I am guessing that not many of us would have predicted how 2020 would begin, and certainly not the impact these first five months would have on our lives, businesses and the economy.
Brexit happened in January, but that has been eclipsed (for the time being) by the Covid-19 pandemic. This has brought into stark reality the need for the UK to bounce back and, in particular, the potentially negative effects of a change in the immigration rules that occurred in March 2019.
Out with the old way
Last year, the UK Government removed the Tier 1 (entrepreneur) visa for new applicants and replaced it with the ‘Start-up’ and ‘Innovator’ routes. This change reflected the Governments focus on a more highly skilled work force and, above all, a focus on Tech and innovation as the future of the UK.
It is worth reminding ourselves that the Entrepreneur visa allowed anyone with a genuine commercial idea to come to the UK to set up their business, invest a minimum of £200,000 (or £50,000 in an existing UK business) and create at least two jobs for people in the local market. Let’s also not forget that this initial investment led to more indirect spending on property, school fees, and other such items.
There were no real restrictions to the commercial ideas, except certain property businesses, which led to a very varied base ranging from specialist coffee shops to manufacturing businesses.
Whilst no-one can argue the old Entrepreneur route had its problems and needed a certain amount of revision, the change in the rules has significantly impacted the number of overseas entrepreneurs establishing their businesses in the UK.
A change in focus
The Governments findings from the review of the Entrepreneur Visa led to more emphasis on the economic viability and trading activity from the start-ups, resulting in more defined expectations in terms of performance.
Again, a good idea in principal but the government’s new policy requires evidence of ‘innovation’, (and realistically how much innovation can there be?) together with the introduction of an Endorsing body to evaluate and monitor the businesses progress. Engagement with these bodies has proved difficult and another barrier to investment.
The end of the overseas entrepreneur?
The result has seen the overseas entrepreneur market effectively end and has stopped genuine businesspeople establishing themselves in the UK, with the subsequent loss of investment in the economy and job creation.
To put this into perspective, there were over 5,000 Tier 1 visa’s granted in 2018, compared with 15 innovator visa applications between April and December 2019.
Where does it leave the UK?
So, I believe the Government is missing a huge opportunity and the policy to reduce immigration may have taken too much of a blanket approach and directly reduced the type of immigration the UK needs.
In a time where Brexit was already restricting external investment into the UK together with the impact of the Coronavirus pandemic, the UK could benefit from rethinking the Entrepreneur route.
There are significant numbers of overseas individuals are looking to set up genuine and economically viable ventures in the UK, which will create jobs, both high and low skilled, investment in housing and other goods and services, which would help boost the economy.
So why are we turning these people away?
Richard Naylor is the Joint Managing Partner of Queensbury, a multi-disciplinary professional services firm and specialises in advising overseas entrepreneurs to grow and expand their business, including those looking to set up outside their own countries, including the UK.