Unpacking Policy Intentions: A Closer Look at UK Immigration Changes

The IM Yearbook sat down with Fragomen’s Nadine Goldfoot to uncover the latest shifts in the UK’s immigration system and place them in the broader context of global investment migration.

Immigration has long been a major fault line in UK politics. Brexit was fought, in part, on the basis of controlling the inflow of people, and in recent years, the country’s immigration system has undergone several shake-ups.

In early 2023, the Innovator Founder visa was launched, offering established entrepreneurs the chance to set up innovative, viable, and scalable businesses in the UK. This visa was intended to become the primary entry route for entrepreneurs, replacing the now-closed innovator and start-up visa categories. However, according to Nadine Goldfoot, Managing Partner of Fragomen UK, it is not always the most preferred immigration category for entrepreneurs.

Innovator Founder Visa: Upsides and Downsides

“There are several pros and cons of this new visa,” Goldfoot says. As a positive, she highlights the elimination of the minimum capital investment requirement. “This has been replaced by a need to demonstrate a genuine, scalable, and viable business proposal, along with sufficient funds to execute the plan— whether that’s £20,000 or £200,000.”

Another plus, according to Goldfoot, is that sole ownership of the business is no longer a requirement; applicants can now be part of a team, although each applicant must demonstrate a significant contribution to the business idea and execution. Additionally, the main applicant can engage in secondary employment alongside running the business, provided it is skilled work.

The new visa also involves fewer check-ins with the endorsing body responsible for verifying project scalability and viability – generally at the 12- and 24-months marks. Moreover, an accelerated pathway to settlement exists, contingent upon evidencing progress in the business. “The departure from the previous limited options to evidence progress to a wider variety on which you can rely, including investment, revenue, job creation, expansion of customer base and Intellectual Property protection, is more reflective of how growing businesses operate in practice and certainly another plus,” Goldfoot says.

The challenge, however, lies in presenting a completely novel business idea with no existing market counterparts, a viable structure poised for potential growth, and scalability indicative of job creation, expanding customer bases, or entering new markets. “In my opinion, the high threshold regarding innovation is challenging to prove and ambiguity about the scalability criteria has also deterred applicants, which has resulted in a relatively small number of applicants,” she says.

Understanding the Motivation for Visa Adjustments

Commenting on the rationale behind the visa changes, Goldfoot highlights that there has long been a desire in the UK to create more active investment that would foster entrepreneurship and innovation. However, concerns were raised by government that the original immigration route for entrepreneurs under the Points Based System was not being used to launch innovative business ideas but rather retail and general services. “While these applicants met the immigration requirements, they were not necessarily contributing significantly to the UK’s innovation agenda,” Goldfoot notes.

Recommendations from the Migration Advisory Committee (MAC) prompted a shift toward the Innovator and Start Up visa routes intended to encourage such activity. However, the original Innovator and Start-up routes also posed challenges for attaining permanent residency (indefinite leave to remain), resulting in limited uptake. Consequently, these routes were replaced by the current Innovator Founder route, which, so far, has also seen limited interest.

Moreover, Goldfoot points out that the UK has never actively marketed itself as a destination for investment migration compared to some other nations, despite having routes like the Investor Visa. The tightening of regulations around the Tier 1 Investor Visa and its subsequent closure were primarily motived by security and source of funds concerns rather than a fundamental shift in policy to actively court investment migration.

Alternative Options

Fortunately, there are several alternative pathways into the UK that do not specifically target entrepreneurs but prove effective, according to Goldfoot. Individuals often opt for the Skilled Worker category, especially if a UK entity exists and can apply for a sponsor licence. Alternatively, the Expansion Worker route can be utilised when there’s an established overseas entity, allowing individuals to be employed by the overseas company to set up a UK branch. Either of these routes can apply to the owner or majority shareholder of the business. For those deeply rooted in the tech industry, the Global Talent Visa is a viable option. “These alternative routes offer simpler ways to enter the UK compared to complexities of the Innovator Founder visa,” Goldfoot comments. She adds that the Innovator Founder visa is frequently seen as a final option, pursued only when all other avenues have been exhausted.

