The UK proposals could create a series of hurdles for lower-skilled EU migrants © Si Barber/FT

British businesses reliant on low-skilled labour have pushed back forcefully against a leaked Home Office plan to make it much harder for Europeans without specialised abilities to move to the UK after Brexit.

The draft paper, which is dated August 7, suggests the UK could create a two-tiered visa system that would throw up hurdles for lower-skilled EU migrants, including shorter residency permits of up to two years, and an income threshold.

The creation of new limits on manual workers would hit the UK’s agricultural, hospitality and manufacturing sectors particularly hard.

An analysis by the Resulution Foundation think-tank found EU nationals account for 31 per cent of the workers in food manufacturing, 21 per cent of those in hotels and other accommodation, 16 per cent of those in agriculture and 15 per cent in warehouses.

Laurence Olins, chairman of British Summer Fruits, the trade body representing UK soft fruit growers, said the Home Office plan “fails to mention enough about the impact Brexit will have on seasonal labour”, which includes thousands of workers from central and eastern Europe.

“We want government to recognise the urgency of getting a system in place,” Mr Olins said. “We must have a solution to this issue by the end of the year, to allow us to recruit seasonal workers for the next season.”

There are about 2.3m EU citizens working in the UK, accounting for about 7 per cent of the workforce. They span both ends of the labour market, with 23 per cent of EU migrants in “elementary occupations” and 17 per cent in “professional occupations”.

Employers who rely on EU nationals for highly-skilled positions were less concerned about the proposed revisions to the immigration system, with the new visa requirements similar to those used to hire managers and professionals from non-EU countries, like the US and other developed economies.

“On the highly skilled side, the system described is one we can work with, after some changes,” said Tim Thomas, head of employment and skills at the EEF manufacturers’ organisation. “The question . . . 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.”

But representatives of industries who are already strapped for unskilled labour said the new limits, if implemented, could have a severe economic impact

“Food and drink manufacturing, Britain’s largest manufacturing sector, will be alarmed by the proposals,” said Ian Wright, director-general of the Food and Drink Federation. “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.”

But some business lobby groups stressed that the paper was simply a leaked draft and not a final plan.

“I think less about the blow-by-blow of the drafting process and more about the final outcome,” said Adam Marshall, director-general of the British Chambers of Commerce.

He said the most pressing issue for business was to ensure that immigration policies do not change much during any post-Brexit transition phase.

The Home Office document suggests some changes, such as shorter residency permits, would take place during an “implementation period”.

“For me the outcome must include a transition period that is near identical for businesses to now,” Mr Marshall said. “They need to be able to recruit with confidence in that transition period and they need to be able to ensure that any individual they take on during that time can stay with the business for the long term.”

Neil Carberry, a managing director at the CBI business lobby group, made a similar point.

“Businesses will look for the government’s final position paper to support an open but managed approach to immigration,” he said. “That means taking the initiative to guarantee those already here that they can stay, a transition period with limited changes so firms can plan ahead, and a final system for the EU that is simpler and more open than the complex work permit system run for non-EEA countries.”

The Institute of Directors said small companies would be particularly worried by the added requirements and bureaucracy.

“At face value, this is obviously not an approach that business leaders, especially of small and medium-sized firms, will want to see,” said Seamus Nevin, the IoD’s head of employment and skills policy. “Businesses are not the border agency. The Home Office is not ‘taking back control’ if it expects employers to do the immigration checks for them.”

Giles Derrington, head of Brexit policy at TechUK, which represents the tech industry, worried that the leaked paper might contribute to a sense that EU nationals are no longer welcome in the UK.

“We need to keep them here and they’re looking at leaving,” he told a business conference in London on Wednesday. About 800,000 EU nationals work in the British tech sector.

Colin Ellis, the chief credit officer at Moody’s, also emphasised the need to reassure foreign workers. He estimated that about half of the employees in Moody’s London office were EU nationals, saying several had expressed concern about their futures in the UK.

“That’s the kind of soft stuff that makes me nervous about retaining talent,” he said.

Additional reporting by Scheherazade Daneshkhu

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