durutti, i moved to london. got a job on more money than i've ever earned. should i jack it in and go back to the black country?
I don't think anyone's saying that individuals shouldn't be free to move as they wish. For me, at least, the argument is that there shouldn't be policies in place which deliberately encourage employers to look abroad for workers (like the way foreign workers get paid less), and there should be some policies in to encourage more local jobs. The government has done this a bit, by moving some of its offices outside London (like the Prison Service headquarters).
Enabling more people to work from home would also help with enabling people to stay in their local area if they want to - although obviously that wouldn't help with construction jobs.

Actually, even there it'd help the administrators and anyone who has to do paperwork as part of their job, which seems to be most people these days.
It wouldn't unreasonable or xenophobic, when offering work to a large contractor, to stipulate that they make efforts to use the existing workforce or look in the local area for workers before deciding to bring people in from abroad. The government might not be able to legislate for this, but they could at least not leap up to defend companies who ship workers from thousand of miles away when there are suitable workers already at the plant where the work will be conducted.
the wealth stays where it is. rich areas pay better than poor ones, inequality becomes more entrenched.
That's a pretty good point, actually. Though, of course, the rich areas also cost a lot more to live in, often cancelling out the extra pay - especially for those who want to live there long-term and have a flat of their own rather than put up with sharing a room because they know it won't be forever.