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Home Office announces Scale-up visa for fast-growth firms

Scale-up visa launched to help high-growth businesses employ talent from overseas, but sponsorship requirements could undermine effectiveness

The UK government has launched a Scale-up visa to help high-growth startup businesses attract talent from around the world.

Announced by the Home Office on 22 August 2022, the Scale-up visa will allow high-growth businesses to employ high-skilled individuals – from scientists and engineers to architects and programmers – who will receive two years’ leave to remain in the UK without the need for further sponsorship or permission beyond the first six months.

To be eligible to sponsor people under the visa, companies will need to have achieved growth of 20% or more in either employment or turnover year-on-year for at least three years, as well as have employed a minimum of 10 people at the start of the three years.

Analysis of the visa requirements by law firm Lewis Silkin found that while the visa would allow for fast-tracked processing of applications and remove the Immigration Skills Charge – representing a saving of £5,000 over a five-year period compared with Skilled Worker or Senior or Specialist Worker visas – the visa holder is only tied to the firm for the first six months and will need to meet a minimum salary threshold of £33,000.

Structured to provide a cheaper, quicker and less administratively burdensome sponsorship process for scaleup businesses, the government said the visa would give these firms greater hiring flexibility and generally help boost the UK’s high-skill talent pool.

“Rapidly growing businesses, like small enterprises, tech and financial services, need the right level of support to go to the next level. Through our Scale-up visa, we’re enabling businesses to focus on their growth and innovation by giving them more freedom to bring in the diverse skills and experience they need, making them more attractive on an international stage,” said Kevin Foster, minister for safe and legal migration.

“Scaleups add over £1tn a year and more than three million jobs to the UK economy, and are present in every community, hiring people from at home and abroad. The visa should help with the skills demands”
Irene Graham, ScaleUp Institute

“By supporting our high-growth tech, financial services and small businesses, we are ensuring the UK remains a global hub for emerging technologies and innovation while enhancing productivity across the economy – creating jobs, growth and prosperity across Britain.”

Irene Graham, CEO of the ScaleUp Institute, which has been pushing for a Scale-up visa since its inception in 2014, welcomed the announcement and said it would provide a “much-needed fast-track service” for thousands of UK businesses.

“Scaleups add over £1tn a year and more than three million jobs to the UK economy, and are present in every community, hiring people from at home and abroad, as they drive growth into their local areas and beyond,” she said.

“The visa should help with the skills demands. We look forward to continuing to work with the government as this service evolves to ensure it fully addresses scaling business needs and works effectively.”

According to analysis conducted by the ScaleUp Institute, there were 33,445 scaleups in the UK in 2019. While the pandemic will have likely altered the number somewhat, 2019 is the most recent year for which this data is available.

However, Dom Hallis, executive director of Coadec and a member of the UK’s Digital Economy Council, said on Twitter that while the Scale-up visa was welcome, “it could have been so much better”.

Noting that the visa had technically already been announced by the chancellor in the March 2021 Budget, which he added was unusual for immigration policy, Hallis said it was explained at the time as “unsponsored”, meaning the barriers for scaleups were lower.

“Rather than making visas better, simpler and cheaper, we have a new set of visas that won’t work as well as they should and could have”
Dom Hallis, Coadec

“The new visa has been announced [by the Home Office] and scaleups will need a sponsor licence – just a quirky one that the Home Office will still administer. And they’ll still have sponsor obligations, potentially even after an employee leaves,” he said.

“So rather than making visas better, simpler and cheaper, we have a new set of visas that won’t work as well as they should and could have,” he added. “This is crappy policy being delivered by a Home Office that sees their job as stopping things happening, not building a well-functioning system.”

Speaking to Personnel Today, Kelvin Tanner, a partner at Charles Russell Speechlys, said the Scale-up visa would not necessarily solve issues around routes to working in the UK for highly skilled workers.

“We expect this ability to change employers will be more attractive to a prospective employee than the Skilled Worker visa route, which requires sponsorship throughout the migrant’s stay in the UK and prohibits changes of role or employer without prior permission from the Home Office,” he said.

“However, given the initial and very high costs to a UK business of obtaining a sponsor licence and sponsoring a visa, it is difficult to see how the Scaleup route would be a more attractive option for an employer than the Skilled Worker route, when the latter has a lower skills threshold and provides more likelihood of retaining the migrant worker in the long term given that the continuous sponsorship requirement makes changes of employer more difficult,” added Tanner.

“The high and very specific eligibility criteria for businesses to qualify for a Scaleup sponsor licence are also likely to be an undermining factor in the route’s usefulness.”

Entrepreneurial network Tech Nation’s seventh annual report, published in March 2021, showed that tech scaleups received one-fifth of all UK venture capital (VC) investment in 2020.

According to further figures from Dealroom, UK tech startups and scaleups secured £12.4bn in VC funding in the first six months of 2022, with a record-breaking £9bn being raised in the first quarter of the year alone.

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