A Cabinet revolt led by Vince Cable, the business secretary, has forced the Home Office to water down its flagship plan to cap immigration.
Executives from multinational companies and other highly paid foreigners will be exempt from the strict limits being placed on economic migrants, The Sunday Times has learnt.
Theresa May, the home secretary, will tomorrow announce a temporary cap on workers entering Britain from outside the European Union, pending a full review of the system.
“The first draft of the plan was highly bureaucratic and would have swaddled businesses in more regulation,” said a cabinet source. “But we are now satisfied that companies that want to move senior managers to this country will not in practice be hit by the cap.”
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However, another senior government source suggested the cabinet row could continue beyond tomorrow’s announcement.
“We asked the Home Office to go back and rework this plan,” said the source. “They are hitting the sorts of immigrants we want to see come to this country without bearing down on those who would contribute less to the economy. As far as I am concerned, the issue is not resolved.”
May’s plans first came in for criticism from cabinet ministers, including Michael Gove, the education secretary, and David Willetts, the universities minister, at a ministerial meeting last Wednesday.
Yesterday, Cable made it clear he shared the concerns of cabinet colleagues. The Liberal Democrat business secretary said: “The government is looking at how to reconcile an immigration cap with the need for flexibility to allow business to operate and universities to attract people from overseas.
“It is very important for the national economy that we have a flexible system. Overseas students bring a great deal of benefit to the universities sector, and it is absolutely crucial for businesses operating in Britain. The government’s objective is to reduce regulation and make it easier for business to operate.”
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Under the terms of the temporary cap, just 24,100 workers from outside the EU will be let into the country between now and next April.
A permanent system designed to meet the Conservative target of keeping annual net immigration down to less than 100,000 will be introduced next year after a public consultation.
However, critics of the proposed cap are concerned that it will not work because non-EU economic migrants account for a relatively small proportion of total immigration.