Migrant clampdown is a setback for UK tech crown

Business groups say that British enterprises could be struggling with the government’s restrictive immigration policies. The Conservative party’s aim of cutting net immigration to below 100,000, commits the party to doubling the “skills charge” for employers who hire non-EU immigrants in skilled jobs. This charge will climb to £2,000 per employee per year.

Confederation of British Industry (CBI) director-general, Carolyn Fairbairn said, “In a global race for talent and innovation UK firms risk being left in the starting blocks because of a blunt approach to immigration.”

Now at the time of the election in mind, she added, “The next government can both control migration and support prosperity – it does not need to be an either-or choice.” Industry group Tech UK said the move was a “retrograde tax or value-generating talent.”

Institute of Directors’ (IoD) boss Stephen Martin said the Prime Minister Theresa May’s determination to stick to her net migration target comes as “a huge disappointment” to firms, especially when combined with the higher levy for recruitment of skilled workers. “We have been promised a ‘Global Britain’ after Brexit, but these policies are pulling in the opposite direction,” he said. The Tory manifesto vows to strengthen the hands of regulators and consumer enforcement bodies, it promises that government would help consumer markets “work more fairly”.

But Martin said May should beware the limits of government intervention. “There has to be a balance between reform and the risk of hampering a company’s ability to make nimble commercial decisions”. He added, “Similarly, interventions in the labour market must be handled delicately, with trade-offs for businesses. Any new employment regulations must be consulted on in depth to ensure that they do not have unintended consequences.”

Head of British Chamber of Commerce, Adam Marshall also criticised May’s eagerness to intervene in markets. “Over the coming weeks, business communities will want to see much more detail on how the manifesto’s pro-enterprise elements would be implemented, and their concerns on its more interventionist elements clearly addressed,” Marshall said.

The concern expressed by businesses is understandable as Britain’s tech sector is one of the great success stories. Having experienced something of a renaissance in the early part of this century, it now generates £170bn a year for the economy, a figure which has increased by £30bn in the last five years alone. But many in the sector feel its success comes in spite of, rather than thanks, to the government, whose efforts to support it have tended to extend to half-hearted promises of super-fast broadband at every budget time, and not a lot more.

Tech types could be forgiven for feeling betrayed by the Conservatives’ election manifesto. Their 88-page document may have pledged to deliver the “world’s most dynamic digital economy”, giving businesses in the sector “access to the investment, skills and talent they need to succeed”.

But raising the cost of the Tier 2 visa, which is used by many tech firms to recruit skilled workers who are not found in the UK, they have dealt a blow to these entrepreneurs.

The increase in the Immigration Skills Charge, which was only introduced in April, risks plunging a sector which already faces a skills shortage into crisis. The tech firms feel the situation is already so bad that Google, Amazon and Microsoft have all pledged free digital skills training to people in the UK. Smaller firms, which form most of the digital sector, will be badly affected by such high barriers to entry.

The manifesto promised to “equip people with the digital skills they need”. But even if that pledge leads to a tangible shift in skills it is not likely to be affective for several years as the generation currently in school starts to work its way up a career.

Britain’s tech sector has emerged as one of its great strengths in recent years, and if the government gives it proper support, it could bolster the UK’s position during Brexit negotiations.

All the more reason now for the government to give the tech industry the freedom to thrive, not hinder it with restrictions.

May denied accusations made by former chancellor George Osborne that her senior team does not support her migration policy. She responded, “People do support the migration target and what they are supporting is the view of the British people. That’s what we’re supporting.”