Yesterday the Government released its long-awaited Innovation Strategy. It makes the right noises on issues like science funding and regulation, though is so far light on detail. One policy announcement, however, really stands out: immigration reform.
As my colleague Sam Dumitriu tweeted, the Government has gone further than few expected, with the creation of the High Potential Individual visa route.
The High Potential Route is (potentially) truly revolutionary. It will mean that people who’ve graduated from a top global university will be able to come into the UK without the requirement of a job offer. This would be an open door to the sorts of entrepreneurs identified in our influential Job Creators report, who when we last looked were behind half of the UK’s fastest-growing startups.
The scale-up route is also worth mentioning. It will allow scaleups – that is, companies that can demonstrate an annual average revenue or employment growth rate over a three-year period greater than 20%, and a minimum of 10 employees at the start of the three-year period – to get a fast-track verification process for their employees.
The Strategy also promises to revitalise the Innovator route, by simplifying and streamlining the business eligibility criteria; fast-tracking applications whose business ideas are particularly advanced; scrapping the requirement to have at least £50,000 in investment funds; and removing the restriction on doing work outside of the applicant’s primary business.
While people will tell you otherwise, Brexit was fought and partially won over immigration concerns. That seems incredible now. And while some might argue that the High Potential Route won’t offset the loss of free movement, a pretty strong argument can be made that they’re getting close. (Incidentally, we have a few other ideas in our recent essay collection with the Tony Blair Institute.)
More broadly, the Strategy aims to support businesses that want to innovate; attract the world’s best innovation talent to the UK; ensure innovation institutions serve the needs of businesses and places across the UK to spread prosperity; and stimulate innovation to tackle the major challenges faced by the UK and increase the our capabilities in strategic technologies. This reflects our own policy priorities and way of thinking.
But while the framing and analysis of the challenge is first-rate, we won’t know the ‘Innovation Missions’ – which aim “to set clear direction, urgency and pace on the issues confronting the UK that we want to tackle with the private sector in the coming years” until a new National Science and Technology Council has been created.
And while we now know the seven pillars that government is going to focus upon – Advanced Materials and Manufacturing; AI, Digital and Advanced Computing; Bioinformatics and Genomics; Engineering Biology; Electronics, Photonics and Quantum; Energy and Environment Technologies; and Robotics and Smart Machines – there is still a lot to be worked out.
Still, we can't fault the immigration announcements. At least, not yet.
Page the Treasury
After John Spindler of Capital Enterprise raised the problem months ago, we’ve been keeping an eye on early-stage funding. We’re not the only ones. SFC Capital and Beauhurst have just released a new report showing that the number of first-time funding rounds into UK seed-stage startups declined for a second consecutive year. There were 1,427 first-time seed-stage deals completed in 2020, down 17% from 2019’s 1,715, and a 36% drop from the 2,055 completed in 2018.
Commenting on the decline in City AM, Stephen Page said: “some of this decline can be attributed to the impact of Covid-19 in 2020, from dented confidence to changes to the investment landscape and founders’ priorities caused by the Government’s introduction of the Future Fund and other financial relief programmes. But only some.”
Page calls on the Government to focus on SEIS reform, increasing the amount of public money allocated to seed-stage funds, and simplifying bureaucracy for early-stage fund managers.
Over the years we’ve undertaken a lot of work supporting SEIS and EIS and reforms to the processes. We've also been very supportive of the work of the EIS Association. If you’re interested in getting involved in this policy area, we have a virtual roundtable with Stephen Page in September as part of our Something Ventured programme with FieldHouse Associates at which we will discuss this. Just drop us an email with a line or two about why you want to attend.
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