Limiting the numbers of non-EU skilled migrants including engineers and IT specialists coming to the UK is threatening the country’s economic recovery, the Confederation of British Industry said.
Criticising what he called the ‘unrealistic’ immigration targets, the CBI director general John Cridland said up to 20 major firms had complained about visa applications for non-EU recruits being turned away after the monthly limit was hit for the first time in June and already again this month.
He said that instead of focusing on the real problem - the bogus asylum-seekers, over-stayers, criminals, welfare-seekers and unskilled workers – interventions taken by David Cameron’s government have hit those the UK actually needs.
"Let's tackle the bits of immigration the public is concerned about but while we have challenges to productivity and education and skills, let's not let migration controls inhibit economic growth because that isn't necessary," he said.
Cridland further criticised the Home Office for its decision to end the right for non-EU students to work for up to 10 hours a week while they study in the UK and to force them to leave the country after they graduate and re-apply to work here rather than being allowed to stay for up to two years.
"If the university route is borne down on, companies will have ever bigger skills shortages," he said. "It is the wrong solution."
The 20,700 annual cap on so-called Tier 2 visas - which cover roles paying at least £20,800 and require arrivals to have at least £945 in savings and to pay a surcharge to cover healthcare - had not been breached since it was introduced in 2011.
But sustained economic growth since the recession meant it had now been reached - with a backlog set to be created as firms re-applied for permission to bring in staff from the allowed allocation each month.
The visa issue was the biggest complaint to emerge from the CBI's analysis of the new Conservative Government's first months in power - on which it gave overall a positive verdict despite deep concerns over the "gamble" of forcing firms to pay a new "living wage".
Immigration minister James Brokenshire said in June there were "no plans to change the limit" and that the Government had rather asked the Migration Advisory Committee to find ways to "significantly reduce economic migration from outside the EU".
The CBI fears that could mean the limit being tightened further despite skills shortages in sectors such as professional services, IT, science and engineering.
"Many companies depend on it (immigration of skilled workers) just as they depend on intra-company transfers and also depend on international students with strong skills working during or immediately after they have done their degrees."
There had also been "some noise" from the Government that they could include intra-company transfers - where existing employees of a firm were moved to the UK to work on specific time-limited projects - in the cap.
But these were "highly-skilled individuals" who "keep the UK at the cutting edge of high-value innovation", Cridland said.
"It is not sensible to try to restrict those people from being able to do months of work in the UK," deputy director general Katja Hall added.
"They are not going to abscond or start claiming benefits in the UK."