The Government's immigration cap has had no effect on bringing down net migration but has "counter-productive" impacts which could have caused a nursing crisis in the NHS this winter, according to a parliamentary report.
Home Secretary Theresa May was forced to step in and put nurses on a shortage occupation list in October after complaints from NHS Trusts that their inability to recruit from overseas was raising questions over safe staffing levels in hospitals.
Releasing the report by the House of Commons Home Affairs Committee, chairman Keith Vaz said the temporary move was "welcome" but the fact that a "panicked adjustment" of this kind was necessary showed that the immigration cap system was "not fit for purpose".
As part of the Government's effort to reduce non-EU migration below 100,000 a year, the cap puts an annual limit of 20,700 on the number of Tier 2 (General) visas granted to skilled workers from outside Europe with offers of jobs in the UK.
The report found that the limit, introduced in 2011, may have discouraged skilled workers from non-EU countries from coming to the UK, but has "stimulated" recruitment from within the EU. With a third of a million migrants coming into the UK each year, the limit on Tier 2 visas appeared to play "a very limited role" in reducing migration, said the committee.
Although the annual cap has not been breached since its introduction, the committee heard that "a large number" of applications from nurses with job offers in the UK were being rejected due to limits on visas issued each month. Once the monthly limit is reached, applications are subjected to a salary threshold, which the committee said was "unacceptably high" and excluded many nurses.
The monthly limit and the salary threshold made planning recruitment difficult, leading to the rejection of applications from engineers, IT professionals, accountants on graduate training schemes and teachers as well as nurses.
Mr Vaz said: "When the cap was reached earlier this year, we saw the perverse effects of the system, as the cap prioritises higher-paid jobs. In June, nurses were being prevented from working in the UK, which necessitated the Government taking emergency measures to allow recruitment to continue.
"Whilst this was a very welcome move, it is clear to see that the system could have caused a crisis in the NHS this winter. A system which encourages panicked adjustments to be functional is not fit for purpose. Nurses should remain on the shortage occupation list."
Mr Vaz said: "The Government's immigration cap does not fit, it may even be counter-productive. It is having no effect on bringing down net migration.
"The latest net migration figures show a third of a million people entered the UK last year, roughly the size of Cardiff, making the Tier 2 cap of 20,700 minimal in comparison.
"Yet it blocks the recruitment of vitally needed skills required by individual employers and the economy as a whole. When the monthly allocation is used up, employers are left with a stark choice between a nurse or an engineer. Britain must be open for business, to achieve this we need skilled workers."