Policy 1: Ensure that the Start Up and Innovator Visas are implemented successfully
In collaboration with The Coalition for a Digital Economy (Coadec), we have produced a manifesto to make Britain the best place in the world to start and grow a business. It features 21 policies across three key policy areas: access to talent, access to investment, and regulation. Over December, we’ll be sharing one policy every day. To read the full manifesto, click here.
International talent is the driving force behind the UK’s startup success story. While just 14% of UK residents are foreign-born, 49% of the UK’s 100 fastest-growing startups and 11 out of the UK’s 16 startup unicorns (pre-IPO startups with a valuation of over $1bn) have at least one foreign-born co-founder. There is an overwhelming economic case for keeping the UK open to international entrepreneurial talent.
The Tier 1 Entrepreneur and Graduate Entrepreneur visas were bureaucratic, badly promoted, and not fit for purpose. The government was right to replace them with the new Innovator and Start Up visas giving incubators, accelerators, and venture capital firms a key role as external endorsing bodies. However, serious flaws in the implementation of the Innovator and Start Up visas risk making it even harder for foreign entrepreneurs to create jobs in the UK.
At the time the previous Tier 1 Entrepreneur visa route was closed, there were no endorsing bodies ready to accept applications, and only one of the 30 initial endorsing bodies had any information about the visa on their website. This created a situation where the UK was, briefly, the only major developed economy without an entrepreneur visa route. In the first quarter since the Innovator visa route opened just two applications were successful. At least four of the initial 30 endorsing bodies have already dropped out.
There are two major flaws in the implementation of the Innovator and Start Up visas. First, the requirement for endorsing bodies to receive approval from two different government departments has delayed endorsing bodies from being able to accept applications. This additional requirement was announced after the scheme had been live for 2 months and without any pre-warning, after a number of bodies had already submitted applications to become endorsers. Second, endorsing bodies are unable to charge immigration fees, despite the fact that in order to endorse an applicant, the endorsing body must input several hours of work in assessing the business plan, alongside other costs.
If endorsing bodies are unable to charge fees, they will only have a financial motivation to endorse an applicant if they are taking loan or share capital in the new business. In practice, entrepreneurs who have their own capital, or capital from organisations other than the small pool of pre-approved endorsing bodies and don’t want to give up additional equity will find it difficult to enter using this route.
Alongside resolving the issues mentioned, the Home Office should also collaborate more with Local Enterprise Partnerships, cities, and business groups to ensure that sponsoring organisations have a wider geographic and industry spread so they better represent the UK’s entrepreneurial ecosystem.