Some UK retailers, including Pret A Manger, have voiced concerns about the impact of Brexit. Photograph: Bloomberg via Getty Images
Britain’s blueprint for a post-Brexit immigration policy, outlined in leaked Home Office documents, would be “catastrophic” for some industries, employers have warned.
Corporate chiefs and industry leaders in sectors including housebuilding, aerospace, farming and hotels said the tighter controls could lead to labour shortages and damage the economy, as one of their biggest fears about Brexitshows signs of becoming a reality.
About 2.2 million European Union nationals work in Britain – roughly 7% of the overall workforce – with some subsectors of the economy almost totally reliant on migrants, official figures show.
Business leaders have long counselled No 10 on the need to retain access to high and low-skilled labour when Britain leaves the EU. The warning is stark from some, with EU workers accounting for more than 20% of the labour force in at least 18 specialist sectors, according to a GMB study of Office for National Statistics figures.
The hotels, retail and hospitality industries, in particular stand to lose from the reforms. Some 75% of waiters and 25% of chefs working in the UK come from other EU nations. “If these proposals are implemented it could be catastrophic for the UK hospitality industry,” said Ufi Ibrahim, the chief executive of the British Hospitality Association.
Hospitality firms need at least 60,000 new EU workers a year in order to fill vacancies, according to research for the BHA by the accountancy firm KPMG.
Peter Gowers, the chief executive of the hotel chain Travelodge, said: “Even if the hotel industry recruited virtually every person on the the unemployment register there wouldn’t be enough people to fill all the roles needed in the 10 years following Brexit. That’s particularly the case in London.”
He said the government must consult on a “meaningful guest worker programme as a matter of urgency” to avoid price rises and cuts in investment in the industry.
The leaked Home Office documentproposes offering EU migrants residency for a maximum of only two years, in a policy designed to drive down numbers. Those in “high-skilled occupations” will be granted permits to work for a longer period of three to five years.
About 4% of aerospace, defence and space industry workers are from other EU countries, while 5% of employees in these sectors working in the EU are UK citizens, with a supply chain that stretches across Europe.
Paul Everitt, the chief executive of industry trade body ADS, said: “It is important the needs of businesses who rely on employees being able to cross national borders are taken into account in the government’s final proposals.”
Downing Street faced a second embarrassing leak in 24 hours after it emerged No 10 has been asking business leaders to sign a letter supporting its Brexit strategy. The document, leaked to Sky News, was circulated to a number of FTSE 100 company chiefs with a request that they consider signing the letter by Friday.
The furious response of businesses is likely to strengthen the position of Philip Hammond, the chancellor, who has been pushing for the government to listen more to companies’ concerns about Brexit. Theresa May’s spokesman insisted on Tuesday that this engagement was already happening, saying: “Business has an important voice in the conversation taking place over Brexit and we will continue to listen to them. One of our aims is to make sure we deliver a Brexit that is as smooth as possible for business.”
Tighter immigration controls could damage economic growth, bringing potentially dire consequences for the nation’s finances. The rapid reduction in net migration to below 100,000 new arrivals to the UK each year – a Tory campaign pledge before the election – could knock 3.1% off GDP by 2025 and lower tax receipts by £32.7bn, according to research from the Centre for Economics and Business Research (CEBR).
Douglas McWilliams, the executive chairman of CEBR, said: “If you destroy the capacity for people to come here looking for work, then there will be a significant effect to the economy and a very big knock-on effect for the public finances.”
Industry sectors lined up to voice concern over the leaked proposals. “If this does represent the government’s thinking it shows a deep lack of understanding of the vital contribution that EU migrant workers make – at all skill levels – across the food chain,” said Ian Wright, the director general of the Food and Drink Federation.
The National Farmers’ Union said an abrupt drop in the number of EU workers able to work in the UK would cause “massive disruption to the entire food supply chain”. Farming produces the raw ingredients for the UK food and drink sector, worth £109bn and employing 3.8 million people.
The EEF, the manufacturers’ organisation, said it could work with the proposals for highly skilled workers but the proposals for low-skilled migrants were a “grave concern”.
Tim Thomas, the director of employment and skills at the EEF, said: “The proposals represent a mixed bag. On the highly skilled side, the system described is one we can work with, after some changes. But, we would have grave concerns that at lower skill levels accessing EU workers will be on a completely different basis.”
Thomas also warned that overseas workers may no longer want to come to the UK: “The question, currently unanswered, is whether workers other than the highly skilled will still want to come to the UK on the basis there’s no family reunion, no pathway to ever settling here, and where their stay is limited to two years.”
The CBI, which speaks for 190,000 businesses that employ 7 million people, said it was essential to keep an open approach to hiring staff from the EU so that vacancies could be filled and that overseas firms carried on investing in the UK.
Neil Carberry, the group’s managing director for people and infrastructure, said the government’s final position paper should support “an open but managed approach to immigration”.
The Institute of Directors said business leaders would not welcome the approach outlined in the leaked documents and its members would be hoping for changes in the government’s final position.
Seamus Nevin, the institute’s head of employment and skills policy, said immigration rules should be clear and simple. “The UK needs an immigration system which provides control while also enabling employers to access the foreign workers they need at all levels – whether it be short-term seasonal workers, intra-company transfers or permanent positions,” he added.
Tim Martin, the founder of the Wetherspoons pub chain and a prominent supporter of Brexit, said immigration was healthy for the economy. He draws about 5% of his 35,000-strong workforce from EU nationals, although he said tighter controls similar to Australian or US rules would be preferable. “The EU method of immigration and migration was unsustainable and was undemocratic, even though you have definitely benefited from the eastern Europeans, in particular, who have come over here in the last decade or so,” he added.
The EU referendum and Britain’s increasingly hostile stance to European workers is already having an effect on employment figures. There was a 1.1% drop in the number of workers from eight eastern European countries to 997,000 in the three months to June from the same period a year ago, according to ONS figures.
A slowdown could contribute to lower unemployment and might potentially push up wages. However, Vince Cable, the Liberal Democrat leader, said old Home Office studies showed that immigration had little impact on wages and employment.
“Overwhelmingly it has been the case that overseas workers have been complementary rather than competitive to British workers,” he said.
Rob Perrins, the chief executive of the Berkeley Group, which builds upmarket homes in London, said some of its EU workers had left because of the sharp fall in sterling since the Brexit vote. The company is heavily dependent on EU workers, who make up half its workforce.
Perrins said about 200,000 workers are needed to build housing in London to address the shortage of new homes. Steve Turner, of the Home Builders Federation, said as many as 70% of workers on some construction sites in the capital hail from abroad, mainly from within the EU.
“Clearly the electricians, bricklayers and plumbers that are coming from Europe we are very reliant on,” Turner added. “You’re going to have to define what’s skilled. House builders need labour of all sorts – skilled and unskilled.”[“Source-theguardian”]