Sir Keir Starmer was accused of bringing back freedom of movement “by stealth” as Germany revealed the UK was close to agreeing a new “youth mobiility scheme”. The German ambassador to the UK has said he is “really optimistic” about the prospects of a youth mobility scheme deal being reached, following a meeting between Sir Keir Starmer and European Commission president Ursula von der Leyen.

But Shadow business secretary Andrew Griffith said: “This government by stealth is trying to take us back into freedom of movement. “They may call it a youth mobility scheme but if nobody ever gets removed at the end of their time here then its immigration by another name.

“We’ve already got an overheated market for housing, which is why these ridiculous amounts are being spent on keeping people in hotels.”

The EU is demanding that the UK sign up to a Youth Mobility Scheme giving people under 30 the right to live and work in the UK or EU as the price for the “reset” backed by Sir Keir, which could include a new defence pact, and the Times newspaper has reported that Home Office Yvette Cooper could be open to the idea of a “one in, one out” scheme.

Mr Griffith said: “I’m not sure that the answer to some of the problems we face right now is Yvette Cooper and Keir Starmer opening the borders again and getting more people to come here.”

May 19 is the date when a deal could be agreed, as the EU and UK will hold the first of regular summits designed to “reset” Britain’s relationship with the bloc following Brexit. Sir Keir will host European Council president Antonio Costa and European Commission head Ursula von der Leyen.

German Ambassador Miguel Berger told BBC Radio 4: “It would make it possible for young people with parents with a lower income to experience the possibility to work abroad, to learn a language, and we would like to have this in both directions.

“There is a very serious and dedicated preparatory work for the summit on May 19.”

Environment Secretary Steve Reed insisted there would be no return to freedom of movement. However, supporters of a youth mobility scheme insist it does not amount to freedom of movement.

Mr Reed described the report in the Times as “speculation” and told the radio station: “We’re very clear in our manifesto that there won’t be any return to the single market, the customs union or freedom of movement, and that remains our position”.