Immigration overshadows economic concerns for CBI delegates

Almost exactly a year after Boris Johnson delivered a speech that featured a surprise appearance by Peppa Pig, business leaders at the CBI’s annual conference this week were grateful for signs of normalcy returning to British politics, even as the new prime minister he offered them little. way of comfort.

For many attendees, this week’s event was overshadowed by comments seen as “dog whistles” by Rishi Sun and Labor leader Sir Keir Starmer, who promised to crack down on immigration after businessmen sought visas to deal with labor shortages.

While many praised the new government’s efforts to tackle inflation and restore stability following former chancellor Kwasi Kwarteng’s disastrous “mini” budget, posts on immigration highlighted concerns about the lack of tangible pro-growth policies.

Following last week’s Autumn Statement, which saw Chancellor Jeremy Hunt raise taxes and cut spending, CBI director-general Tony Danker opened the conference on Monday and called on the government to develop a strategy to boost business confidence. This included measures to mitigate the impact of Brexit, such as fixed-term visas for foreign workers.

Andy Briggs, chief executive of insurance group Phoenix, said it was “important to control inflation and manage interest rates in reasonable areas”. But he wanted the government to do more to stimulate economic growth. “Good early start. We are starting to see the necessary regulatory change. That’s great. But other changes are also needed to bring about the flow of investment.”

Joni Rautavuori, chief executive of robotics company Tharsus in Blyth, a former Labor or so-called “red wall” seat won by the Conservatives in the 2019 election, said the government needed a more consistent approach, “it’s not there . . . the overarching theme is missing,” adding that manufacturers needed “conditions to remain competitive” globally.

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He added: “Hunt’s autumn statement had a lot of good points, but it’s all, ‘We’ll do that later.’ As a company, we say, ‘So what do we do?'”

Bosch Vonjy Rajakoba
Vonjy Rajakoba, Bosch: “We need to develop new skills. . . but to ease the immediate requirements, we need a more favorable immigration policy © Daniel Thomas/FT

Vonjy Rajakoba, managing director of manufacturer Bosch UK, said his company was holding back on making “major investment decisions”. . . for now”.

“We see uncertainties, especially on the consumer side, where we see stagnation and a deterioration of disposable income. [and also] increase in production costs.”

He said there were growth sectors in the UK – pointing to advances in hydrogen technologies – but said planning for next year was “extremely difficult” because conditions had “changed so radically after the ‘mini’ Budget.”

Peter Hogg, a partner at design and consultancy firm Arcadis, said he had to work harder to convince the firm’s Dutch investors that the UK remained a “good bet” for growth.

“As the UK division of a Dutch-based business, we had to work very hard with our Dutch investors to convince them that they should continue to focus on the UK business.”

Peter Hogg from design firm Arcadis
Peter Hogg from design firm Arcadis: “When we heard so much ambition in Sir Keir’s speech, it was a missed opportunity and he failed to be ambitious. [visas and immigration] and” © Daniel Thomas/FT

But he added: “We are cautiously optimistic. . . The UK is still investable. Our board remains committed to the UK market. But more and more questions were being asked.”

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After listening to Sun extol the government’s ambitions for R&D-intensive industries, some bosses wryly noted that his government’s most notable move in this area so far was to slash the popular R&D tax system for small businesses.

The business tax increases announced by the chancellor last week also worried other leaders. David Bunch, chairman of Shell’s UK operations, said it would “evaluate” its £25 billion investment in UK projects on a case-by-case basis because of the new windfall tax.

Leaders have expressed frustration with Sun and Starmer over their stances on immigration, with some complaining that both leaders have traditionally used the forum to engage with British businesses to send party political messages.

Anna Orr, manager of Pawprint, a software platform that helps businesses meet sustainability goals, described immigration-focused “politics” as being more for certain constituencies than for businesses.

“There are much more pressing problems to be solved. We are already seeing other consequences of Brexit. We would have liked Sunak to at least mention net zero or sustainability.”

Anna Orr from Paw Print
Anna Orr, Pawprint © Daniel Thomas/FT

A senior Labor aide admitted that Starmer’s comments about ending Britain’s reliance on immigration in his speech to the CBI on Tuesday were intended to appease voters in pro-Brexit “red wall” sessions.

“It is very important for us to improve Britain’s productivity and the easiest way to do that is to join the EU and increase immigration – which business would like – but there is no way we can do that politically,” they said.

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When asked by the FT what level of immigration he had in mind, Starmer said he preferred not to talk about “arbitrary numbers” and would rather focus on his party’s plan for British companies to invest more in local skills.

“If we do this right, immigration will decrease in some areas that are too dependent on immigration, but we will also not hold back businesses if there are innovative technologies where we need foreign talent.”

Sir Keir Starmer addresses the CBI conference
Sir Keir Starmer addresses the CBI conference © Jacob King/PA

While Starmer’s speech on Tuesday was generally better received by delegates than Sun’s 24 hours earlier, they would have preferred the Labor leader to recognize the urgent need to address short-term labor shortages.

“I fully respect Keir’s views on the need to improve skills, but this is a long-term solution,” said Darryn Gibson, chief executive of Sciensus, which employs 1,600 people in UK pharmaceutical services, adding: “There is still a short The need to address workforce shortages – yet the market pressure is enormous even at low levels of education.”

Rajakoba said of the skills gap: “We need to build new skills – and that’s working with universities – but to ease the immediate requirements, we need a more favorable immigration policy.”

Hogg says more flexibility is needed on visas and immigration for skilled jobs. “When we heard so much ambition in Sir Keir’s speech, it was a missed opportunity that he could not be ambitious in this area either.”