This article is more than 1 year old

This article is more than 1 year old

The government’s proposals for a post-Brexit immigration system will deal a “sucker punch” to the economy, leaving industry short of the migrant workforce they rely on, business leaders have said.

The plans, unveiled in the long-awaited immigration white paper, introduce a new skills-based immigration system and the end of free movement of people from the EU.

Underpinning the document is the removal of a cap on skilled workers coming into the UK and a proposed minimum £30,000 salary threshold, which has been put out to a 12 month consultation.

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The Confederation of British Industry (CBI) said the main blow to business was that people earning below £30,000 would only be able to stay in the country for 12 months. It has set business leaders on course for a battle with Theresa May, who has been accused of putting immigration restrictions before the economy.

“A new immigration system must command public confidence and support the economy. These proposals would achieve neither. The proposals outlined in the white paper don’t meet the UK’s needs and would be a sucker punch for many firms right across the country,” said the CBI’s deputy director general, Josh Hardie.

The financial sector, which typically employs people on higher salaries, welcomed the proposals. The City of London Corporation’s policy chair, Catherine McGuinness, said access to high-skilled workers was vital for the sector, with four in 10 workers coming from overseas.

But outside the City the proposals are causing widespread alarm. The Institute of Directors (IoD) welcomed the removal of a cap on numbers of skilled workers but said it was deeply concerned about the salary threshold.

“The white paper gives with one hand and takes away with the other. There are some useful proposals, such as removing the cap for high-skilled visas and lowering the qualifications requirement to A-level or advanced apprenticeship, but the £30,000 salary threshold is still in there for consultation, which could affect around 60% of jobs at intermediate skills levels,” said Stephen Martin, the IoD’s director general.

There are fears the £30,000 threshold would cut off the supply of workers in hospitals, the construction industry, the hospitality sector, manufacturing, agriculture and logistics where the workforce is predominantly made up of EU migrants.

There are also fears that industries outside London would suffer disproportionately because of lower wages.

Hardie said: “The facts are clear. Brexit is cutting off the ability to recruit and retain staff for nine out of 10 firms. Despite firms spending over £45bn in training each year, staff shortages are already biting. Hospitals, housebuilders and retailers are all struggling to find the people they need at salaries well below £30,000. These proposals must change.”

The Federation of Small Businesses (FSB) said the emphasis on high skills would be a “real headache” for small companies and the self-employed. Its chairman, Mike Cherry, said seven in 10 small employers relied on mid- or low-skilled staff, who could be disqualified from working in Britain under May’s plan.

“Getting this threshold wrong will cause serious disruption to the economy. With the employment rate at a record-high, small firms are already struggling to access the skills they need,” said Cherry.

Business leaders are also concerned that businesses will be thrown into immigration chaos if there is no deal, with many small to medium-sized businesses having no experience of the current points-based visa system.

“That needlessly increases costs and discourages migrants from integrating into local communicates – a key social concern. It’s not good for the public or business,” said Hardie.

The CBI said the government’s own economic analysis contained in the paper suggested the country would be poorer as a result of the proposals.

The organisation, which represents 190,000 businesses, has been waging a year-long battle against the proposed new immigration system. It has accused the government of putting its hands over its ears whenever it hears something that does not fit May’s immigration philosophy.

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“It tunes into business evidence on a disastrous Brexit no deal, but tunes out from the economic damage of draconian blocks on access to vital overseas workers,” said Hardie.

The home secretary, Sajid Javid, said the immigration proposals heralded the biggest shake-up to British immigration policy in 40 years.

Concern about the long-term social and economic impact of immigration helped drive Britain’s 2016 referendum vote to leave the EU.

Andrew Tingley, the head of immigration at the law firm Womble Bond Dickinson, welcomed the removal of the requirement for employers to demonstrate settled candidates for the job were not in place already and the change in skills grades eligible for entry.

“However, the £30,000 threshold will be incredibly problematic for a significant number of UK employers,” he said.