Philip Salter is the founder of The Entrepreneurs’ Network.
Fairly or not, David Cameron will be remembered principally for his failure to win the referendum on our membership of the European Union, while Theresa May’s legacy will probably be tied up with the deal she strikes with the EU over our exit.
A lot is still up for grabs. Those still calling in vain for a second referendum would do better to concentrate their energies on campaigning to keep us in the single market. This includes a lot of tech entrepreneurs, who seem to think the weight of their desire to stay should be enough to overturn the will of the people.
Everyone knows that the extent to which we remain in the single market is critical. The supposed trade off comes in how much we will have to give away in terms of accepting the free movement of people. It’s a false trade off though (at least when it comes to the economics): EU immigrants have been good for Britain.
There is no evidence of immigrants having a negative impact on jobs or average wages; productivity impacts are believed to have been positive; immigrants are more likely to entrepreneurial; and, despite the fact that most immigrants coming to the UK from the EU weren’t selected by skill, they are considerably more likely to be highly educated than natives. The facts are clear: EU migrants are 45 per cent less likely to receive benefits and pay £1.34 in taxes for every £1 they receive in state assistance.
Of course, people might want to curb immigration for reasons other than economics, but May will now need to weigh those concerns against the substantial economic benefits of migrants.
Entrepreneurial hubs need talent to flourish. This isn’t just about a few tech companies in London; or even Cambridge, Manchester, Edinburgh and Birmingham for that matter. There are clusters of entrepreneurial companies all over the country. For example, the Octopus HGSB 2016 Urban Hub League Table ranked Cardiff third, Liverpool fourth, Reading sixth, Glasgow seventh, Milton Keynes eighth and Bristol ninth. The Northern Powerhouse initiative – which shouldn’t be dropped despite George Osborne’s fall from power – is predicated on the idea of ensuring Britain’s cities northern rise as one, but improving transport connections and devolving power won’t achieve anything without the human capital needed to make it a success.
To its discredit, the Leave campaign ran on an explicit platform of anti-immigration, which seems to have pushed politicians into believing they need to end free movement. This is despite the fact that two major polls – the first by YouGov for the Adam Smith Institute, and the second a ComRes poll for the BBC – show that the public thinks staying in the single market is more important than stopping free movement. It’s deeply ironic that the public may well be ignored on this issue at a time when the country has developed an unhealthy taste for direct democracy.
Free movement has a lot going for it – the main one being that the Government doesn’t get involved. The friction of applying for visas is prohibitive, so anything less than free movement will be bad for our economy, but there are better and worse systems that could take its place.
First, we need to keep the entrepreneurs coming. The evidence is conclusive: entrepreneurs innovate, which leads to economic growth; they also increase competition, have net positive employment effects and boost productivity. And immigrants are particularly entrepreneurial: it’s no coincidence that first or second generation immigrants have founded 40 per cent of the Fortune 500 companies.
We currently have entrepreneur visas but they require £50,000 or £200,000 investment. This doesn’t work well as a proxy for assessing the entrepreneurial skills of a migrant and creates an unnecessary hurdle for bootstrapping entrepreneurs. A start-up visa should be introduced contingent on immigrant entrepreneurs gaining endorsement from a government-approved third party – whether an accelerator, venture capital firm or other respected organisation.
But we don’t just need talented entrepreneurs; we need talented employees too. There has been a lot of talk about an Australian-style points-based system; however, if this is going to work we will need to come to terms with not cutting immigration to the tens of thousands as previously promised. To help focus immigration where there is public acceptance, a location limited visa could also be introduced. London, Liverpool, Newcastle, Edinburgh and other cities that voted to remain in the EU would no doubt welcome the powers to issue a visa for those wanting to live and work in their cities. Boris Johnson made the case when he was Mayor of London, but this could be open to all cities and regions, and would complement the devolution deals and burgeoning new mayoralties.
Access to talent is the big issue for entrepreneurs in the UK. At the Home Office, Theresa May wasn’t considered particularly liberal, but it should be remembered that it’s at least in part the logic of the role. As both Leave and Remain politicians have stressed, Britain, now more then ever, needs to be an open, outward-looking country. Keeping the doors open – or if not wide open, at least ajar – to Europe’s best and brightest has to be central to this.