Industry chiefs slam Labour policy

Labour plans to require large companies to offer a new apprenticeship place each time they hire a worker from outside the European Union (EU) came under attack from business leaders today.

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Labour leader Ed Miliband and his wife Justine take their children Daniel (left) and Sam (right) for a walk along Brighton beach on the eve of the Labour Party annual conference.

The flagship policy - which Labour believes could create 125,000 new apprenticeships over the next five years - was unveiled by leader Ed Miliband, who announced it will form part of an immigration bill in the first year of the next Parliament if he wins the 2015 general election.

But the British Chambers of Commerce denounced it as an "apprentice tax" while the Institute of Directors said it was "completely removed from reality".

The Confederation of British Industry described as "unworkable" a separate proposal, floated by Mr Miliband, for varying minimum wage rates in different sectors of the economy.

Conservatives said the apprenticeships scheme would breach EU law unless the posts were open to nationals from the other 27 member states, in which case it might drive up immigration.

'Labour left Britain with immigration chaos. They haven't apologised," said skills minister Matthew Hancock.

"Now they are demanding an unworkable apprenticeship scheme that would be illegal unless it was open to all EU citizens - encouraging more immigration. It's hard-working British people who would pay the price.'

Labour dismissed Mr Hancock's comments as "ludicrous" and said the Conservatives were putting themselves into the position of rejecting a policy which could create tens of thousands of apprenticeships.

Shadow immigration minister Chris Bryant confirmed that the posts would be open to applicants from the European Economic Area - the EU, Norway, Iceland and Liechtenstein - but said the bulk were expected to go to UK workers.

Mr Bryant said in a Tweet: "New apprenticeships exactly as now open to all EEA but in practice 99% go to local workers."

The scheme was one of a raft of policies launched as Labour's annual conference got under way in Brighton, which Mr Miliband said would help create a "high wage economy" and ease the "cost of living crisis".

The Labour leader announced he would increase fines on employers paying below the minimum wage from £5,000 to £50,000 as part of action against exploitation of migrant workers.

"In our first year in office we will legislate for an immigration bill which has secure control of our borders, cracks down on exploitation of workers coming here undercutting workers already here and says to big companies that bring in people from outside the EU that they can do that, within a cap, but they have got to train the next generation," Mr Miliband told BBC1's Andrew Marr Show.

"It's about making our economy really work for working people in our country and training up our people, that is the way to tackle our standards of living issues that so many families are facing in this country."

He added: "I do want to get low-skill immigration down and therefore overall immigration down, yes."

Aides said that the new bill also would include maximum transitional controls on workers from new EU states, "proper checks" to count people in and out of the UK, a ban on recruitment agencies hiring only from overseas and a taskforce to tackle exploitation of low-skilled migrant labour in the care sector.

But it was the proposal on apprentices which attracted fire from business. British Chambers of Commerce director general John Longworth described it as " an 'apprentice tax' on employers and job creation".

"Businesses need to be able to choose the talents and resource they need, and sometimes cannot find in the UK. This immigration benefits Britain," said Mr Longworth.

"Penalising good companies by making the grant of a work permit conditional on taking on a UK apprentice just raises business costs and new red tape."

Simon Walker, director general of the Institute of Directors, said: "Several of Labour's proposals are completely removed from reality and betray the fact that their authors can have had no experience of running a business.

"Compelling companies to take on an apprentice for every non-EU employee is a daft policy which would damage many small and medium-sized businesses just as they are starting to grow."

Mr Walker dismissed plans to hike fines for breaches of minimum wage legislation as "a laughable political gesture", pointing out that there have only been two convictions in recent years.

" If this is a serious problem then authorities should prosecute using the laws we have," he said.

Mr Miliband has appointed Alan Buckle, deputy chairman at accountants KPMG, to investigate how the role and powers of the Low Pay Commission could be extended to strengthen the minimum wage.

The Labour leader today said he wanted to see the rate "go up over time", but declined to suggest a figure.

CBI director general John Cridland cautioned: "A sectoral approach to setting the minimum wage would be unworkable and hit smallest companies the hardest.

"It's based on a completely false premise that all companies working in the same sector operate on the same margins.

"The staff of a small IT start-up might choose to forego higher wages to help get the business off the ground, surviving on wafer-thin margins. Sectoral minimum wages would favour incumbents over challengers."

Mr Miliband rejected Tory claims of a £27.9 billion "black hole" in his party's spending plans for the year after the general election.

Treasury minister Sajid Javid released analysis by Treasury officials suggesting Labour promises would require more than £1,000 extra borrowing per household in 2015.

But Mr Miliband told the Andrew Marr Show: "Let me be clear, we have said in 2015/16 that Labour won't be borrowing more for day-to-day spending.

"F rankly, I think Treasury ministers should be worrying about the cost-of-living crisis facing families and not making up things about the Labour Party."

A poll for BBC1's Sunday Politics suggested 54% of Labour councillors would oppose forming a coalition with the Liberal Democrats if the party wins the most seats but no overall majority at the next election.

Shadow environment secretary Mary Creagh told the programme: "We would never say no to going into coalition if there was a chance to be in government and repair some of the damage that's happened over the last three years."

Tony Blair's former communications chief Alastair Campbell warned Mr Miliband and his colleagues at the top of the party against any complacency and called for sharper attacks on the Tories.

He told BBC1's Sunday Politics that Mr Miliband should use the conference to "really speak to the British people about himself, about what he believes and particularly about the kind of policy agenda he is shaping for the future".

He added: "The other thing I would say to him is 'start to hit the Tories harder', because this Government is there for the taking. They are not popular, they are not competent, they are not delivering a recovery for all, they are screwing up the health service, they are screwing up the other public services ... and yet they are neck and neck.

"I would say not just Ed, the whole shadow Cabinet, the whole of the Labour party has got to understand you win elections by wanting to win elections every minute of every day.

"There's frankly too much complacency - there's too many of them who think that a small poll lead means you're going to get a small win. A small poll lead now you have to grow into a big poll lead, and you do that by energy, conviction and policy."