The Government’s new immigration system “works for small businesses”, but only if costs can be kept to a minimum, an industry body has said.

According to the Federation of Small Businesses (FSB), around half (48 per cent) of business owners said they would be “unable to meet the immigration fees currently levied on employers when they hire non-EU staff”, meaning the new system should be made affordable and accessible to boost the UK economy.

The finding forms part of the FSB’s new policy report, A World of Talent. The study found that almost four in 10 (38 per cent) small businesses “struggled to recruit” staff in the past 12 months, with many of those citing “unwillingness of UK citizens to work in their sector” – placing greater importance on the new immigration system to provide a stream of workers.

This is critical in sectors such as the professional, scientific and technical services industries, of which 41 per cent of employers have “engaged EU contractors”.

The FSB also warns that the new system must accommodate the struggling social services sector, calling for a “special visa” to help address “severe personnel shortages”. According to the report, it would take more than 15 years to recruit and train the personnel needed if only UK citizens were available.

Commenting on the report, FSB National Chairman Mike Cherry said: “A points-based model can work, provided costs are kept down and systems are easy to navigate for small firms – the overwhelming majority of which have no experience of hiring a non-EU worker.

“Against a backdrop of weak economic growth, record employment and an ageing workforce, it’s critical that we get this new system right, particularly when timeframes are so tight. Otherwise, we risk business closures.”

The call comes after the FSB found that the cost of a Tier 2 visa sponsorship under the current immigration model can often exceed £3,000, a fee described as “unrealistic” for small employers.

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