Thom Norman is a public relations consultant for financial technology companies and Conservative candidate in the 2018 London Council elections in Wandsworth
The Home Secretary’s new start-up visa is a welcome acknowledgement that we can do more to attract the founders of the next generation of innovative companies. But without deeper reform of our immigration system, it is unlikely to have much real impact.
Launched as part of London Tech Week, the new start-up visa is designed to widen replace the current Tier 1 Graduate Entrepreneur visa. The Home Office is yet to announce the details of the scheme, but the main changes look to be that it will no longer be exclusive to graduates and ‘approved business sponsors’, such as a start-up incubator, will be able to sponsor applicants.
The Home Office press release also says it will make “the visa process faster and smoother for entrepreneurs coming to the UK.”
Under the current system, applicants need to be sponsored by a university or the Government. Allowing experienced investors to decide what is a good business idea, rather than leaving it civil servants or academics, is entirely sensible.
Sajid Javid has listened to the advice of UK’s technology community to make a sensible change. For that, he should be congratulated. However, making Britain’s immigration system fit for the business world of today requires far more route and branch reform.
We are currently facing significant skills shortages for Tier 2 visas. These applicants are, by definition, exactly the people we need to attract to the UK. They are skilled workers who already have a firm job offer from a UK employer which wasn’t able to fill the position domestically. They also account for a much larger proportion of foreign workers – the scheme which the new start-up visa will replace has had just 900 applications since it started five years ago.
There are only a finite number of Tier 2 visas each year and, when the cap is reached, the minimum salary a worker needs to qualify ratchets up substantially. As a result, since November, 1,946 IT workers with solid job offers have had their visas rejected, as well as 2,360 doctors.
In technology companies, especially fast-growing start-ups, hiring good workers is one of the biggest challenges and can be a significant limit on their ability to scale up quickly. It’s all very well encouraging entrepreneurs to come to the UK, but they won’t stay long if there is no one here to hire.
The fundamental problem is that we have an immigration and visa system driven by quotas and targets, not by the shifting requirements of businesses. Just as top-down state planning in the economy usually does, this leads to artificial shortages of supply.
It has also created the kind of perverse incentives which lead to Home Office officials acting with a lack of basic humanity and common sense when it comes to dealing with migrants, most dramatically demonstrated in the recent Windrush debacle.
Removing the arbitrary fixed cap on the number of Tier 2 visas would create a far more responsive labour market, enabling businesses to find the talent they need when they actually need it. That would truly make the UK an attractive place to start a tech company and could put the brakes on the trend for many of Britain’s biggest tech names outsourcing much of their development work to Eastern Europe and Asia.
Javid is right when he says that “the UK can be proud that we are a leading nation when it comes to tech and innovation”, and that the immigration system is a key part of that. But if he really wants to make a difference, our visa system needs far more concerted reform.