Sadiq Khan says businesses in the capital need reassurance over fate of a million Londoners who are EU citizens

The government should offer a “cast iron guarantee” on the rights of EU nationals the moment article 50 is triggered to avoid a potentially disastrous exodus of staff and jobs from London, Sadiq Khan has told MPs.

Suggesting he might also support a London-only system of work permits for foreign nationals, the city’s mayor said businesses needed reassurance over the fate of “a million Londoners – and they are Londoners – who are EU citizens”.

Answering questions from the committee on exiting the EU, Khan – who has become one of the more prominent opposition voices on how Brexit should be handled – also urged ministers to put in place in interim deal in case no full agreement could be agreed within the two-year process.

Sadiq Khan: lack of interim EU trade deal could cause ‘colossal damage’ Read more

Business people in London understood Brexit would happen but feared a “falling off the cliff edge” scenario of default to World Trade Organisation (WTO) rules, especially for banking and financial services, the Labour mayor said.

“When you speak to the service sector in particular, no deal equates to WTO terms, equals a catastrophe as far as they are concerned,” he said.



Khan said that in construction alone, half London’s current 300,000 workforce came from overseas, and up to 20% of the British contingent would retire within five years, meaning training new UK workers would not be enough.

Asked about the potential impact of a halt of workers from the EU, he said: “The short answer to your question is: if we can’t continue to attract talent, it will have a huge impact on our ability to be a wealth generator for our country.”

Companies were also worried about the fate of their current EU staff, Khan said, some of whom were deciding to return home amid the government’s refusal to guarantee their status.

When Theresa May triggers article 50 to start the Brexit process, Khan said, she should pledge to do so and to streamline applications for permanent residency.

“That would show an act of good faith when it comes to negotiating with the EU. This is not a clean-break divorce, this is a negotiation that will lead to a relationship post us leaving the EU,” he said.

“And what a great way to start the negotiations, by saying, as a gesture of goodwill: we’re giving a cast iron guarantee to EU citizens here.”



Asked about the idea of work permits allowing EU nationals to base themselves only in London, Khan said this would be one way to meet the economic needs of a city that voted resoundingly to stay in the EU.

“I’m not saying we have a London borders agency. Nor am I suggesting we build a wall around the M25. What I am saying is London’s needs are different to the rest of the country,” he said.

“The starting point is this: does the government accept that London is the engine for the country? Does the government accept that for London to continue to prosper, thrive and succeed we need to continue to attract talent.

“If that be the case, how do we square the circle of parts of the country not wanting immigration, and London needing it and wanting it? That’s where we need a flexible immigration system.”



Khan also said the City needed a retention of passporting rights, which allow financial transactions to pass freely. The idea of an exodus of banks from London had not yet happened, he said, but passporting was vital to make sure it didn’t.

“The good news is that when you speak to banks and financial institutions, there is no one city they all agree on to go to,” he said. “If we can keep financial passporting it would be a real boon to us, and I think we should try to do it.”

Khan, who strongly backed remain in the EU referendum, came under pressure from some Conservative MPs to discuss the potential benefits to London of Brexit, prompting a couple of tense exchanges.

“Surely your job is to talk up London?” asked John Whittingdale. Khan replied, frostily: “I appreciate the advice on how to be a great mayor.” He added: “One of my jobs is to articulate what businesses tell me.”

Alistair Burt, a Tory MP who had backed remain, asked if London’s thriving universities had expressed “excitement” at the opportunities from Brexit.

Khan replied: “I’ve not had it articulated to me by the universities any excitement. They’re worried about less collaboration; they’re worried about losing some of the research funds.”