Great immigration news for tech, science and fintech sectors competing for world’s best talent

Great immigration news for tech, science and fintech sectors competing for world’s best talent

18th March 2021

Will the UK Government’s new immigration routes compensate for the end of free movement?

Replacing free movement with the EU with a new points-based immigration system this January was, according to our Home Secretary Priti Patel, set to make it easier to attract the “brightest and best from around the world.”

Despite a drop in work visas during the pandemic the Tier 2 (General) visa became the most popular route for firms bringing in skilled talent (30,109 successful visas in 2020.) The Skilled Worker route replaced Tier 2 (General) in January removing the Resident Labour Market Test for firms hiring skilled workers and reducing the salary threshold to £25,600. The Shortage Occupation list has been expanded and the new points-based system also affords bonus points for those filling shortage occupations and with relevant PHD qualifications.

Yet barely three months after free movement for entrepreneurial Europeans came to an abrupt end along with membership of the EU’s internal market, the UK Government has announced new tweaks to its points-based immigration system to make it easier for the UK’s productive science, tech and fintech hubs to attract the world’s best talent.

What are the new immigration changes set to provide UK science, tech and fintech firms a competitive edge globally?

Early this month, the Chancellor of the Exchequer unveiled more immigration routes to boost the “international competitiveness” of the UK’s vital start-up, scale-up, science, research, tech and fintech sectors.

Careful not to mention the word, “Brexit”, Rishi Sunak nonetheless told MPs new immigration measures would ensure Britain could still attract the “international talent” crucial for the UK to protect its most innovative businesses.

While the £65 billion to prop up a pandemic-hit economy over the course of the year made most Budget headlines, Rishi Sunak also stole the Home Office’s thunder by heralding “a new unsponsored points-based visa to attract the best and most promising international talent in science, research and tech, new improved visa processes for scale-ups and entrepreneurs, and radically simplified bureaucracy for high-skilled visa applications.”

These are the new immigration reforms all set to be rolled out over the next 12 months:

  • An elite points-based visa with a scale-up stream, offering fast-track visas for overseas workers with job offers from recognised UK scale-ups by March 2022
  • Much-needed reform of the Global Talent Visa, such as automatic qualification for winners of international prizes and scholarships or programmes for those showing early promise
  • A crucial review of the Innovator Visa which needs to remove barriers for innovators bringing innovative start-ups to the UK
  • Brand new Global Business Mobility Visa for overseas businesses establishing a presence or transferring staff to the UK to start by spring 2022
  • A promise of support for small firms having to use the visa system for the first time
  • A year-long “roadmap” to make the sponsor system easier to navigate for employers
  • Growing the Global Entrepreneur Programme, marketing the UK and build an “overseas talent network”

The Chancellor promised these measures would reinvigorate the UK’s tech and innovation sectors, alongside a “Future Fund Breakthrough” to encourage investment from the pensions industry with “more flexibility to unlock billions of pounds from pension funds into innovative new ventures.”

The Treasury have also promised more improvements to the Listing rules with the UK Listing Review launched in November to examine how the UK can “enhance its position as an international destination for IPOs and improve the capital-raising process for companies seeking to list in London, whilst maintaining the high standards of corporate governance, shareholder rights and transparency for which London is known.”

The measures set “to encourage more companies to list here” are likely to include dual class share structures so innovators can retain a degree of control over their fast-growing firms, alongside other measures to give the UK a competitive edge over other places to IPO.

In addition the Graduate Visa will come into effect from 1 July 2021 which will allow firms to engage graduates of UK academic institutions without the need to sponsor them.

Why are the new immigration reforms so important for UK firms?

If “global Britain” is to be more than just a slogan, the Government needs to go a long way to make up for the potential talent drain from ending freedom of movement with the EU during a pandemic that has hit global mobility hard.

Last year, the number of EU citizens moving to Britain slumped to 58,000 from a high of more than 200,000 in 2015.

Immigration statistics, year ending December 2020 (Home Office)

Overshadowing the Chancellor’s announcements, the latest official immigration statistics revealed a shocking drop to just under one million visas granted in 2020 – down 69% from the year before.

Work visas fell 35% to just 125,176 in 2020 (including dependants).

Cities such as London, Oxford and Cambridge are likely to continue to attract the finest global tech talent.

Despite the UK’s financial and tech hubs looking like ghost towns at points during the pandemic, many innovative firms have appeared less affected by the pandemic than other sectors of the economy.

Despite a large overall drop in immigration over 2020, the above measures should help the fintech and tech sectors bring in the vital talent they need to keep growing apace.

Allowing scale-ups in sectors such as the fast-growing fintech sector – which contributes around £11 billion a year to the British economy – to bring talent from abroad with no need for sponsorship or “third-party endorsement” will definitely cut the red tape thrown up by the loss of free movement from Europe and help speed up bringing in talent from further afield.

This echoes recommendations in the Treasury-commissioned Kalifa Review of the fintech sector which suggested such reforms “in order to remain a global leader in fintech.” The fintech report warned that “the UK needs to strengthen its position on immigration or risk a significant shortage in human capital.”

Around 42% of Britain’s 76,500 fintech workers are migrants, according to recent Department of International Trade figures, so the ease of attracting global talent is clearly crucial to compete with rival European fintech hubs such as Amsterdam, Berlin and Barcelona. 

Moves to make the Global Talent Visa route more accessible for science, tech, research and academia is much needed good news too. The fintech industry alone recorded a 48% increase in Global Talent Visa applications in 2020 - during a global pandemic!

The requirements of the Global Talent route are still very narrow for sectors such as film and TV production, music and theatre, yet there was no mention of the arts sectors in any review. Hopefully this will change as these are some of the industries hit hardest by Coronavirus measures over the past year.   

The reform to the Graduate Visa announced in March is great news too, adding flexibility to spotting and hiring fresh academic talent. Any business will now be able to employ someone graduating in the UK with a Graduate Visa for up to two years without the need to first sponsor them. This is a great opportunity for employers to assess and work with someone without committing to the responsibilities of sponsoring them.

The Innovator Visa immigration route aimed at “more experienced business people” with £50,000 to invest in an innovative scalable business has been unnecessarily difficult to negotiate since it was introduced in 2019, with hurdles such as cumbersome conditions for obtaining indefinite leave to remain in the UK putting many off. So the promised review could spell good news too for Britain’s innovation sector.

We look forward to all these moves helping UK businesses grow with the right people as the country recovers from the worst of the Coronavirus pandemic.