Changes to the law will make it easier to prosecute companies who employ illegal workers, the home secretary David Blunkett has announced.

Government Response: Home Office

David Blunkett, home secretary, said: "Illegal working is a modern day slave trade run by organised criminals. It exploits vulnerable people, undermines fair business competition and the minimum wage, deprives the economy of tax and National Insurance contributions and acts as a pull factor for illegal immigration to the UK.

"The government is taking action - increasing the number of enforcement operations, enhancing the powers of immigration officers to raid business premises and investing in multi-agency taskforce Reflex to disrupt the people-smuggling gangs behind this trade. We are also reviewing the enforcement work of the Immigration Service to ensure it is given an adequate priority. Illegal working is a serious crime and we are considering whether to increase the penalty for employers who flout the law.

"But illegal working cannot be tackled by government alone, and we have been working closely with employers and unions to draw up these measures. Employers have a duty to make proper checks on employees. This change will help legitimate business keep on the right side of the law, and make it easier to prosecute those who think they can get away with employing illegal workers. Companies need to continue to play their part, and make proper checks on workers.

"In the longer term I believe that ID cards will make it possible to implement a more robust process and ensure that employers comply with the law.

"The United Kingdom needs and welcomes legitimate foreign workers who will work hard and contribute. We have expanded the opportunities for people to come to the UK to work legally to help fill over half a million vacancies in our labour market."

Party Response: Conservatives

David Davis MP, shadow home secretary, said: "Increasing penalties for hiring illegal workers are unlikely to pose much of a threat unless they are enforced. History shows us only eight people have ever been found guilty of employing illegal immigrants and where they do know illegal working is taking place they ignore it (in the example of Morecambe Bay). This is a prime example of a headline grabbing initiative which is frankly too little too late and gives no guarantee that the Home Office will actually improve on the chaotic shambles that is their current immigration policy.

"What is even more notable is that the Home Office did not allow Beverley Hughes to make this announcement even though she is responsible for this brief. Not surprising really, considering it would have been a farce to have a minister who dropped checks on dodgy businessmen, bogus students and sham marriages instructing employers to make more careful checks on who they hire.

"The home secretary is obviously sidelining her already because of the embarrassment she has brought to the government over the last few weeks."

Forum Response: Institute of Directors

Richard Wilson, business policy executive at the Institute of Directors, said: "Businesses should not employ illegal workers. It is against the law and exploits vulnerable workers. Nevertheless, it is imperative that the Home Office makes it crystal clear to employers what documents they are required to see as evidence of entitlement to work. At the same time, the government must redouble its efforts to improve the UK's border controls to make it more difficult for illegal workers to be smuggled into the UK."