There is a strong argument to make for keeping the U.K open to international talent. Did you know that 49% of the 100 highest growth startups have at least a co-founder that are foreign with exceptional talent. To add to this 11 out of the U.K 16 unicorn startups (Each with an pre-IPO valuation of a £1Bn) also have foreign talent on their board.
The U.K use to function with a Tier 1 Entrepreneur & Graduate Entrepreneur VISA to draw more talent into the country. However, it was poorly promoted and unsuitable to be effective. We got rid of this and shortly after introduced the Innovator & Startup VISAs.
There are two main concerns highlighted in the manifesto. Firstly, endorsing bodies had to receive approval from two different government departments which massively delayed the time taken to accept an applicant. Surely you can imagine how difficult it is for us to get through to the person needed in any government organisation, now imagine having to jump through that hoop twice.
The other issue is that these endorsing bodies are unable to charge any fees. This is detrimental as to endorse an applicant to come to the country at least several hours of work must be done assessing their plans and costs. That time can be highly costly to these businesses. This unfortunately leads to their only financial motivation to endorse an entrepreneur is if they take a loan out with the endorsing body. Another option to the company is to agree to endorse the individual for equity in the company. This is extremely unfavourable for majority of entrepreneurs. As a result, they may take their business to a different economy whilst the U.K goes without these up-and-coming leaders in business.
“Limiting access for people who bring the skills we know we are lacking is completely counterintuitive and detrimental to our economy”
– Dr Miguel Martinez, Co-founder of Signal AI
Once we leave the EU (if it ever happens) the reduction in free movement of people, specifically young people who are skilled & talented, will deprive startups of gaining an edge over larger corporations.
We used to have a system in place for bringing highly skilled migrant workers into the country (Tier 1 General VISA) to fill in gaps of our own workforce and to also enable startups to benefit from this talent. This system was redesigned in 2008 and then ceased to operate in 2015. To enable our economy to remain competent and developing we must ensure a new system is implemented to take this role on.
Regarding the Tier 2 VISA Salary threshold, the issue here is that the minimal requirement prevents these individuals coming to the country to work in a new startup that may pay below that threshold. This isn’t due to them keeping costs down to increase profit margins but rather they are fresh on the block. Quick expansion can often kill a startup off. The manifesto suggests lowering the threshold to £21,000. 25.30% of employees in technical jobs and 39.20% of all people in full time employment earn less than £21,000 so safe to say this a comfortable level of income.
They also suggest that stock options provided to key hires or any, should also be valued and added to whether the hire meets the minimal threshold. This is because it provides a startup with flexibility to hire quality talent whilst not having to pay huge salaries which as a startup would be detrimental. Instead these stock options provide the hires with equity in the business that reflects their performance. In my opinion I’m a big fan of these options. Being a startup myself I can relate to the difficult in variety of hires when you’re unable to provide a high salary at the present time.
To argue the point of why stock options should be valued and then added to their salary to see if they meet the minimal level of income via the job would be that stock options are used in the analysis of the gender pay gap. If these forms of financial products offered to employees is considered under that light as having genuine financial worth (which it does) then it should also be the same under the Tier 2 VISA.
Tier 5 VISAs support youth mobility currently those between 18-39 from specific countries. This allows them to enter our country to work or start their own business for up to 2 years. Once we leave the EU (Again, that’s if it ever happens.) we should immediately extend this to include EU countries. As a result, we may be able to maintain our fluidity in our market for skills and bright individuals. Important to note that this benefits our businesses as it can provide us an insight into new markets potentially foreign ones to expand into. This leads to our economy becoming strengthened which we are in need of, don’t you agree?
Something else to sweeten this change is to also enable them to move onto a Tier 2 VISA (if they find a sponsor) allowing them to remain in work in our country helping build our economy.
“U.K startups and scale-ups compete for talent not just domestically, but more widely on an international level.”
– Virginie Charles-Dear, Founder of Toucan box
One major issue for startups is the inability to compete with larger established tech firms etc, in providing a high paying salary. This inevitably leads to the larger corporations having all the buying power when hiring. As a result, startups struggle to grow and develop as they are restricted on their level of quality skills in their company.
EMI (Enterprise management incentive) helps combat this stagnation in development of new companies by providing share options to key employees based on a tax-advantaged basis. This compensates the hire for their smaller cash salary and riskier employment choice by offering these reliefs.
The criteria for EMI was set in 2000, as you can imagine this is certainly outdated by today especially with the rate of inflation since then and the depreciating value of the pound consistently since 1988. 75% of startups have cited “brain drain” of talent to large tech firms over the last five years because their growth and success has consequentially locked them out of the EMI scheme.
The current suggestion which has been supported by over 100 startup founders is to raise the limit from £30M asset capitalisation to £100M and from 250 to 500 employees. As a result, this allows for greater employee ownership having companies better represented by their workforce whilst reducing the exodus of talent.
Now this one is pretty exciting to share with you guys. There’s a suggestion for utilising private coding schools’ success by applying to a larger and more general market. This will help educated our future generations and current young people in digital skills. In an ever-evolving digital world the ability to understand and utilise those platforms is ever increasing in desirability and need in employment.
The general premise is to bring these small private schools that can turn a novice into a fully qualified coder in just 12 weeks to our academic curriculum.
“But the country’s skills crisis has been an issue long before Brexit. The next government must recognise that educating a workforce equipped to thrive in a hi-tech digital economy should be placed at the heart of their approach.”
– Taavet Hinrikus, CEO of Transferwise