“Political Posturing”

Meanwhile, the UK hit the headlines in December 2023 when the government proposed a package of measures designed to deliver the biggest cut in net migration to the UK. These measures are set to take effect from spring 2024. “The suggested changes took everyone by surprise but are not inconsistent with the government’s current immigration policy,” says Goldfoot.

She adds that the Government has had a mandate since 2010 to reduce net immigration numbers. However, figures released in November 2023 showed that annual net migration to the United Kingdom hit a record of 745,000 in 2022, with many migrants now coming from places like India, Nigeria, and China instead of the EU.

“With an election expected in 2024, the government is keen to demonstrate that it has delivered on its mandate to reduce net migration,” says Goldfoot.

Government’s proposed measures include increasing minimum salary thresholds to £38,700 from its current level of £26,200, removing the right for incoming care workers to bring dependents, potentially scrutinising graduates who have studied in the UK, and reassessing the shortage occupation list. This list identifies sectors with severe staff shortages and thus far allows employers to pay migrants only 80% of the going rate.

Goldfoot believes that the changes are likely to disproportionately affect certain industries, especially those already impacted by Brexit, such as healthcare, hospitality, and construction. There is also a risk this could lead to wage inflation. “The level of the rise in salary threshold is quite staggering and raises concerns that the government’s attempts to lower net migration figures are taking precedence to an economic need. Sectors who relied on the EU workforce to thrive have not had sufficient time to see the benefits of grassroots level training yet and have relied on sponsoring workers in typically lower paying roles, also paying the very high government fees associated. The impact is that employers will also need to increase wages, which may simply prove unaffordable and exacerbate shortages already felt and undermine the progress being made to curb inflation,” Goldfoot summarises.

Trends and Global Shifts

Turning back to investment migration, Goldfoot says the sector is changing, partly due to public opinion affecting local economies and society. Pressure from various levels—local, governmental, or international bodies like the EU and OECD—has sparked talks about limiting these pathways. “But it’s not all negative,” Goldfoot says. “I think the current situation presents an opportunity for the industry to transform, shifting from passive, often real estate-based investment solutions toward innovation, entrepreneurship, job creation, sustainability, and social responsibility, all of which can address current economic and social needs.”

One challenge is the assumption that commitment to a jurisdiction relies solely on physical presence. “We know that in the investment migration market, individuals are often global citizens with interests all over the world and cannot necessarily commit to an extensive physical presence in a single jurisdiction. Therefore, the industry, must illustrate that value, integration, and commitment to a jurisdiction can be demonstrated through capital investment and sharing expertise, talent, skill, and guidance, not just physical presence.”

Both markets and products are evolving rapidly and Goldfoot noted an increased “regional focus”. She points to the Middle East, where the UAE golden visa has played a pivotal role in luring talent by offering 10-year residency to individuals and their families, including household staff. This move, she says, has significantly opened doors to the Dubai market. “Similarly, the launch of residency visas in Saudi Arabia in 2019 is gradually enabling family moves following a similar path,” she adds. Across Asia, there is also a revived interest in investment migration, particularly in Hong Kong, Singapore, and Malaysia.

As a global law firm and provider of immigration services, Fragomen is dealing with all facets of global mobility and immigration law. Goldfoot passionately advocates that investment migration holds untapped potential beyond the traditional scope, foreseeing its capability to expand even further. According to her, high- net-worth individuals are increasingly exploring retirement-based residency options, whereby they leverage passive income to meet residency criteria. This trend benefits countries like Portugal, Spain, Ireland, France, and Italy by attracting spending, although restrictions on work might limit active economic involvement.

Moreover, digital nomad visas are increasingly available across several jurisdictions. Highlighting that aligning legislation with tax and labour laws is vital for their effectiveness, Goldfoot goes on to say that the big question remains whether “these temporary arrangements could eventually lead to long-term residency.”

Moment to Redirect

She believes investment migration is here to stay, however, to succeed, pathways must pivot their strategies. “Shifting from a passive to a more active investment approach is crucial, along with a continued emphasis on compliance, due diligence, and ethical best practices.”

“Governments also need to enhance transparency without compromising individual confidentiality. Sharing redacted information on fund generation and expenditure is paramount.” This, in turn, might cultivate heightened public endorsement for investment migration

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