26 April 2023

Passport to prosper – startups need a speedier immigration system

By Bella Rhodes

The UK is a global leader in tech because it draws to it many of the world’s most talented people who regard it as one of the best places in the world to start, grow and scale a business. London, especially, is the engine of our entrepreneurial ecosystem: it’s not just a hub for our own domestic talent pool, it exerts a magnetic pull for the best and the brightest from across the globe. 

On paper the UK’s immigration system is equipped to support the talent it attracts – a system designed to welcome high-skilled migrants to come and benefit our economy. In practical reality however, this is not always the case. 

Like saplings, startups are vulnerable in their early stages. Few survive to adulthood. Startups are time and cash poor making two of the most frequent startup-killers unexpected costs and unexpected delays. Both of these are things our immigration system regularly throws at startups. Compounding these stressors, startups are often innovating at the cutting-edge of what is possible – from AI to climate-tech – so this means the talent pool from which they can draw is very small. Often when a startup needs to make use of the visa system it will be for a business-critical hire. This means the practical functioning of the UK’s immigration system should be regarded as a fundamental ingredient to the UK’s continued tech success. 

From conversations with founders, there are three main areas that need tackling. 

Firstly, and most importantly, on average startups are stuck in the immigration system far too long. When a startup needs a crucial hire, they need that person quickly: startups don’t have the flexibility of a large corporation with an HR department that can easily deal with reams of paperwork, nor do they have the ability to rearrange projects to accommodate long delays. The Home Office has targets for applications: 90% should be decided in three weeks, 98% within six weeks and 100% within 12 weeks – but too often we speak to startups where the decisions have been delayed by three months or more. The problem is not policy intent – it is red tape and delays within the Home Office. 

Cost is also an issue startups often raise. Early-stage startups have tight cash-flows. For a standard Skilled Worker visa, the startup needs to pay £199 for registration as a sponsor, a £364 Immigration Skills Charge, up to £719 for the application itself, followed by a yearly £624 Healthcare Surcharge – then there are constant lawyer fees to ensure paperwork is in order. There are other options beyond the Skilled Worker visa that skip formal sponsorship (and its charges) but not all of these work for startups. Expanding the Youth Mobility Scheme to the US, expanding the High Potential Individual visa to include top university graduates, and reforming the Scaleup visa so that it works for the startups it was originally designed for should be urgently examined. 

Finally, awareness and understanding must be increased. While the UK’s immigration system currently offers lots of options for skilled talent, that flexibility has bred complexity. When the options are different for a cyber specialist compared to a generalist, an Australian under 30 compared to an American under 30, or a graduate from the Université Paris Sciences & Lettres compared to a graduate from the Sorbonne, it is no wonder startups are confused. And like most issues in the startup ecosystem, any problems will land on the desk of the founder: early stage startups don’t tend to have the back office functions more established and traditional companies have. Founders deal with everything. 

Innovation in the UK relies on a well functioning immigration system that founders can rely on; but right now bureaucracy and complexity are major barriers. If startups cannot easily hire talent within the UK they will go elsewhere. The intent is all there in the Government’s policy – now, we just need the delivery.

This article originally appeared in Operation Innovation, an essay collection from The Entrepreneurs Network about how to build a more innovative economy.

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Bella Rhodes is the Talent Policy Lead at Coadec.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.