Tax firms more to hire foreign staff, says Lord Wolfson

Companies that bring in migrant workers could be taxed an additional 7pc on their wages, says Next boss

Britain must introduce a “demand-led” immigration system where businesses are free to recruit overseas workers as long as they pay a visa tax, one of the country’s top retailers has  said.

Lord Wolfson, the boss of Next, is proposing a dramatic liberalisation of rules on hiring from abroad to end a labour shortage that has disrupted the supply of everything from food to fuel.

Companies that bring in migrant workers could be taxed an additional 7pc on their wages to prevent over-reliance on cheap foreign labour, the Conservative peer said.

Economists said that the proposals –- which would involve ripping up the post-Brexit points-based migration system introduced in January –- could offer more flexibility for businesses but risk being seen as an effort to reintroduce freedom of movement by the back door.

Writing in the London Evening Standard at the start of the Conservative Party conference, Lord Wolfson said: “Post-Brexit Britain can have the best of all worlds 

“We can have an immigration system that accurately gauges the number of workers, with the right skills, in the places they are most needed and ensures that overseas workers do not displace or undermine UK workers.”

The Brexit backer said ministers should allow businesses to sponsor “as many work visas as they need”.

But in return, firms would be required to ensure that overseas workers receive the same pay as UK colleagues, as well as coughing up a percentage of the foreign wage bill to the Government.

Lord Wolfson said a “small but meaningful premium” on hiring overseas workers under a visa tax would help control immigration numbers and stop them depressing wages.

The introduction of the post-Brexit points-based immigration system has coincided with severe worker shortages, exacerbated by the pandemic, as the UK moved away from a market-driven system under the EU

Paul Dales, chief UK economist at Capital Economics, said the measure effectively amounted to “freedom of movement decided by business”.

He said: “The problem with it from a government point of view is essentially unlimited immigration if businesses want it. But from an efficiency point of view, it is actually probably pretty good.

“Politicians don’t really make very good decisions on these kinds of things, but businesses do because they know that it affects their bottom line. In that sense it could be a productivity gain.”

Tony Wilson, head of the Institute for Employment Studies, cautioned that “firms may not make the decisions that you want”.

Madeleine Sumption, dDirector of the Migration Observatory at the University of Oxford, said: “The UK has only just abandoned a ‘demand-led’ immigration system: free movement.

“Introducing a visa system that allowed widespread recruitment of migrant workers into low-wage jobs is perfectly feasible – Sweden does it – but would raise some tricky implementation questions.

“The risk is that you end up with something a bit like free movement but where the workers have fewer rights.”

A Treasury spokesman refused to comment on tax policy ahead of the  Budget.

License this content