Work and Pensions secretary Iain Duncan Smith has urged businesses not to simply “fall back on labour from abroad”, but instead to give young unemployed British workers a chance.

In a speech given in Madrid he accepted that immigration plays a “vital role” in bridging skills gaps but said there were many foreign nationals in low-skilled or semi-skilled jobs that could be done by unemployed British workers.

He said: “We have to ensure that our immigration system works in the interests of Britain, enabling us to make a realistic promise to our young school leavers”, adding that the immigration system must give unemployed people “a level playing field.”

David Frost, Director General of the British Chambers of Commerce (BCC), said:

“Businesses in this country need to have a highly skilled workforce and for many firms that means employing migrants. Employers need staff who can read, write and communicate properly, and our young people often lack these basic skills needed for the workplace.

“Getting more young people into work in this country doesn’t rely upon stemming the flow of skilled migrants coming to the UK. It’s about more than just additional training to get people into work. We need to provide our young people with the right skills at school in the first place, and overhaul our welfare system so it incentivises people to move into employment.

“The government is already acting to reduce the numbers of unskilled migrants coming to this country. But highly skilled foreign workers are important to our economy, and it is vital that they are allowed to enter the country so businesses can hire the workers they need.”