Drop the Target: Business leaders warn Theresa May migration cap will damage economy

Experts say target is 'arbitrary figure' and does not reflect recruitment needs

The Federation of Small Businesses found that one in five small firms employs EU workers, and that 59 per cent of those companies are worried about skills shortages after Brexit (Reuters)

Business leaders have warned Theresa May she will damage the economy by renewing the Government’s commitment to reduce net migration to under 100,000 a year.

Five leading business groups have told The Independent they are worried the controversial target to cut the figure – which stood at 273,000 for the year to September – to “tens of thousands” will deny companies the foreign workers they need to meet the huge challenges they face post-Brexit.

Although business groups want the Prime Minister to think again, the target set by David Cameron in 2010 looks certain to be repeated in the Tory manifesto next week.

Ms May has overruled Cabinet colleagues including Amber Rudd, the Home Secretary, who hinted at a more flexible approach. Some ministers fear the target will never be hit.

Reacting to the business criticism, a Conservative spokesman said: “Under the strong and stable leadership of Theresa May, the UK will continue to attract the brightest and best to give the economy the skills needed while bringing net migration down to sustainable levels.

“By contrast Jeremy Corbyn appears to have no plan for immigration and would put the Brexit negotiations and our economic progress at risk.”

But Josh Hardie, the deputy director-general of the CBI, said: “It is right that the UK takes control of immigration but the starting point must be the outcomes that we want for people, in work and in public services, not a single, blunt target that risks backfiring at a pivotal time for the UK economy.”

Dr Adam Marshall, the director general of the British Chambers of Commerce, agreed. He said the target did not reflect what businesses in Britain needed, and risked reducing jobs and investment.

He said: “Politicians may think a terrible idea is a vote-winner, but that doesn’t make it any less terrible.

“An arbitrary target for migration isn’t what the British people want, or what British businesses need, to navigate the challenges and opportunities of Brexit. There is a huge difference between controlling immigration, which people understand and accept, and setting an arbitrary target that damages jobs and investment.”

The Institute of Directors said such a target was a poor substitute for a proper immigration policy. Instead, Seamus Nevin, the institute’s head of employment and skills policy, said setting “arbitrary numbers” which are not linked to the skill gap would achieve nothing without the infrastructure in place to enable the target to be met.

His comments were echoed by the chief executive of London First, Jasmine Whitbread. She said: “Business understands the need for control over immigration, and is up for working with government to achieve this in a phased and realistic way. But a net migration target makes no sense whatsoever - it would be an arbitrary number and prove impossible to meet without risking serious damage to the UK economy.”

For Verity O’Keefe, the senior employment and skills policy adviser at EEF, the manufacturers’ body, the government’s target to cut net migration “by tens of thousands” has made it more difficult and costly for employers to recruit the people they need.

“If we want to prevent a skills cliff-edge, government should be opening its doors to global talent, not closing them," she said.

Chuka Umunna, Labour’s former shadow Business Secretary, slammed the government’ target as “incompatible” with businesses’ recruitment needs and called for the target to be dropped.

He said: “Businesses could not be clearer: they need the talent and hard work of Europeans to thrive and innovate. This is true of all the major sectors of our economy, whether manufacturing or science, hospitality or farming.

“The Government’s extreme target to reduce migration to the tens of thousands is simply incompatible with this. It should be dropped immediately, not least because no one thinks it is achievable and so it only serves to erode trust in the system. Ministers would be applauded for their bravery if they change course.”

The warnings from business leaders come as The Independent and the Open Britain group are running a Drop the Target campaign urging the Government to abandon its goal.

Further evidence of the need for a more flexible approach to migration after Brexit emerged in a survey of other trade groups by Open Britain.

The Federation of Small Businesses found that one in five small firms employs EU workers, and that 59 per cent of those companies are worried about skills shortages after Brexit.

Some 13 per cent with EU employees would consider moving their business abroad if there were additional barriers to recruiting in the EU.

The British Hospitality Association said that, without future EU migration, the sector would face a recruitment crisis, with more than 60,000 workers a year needed on top of the usual 200,000.

EU citizens account for 27 per cent of the workforce in the food and drink industry and provide a highly-valued solution to the skills gap.

According to the National Farmers’ Union, the sector needs EU and non-EU seasonal and permanent labour to ensure the timely delivery of high quality affordable food to consumers.

The Association of the British Pharmaceutical Industry said uncertainty was creating “the negative impression that the UK is closed to foreign workers, making it harder to market the country as an attractive destination for the talent essential to the industry.”

Free movement of labour within European borders should continue, said the Society of Motor Manufacturers and Traders, which pointed to more than 5,000 vacancies in the automotive sector.

The Wine and Spirit Trade Association said: “Any future controls on the movement of people must ensure continued access to a skilled workforce: winemakers, pickers and the hospitality sector.”