Hostility to immigrants 'is holding UK back'

Widespread public hostility to immigration threatens to undermine efforts to attract the skilled foreign workers crucial to Britain's future prosperity, the Government is warned today.

An influential think-tank says skills shortages, an ageing population and increasing demand for highly qualified workers will leave UK companies more dependent than ever on hiring abroad.

The Work Foundation challenges ministers to make greater efforts to put the case for skilled migration to a population sceptical about its merits.

It warns in a report that recruitment problems are growing for specialised computer, science and healthcare firms and that a lack of skilled employees could deter multinational companies from moving to Britain.

The Home Office this year launched the first stage of a points-based immigration system to attract the most skilled incomers.

But Katerina Rüdiger, the report's author, said the Government needed to be more proactive in promoting Britain to foreign workers and in tackling scepticism in the UK about the extent of migration.

She said: "The UK needs to be seen ... as being among the most open and attractive places for highly skilled people to want to move.

"At present, despite the hype, numbers are relatively low – only 167,000 high- skilled workers came to this country on official figures from 2005. Politicians need to actively make the case for highly skilled migration."

The report argues that the debate about highly skilled migrants is difficult to disentangle from the wider controversy about immigration. It acknowledges that politicians face a dilemma in opening the door to the most talented foreign migrants without seeming a "soft touch on controlling their borders".

The report shows Britain has 715,000 foreign workers with professional and technical skills – the third largest total in the developed world behind the US and Canada. About a quarter work in information technology. Indians are the largest group of highly skilled migrant workers, with a total of 45,000 moving to the UK in 2005. There were 25,000 Americans, 10,000 Filipinos, 8,000 South Africans and 6,500 Australians.

The report concludes: "The UK is not sufficiently tapping into the global supply of labour to an extent that it would enhance its competitiveness ... A good example is the biomedical and pharmaceutical sector, an industry in which the UK was seen as having a comparative advantage, but which is now facing severe problems connected to the availability of skills."