British enterprises risk being "left in the starting blocks" by Theresa May's restrictive immigration policies, business groups warned yesterday, after the Prime Minister revealed a highly interventionist manifesto ahead of next month's General Election.
The manifesto reiterates the Conservatives' aim of cutting net migration to below 100,000, and 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.
“The Conservative manifesto has an Achilles heel," 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."
“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 on value-generating talent".
The manifesto promises a series of additional government interventions. "We do not believe in untrammelled free markets," it says.
Institute of Directors' boss Stephen Martin said the list of pledges "seeks to reach into all areas of the economy." May's determination to stick to a “tens of thousands” net migration target would come as “a huge disappointment” to firms, he said, 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 added.
The manifesto vows to strengthen the hands or regulators and consumer enforcement bodies. It promises that government would help consumer markets “work more fairly”.
But the IoD's Martin warned that May should be mindful of the extent of government intervention.
“There has to be a balance between sensible reform and the risk of hampering a company’s ability to make nimble commercial decisions,” he said.
“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.”
British Chambers of Commerce director general 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 Institute of Economic Affairs' director general Mark Littlewood said: “It’s concerning that we may be seeing the advent of a Conservative Party which fails to understand that economic and social problems are more likely to be eased by free market solutions than by increased state intervention, however well intentioned.”
The manifesto re-states May's commitment to stronger representation for shareholders, vows to probe the role of share buybacks in executive pay, and promises a consultation on strengthening the corporate governance of privately-owned firms.