Digital tech – meeting the sector’s burgeoning immigration needs

Posted: 16/06/2017

At the beginning of London Tech Week (#LTW) I wrote about the main immigration options for digital tech companies and tech entrepreneurs.

As the week draws to an end, the uncertainty around which immigration policies will eventually be implemented by the Government remains. What is clear is that the UK continues to face a digital skills crisis. The Science and Technology Committee’s report which was published last year acknowledged that the current domestic market is in short supply of skilled digital workers, which is leading tech businesses to look overseas for the right skills and experience to fulfil their business needs.

The Government needs to do more to help tech flourish and meet the sector’s unique needs. There must be:

• a clearer understanding of how it functions and what types of skills it requires
• 'fit for purpose visas' 
• clarity for EU workers and a post Brexit immigration policy which continues to allow the tech sector access to EU talent
• the introduction of Third Party Sponsorship (TPS)

Recent findings

Following the General Election result, Tech London Advocates (TLA) commissioned a survey of tech companies. The survey found that:

• 74 per cent of tech professionals in London believe that the policies outlined in the Conservative manifesto, if implemented, will restrict access to talent in the UK tech sector and therefore threaten its continued success.
• 56 per cent of tech professionals believe the current immigration policy does not permit world-class talent to enter the UK. Less than a third of respondents (30 per cent) stated that the current policy is sufficient to provide companies with top international talent.
• 74 per cent of those surveyed expressed support for the introduction of a Third Party Sponsorship (TPS) visa programme.

It is clear that much more needs to be done within the current immigration system to ensure that the flow of talent to the UK remains consistent and, at least in the short term, fills the skills gap.

Tech is an important industry to the UK economy but major skills shortages threaten its future. The 2017 Conservative party manifesto stated:

We will therefore ask the independent Migration Advisory Committee (MAC) to make recommendations to the Government about how the visa system can become better aligned with our modern industrial strategy. We envisage that the committee’s advice will allow us to set aside significant numbers of visas for workers in strategically-important sectors, such as digital technology, without adding to net migration as a whole.

Flexibility for a diverse sector

Back in February 2015 the MAC published its report on the partial review of the shortage occupation list. In this report the then chair of the MAC, Professor Sir David Metcalf CBE, said: “Our extensive consultation with the digital technology sector revealed that smaller companies are struggling to compete with large firms when it comes to employing the most experienced and specialist staff to help grow their business. Companies told us there was a lack of UK experience in a variety of jobs, and that they were keen to bring in staff from outside the EEA to take up these roles and train UK staff.”

At the time, TLA in its evidence identified that start-ups often have different immigration needs to scale-ups and larger more established companies. For example, start-ups may find the time, cost and requirements to obtain a Tier 2 sponsor licence particularly burdensome. Further evidence was collated in relation to this and a paper was launched in December 2015 entitled ‘Immigration and tech working together’. The paper proposed the introduction of Third Party Sponsorship (TPS), which would allow larger and more established organisations, for example accelerators, to endorse visas.

Following the referendum vote, the argument for allowing start-ups to benefit from the concept of TPS becomes even stronger, especially if in the future the ability to recruit EU workers is restricted. Currently small start-ups and early stage entrepreneurs often rely on EU labour as their first hires, where domestic skills are not available. Companies that are looking to grow need to have their growth teams on-site. Newer businesses need to be much more agile in the speed of their response; the way in which they take and use customer feedback can determine whether or not they will succeed. TPS provides a solution to these issues.

In 2015 employers estimated that it would take five to ten years to develop enough UK workers with sufficient experience to fill these roles. Relevant experience is the key factor in such jobs and there is no shortcut to achieving it. What would speed up the development of UK staff would be bringing in senior figures with experience that they could impart to the existing team (taken from MAC report 2015).

In the longer term we also need more innovative solutions. The Dyson Institute of Technology for example is set to open this year; its students will not pay fees and will instead receive an annual salary. During the week they will work alongside Dyson engineers as well as undertake practical study. The school is one of many initiatives introduced to improve design education in the UK and bridge the skills gap and is an example of the creative approach needed to overcome the country’s skills shortage.

Immigration for tech – what works, what doesn’t and what we need to lobby for

Tier 1 Exceptional Talent visa (Tech Nation visa) – the changes to the Tier 1 Exceptional talent visa, on which the TLA immigration working party provided input to create the Tech Nation visa, are welcomed and result in a ‘fit for purpose visa’. However the maximum number of endorsements will need to remain under review, especially following the surge of applications since the referendum result. Applications are considered by a panel of experts and those endorsed can either work for an employer in the field of digital tech or be self-employed.

Tier 1 (Graduate Entrepreneur) visa and DIT’s Sirius programme – this visa allows UK universities or DIT to endorse recent international graduates who have developed a genuine and credible business idea and shown entrepreneurial skills. While it is a useful visa that helps talented individuals (many of whom set up tech businesses), transition to the entrepreneur visa can be difficult due to complicated and often confusing rules. In addition, due to the cap on numbers, universities will very often only endorse their own graduates and DIT can only endorse a limited number of entrepreneurs. Further, applications to the Sirius programme can only currently be made during a short window each year. The concept of endorsement is nevertheless welcomed. TLA has previously proposed that the main entrepreneur visa should be based (at least in part) on the concept of endorsement. Awareness of both of these schemes is relatively low and more needs to be done to increase visibility of these options.

Tier 1 (Entrepreneur) visa – this is the visa category which allows entrepreneurs to invest money in a new or existing UK business. The visa category is effectively broken and is no longer fit for purpose. The Government is urged to review the MAC’s recommendations and take forward changes without further delay. MAC published its report in October 2015, which included TLA's recommendations for experts to endorse business ideas and the introduction of a start-up visa. Tech entrepreneurs can be deterred from using this category for initial visa applications due to the high refusal rate, mainly caused by inconsistent decision making processes and rules which are complicated and can be seen as out of touch with tech business needs.

Tier 2 sponsor licensing and Tier 2 visas – the Tier 2 route works best for larger companies. The route does not always work for small companies, especially those with limited resources. TPS is the natural alternative for such companies. While the introduction of digital tech jobs on the shortage occupation list is welcome, this relies on traditional working environments and a Tier 2 sponsor licence is still required. An analysis should be undertaken of the companies that have registered to use this process and how effective it has been.

Third Party Sponsorship (new proposal) - as stated above, start-ups need an alternative solution to the costly and somewhat rigid requirements of Tier 2 sponsorship – the answer is carefully managed Third Party Sponsorship, available to limited organisations. Once companies have reached a certain size, they would need to transition to Tier 2 Sponsorship. MAC included this concept in its 2015 report ‘Partial Review of the Shortage Occupation List’:

‘Start-up and scale-up companies in this sector seem to be disadvantaged (eg in time and cost) in terms of becoming a Tier 2 sponsor. Improvements could be made to facilitate access for those employers in genuine need of non-EEA skilled migrant workers. For instance, could the admin arrangements be handled by an umbrella organisation in the digital technology sector?’

EU workers – As stated above, access to highly talented EU nationals allows tech companies who are unable to obtain a sponsor licence to fulfil their hiring needs. It is clear that the UK must continue to work hard to attract key tech workers and tech entrepreneurs from both within and outside the EU.

Conclusion

The tech sector is often described as ‘a great British success story’. It is vital that it continues to have the right talent to be able to continue to flourish. 

Written by Pat Saini, chair of TLA’s immigration working party and head of immigration at Penningtons Manches LLP.

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