David Prosser: In no mood to listen on immigration caps

Outlook All that said, the Government so far shows little sign of listening to the complaints of employers about its immigration policy. A row has broken out remarkably quickly, with businesses moving from an assumption that no government would implement rules so rigid they would be prevented from hiring sufficient numbers of highly-skilled workers – particularly if doing so was likely to jeopardise the growth of the private sector, or drive companies to move operations to other jurisdictions – to saying that this is exactly what has happened.

Employers had hoped theConservatives' tough talk on this subject was intended to address general public anxiety about high levels of immigration rather than to catch out companies that, for whatever reason, have discovered skill shortages in certain areas.

However, it is becoming increasingly clear that some companies are finding it difficult to cope with the system the Conservatives have introduced. We know this because Vince Cable, the Business Secretary, said so a fortnight ago. And though the Treasury dismissed his warnings, they were repeatedyesterday by the Confederation of British Industry.

A permanent cap on immigration is not due to be introduced until next year. But, mindful of the risk that people might rush to get in before then, the Government introduced an interim arrangement in July. This arrangement, says the CBI, is so inflexible that companies are already finding it difficult to keep hold of foreign staff and to recruit new specialists. It wants an immediate review of the interim cap.

This is not an auspicious beginning for a flagship government policy. The permanent arrangement may be better designed than the hastily-implemented temporary cap. But businesses like to plan ahead with certainty about the regulatory structures within which they will have to operate. The immigration cap threatens to be a drag on the UK economy's most highly-skilled companies – and on the country's ability tocompete for international companies that are seeking to employ multinational workforces.