The government’s immigration cap must be scrapped completely, or the international competitiveness of the UK will be damaged, the Law Society warned today.

In a speech at the Policy Exchange thinktank, home secretary Theresa May confirmed that restrictions on highly skilled workers entering the UK will be tightened further. Her speech today followed a highly critical Commons Home Affairs Select Committee report on the proposed cap, which suggested earlier this week that it would not achieve the government’s objectives.

However, in what Chancery Lane dubbed ‘an encouraging move’, the prime minister announced that intra-company transfers should not be part of the annual limit.

Law Society chief executive Desmond Hudson said: ‘Tweaking the cap is going to make little difference. If anything, changing the cap limit each year will only bring uncertainty for businesses and hinder forward planning. Any cap on highly skilled workers in the UK sends the wrong message to markets across the world, putting our competitiveness at risk.

‘The world’s business community will no longer look to the UK for commercial legal services, they will look at jurisdictions that allow greater mobility and in turn have the best, specialist legal talent.

‘The fact that this week the Home Affairs Select Committee found the government is concentrating on the wrong sector of immigration to achieve its stated aim of reducing net migration shows that not only is the cap preventing the business community from climbing out of the recession, but also that it will not actually work to reduce migrants by the tens of thousands predicted.

‘It does appear that the government is beginning to see how important for the recovery highly skilled migrant workers are. Legal practices need expertise from outside the EU to supplement their already strong legal knowledge for the benefit of clients doing business overseas.

‘However, the cap remains a major stumbling block to maintaining the UK’s standing as the jurisdiction of choice for the world.’

The Home Affairs Select Committee reported earlier this week that if a permanent cap were implemented at the current temporary rate of 5%, the reduction in net migration would amount to less than 1%.