UK will still lure migrants, says business

David Cameron is confident that his plan to clamp down on welfare for EU migrants will reshape Britain's labour market by making it less "magnetic" for Europe's low-paid, low-skilled workers. But the companies that hire such people are not so sure.

The overwhelming reaction from employers was relief that the prime minister did not propose to cap migrant numbers.

Even employers in the sectors that rely on low-skilled workers from abroad - such as hospitality and agriculture - believe that his plan is unlikely to have a significant impact.

Produce World supplies vegetables to retailers and employs about 800 people in its factories across East Anglia. Roughly 55 per cent of the workers come from abroad, mostly from eastern Europe. David Frost, the group HR director, said: "I don't think we're too worried" that the measures would make it harder to recruit.

His workers come to settle in the community and learn English, he said. "I don't think it will necessarily put them off - they're coming here for reasons other than just money."

Figures quoted by the think-tank Open Europe from the official Labour Force Survey suggest that about 85 per cent of EU migrants work without claiming in-work benefits within four years of arriving in the UK.

"I'm actually finding it hard to see what significant impact it would have," said Martin Couchman, the deputy chief executive of the British Hospitality Association, a sector where migrants comprise about a quarter of the workforce.

"I think people would still come - they might not be happy that they were being treated less well than UK residents - but they would probably still be better off, either because they've been unemployed in somewhere like Spain, or because they're coming from one of the eastern European countries which are poorer."

While Mr Cameron stressed the generosity of the tax credits system for families with children, it is far less generous to the typical single migrant worker. Only 4 per cent of the money spent on tax credits to non-UK families goes to in-work claimants without children.

In total, HM Revenue & Custom data show the government pays tax credits to 317,800 households where at least one adult is from another part of the EU, which costs about £2.2bn a year out of a total tax credit bill of about £30bn. That figure is likely to be much higher than the amount of money the Treasury could expect to save, since it will include money that goes to families who arrived more than four years ago.

Katja Hall, the deputy director-general of the CBI business lobby group, said she thought business would be "pragmatic" about Mr Cameron's welfare proposals, and see them as an "acceptable balance".

"Business would have been very concerned if there had been some restriction on the freedom of movement of labour," she said. "I think for business, what matters is more making sure people can still come here to work. I don't think there's been any restrictions on that."

Chris Hartfied, chief horticulture adviser at the National Farmers' Union, was more concerned - but not by the specifics of Mr Cameron's proposals.

"Whether or not someone will be put off coming to the UK as a place to work will be driven more by their perception of the UK's attitude towards migrant workers as a society, rather than as a result of these measures Mr Cameron is proposing," he said. "I think society's attitude towards migrants might be the thing that starts putting people off coming to work in the UK, and I think that's a concern."

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