Business alarmed over visa crackdown

British business leaders reacted with concern on Tuesday after the government announced it was raising the salary threshold for a skilled worker visa to £38,700 from next April.

Image of passport UK Visa aeroplane
The new figure is some £4,000 above average salaries in the UK and represents an unprecedented increase on the current threshold of £26,200. Only health and social care workers will be exempt from the new income minimum, but they will now be banned from bringing dependants into the country.Prime Minister Rishi Sunak felt obliged to act after right-wing Conservative MPs' anger over revised figures last month that showed net migration last year had soared to a record 745,000. The government believes the new measures could lop 300,000 off that total.Immigration Minister Robert Jenrick - who was to resign later in the week over controversial plans to deport illegal immigrants to Rwanda - claimed on Times Radio on Tuesday that the clampdown on immigration would actually benefit the UK economy."We believe that this will be good for the economy because it will encourage employers in particular, to invest in their own workforce, raising skills levels, investing in technology and efforts to improve their productivity. It will help more people off welfare and help those who are economically inactive," he said.

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But industry bosses disagreed at a time when job vacancies in the UK remain close to a million and companies are repeatedly reporting difficulties in finding the skills they need.Neil Carberry, chief executive of the Recruitment and Employment Confederation (REC), said the new restrictions "will send the wrong signal around the world".He added: "They are wholly disproportionate, given that immigration for work in the private sector is such a small part of total immigration.“From world-leading universities to globally competitive firms, attracting people to the UK for work and study is a benefit to growth and prosperity here. And it helps to solve shortages – as the government must know, given that health and social care are the heaviest users of our expensive work visa system.“But while firms have to pay the price, the government chooses to exempt itself from the new threshold. One rule for business, another for the public sector in health and care will not go down well with those in industry.“It is time for politicians to be more open about these trade-offs. Given the recent trend in wages, some uprating of the salary threshold would have been sensible – but such a large rise is likely to negatively affect smaller firms and those in regions farther from London."Alexandra Hall-Chen, principal policy adviser for sustainability, skills and employment at the Institute of Directors (IoD), said the government's announcement would "cause concern among businesses already struggling to recruit the labour they need".She said: "We know that skills and labour shortages continue to be one of the top pain points for businesses in the UK, with 39 per cent of business leaders citing skills shortages as negatively affecting their organisation in a November IoD poll.“Continued tightness in the UK labour market is feeding inflation and is a key reason that interest rates remain high. Without measures to increase domestic labour supply, policies designed to restrict businesses’ ability to hire overseas workers risk worsening inflation and holding down economic growth.”Matthew Percival, future of work director at the Confederation of British Industry (CBI), said that businesses supported the government's focus on productivity growth as the long-term answer to labour shortages.“However," he added, "inflation-busting increases to minimum salary requirements and charges won’t address the shortages that are currently holding back business investment and growth.“Businesses strongly support the Shortage Occupations List and, if used correctly, it remains an important tool to help reduce acute labour gaps. They will also back the government’s decision to close the loophole that could allow firms to use foreign labour to undercut the salaries of UK workers.“An honest conversation about immigration would focus on how visa rules best support economic transformation and sustainable growth, beyond short-term fixes.”Madeleine Sumption, director of the Migration Observatory at Oxford University, described the decision to raise the income threshold to £38,700 as "the biggest surprise of the day" and could have the most significant impact on individuals.“This threshold determines whether British citizens can bring a foreign partner to live with them in the UK, and the level has been more than doubled,” she said.“Family migration makes up a small share of the total, but those who are affected by it can be affected very significantly. The largest impacts will fall on lower-income British citizens, and particularly women and younger people who tend to earn lower wages.”Even Prof Brian Bell, who chairs the government's independent Migration Advisory Committee, said industries could face further recruitment problems because of the visa changes.He told Times Radio: "I think we’re going to see quite a lot of what you might describe as middle-skilled jobs that are going to struggle."Social care will still be allowed to employ people at lower wages - the big change is workers won’t be able to bring their dependants with them, and that’s a fundamental change."Kate Nicholls, chief executive of trade body UKHospitality, feared her industry stood to be particularly badly hit. "These changes will further shrink the talent pool that the entire economy will be recruiting from, and only worsen the shortages hospitality businesses are facing," she said."We urgently need to see an immigration system that is fit-for-purpose and reflects both the needs of business and the labour market. The system at the moment does none of that."

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