Business groups have warned Sir Keir Starmer that his reforms to immigration risk damaging the economy unless there is a significant overhaul of the skills system.

The Prime Minister is promising to limit the number of low paid immigrants and encourage companies to train British workers to tackle what he describes as a “broken” system.

He wants to create an immigration process that is “controlled, selective and fair”, backed by measures to train young people in a range of industries currently using high numbers of workers from overseas.

“For years we have had a system that encourages businesses to bring in lower paid workers, rather than invest in our young people. That is the Britain this broken system has created,” he said.

There is expected to be quick action to cut the number of lower skilled and care workers coming to the UK. The Prime Minister said immigrants will need to stay longer in order to claim British citizenship and will be required to pass a number of tests, including language skills.

“Every area of the immigration system, including work, family and study, will be tightened up so we have more control. Enforcement will be tougher than ever and migration numbers will fall, he said.”

The changed system will recognise “those who genuinely contribute to Britain’s growth and society, while restoring common sense and control to our borders”, he said.

“This is a clean break from the past and will ensure settlement in this country is a privilege that must be earned, not a right,” Starmer will say, adding that people who come to the UK should “commit to integration”.

Speaking to the media in Downing Street he said from 2019 to 2023 net migration “quadrupled” under the previous government, reaching a record high of nearly one million in the year to 2023.

He said this is almost the size of the city of Birmingham, the UK’s second largest city. “That’s not control, it’s chaos,” he said.

He accused businesses of bringing in low paid workers which is “not championing growth and justice. You are contributing to the forces slowly pulling this country apart.

“We need to reduce immigration. Significantly.”

However, there were warnings that the reforms will damage the economy unles they are accompanied by an overhaul of the country’s approach to training.

Recruitment and Employment Confederation (REC) chief executive Neil Carberry, said: “This major intervention in the labour market will leave many employers fearful that in tackling concerns about immigration, government goes after the wrong target.

“Being open to skilled workers supporting businesses investing here is essential. And we should remember that the private sector has not been the source of the recent growth in numbers.

“It is crucial that labour market experts from business have a regular voice in the new Labour Market Evidence Group (LMEG). This group must remain open to a flexible immigration system that responds quickly to changing market needs.

“Employers are clear: boosting training in the UK is essential, but so is a controlled, affordable and responsive immigration system that keeps investment flowing to the UK.”

The Institute of Directors said Sir Keir’s “comprehensive plan” would raise further concerns “for the many employers already struggling to access the skills they need”.

Stephen Phipson, chief executive of the industrial trade group Make UK, said it was essential that the government “recognises that manufacturers only seek overseas staff because the domestic skills training system is fundamentally flawed”.

Jane Gratton, deputy director of public policy at the British Chambers of Commerce, said the group supported the “broad direction” of the plans but warned: “It’s vital that the pace of change in the immigration system does not cut off access to global talent before the UK’s wider labour market problems are properly addressed.”

The CBI warned that further restrictions on student visas will put more pressure on university finances and add to the perception that hiring immigrants is a lazy or cheap route for employers to access labour.

“The reality for businesses is that it is more expensive and difficult to fill a vacancy with immigration than if they could hire locally or train workers,” said Rain Newton-Smith, the CBI’s chief executive.

Kate Nicholls, chief executive of UKHospitality, said: “We understand the Government’s intention to reduce migration, which comes on the back of additional restraints on hospitality last year.

“When imposing these restrictions, the Government has to bring forward an employment and skills strategy to further drive domestic recruitment.

“Hospitality recruits more than three-quarters of its workforce from within the UK and measures like apprenticeship levy reform, the introduction of foundational apprenticeships and investment in pre-employment training can allow us to go even further.

“Against a backdrop of £3 billion in additional employment costs hitting hospitality businesses, such a strategy is critical if the Government is to achieve its goal of getting more people out of welfare and into work.”

Political reaction included concern within the Labour ranks over Sir Keir’s comments about creating a “nation of strangers”. Critics pointed to parallels with the sentiments of Enoch Powell in the 1960s and his previous enthusiasm for EU freedom of movement.

Conservative leader Kemi Badenoch admitted her party got it wrong with record net migration of 745,000 in 2022, but says the idea that Keir Starmer “is tough on immigration is a joke”.

The Liberal Democrats say the immigration system is in “tatters”, and that it looks forward to scrutinising the government’s plans.

Reform UK said its strong performance in the local elections in England was due to public anger about both legal and illegal migration.

The Scottish Greens say the plan to curb international visas for workers in the care sector and other vital parts of the economy will hammer Scotland’s services.

The SNP last month unsuccessfully attempted to introduce a Scottish visa to increase the number of overseas workers able to fill key vacancies in Scotland.

Labour MPs led by Scottish Secretary Ian Murray blocked a bill by the SNP’s Stephen Gethins MP to devolve migration powers to Scotland, and introduce a Scottish visa route, to address the migration needs of Scotland’s care sector and economy. They claimed Scotland’s needs would be met within the Westminster system.

Today First Minister John Swinney described the Prime Minister’s plans as “deeply damaging” for Scotland’s economy, universities and care sector.

Starmer’s new measures include:

* Taxing universities 6% on their income from foreign students.
• Reducing the length of time foreign students can stay in the UK after graduation from two years to 18 months.
• Cancelling the visas of migrants who commit lower level offences such as prolific shoplifting or drug offences..
• Employers forced to pay more to hire foreign staff through a 32% increase in the Immigration Skills Charge.
• Migrants only able to obtain a job if it is graduate-level or above in an attempt to end low-paid migration, making 180 occupations ineligible.
• Higher English language requirements for all foreign workers, with assessments to ensure they improve. • Doubling the amount of time before migrants can apply to settle in the UK from five to ten years.
• A ban on recruiting care workers from overseas.
• Employers unable to recruit foreign workers if they first fail to invest in the domestic workforce to fill shortages.