Clegg backs immigration cap rethink after firms complain

The Deputy Prime Minister risked antagonising his coalition partners by saying he "strongly agreed" with Business Secretary Vince Cable who has spoken out about problems being experienced by firms struggling to attract skilled workers.

The Government brought in the temporary cap on non-EU immigration after the general election, ahead of a permanent cap expected to be agreed later this year in line with a flagship Tory pledge.

But business leaders have pointed out that the cap was based on the demand for international workers in the depth of the recession, and Mr Cable's concerns have been backed by the Confederation of British Industry (CBI) and senior company bosses.

Asked about Mr Cable's comments during yesterday's question and answer session in Liverpool, Lib Dem leader Mr Clegg said: "He was quite right as Business Secretary to say look, we have to have some flexibility and pragmatism in the way we apply any immigration policy.

"I think he's quite right to make that case.

"I've been very clear throughout if there are clear examples where this new policy – in as much as it's already being applied – is actually producing perverse outcomes, where we're not actually welcoming people we should be welcoming in, we're actually making life more difficult for British businesses than we should be, then we should be looking at that. It would be self-defeating to do anything else."

Mr Clegg's comments are unlikely to be welcomed among Tories, with Downing Street having been keen to play down the concerns.

Mark Elborne, General Electric's national executive for North Europe which employs 18,000 people in Britain, yesterday spoke out to reveal he had been unable to hire a stem-cell research executive from India and gas-turbine engineers from outside the European Union because of the Government ban.

Meanwhile, the Lib Dems yesterday pledged to make people pay their "fair share" of tax as they unveiled plans to recoup 7bn a year currently being dodged.

Mr Clegg, MP for Sheffield Hallam, said the coalition would come down "as hard on tax cheats as on benefits cheats" as it seeks to tackle the deficit.

Funding will be made available for HM Revenue & Customs to increase criminal prosecutions for tax evasion five-fold, with a dedicated team of investigators created to catch those hiding money offshore. Private debt collection agencies will be tasked with recouping up to a billion pounds of tax debt, while smugglers and organised crime will also be targeted.

HMRC estimates that the 900m package will boost revenues by 7bn annually by 2014-15.

However, it is unclear whether the initiative will actually increase the government's current 1.2bn expenditure on tax avoidance, evasion and crime.

Officials indicated HMRC will be forced to find up to 25 per cent in efficiencies from its budgets as part of the Comprehensive Spending Review before the 900 million is injected over four years.

Chief Treasury Secretary Danny Alexander said: "There are some people who seem to believe that not paying their fair share of tax is a lifestyle choice that is socially acceptable.

"It is not. Like the benefit cheat, their actions take resources from those who need them most."

Tax evasion is estimated to cost the Treasury 7bn each year in uncollected tax revenues, and avoidance the same again.

Attacks on the tax system by organised criminals are thought to cost around 5bn.

The coalition plans to bolster registration checks to stop people claiming false tax repayments, deploy cyber teams to prevent attacks on HMRC's electronic systems, and invest in technology to detect alcohol and tobacco smuggling.

HMRC's accounts for 2009-10 said that losses from written off or remitted tax debt stood at 6.3bn.