Earlier this year, in a landmark speech on migration, David Cameron stated:
'We want the brightest and best innovators and entrepreneurs to choose Britain as the best place to start their next businesses'
The Tier 1 migration route for entrepreneurs and is intended to do just that, while its sister route, for investors is intended to attract individuals of high net worth to bring their substantial funds to the UK. The visa is currently granted to around 700 individuals a year to set up a business, with a minimum investment of £200,000 or invest a sum of at least £1 million. If visa holders meet requirements, which include meeting business milestones and residency requirements, they can apply for leave to remain and, in time, a UK Passport.
The Tier 1 route attracts experienced entrepreneurs and investors
How well is this route working? Is it attracting the brightest and best? A new report, published by the Migration Advisory Committee looks into the functioning and impact of Tier 1, using a review of evidence and interviews and email contributions from 46 entrepreneurs and investors. The research, carried out by Max Nathan and myself at the National Institute of Economic and Social Research (NIESR) and Carlos Vargas-Silva at the Migration Observatory found that the route is attracting high net worth individuals and people with a strong track record in business overseas. They are undoubtedly an asset to the UK: entrepreneurs taking part in the research had set up businesses across diverse sectors from spas to mechanical engineering, from software design to boat furnishings. Although many had been in the UK for little more than a year, they had launched products and services, hired staff and forged links with other businesses for services including marketing and accountancy.
Selection for Tier 1 should include business assessment
Although the Tier 1 route brings clear benefits to the UK, we may be failing to attract the less wealthy but even brighter stars of the future. The reason for this is that the UKBA makes decisions about entry through Tier 1 without any assessment of business potential, but almost entirely on financial resources. This means that fledging entrepreneurs without the required investment sum of £200,000 don't get a look in.
The minimum fund requirements for the entrepreneur visa of £200,000 reduces the risk that an individual does not have the financial resources behind them and therefore falls at the first hurdle. However, one consequence is that the visa attracts individuals with an established track record in business. The UK visa system is notoriously inflexible and is essentially a box-ticking, scoring exercise. Our research points to a need for greater flexibility - to attract the brightest, best but less well-heeled. This could involve an assessment of business plans and viability as part of the visa application process, carried out through coordination between the UK Border Agency and Department for Business Innovation and Skills (BIS), particularly UK Trade and Investment (UKTI). The research also found that entrepreneurs who did more research before coming to the UK and who accessed more business support appeared to be making more progress than those who did not. This also suggests the potential value of more business assessment and assistance to Tier 1 applicants and visa holders.
Migrant businesses see more red tape than red carpet
In his March speech, David Cameron also proudly claimed:
'We're rolling out the red carpet to those whose hard work and investment will create new British jobs.....the right immigration is not just good for Britain - it's essential.'
While convinced that the UK is a good place to do business, entrepreneurs felt they had not been given the VIP treatment pledged by the Prime Minister. Their experiences involved more red tape than red carpet. Business plans had faltered at the hands of banks, bureaucracy and by poor economic conditions. Particular problems were reported with banks. Far from rolling out the red carpet, banks had given the cold shoulder to some entrepreneurs who experienced difficulties and delays in simply opening a bank account. This led some to question the government's claim that Britain is open for business.
Let's ensure that Britain gets talent
So is the Tier 1 visa helping to achieve the coalition's stated aims in relation to skilled and talented migration? It is certainly attracting wealthy individuals who want to live and work in the UK for a variety of business and personal reasons. But if the aim of current UK immigration policy really is to attract the 'brightest and best' then the terms of the Tier 1 visa need revising: currently, both Tier 1 and other, more recent developments, the introduction of the visitor bond scheme, let in those with money. We all know that money talks, but it may not speak business sense. If migrants are going to continue to add to boost the innovation and wealth of the UK, policy needs to select those with the biggest talent, not just the biggest bank balances.