London's appeal to new graduates is declining
The number of UK graduates staying in London after their studies have finished is shrinking, largely due to high housing costs, according to a report by the Resolution Foundation. Moreover, millennial graduates are discovering that, even with higher salaries, they can be worse off than if they lived in the north of the country using the measure of net income after housing costs. Increasing numbers of over 30s are leaving London although they tend to stay close to the capital. Analysis of the report suggested that following Brexit, employers may have to raise salaries to attract graduates or relocate to find employees.

Dick Whittington, Vic Brown, the Three Girls and the crowd in London Irish all moved to the capital to seek their fortunes. Or to escape from the places they grew up in. Either way, as our films and literature tell us, the young and restless tend to up sticks and move and they usually head to London.

The data we have on movements of people back this up. A report by ONS in 2014 contained this fascinating graph which shows the northern English regions losing their young people. Some move after A-levels but their number is more than offset by an influx of students. As everybody knows, the coolest universities are in the north of England so lots of people want to study there. But, as soon as they get their degrees, they are off back down south, along with their fellow students who grew up in the north. In the year to 2013, there was a net loss of 24,000 21-30 year olds to the rest of England.

A report by Centre for Cities last autumn drew similar conclusions. It shows young people with A-Levels moving to the large and medium-sized cities and graduates moving away again, with London as the main beneficiary.

Net inflow by age and qualification for city groups, 2010-2011

Chart by Centre for Cities based on 2011 Census

Once into their 30s, people start moving out of London. The graduates don’t tend to go back home though. Most of them stay close to London. As the Centre for Cities report notes:

While overall London loses older degree-holders to the rest of the country, the majority of these do not tend to go very far. Of the older degree-holders who left London, 69 per cent remained in the Greater South East.

Chart by Centre for Cities based on ONS data

This has been the story of many people I have known. Off to university, somewhere exciting. Swear you’ll never move to London. Move to London because there’s no interesting work locally, vowing that you’ll not stay long. 10 years later still there because you’ve gotten used to the lifestyle and the money. Marry, think about having kids. Move out of London because the schools are better and the houses cheaper. Stay within commuting range because your money-earning potential is still in London.

It’s a classic English graduate trajectory which sees graduates moving from other regions to London and then to the South-East. As housing market analyst Neil Hudson put it:

London imports the young, extracts their value, and then exports their typically middle-aged remains to the provinces! — Neal Hudson (@resi_analyst) June 22, 2017

But there are signs that more recent generations don’t want to play this game any more. A report by the Resolution Foundation this week found that the proportion of graduates moving for work has declined over the past decade.

Chart by Resolution Foundation

This map, from the report, is particularly interesting. London still has a net gain of graduates from the rest of the UK but the region with the highest net gain is the South-East.

Chart by Resolution Foundation

Chart by Resolution Foundation

The reason for this is that London isn’t attracting graduates from elsewhere in the UK in the same numbers that it once did. As the report cautiously notes:

Although net graduate migration to the capital appears to be lower than it was two decades ago – with last year’s gures showing that it may even have turned negative for the first time since 2004 (we can’t be definitive because the change was statistically insignificant) – it is too soon to determine if London is becoming a less attractive place for highly-qualified young people. Current trends appear to be pointing that way however.

So one explanation for this map might be that older generations of graduates who moved to London are still moving out to the South-East but they are not being replaced by new graduates from elsewhere in the UK. The plug hole is still open but the taps are being turned off.

Those who stay in the places where they studied are more likely to join the increasing proportion of graduates that are in non-graduate jobs.

But perhaps more people are deciding that is a reasonable trade-off. The Resolution Foundation’s living standards report showed the effect that London’s brutal housing costs have on household incomes.

Even with their higher salaries, graduates in London can find that, once they have paid for their housing, they are worse off than some of their friends who stayed at home. Might it be, therefore, that more young people are deciding that the aggro of moving to London just isn’t worth it?

If there ever was any truth in the stereotype of the freewheeling job-hopping millennial, I suspect it dates from before the recession. Nowadays, as the Resolution Foundation’s Stephen Clarke says, they are spearheading the decline in regional mobility. Perhaps after Brexit, when it will probably become more difficult to recruit graduates from elsewhere in Europe, employers might be forced to offer higher salaries or even move some of their operations to where the graduates are.

This summer, another cohort of graduates will move to London and start work. It’s a well-trodden path but one that, for whatever reason, fewer young people want to take. Perhaps they have decided that the view just isn’t worth the climb.

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