Introduction

The government's policy of reducing net migration to the tens of thousands continues to attract fierce debate among stakeholders. In a recent development, a number of the United Kingdom's most powerful technology leaders 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 number of skilled migrants entering the country from outside the European Economic Area.

In an open letter dated October 27 2015, more than 230 start-up founders and investors warned the prime minister that cracking down on skilled migration could put the United Kingdom'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.

Criticism from tech sector

The letter argued:

"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, the Coalition for a Digital Economy (Coadec), made a submission to the Migration Advisory Committee in September 2015 making a robust case to "save skilled migration". Coadec noted that the United Kingdom has a strong digital economy worth around 10% of gross domestic product (GDP) and contributing £180 billion to the economy. The representation stated:

"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 1.4million people employed across the UK's (at least) 21 clusters… British start-ups raised nearly £1.5billion in investment during the first half of 2015 and the UK is home to 17 of the 40billion-dollar start-ups in Europe, the so called 'Unicorns' (including companies like TransferWise, Funding Circle and Zoopla)."

During the May 2015 election campaign, Prime Minister David Cameron made the point that the United Kingdom should be a great "start-up nation", stating: "I want this to be the start-up nation in Europe and one of the great start-up nations of the world."

Coadec noted that this is a fair and realistic ambition, but the policy environment must remain supportive for that to happen. In Coadec's 2014 start-up manifesto survey, over 60% of respondents listed the lack of talent residing in the United Kingdom 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 these, 97.7% indicated that UK digital start-ups benefit from Tier 2 migration. They made the point that a policy of restricting Tier 2 visas further would have a significant knock-on effect on:

  • the competitiveness of the overall UK start-up ecosystem;
  • the ability of start-ups to recruit the talent that they need to grow;
  • the ability of start-ups to recruit people with relevant experience in mature start-up ecosystems (especially the United States); and
  • the impact of skilled migrants in helping to up-skill the domestic labour market.

Of these respondents, 84% 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 venture capitalist and government adviser Eileen Burbidge. While she was not a signatory to the open letter to the 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 Business Insider that immigration and allowing UK tech firms to hire skilled talent should be a key priority for the 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 digital economy, which represents 10% of the country's GDP and is the biggest and fastest growing of the G20 nations, set to hit 12% of GDP in 2016. The open letter goes on to state:

"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… 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 start-ups to higher 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 the various representations from the digital technology sector that the existing system was not allowing top global talent to come to the United Kingdom.

The new scheme improves the Exceptional Talent visa criteria, which were felt to be too restrictive, to allow for candidates to qualify in a number of new circumstances. These include the following:

  • Scale up fast track – this will enable UK companies to get the talent that they need to scale up, including taking the company to an initial public offering or where the individuals have specific skills and technical knowledge;
  • Exceptional promise – the previous scheme allowed only 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-track applications for digital businesses in Hull, Leeds, Liverpool, Manchester, Newcastle, Sheffield and Sunderland as part of the Northern Powerhouse initiative; and
  • 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 finally 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 200 applicants a year and therefore cannot 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 goodwill.

Comment

These specific tech sector concerns and representations to the government should be seen in the context of the myriad responses to the Migration Advisory Committee call for evidence from many different industry sectors. It remains to be seen how the Migration Advisory Committee will frame its recommendations to the government and – more importantly – how the government will respond with policy changes.

For further information on this topic please contact Ben Sheldrick at Magrath LLP by telephone (+44 20 7495 3003) or email (ben.sheldrick@magrath.co.uk). The Magrath LLP website can be accessed at www.magrath.co.uk.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.