The government's cap on non-EU migrant workers will stifle the growth of many British businesses and limit our export exposure into emerging markets, according to the country's top business leaders.
Following on from the Home Office's decision to drop the net number of inward migrants into Britain from 280,000 to 100,000, British commerce leaders have openly criticised the government – saying the reduction sends out a message that Britain is closed for business.
"We accept that a poorly informed public debate about immigration has made migration an electoral issue that politicians feel bound to respond to," John Wastnage, policy adviser at the British Chambers of Commerce, told the Huffington Post UK.
"But employers would like politicians to show some leadership in explaining that skilled workers are good for the UK, particularly at a time when the country needs to compete as effectively as possible in the global market."
Neil Carberry, the Confederation of British Industries’ director for employment and skills, agreed, adding that what employers waned was need a system that doesn't just control migration but attracts the skilled workers the economy needs, who would otherwise go to our competitors.
He added that the policy was in danger of "creating a long lasting, negative perception of Britain as a place to do business".
"Getting a firm grip on this has to be the top priority for ministers. The net-migration target is unlikely to be met by 2015, despite ongoing reforms," Carberry said.
"We are concerned that yet more short-term changes to hit this political goal risks holding back growth, deterring investment and damaging universities. Businesses need policy stability above all."
In London, the issue is particularly hitting small and medium sized businesses, who often need the skills of non-EU migrants to fill a gap which homegrown talent can't.
Colin Stanbridge, chief executive of the London Chamber Of Commerce, told HuffPost UK more than half of the capital’s smallest firms, those with 1-19 employees have either employed non-EU migrant workers in the last five years or have considered doing so.
"Often businesses take on staff for language skills or knowledge of particular markets that just doesn't exist in the home workforce. Smaller businesses need to be able to access these types of skills to grow and expand and drive the growth the UK badly needs," he explained.
"The levels of unskilled non-EU migration have been negligible for some time now, meaning that they are limited to restricting skilled and highly-skilled non-EU migration – the very sort that businesses are looking for.
"It costs a business six times more to employ a non-EU migrant that a domestic worker – in other words, they are doing it because they are accessing a different skill set, unobtainable in the domestic market. How many Britons have a significant cultural and industrial knowledge of China or India for example?"
Stanbridge also said other restrictions on migrants were needlessly putting them off coming to the UK, including:
- Tourists wishing to travel to the UK and on to other European cites, have to fill out two application forms, a large proportion of which are identical. The applicants passport is also retained for the duration of the process
- The time taken to process applications is excessive (while UKBA in China now have this down to five days on average, that is certainly not the case elsewhere)
- The time it takes for UK companies to apply for a sponsor's licence is excessive
- Many questions on the forms are overly intrusive
- Often applications are refused on the basis of misunderstandings that could be addressed with a change of attitude
- The language barrier facing applicants
- Stronger restrictions on T1 migrants (entrepreneurs)
- The abolition of the post-study work visa for students is having a massive impact on the numbers applying to British Universities
In a recent interview with the BBC, Dan Crow, chief technology officer at Songkick, said the net migration cap would hugely affect the UK's tech industry - the exact industry the government was trying to boost.
"The high tech companies around Silicon Roundabout are really affected by the immigration cap; we thrive on having really skilled workers, and our ability to grow, expand and provide new jobs in this area is very much affected by our ability to get those skilled workers," said Crow.
"If we're really going to grow Silicon Roundabout into something that is world-beating and that has a major effect on the economy, we need the best and the brightest from around the world."
Many of the business leaders we spoke to also pointed out that limiting non –EU workers would slow down the UK's economic recovery; something which was championed at the World Economic Forum in Davos, Switzerland earlier in January.
Natarajan Chandrasekaran, the chief executive of Tata Consulting Services, said improving labour mobility would help the UK's economy to recover faster.
He added that his company would be in a 'unique position' to help UK companies do this, if only his staff could get into the country. "We want to be able to help our clients but need more flexibility of labour," he said. His staff were not interested in emigrating to the UK, he insisted, they just wanted to come over, work, and then leave.
Proponents of the cap say by limiting the net migration from skilled non-EU workers we will encourage businesses to train up more home grown staff – helping to boost the economy and companies' worth.
"Businesses will always need to draw on talents from other countries, but more can be done to ensure that UK workers are equipped to fill skills gaps rather than forcing employers to recruit from overseas," acceded Wastnage, but he believes the migrant cap isn't the way to accomplish that task.
"Rather than this protectionist policy, which reduces the UK's ability to compete in the world, we would like supply-side reforms to improve the skills of the domestic workforce so that UK businesses can find the brightest and the best for their sector among UK workers," he offered.
"Business people tell us that they would like a more responsive skills system to ensure that the domestic labour market can better meet their needs."
Some businesses are already seeking to find loopholes - so-called intra-company transfers allow businesses to move overseas staff into the UK without them falling into the immigration quota - the Migration Advisory Committee said in February 2012 as many 30,000 migrants have entered Britain using this policy.
And if loopholes can't be found, our neighbouring EU countries are only too ready to offer their services. Laurent Fabius, the French foreign secretary, told listeners to radio station France Info, said that his country would "dérouler le tapis rouge" (roll out the red carpet), to businesses before prime minister David Cameron had even finished his speech.
The red carpet reference was a pertinent dig at Cameron, who used precisely the same term last year in reference to French businessmen and the new 75% tax which has been proposed by French president Francois Hollande.
HuffPost UK contacted the Home Office for comment on the issue; a UKBA spokesman said: "There is no incompatibility between economic growth and controlling migration - our reformed, more selective immigration system can achieve both.
"The UK is open for business to the brightest and best migrants and we want to ensure we remain an attractive destination for global talent."