The battle between the Conservatives and Labour to show they are tough on migration risks damaging sectors that are vital to the economy, industry figures have warned. Rishi Sunak unveiled a Conservative pledge to cap visas awarded to migrant workers on Monday, promising “bold action to reduce immigration” amid pressure from a Reform party reinvigorated by the return of Nigel Farage as leader. The prime minister said the number of migrant work visas would fall each year under a Conservative government, although he did not set out a number for the proposed reduction. Speaking days after Labour unveiled its own plan to slash net migration, the shadow home secretary, Yvette Cooper, accused the government of “rehashing” failed policies. Net migration to the UK fell 10% last year to 685,000, after hitting a record high of 764,000 in 2022, according to official figures. As the war of words put migration front and centre of the election campaign, representatives of businesses that employ millions of people in tourism, hospitality, construction and manufacturing warned that politicians were failing to understand the UK’s need for migrant labour. They warned that an arbitrary crackdown could exacerbate skills shortages, constrain output and even force factories to move more rapidly towards automating some roles. “It’s headlines and it doesn’t reflect economic reality,” said Kate Nicholls, the chief executive of the lobby group UK Hospitality, which represents a sector employing 3.5 million people. She said the proportion of UK hospitality staff from abroad had already fallen from 25% to 12% since Brexit, leaving little room for further reduction. Pubs and restaurants have also been forced to reduce hours as they struggle with worker shortages. “There are labour shortages across the economy. It can’t just be arbitrary numbers or arbitrary caps.” The share of workers born overseas has risen over the past two decades from 9% of the workforce to 19%, according to figures from the Office for National Statistics (ONS). The Labour leader, Sir Keir Starmer, put forward plans to slash legal migration earlier this week, while Reform’s revivified leader, Nigel Farage, has vowed to cut net migration to zero, pilling pressure on the Conservatives and Labour. “All of the main parties are trying to outdo each other and appear tough,” said Nicholls, warning that political rhetoric risked becoming “divorced from reality”. Nicholls stressed the importance of investing in skills and helping people into employment, to ensure any long-term reduction in migration rates did not exacerbate skills shortages. “Looking at one in isolation will result in economic harm,” she said. Tourist hotspots such as the Lake District are particularly vulnerable to any crackdown, according to Gill Haigh, the managing director of Cumbria Tourism. “We’ve got a really sparse population and it’s super-ageing,” she said. “The bottom line is that even if you took every single person in Cumbria seeking work, you would not fill that gap.” She said the shortage of staff was already forcing businesses to close, or cut back services, such as reducing the number of days when they could serve food. In manufacturing, employers are likely to turn to automation if they cannot employ migrant labour rather than paying UK-born workers more, according to David Bailey, professor of business economics at Birmingham Business School. “The government has assumed restricting migrant workers will lead to higher wages and productivity but that doesn’t happen automatically. “You need an industrial strategy to boost investment and training … where we’ve got a terrible record,” he said. “Even greater restrictions [on top of Brexit] would make recruiting workers more difficult and might constrain companies’ ability to increase output. “It also means that companies would have to look at more automation. If you can’t get workers, you have to automate.” The construction sector has suffered a particularly steep drop in employment numbers, according to the Construction Products Association, driven partly by the loss of EU workers since Brexit but also by high levels of retirement among an ageing workforce that is 85% UK-born. “Immigrant labour is likely to be critical to any government that is serious about building substantially more homes as well as more and better infrastructure,” said Prof Noble Francis, the CPA’s economics director. “Training of UK workers is currently insufficient to meet even building what we were building just a few years ago, never mind what we will need to build in the future.” He said relying on domestic apprenticeships to plug the labour shortfall would require “a whole generation” to address the loss of UK construction workers. The head of public policy at the Chartered Institute of Personnel and Development (CIPD), Ben Willmott, said: “It’s important the immigration system remains responsive to the demands of the economy and is able to address key skills shortages that can prevent the delivery of key public services or hold back growth.”