Prime Minister Sir Keir Starmer has reaffirmed his commitment to cutting net migration to the UK, outlining what he describes as a more ‘British approach’ to regulation—particularly in future-focused areas such as artificial intelligence (AI). But as his government pushes ahead with these curbs, business leaders are raising serious concerns about the potential impact on economic growth and the deepening skills crisis that has persistently hampered productivity.
The Institute of Directors (IoD), Make UK (the manufacturers’ organisation), the British Chambers of Commerce (BCC), and the Confederation of British Industry (CBI) have all warned that cracking down on immigration without concurrent investment in domestic skills training risks stifling growth. This comes amid a backdrop of Britain’s economy struggling with stagnating productivity and declining output in several sectors.
Under the government’s proposed changes, all visa types—including work, student and family categories—will be subjected to tighter controls as Starmer aims to reduce overall migration numbers. However, many employers are reliant on overseas talent to fill roles amid persistent labour shortages, particularly in industries such as manufacturing, construction, hospitality and care.
Alex Hall-Chen, principal policy adviser on skills and employment at the IoD, warned that “these plans risk damaging already fragile economic growth by further limiting employers’ ability to fill urgent skills gaps”. He emphasised the need for government to follow through on its commitment to better integrate the immigration system with domestic training pipelines and incentivise businesses to invest in UK-based workers.
The UK’s apprenticeship system remains a focal point of contention. Stephen Phipson, chief executive of Make UK, said “the apprenticeship levy, as currently structured, has been disastrous”, making it more difficult—not easier—for businesses to access relevant training. Introduced in 2017, the apprenticeship levy requires employers with an annual pay bill over £3 million to pay 0.5% into a ring-fenced digital account, which can be accessed to fund apprenticeships. However, many firms report difficulties in accessing or spending the funds effectively, with some £2 billion in levy contributions going unused, according to estimates from the Chartered Institute of Personnel and Development (CIPD).
Phipson urged the government to include a “clear, urgent plan to build up the UK’s technical skills base” in its forthcoming industrial strategy. “In the face of a crisis, the response must be significant, structural and fast,” he added.
Jane Gratton, deputy director of public policy at the BCC, echoed similar concerns. While she supported efforts to reduce long-term reliance on overseas labour, she warned that “the pace of change in the immigration system must not cut off access to global talent before the UK’s wider labour market problems are properly addressed.” Many firms, she said, face immediate challenges filling vacancies locally and need short-term access to the global workforce to maintain operations and growth.
Rain Newton-Smith, CBI chief executive, highlighted another pressing concern: the implications of student visa restrictions. Overseas students are a key financial pillar for UK universities and play a vital role in the broader skills landscape, particularly in STEM subjects. Curbing these numbers, Newton-Smith warned, could deepen the funding crisis in higher education and reinforce harmful political narratives about migrant workers rather than recognising their contribution to the economy. “Labour shortages can’t be solved by training alone,” she said, noting that with an ageing workforce and declining birth rates, the UK’s labour market will continue to shrink in coming decades.
The UK’s Office for National Statistics (ONS) projects that by 2050, nearly a quarter of the population will be over 65, intensifying the need for both higher workforce participation and investment in automation and new technologies to maintain productivity. In this context, many business leaders argue that access to overseas talent is not a luxury but a structural necessity for long-term competitiveness.
International comparisons further underline the UK’s lagging performance in skills development. According to the OECD, the UK ranks below average for adult learning participation, and spending on vocational education is significantly lower than in Germany or the Netherlands. Meanwhile, employers frequently cite a mismatch between what is taught in further education and the practical skills needed in the modern workplace.
As Whitehall presses forward with immigration reforms, industry leaders are calling for a comprehensive strategy that realigns immigration policy with economic reality. Without swift and coordinated reform in education, vocational training and employer support, they warn, the ambition to reduce migration could inadvertently choke off the very growth and innovation the country needs to compete on the global stage.
For further details, read: Business leaders warn immigration reforms could undermine growth without urgent training reform.
