CBI urges Jeremy Hunt to relax immigration rules to ease UK staff shortages

Lobby group says failure to tackle workforce shortages would be highly damaging for the economy

Britain’s foremost business lobby group has urged Jeremy Hunt to use this week’s autumn statement to shake up immigration rules to support companies struggling with chronic staff shortages and a looming recession.

The head of the Confederation of British Industry (CBI) said urgent action was required from the chancellor on Thursday to bolster the economy, including “tough political choices” to allow more overseas workers in Britain as employers struggle with a desperate lack of staff.

With Hunt expected to offer thin gruel for businesses and individuals in an autumn statement focused on balancing the books through tax rises and spending cuts, the CBI said “cost-free” options to bolster economic growth had to be taken or businesses would “go into hibernation” this winter.

After the financial storm caused by Kwasi Kwarteng’s disastrous mini-budget, Tony Danker, the director general of the CBI, said its members agreed to “tough fiscal choices” on spending and tax. However, CBI members feared the government was not willing to face down backbench Conservative MPs on issues such as immigration and planning reform, which divide the Tory party but could support the economy.

“With fiscal and monetary policy tightening, we need many more pro-growth policies for our economy, if we’re to avoid a decade of no growth,” said Danker. The chancellor has promised to set out a plan for growth on Thursday but he said it needed to “tackle the real barriers we face right now”.

Ahead of what is expected to be an austerity budget, the lobby group which speaks on behalf of 190,000 firms nationwide, said failure to tackle workforce shortages and to encourage business investment would be highly damaging for the economy in the short and long term.

“Not matching action on spending and tax with measures to tackle labour shortages and productivity is likely to be damaging in the short and long term,” said Danker. “A desperate lack of workers is inflating wages and stopping firms growing.”

“Our planning rules allow local officials to hamper major projects we need. Our regulatory regime doesn’t do enough to incentivise investment and innovation. It is far more important to change that than partisan efforts to simply repeal EU laws which won’t make any positive difference to most firms.”

Last week Simon Wolfson, the chief executive of the clothing and homeware retailer Next, urged the government to make it easier to allow foreign workers into the UK, stating this is “not the Brexit I wanted”.

The Conservative peer and Brexit supporter said the government was blocking much-needed workers from entering the UK, even though firms were desperate for labour.

Company bosses warn that sectors including hospitality, construction, and manufacturing are suffering the worst staff shortages. The CBI said the government’s shortage occupation list, which offers easier work visas for overseas workers in specified jobs, could be expanded. Student and graduate visa routes could also be added, as well as visas linked to specific economic projects.

It comes amid signs of a collapse in business confidence after the turmoil unleashed by Truss’ mini-budget. According to a poll of 1,400 UK firms by Accenture and S&P Global, boardroom confidence fell to its lowest level in at least 13 years in October.

Industry leaders have warned that crippling energy costs are of growing concern ahead of a “cliff edge” in support next spring, when the government’s energy bill relief scheme is due to end on 31 March.

The British Chambers of Commerce (BCC) said half of small businesses would find it difficult to pay their bills when the support ends, while calling on the government to announce fresh measures to help companies with soaring costs.

Shevaun Haviland, the director general of the BCC, described it as a worrying number but said it was “even more concerning” that 4% said they would be unable to pay at all without the subsidy.

With over 5.5m small and medium-sized enterprises (SMEs) across the UK, if this was replicated on a national level, over 220,000 SMEs would be in danger, she said. “There is a cliff-edge looming, and firms will struggle to see beyond it.”

The CBI said an autumn statement on Thursday that failed to provide enough encouragement for companies to invest in capital projects and new innovation could risk “another decade” of flatlining economic performance, making a fresh round of spending cuts and tax rises more likely.

Official figures last week showed Britain’s economy took its first steps towards a potentially lengthy recession in the three months to September, while inflation is at its highest level since 1982.

In the tumult that followed the mini-budget, Liz Truss reversed her plan to cancel a rise in corporation tax next spring. The scheduled rise from 19% to 25% will now go ahead from April. However, the CBI said the damage to sentiment caused by the brief experiment with “Trussonomics” meant many global companies were choosing not to invest in the UK next year, while warning that Hunt needed to change their minds.

“Many businesses are doing their 2023 budgets right now,” said Danker. “They do see growth ahead and want to invest but fear that all signals from policymakers are warning them against doing so.”


Zoe Wood

The GuardianTramp

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