt that no further rate rises were needed at its June meeting.

So, while it’s possible that there may be one or two more rate rises as a result of CPI data surprises, interest rates are probably close to peak. So, over the coming months, we can expect the MPC to reach a peak interest rate and to hold it there for some time until it deems that the economy is ready for it to begin unwinding interest rates.

A key issue for a long while has been the fall in labour supply. Where is the UK labour market currently in terms of employment, unemployment and vacancies, participation, and wage growth and where do you see it going?

HL: The current state of the labour market: febrile and tight. Since NIESR published our Spring Outlook, the employment rate increased by 0.2 per cent to 76 per cent while the unemployment rate remained unchanged 3.8 per cent. It is notable that both indicators are still below the pre-pandemic rate.

However, there is some evidence the labour market is on the turn as vacancies fell by 0.05 million to 1.05 million suggesting that global economic uncertainty is still impacting businesses and firms are adjusting their hiring plans in response to weaker activity. The economic inactivity rate also decreased by 0.1 percentage point but remained 0.7 percentage points above its pre-pandemic level. The long-term sick remain the largest group within the inactive population and the number of long-term sick has reached its highest level since the start of the pandemic – this is a serious cause for concern amidst the hot labour market.

This shrunken workforce will lead to increased competition for staff and thus continue to drive rapid wage growth (especially in the private sector), which shows little signs of slackening, and this could keep price pressures elevated for some time. With near record-low unemployment, more than a million job vacancies and wage growth of 7.2 per cent – we expect that the job market will remain tight for a long period.

Source: National Institute of Economic and Social Research

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The Government will spend £3.5billion on the asylum system in a year, the Home Secretary said as she confirmed plans to house migrants on disused cruise ships were being considered.

Suella Braverman said £2.3billion of the total bill for 2022/23 will go towards paying for hotels.

“We are accommodating 117,000 people overall who are in our asylum process”, she told the Lords Justice and Home Affairs Committee on Wednesday.

There is a huge amount of money that is going into accommodating a very large number of asylum seekers

Suella Braverman

Describing how “everything is still on the table and nothing is excluded”, Ms Braverman confirmed the Home Office was considering housing asylum seekers on disused cruise ships and suggested officials were in talks with ship companies.

She also discussed the “incredibly difficult” challenge of hitting the ambition of getting 100,000 asylum seekers into local authority accommodation – as opposed to resorting to hotels – with that figure currently at 57,000.

“You then asked about cruise ships, we want to end the use of hotels as quickly as possible because it’s an unacceptable cost to the taxpayer, it’s over £5 million a day on hotel use alone,” she said.

“We will bring forward a range of alternative sites, they will include disused holiday parks, former student halls – I should say we are looking at those sites – I wouldn’t say anything is confirmed yet.

“But we need to bring forward thousands of places, and when you talk about vessels all I can say is – because we are in discussion with a wide variety of providers – that everything is still on the table and nothing is excluded.”

Alistair Carmichael, home affairs spokesman for the Liberal Democrats, branded the asylum costs “astronomical” and warned that the “ludicrous proposals” to house asylum seekers on cruise ships will be “ineffective and incredibly expensive”.

Steve Valdez-Symonds, Amnesty International UK’s refugee and migrant rights director, said: “On top of the clear unsuitability, Suella Braverman’s talk of housing people seeking asylum in old cruise ships, disused holiday camps and student halls is just more distraction from the urgent task of reforming an asylum system that she and her predecessor have effectively broken.”

During the session, Ms Braverman also suggested she has yet to find a new airline to deport migrants to Rwanda.

There were “ongoing discussions with several airlines” after Privilege Style pulled out in October amid pressure from campaigners, she said.

The Government used a plane run by the Spanish charter airline for the first flight in June, which was abandoned at the last minute due to legal challenges.

Asked if she had since found another airline to operate flights to Rwanda, Ms Braverman told peers: “We have a lot of ongoing discussions with several airlines.

“We are returning people almost every week to various countries around the world. We do that through scheduled flights, we charter flights… so we’re in a variety of discussions with several airlines for lots of different destinations.”

The “delivery” of the Rwanda deal was “on pause, it’s on hold while we’re going through litigation”, she added.

Earlier this week Ms Braverman said she was committed to sending migrants to Rwanda as soon as possible after High Court judges ruled the Government’s multi-million pound plan to give migrants who cross the Channel to the UK a one-way ticket to the east African nation was lawful.

But Downing Street admitted it was impossible to say when flights could take off while the threat of further legal action remained.

Source: Independent News

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