The government’s policy of reducing net migration to the tens of thousands continues to attract fierce debate among important stakeholders. In a recent development, a number of the UK’s most powerful technology leaders have issued a warning to the prime minister that businesses within the technology sector will suffer if the Home Office presses ahead with plans to reduce the numbers of skilled migrants entering the UK from outside the European Economic Area.
In an open letter dated 27 October 2015, over 230 start-up founders and investors warned the prime minister that cracking down on skilled migration could put Britain’s digital economy at risk.
These high-profile digital entrepreneurs, including Martha Lane Fox and the founders of Citymapper, DeepMind, SwiftKey and Unruly, signed the letter calling for a rethink of government proposals to further restrict visas for skilled workers.
This representation comes as the government’s Migration Advisory Committee (MAC) considers proposals that would make hiring skilled workers from outside Europe significantly more difficult.
The letter argues:
‘The UK has become a global tech hub thanks in large part to start-up founders, investors and employees from across the globe, including many of us who were not born in Britain but choose to invest our time and talents here.’
‘Further restrictions on skilled migrants could restrict the growth of our businesses and hurt the UK’s digital economy.’
Another stakeholder, Coadec (the Coalition for a Digital Economy), made a submission to the Migration Advisory Committee in September 2015 making a robust case to ‘save skilled migration’.
Coadec made the point that the UK has a strong digital economy, worth around 10% of GDP and contributing £180bn to the economy. The representation states:
‘We have the largest and fastest growing digital economy in the G20 and that is underpinned by a growing start-up ecosystem. As Tech City UK identified in their report last year, there are over 1.4 million people employed across the UK’s (at least) 21 clusters.’
‘British startups raised nearly £1.5bn in investment during the first half of 2015 and the UK is home to 17 of the 40 billion-dollar startups in Europe, the so called “Unicorns” (including companies like TransferWise, Funding Circle and Zoopla).’
During the election campaign in May, David Cameron made the point that the UK should be a great ‘start-up nation’. He said:
‘I want this to be the start-up nation in Europe and one of the great start-up nations of the world.’
Coadec makes the point that this is a fair and realistic ambition, but the policy environment must remain supportive for that to happen. In their start-up manifesto survey in 2014, over 60% of respondents listed the lack of talent residing in UK as one of their most pressing concerns. Similarly, Tech London Advocates found that 70% of advocates believed that a lack of talent was holding back start-up growth. Coadec ran a survey of 130 people from the tech start-up ‘ecosystem’, including 63 start-up founders, 13 investors and a range of individuals in supporting fields. Of the respondents, 97.7% indicated that UK digital startups benefit from Tier 2 migration. They make the point that a policy of restricting Tier 2 visas further would have significant knock-on impact on:
- The competitiveness of the overall UK start-up system.
- The ability of start-ups to recruit the talent they need to grow.
- The ability of startups to recruit people with relevant experience in mature start-up ecosystems (especially the US).
- The impact skilled migrants can have to help up skill the domestic labour market.
Further, 84% of respondents also indicated that a rise in salary thresholds for Tier 2 visas would have a negative impact on the technology sector.
Other prominent names who have contributed recently to this debate include the venture capitalist and government advisor, Eileen Burbidge. While she is not a signatory to the open letter to government (probably because she is now a chair of Tech City UK and therefore a government spokesperson), she is on record as being firmly in favour of skilled talent from overseas. She told the Business Insider publication that immigration and allowing UK tech firms to hire skilled talent should be a number one priority for government:
‘We absolutely need highly skilled talent. It’s difficult because obviously there is a larger political narrative which is about the stress on social services of an ever-growing population, but I think that what we can do are small measures, small things about making sure that we know where certain pockets exhibit a need or demand, and how to service that.’
Tech City UK also affirmed that 1.46 million people work in the UK’s digital economy, which represents 10% of the UK’s GDP, and is the biggest and fastest growing of the G20, set to hit 12% of GDP next year. The letter goes on to state:
‘We call on you to ensure that any future changes to the immigration system make it easier, not harder, for qualified digital entrepreneurs to come to the UK to start their business, and for growing startups to hire top international talent.’
TECH NATION VISA SCHEME
In a more positive recent development it appears that the government is prepared to make some concessions towards the technology sector in the form of the Tech Nation Visa Scheme, which has been agreed by the Home Office after various representations from the digital technology sector that the current system was not allowing the top global talent to come to the UK.
The new scheme improves the Exceptional Talent visa criteria, which were felt to be too restrictive, allowing for candidates to qualify in a number of new circumstances. These include:
- Scale up fast track – enabling UK companies to get the talent they need to scale up, including taking the company to an IPO or where the individuals have specific skills and technical knowledge.
- Exceptional promise – the previous scheme only allowed those recognised as world leading experts with successful track records or awards. The new criteria will allow the superstars of tomorrow to be endorsed and allowed to apply.
- Tech North fast track – this will fast applications for digital businesses in Hull, Leeds, Liverpool, Manchester, Newcastle, Sheffield and Sunderland: a component of the northern powerhouse initiative.
- Tech Teams – teams of up to five with a proven track record of creativity, collaboration and commercial vision will now be able to apply together.
The new scheme marks a significant development and at long last recognises the need for the tech sector to be able to access the global pool of skilled digital talent. While the scheme is limited to just 200 applicants per year and cannot therefore alleviate the major industry concerns set out above, it is a step in the right direction. The development provides an indication, at least, that the government is listening. However, in the context of the sector as a whole and its value to UK GDP, the new scheme can claim to be no more than a gesture of good will.
These specific tech sector concerns and representations to government should be seen in the context of the myriad responses from many different industry sectors to the MAC Call for Evidence. It remains to be seen how MAC will frame its recommendations to government and, more importantly, how the government will respond with policy changes in the New Year.
By Ben Sheldrick, partner, Magrath LLP.