A recommendation to cut the number of migrant workers to the UK from outside the European Union by up to 25% a year has been met with concern by employers and other industry watchers.
The Migration Advisory Committee, an independent body tasked with recommending suitable levels for the coalition government's proposed immigration cap, proposed allowing between 37,400 and 43,700 workers with Tier One and Tier Two visas into the country each year from outside the EU.
About 50,000 workers entered the UK with such visas last year, but a cut of between 5,000 and 10,000 would mean reducing the number of visas issued by up to 80% by 2015.
The report also recommended that Tier Two visas– aimed at skilled workers with job offers – should be given priority over Tier Ones, which are given to highly skilled workers without a job offer. It likewise proposed that the criteria for awarding both should become more selective and the threshold for earnings and qualifications should be raised.
The government's aim is to cut net immigration to "tens of thousands" from current levels of nearly 200,000.
While Professor David Metcalf, chairman of the committee, admitted that the drop in migrant workers would lead to a 0.02% cut in the UK's GDP or about £6 per person, he believed "businesses would be able to cope" and could
"adjust" to the cap by upskilling British workers or improving production.
But Sarah Mulley, associate director at the Institute for Public Policy Research, warned: "The Migration Advisory Committee's analysis shows clearly how difficult it will be for the government to fulfil its promise to cut immigration substantially."
As a result, it now faced "an unpalatable choice" between introducing a policy that it knew would be "damaging to the economy and public services" or failing to fulfil a key promise to the electorate, she said.
"The MAC report concludes that these highly skilled migrants make a positive contribution to economic growth and to the public purse, which implies that implementing such drastic cuts in entry visas over the next four years would have serious consequences for the UK," Mulley continued.
MAC's conclusion that the government could only achieve its objectives by including intra-company transfers in its cap, despite recent suggestions by the Prime Minister to business leaders that they would be excluded, was also "striking", she added.
David Frost, director general of the British Chambers of Commerce, likewise warned that the government must ensure that any move to drive down net migration did not harm the UK's competitiveness.
"While we support the prioritisation of those who have a clear job offer over those who don't, we must still allow global talent into the UK. Evidence suggests that skilled migrants make a positive economic contribution to UK plc. Business has no problem with tighter eligibility criteria, but an inflexible cap could harm business growth," he said.
Maintaining flexibility to ensure employers had access to the skills they needed in the short-term until they could train up UK workers for the medium- to long-term was crucial. "The Prime Minister has said Britain is 'open for business'. Our migration policies must reflect that sentiment," Frost said.
