Philip Salter is Director of The Entrepreneurs Network.
Long gone are the days when Britain ruled the waves, but there’s life in the old world yet. Just consider our universities, which remain some of the best on the planet. However, though we can attract the world’s top students we have an immigration system that boots many of them out the moment they finish studying.
Bewilderingly, students are included in the net migration figures. So today’s confirmation of the inevitable failure of David Cameron’s target of keeping net migration to the tens of thousands can only do more harm to the case for the benefits of immigration. A sizeable chunk of the additional 260,000 people in our country are students, with the latest figures showing that there were 222,941 study visas granted, including dependants, in the year ending September 2014.
We shouldn’t be concerned. And thankfully, most of us aren’t. According to a recent ICM poll, only a fifth (22 per cent) of people think of international students as “immigrants”, while 59 per cent of people, and 66 per cent of Conservative voters, say the government should not reduce the number of international students, even if this makes it harder to reduce immigration numbers. But we should go further. Not only should we not worry about the students, we should also let the most entrepreneurial ones stay on to build a business in the UK.
In a joint report with the National Union of Students (NUS), Made in the UK: Unlocking the Door to International Graduate Entrepreneurs, we have found that our visa system isn’t supporting the entrepreneurial ambitions of international graduates.
The world is changing. An increasing number of young people want to be entrepreneurs rather than work in the professions. The Zuckerbergs of this world have redefined what young people can achieve, and our survey confirms this phenomenon – 42 per cent of international students intend to start up their own business following graduation. Sadly, only a third of these entrepreneurial students want to do so in the UK. This is because we’ve shut the door to most of them.
Today, if an international student from outside the EU wants to start a business here following their studies, they’ll need to apply for a Tier 1 (Graduate Entrepreneur) visa, which requires their university’s endorsement. This visa was introduced in 2012 to try to plug the gap following the end of post-study visa routes. However, the take-up has been woeful. This lack of interest is reflected in the sentiment of international students, with our survey showing that just 2 per cent of those intending to start a business have applied for the scheme.
Our report addresses the multiple failings of the Tier 1 (Graduate Entrepreneur) visa. Most crucially, universities are fearful about taking on the risk of endorsing students for it because they’re worried about losing their Tier 4 licence (which lets them take international students) if something goes wrong. This risk needs to be mitigated by decoupling the Tier 1 (Graduate Entrepreneur) visa from universities’ Tier 4 licence. This should be made explicit in the official Home Office guidance and in the way the Home Office applies its audit procedures for institutions.
We also recommend that UK Trade & Investment (UKTI) approved accelerators – such as those used on the successful Sirius programme – should be permitted to endorse international students in their programmes to increase the avenues for endorsement and take the risk off universities.
There are plenty of other tweaks set out in the report that would improve the system, but the one that would arguable help the most would be reinstating a post-study work visa so that international graduates can experiment before starting a business. The NUS is right in its campaign to call on the government to provide all non-EU international students with the right to work, free from restriction, for 12 months after study.
We are lucky enough to have the institutions to attract some of the best and brightest students in the world; we also have a flourishing ecosystem for entrepreneurs to make their mark. As Alex Macpherson, Head of Ventures at Octopus Investments, points out in response to our report: “The best and brightest founders are recognising that if they want to grow a global business then the UK has everything needed to make a great launching point. Governments across the globe are considering ways to encourage the smartest graduates with the most potential to root themselves in their countries to develop ideas, create jobs and ultimately build world changing companies.”
He adds: “The growth in entrepreneurship that we’re seeing in the UK, in our schools, universities and business community, along with the development of new accelerators and increased sources of venture funding has put the UK in a strong, internationally competitive position to attract and retain some of today’s most talented and entrepreneurial minds. If we want the UK to continue to develop global billion dollar businesses then we need to ensure this remains the case and do everything that we can to encourage international students with entrepreneurial ambitions to remain on our shores and start businesses here.”
But our politicians are playing catch-up with what our economy needs to maintain its successful path. Lord Bilimoria CBE, Founder of Cobra Beer and Chancellor of the University of Birmingham, has written the foreword for our report. In it he sets out the political context, writing:
“As ever, it is the government’s attitude to immigration and student visas that is the most damning. Many students continue to feel a sense of alienation from the government, and we must continue to press for a more welcoming and attractive environment.” He adds: “It is also damaging that the government continues to include international student numbers within the immigration figures, although the whole notion of an immigration cap is harmful. The reintroduction of the post-study work visa for postgraduates is rightly seen as a vital policy.”
If the next Larry Page, Wu Yajun or Aliko Dangote were currently studying in the UK, the visa regime (let alone the political rhetoric) would make them feel unwanted and they would likely set up their businesses elsewhere. The UK’s success in attracting and keeping the world’s next generation of entrepreneurs is hinging on the implementation of the recommendations in this paper.