Is our immigration policy attracting the ‘brightest and best’ entrepreneurs to the UK?
UK immigration policy has been increasingly focused on high-level skills and enterprise, supported by frequent statements about attracting the ‘brightest and best’. The Tier 1 migration route for entrepreneurs and is intended to do just that, allowing entry to individuals with £200,000 in their own business, while the Tier 1 investor route is intended to attract individuals of high net worth to the UK through investments of £1 million or more.
Research just published by the Migration Advisory Committee carried out by NIESR and the Migration Observatory at Oxford University looked into the functioning and impact of the Tier 1 entrepreneur and investor visa through an evidence review and responses from 46 individuals. We found that despite limited support, unfavourable economic conditions and pressures to perform to achieve visa renewal, many migrant businesses are performing well. Our report recommends some changes to make the route more open to the brightest and best, with smaller upfront financial resources.
The UK is attractive to migrant entrepreneurs and investors because of our location within European markets and to other key business and trading centres, language, time zone, ease of set up, business opportunities and support and supply of skills. Other factors include good schools, culture and lifestyle, the people, diversity, the arts, rule of law and, perhaps surprisingly, the weather.
Tier 1 visa holders taking part in the research had set up businesses across diverse sectors, including engineering, IT software, web-design, retail and the leisure industry. One young entrepreneur had set up a business designing fixtures for yachts. But, for many entrepreneurs, setting up in the UK was not plain sailing. Business plans had faltered at the hands of banks, bureaucracy and by the economic recession. Earlier this year, in a keynote speech on immigration, David Cameron promised a ‘red carpet to those whose hard work and investment will create new British jobs’ but many who participated in the research had encountered red tape rather than a red carpet. Particular problems were reported with banks, which individuals had approached to open current accounts and for loans such as mortgages. Many of those who took part in the research had experienced difficulties and delays in simply opening a bank account, leading them to question whether the UK is open for business.
Despite these problems, and the relatively short period of time that many respondents had been in the UK, it was apparent that many were achieving some success, generating new products and services, recruiting staff, hiring freelance staff and consultants and contracting out production and service delivery. A number of businesses had hired highly skilled professional staff in areas such as IT and marketing. A number had recruited local people and others were planning to do so.
Our research focused on the successful applicants, although we were able to include some who had not obtained a visa or who had returned home. These included a business which had based its model on misleading research and a restaurant franchise which became surrounded by boarded up shops when recession its High Street location. Those businesses that fared the best included those who had taken up business advice, from organisations such as UK Trade and Investment (UKTI) and Scottish Enterprise, pointing to the value of such help for new businesses.
It was also clear that our sample of 46 who took part in the research included very few fledgling entrepreneurs, with most having achieved success in their home countries, allowing them to raise the necessary £200,000 funds (a lower investment is possible, but involves securing UK investment in advance).
While a valuable route for attracting entrepreneurial talent and high net worth individuals to the UK, there is a case for lowering the bar, to allow budding entrepreneurs without access to the high level of funding required, particularly when their businesses do not need such investment. This could be ensured by including an assessment of business plans and viability within the application process, for example through partnership between the UK Border Agency and the Department for Business Innovation and Skills (BIS), particularly UKTI. We all know money talks, but it may not speak business sense. If we want migration to help us achieve economic growth we need to attract those entrepreneurs with big ideas, not just big bank balances.