Don't let Brexit slam the door on Europe's entrepreneurs

It's too hard for migrants to start their business in Britain.

by Sophie Barrett-Brown
Last Updated: 29 Sep 2016

Three months have passed since Britain voted to leave the EU, yet to say that the future of the UK’s immigration system remains uncertain would be no understatement. As we all scramble to divine what ‘Brexit means Brexit’ actually means, the UK must walk a fine line between addressing the concerns of a majority of Britons who voted to leave and the need to support entrepreneurial endeavour and pro-business policies in the interests of the UK’s economy.

But an ever-widening gulf exists between the Government’s open, inclusive, and supportive rhetoric regarding immigration and the reality experienced by foreign entrepreneurs trying to enter the UK. We’ve seen a drop in entrepreneur applications, accompanied by a refusal rate of more than half. In the year ending March 2015 the UK granted only 842 main applicant entry clearance visas for Tier 1 (Entrepreneur) migrants, while refusing 949, according to ONS data.

In order to prosper in the wake of the Brexit vote, Britain must become more welcoming to migrant entrepreneurs, not less, or we’ll drive the innovation, jobs, and wealth they create to ‘friendlier’ countries abroad.

Despite repeatedly missing deadlines, the Government remains resolved to meet a pledge to reduce net migration to the tens of thousands. In an effort to deliver, they’ve closed a number of routes for highly skilled migrants (Tier 1 General and Tier 1 Post Study Worker), introduced increasingly stringent requirements for many visas and fuelled a general media climate of hostility towards immigration with policies such as the shocking "Go Home" vans. The contrast with the government’s purported parallel desire to attract the ‘best and the brightest’ to the UK is stark.

For the time being, citizens from the European Economic Area (EEA) and Switzerland continue to enjoy the right of free movement, while non-EEA nationals must apply for permission to enter or remain in the UK, typically under the Points-Based System (PBS).

For the latter, who fall within the crosshairs of the government’s net migration reduction policies, options have narrowed in recent years. This is particularly true for young entrepreneurs, for whom there are few realistic options, and who face high rates of refusal owing in particular to subjective "genuineness tests" – refusal rates leapt to 64% following their introduction in 2013 and have hovered around 50% ever since (with applicants from certain geographical locations vastly more likely to be refused than others). Little wonder then that some young entrepreneurs may now be deterred from even applying.

These challenges are especially apparent in the area of tech start-ups, where many of the young, brilliant entrepreneurs with innovative ideas simply lack the finances or business backgrounds to meet the requirements of an entrepreneur visa or sponsorship from a domestic business.

Indeed, to qualify under Tier 1 (Entrepreneur), the primary route under the PBS for entrepreneurs, individuals must have access to £200,000 (or £50,000 in limited circumstances, for example where the enterprise is funded by UK-regulated venture capital or government departments). Additionally, applicants must meet English language and maintenance requirements, and are subject to the ‘Genuine Entrepreneur Test’. The rules are rigid and inflexible whilst being complex and confusing and often fail to recognise how entrepreneurs and business operate.

Government attempts to accommodate the needs of tech entrepreneurs, for example by adding Tech City as an endorsing body for the Tier 1 Exceptional Talent route, are welcome. But with a limit of just 200 and with very few applicants able to meet the high threshold, we’ve seen a disappointingly low number of applicants.

It is alarming enough that we are already failing to capitalise on entrepreneurial talent from outside the EEA. It is a deeply worrying prospect that we may also begin turning away entrepreneurial talent from within the EEA – prospective employers who until now may have been attracted by the business culture in the UK. The disconnect between welcome initiatives like the Mayor of London’s #LondonIsOpen campaign, backed by Government ministers, and the reality of UK immigration policy is concerning. The effort to counter growing post-Brexit fears that the city will be shutting its doors to innovation and investment is laudable. But if entrepreneurs continue to experience the same indifference or hostility in our immigration system, the goodwill generated by the PR campaign will fall flat.

For a country where migrants founded one in seven companies, foreign entrepreneurs are of vital importance. We should be welcoming them with open arms.

Sophie Barrett-Brown is partner and head of the UK Practice at Laura Devine Solicitors


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