Business advocates criticise immigration cap

A number of business advocates have come out in opposition to the cap on the number of workers allowed into the UK from outside the European Union that has been operating since July.

Last week, for example, UK business secretary Vince Cable told the Financial Times newspaper that there were already a number of examples of multinational companies withholding investment in the UK due to the limited availability of key skills such as “management, specialist engineers, and so on”.

Breaking ranks from the coalition government, Liberal Democrat Cable said that the interim cap, a temporary measure until a formal cap is introduced in April 2011, threatens the future of the UK economy.

“Of course, I’m part of the Government and we have a policy that we all subscribe to, which is that there has to be an overall cap on migration from outside the European Union,” he said. “Nonetheless, I am the Business Secretary and I have to represent business and the contribution that business makes to the British economy. The brutal fact is that the way the system is currently being applied is very damaging.”

Also diverging from the Conservative party line was London’s Tory Mayor Boris Johnson, who told Channel 4 news earlier in September that businesses based in the capital were “unanimous in their opposition and hostile to the proposal”. "They warn that the limit will damage small, medium and large businesses, prevent inward investment, talent and trade opportunities coming to London, and thereby materially damage London’s competitiveness,” he said.

Those concerns were echoed this weekend by Mark Elborne, European head of technology giant General Electric, who said: "Someone who is trying to run global product lines … will simply regard the UK as a more difficult place to do business. That is not just an inability to grow but it is damaging future long-term prospects. The UK simply has to stay competitive in an open, global market place."

The Confederation of British Industry said that while it “has no problem with the principle of a cap”, it had seen that the particular limitations set by the interim measure were “causing serious problems for many firms.”

Yesterday, deputy prime minister Nick Clegg supported Vince Cable’s call for a review of the immigration cap. “He was quite right as Business Secretary to say look, we have to have some flexibility and pragmatism in the way we apply any immigration policy,” Clegg said at the Liberal Democrats’ conference. “I think he’s quite right to make that case.”

Indian IT companies are allowed to bypass the immigration cap through what are known as “intra-company transfers”, wherein employees that are already on the company payroll may be relocated.

However, combined with a recent hike in the cost of migrant worker visas to the US, the cap suggests a growing antipathy towards outsourcing to companies from developing economies that could threaten them in future.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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