Lord O'Donnell: UK work permit cap is barrier to growth

01 Nov 2012 | Posted by Carl Thomas

Businesses have been saying it for some time now, but this week the former head of the civil service, Lord O'Donnell, accused the government of “shooting itself in the foot” with its immigration policies.

Writing in The Times paper, Lord O'Donnell stated that the annual limit on UK work permits for skilled employees is a “big barrier to growth”, warning that it risks depriving the country of talented people.

Across all routes of immigration, the coalition has set out to lower the level of net migration from 240,000 to a figure in the tens of thousands by 2015. Student visas, family visas and work permits have all come under scrutiny as part of these efforts.

At the moment, the annual Tier 2 work permit limit stands at 20,700. However, the government has considered lowering the restrictions on this area of immigration due to a low level of demand; a move which is likely to be welcomed by businesses.

Vince Cable, the business secretary, has already voiced his own strong opposition to the cap, which he claims damages the UK economy. Now Lord O'Donnell has also come out in favour of a change to the restrictions following the publication of a report on stimulating growth by Lord Heseltine, the Conservative former deputy prime minister.

Lord O'Donnell observed that the former deputy PM “clearly sympathises” with businesses that are currently facing problems in recruiting essential talent from overseas. “The first thing the government can do to help growth is to stop shooting itself in the foot,” he remarked.

Finally, the former head of the civil service asserted: “We cannot restate often enough that the UK has benefited from being an open economy which welcomes foreign investment.”