Chief Political Correspondent
The Home Secretary was last night resisting pressure to retreat on the Asylum and Immigration Bill after being warned by business leaders and a Cabinet minister that it was potentially racist.
Michael Howard was seeking to overcome the criticism by Gillian Shephard, Secretary of State for Education and Employment, that the plan to fine employers of illegal immigrants could lead to racial discrimination.
The strength of an attack by the British Chamber of Commerce last night intensified the pressure to shelve the Bill. Warning Labour would oppose the legislation, the Government was accused by Jack Straw, shadow Home Secretary, of "playing the race card".
Mr Howard had to postpone the publication of the Bill until the end of the month to resolve differences disclosed in a leaked Whitehall memorandum by Mrs Shephard.
Its fate will be decided by a meeting of the Cabinet EDH Committee, on economic, domestic and home affairs issues, chaired by Tony Newton, Leader of the House, after next week's Tory party conference.
Mr Howard has already watered down the proposals in the face of criticism from business, by dropping plans to require employers to carry out checks on immigrants. However, he is proposing legal sanctions against employers, which Mrs Shephard said would lead to companies being less ready to recruit ethnic minority staff.
Business leaders said they thought it had been abandoned, but the disclosure that a scaled-down Bill was still being prepared threatened fresh opposition from the Institute of Directors, the CBI and the British Chambers of Commerce.
Richard Brown, the deputy director-general of the British Chambers of Commerce, said it could "give rise to allegations of racism", if employers were required to check on people they suspected of being illegal immigrants. He said the problem of illegal immigrants had never been raised by the chambers. "We really don't see it as being a crucial matter."
Whitehall sources said the objections raised by Mrs Shephard were "not insurmountable" and the proposed Bill could still go ahead. Mrs Shephard told Mr Howard in her memorandum she agreed in principle with deterring illegal working. But she wrote: "There is a danger that employers will concentrate checks on prospective employees whom they see as a risk, if not simply exclude them from consideration for the job."
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