Labour would relax immigration rules to help business growth, Keir Starmer to say

Business leaders tell Rishi Sunak to ‘open his mind’ on lifting barriers to trade with EU

Labour will relax immigration rules to boost growth in a renewed push for business support, Sir Keir Starmer is set to say, after Rishi Sunak rebuffed the Confederation of British Industry’s (CBI) call for greater access to overseas workers.

In a speech to business leaders on Tuesday, the Labour leader will put his party at odds with the government on the key battleground issue, saying his government would be “pragmatic” on migrant workers as part of a national “strategy for growth”.

But he will tell the CBI that any easing of restrictions must be matched by commitments from employers on better training, pay and conditions for homegrown staff – to end the “cheap labour” model for growth and wean Britain off its “immigration dependency”.

The head of the UK’s biggest airport group said on Monday that there was “no doubt” that Brexit had damaged the economy and had “massively exacerbated” labour shortages.

Charlie Cornish, chief executive of MAG, said the aviation sector’s ability to recruit workforce “at scale and at pace” had been harmed. “Pre-Brexit, that problem was never there.”

It comes after Mr Sunak dismissed reports the government was considering a Swiss-style deal with the EU to remove barriers to trade, which would involve a return to greater freedom of movement for workers.

After Tory Brexiteers erupted at the proposal – and Nigel Farage branded it a betrayal that would see Conservatives “destroyed” at the next election – the prime minister insisted he was “unequivocal” that under his watch the government would not pursue “any relationship with Europe that relies on alignment with EU laws”.

But business leaders said Mr Sunak should “open his mind” and recognise that the deep economic downturn forecast last week by the Office for Budget Responsibility makes a closer relationship with the EU vital for Britain.

The vice-chair of the Northern Powerhouse Partnership – former Siemens UK chief executive Juergen Maier – told The Independent: “The thing that’s so difficult for business people to understand is that ideology is getting in the way of economic pragmatism.

“We need to be able to have a conversation about alignment. A better model is fuller access to the single market, whether it’s done by EEA (European Economic Area) membership or a bespoke arrangement. It’s time to open the mind and truly listen to business.”

The chief executive of the British Meat Processors’ Association (BMPA), Nick Allen, said a Swiss-type arrangement would be a “sensible” way of removing checks at the borders.

“Sooner or later we have to confront these ideas and consider them,” he said. “We’re not seeing any benefits from Brexit and we need some new answers.”

On Monday, CBI chief Tony Danker called for more fixed-term visas to help “plug the gap” of around 1 million vacancies in the UK economy. He warned that businesses considering investing in the UK need more detail “as soon as possible” about how the PM intends to boost growth.

Speaking to the CBI, Mr Sunak said he wanted to create “one of the world’s most attractive visa regimes for entrepreneurs and highly skilled people”.

But he gave no ground on the points-based system controlling migration for lower-skilled workers, saying that his “number one priority” was tackling illegal migration.

By contrast, Sir Keir is set to tell the CBI a Labour government would be “pragmatic” on the recruitment of labour from overseas.

But he will add: “Any movement in our points-based migration system, whether via the skilled occupation route or the shortage worker list, will come with new conditions for business.

“We will expect you to bring forward a clear plan for higher skills and more training, for better pay and conditions, for investment in new technology.”

Aides said Labour would not return to free movement and would keep the system under which points are allocated to would-be migrants according to the demand for the skills they offer.

Conservative former deputy prime minister Lord Heseltine said that Mr Sunak’s comments appeared to indicate he is ready to revisit elements of Johnson’s Brexit deal.

“He is saying he has red lines, but it’s not a straight denial,” the pro-EU Tory peer told The Independent. “Any responsible prime minister concerned with the rebuilding of our economy must realise that this involves a closer and better relationship with the largest market on our doorstep.”

The vice-president of the European Movement, former Conservative cabinet minister Stephen Dorrell, also said: “Mr Sunak is clearly nervous of his right wing, but most people would regard it as self-evidently commonsensical to seek to remove barriers between ourselves and our largest market.”

The comments came as fresh evidence emerged of economic damage from EU withdrawal, as the Icelandic owners of a Grimsby seafood factory blamed Brexit, along with the Covid pandemic and Russia’s war in Ukraine, for their decision to pull out of the UK.

A prominent wine importer who relocated from Wales to France because of the additional costs imposed by Brexit red tape, said Mr Sunak appeared to be “in denial” about the impact on small firms.

“We have got a government who are just not interested in business,” said Daniel Lambert. “It is killing small businesses left, right and centre and still the government want to pretend there’s nothing wrong.”

Tina McKenzie of the Federation of Small Business said that since Brexit “thousands of small businesses have stopped trading with the EU, either temporarily or permanently”.

And she said that smaller businesses were “priced out” of recruiting skilled workers from abroad by sky-high visa fees, calling on the government to introduce a cap of £1,000 a worker to produce a level playing field.

“We would like the government to put every effort into delivering a welcoming trading environment for small businesses who import or export goods and services,” she told The Independent.

Green MP Caroline Lucas said: “Brexit has caused an economic and social catastrophe – a 4 per cent drop in productivity, 15 per cent drop in trade, a 6 per cent increase in food prices, lower wages, workforce shortages, the highest inflation in the G7.”

The government’s reaction to discussion of a potential Swiss-style deal showed it was “too wedded to a self-defeating ideology to even mention this elephant in the room”, she said.

“The Greens wouldn’t just adopt a Swiss-style deal,” said Ms Lucas. “We’d go further – our party conference agreed last month that we would seek to rejoin the EU as soon as the political situation is favourable, and the right terms are available.”

Labour MP Hilary Benn, the co-convenor of the UK Trade and Business Commission, said: “Businesses would welcome any move by the government to remove red tape and trade barriers which have been harming them and stunting growth since Brexit came into effect.

“A new deal with the EU that includes a veterinary agreement and alignment on standards - as the current Swiss arrangement does - would also do much to remove remaining sticking points over the Northern Ireland Protocol.”