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The government’s new immigration rules are a recipe for stagnation

New salary thresholds will exclude valuable and talented individuals in some of the most productive, innovate sectors.

By Derin Kocer

He could’ve been the prime minister of innovators, until he wasn’t. Rishi Sunak’s fondness for Silicon Valley made him look like a natural leader to make the UK a science and technology superpower. However, Britain needs two groups of people for that project to succeed: inventors to innovate, and entrepreneurs to commercialise innovation. The government’s recently-announced immigration policies mean we will get fewer of both.

The new rules presented in parliament this week raise the salary threshold for skilled workers coming into the country from £26,200 to £38,700 – which is £4,000 higher than the average salary in the UK. The government will also reconsider the graduate visa, which gives international graduates a two-year work permit. 

These policies are an obvious reaction to the most recent net migration figures, which came to 745,000 during 2022. Days before announcing these strict measures, Sunak was trying to charm international investors by boasting that Britain’s migration system was giving talented young people a chance to build their lives in this country. And rightly so: the business think tank The Entrepreneurs Network found that 39 per cent of the UK’s fastest-growing firms last year had a foreign-born co-founder. 

The new salary threshold may not be an insurmountable hurdle for experienced professionals working for big corporations, but it will be much harder for top foreign graduates of the UK’s leading universities. It will disincentivise working for start-ups because most of these firms lack the financial resources to pay recent graduates a salary that only the top third of the income bracket earns. Young people will work instead for stagnant incumbent companies, rather than innovative challengers.

If the government goes even further and scales back the graduate visa, then international students would need to land a job that pays nearly £40,000 upon graduation. This will make staying in the UK unimaginable for most international students. The UK was already failing to retain talented young people educated in British universities. According to Migration Observatory, only 5 per cent of non-EU 2016 graduates held work visas in Britain by 2021. This will only get worse.

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The future is even bleaker for researchers. Although they are at the forefront of invention, most of the work they do is not commercial but serves as the launching pad for innovative entrepreneurs. This means that average salaries are low, but this doesn’t make their work less valuable. Their output will be critical if we’re to solve mounting healthcare challenges or meet the UK’s net zero obligations.

For instance, at the University of Oxford, the starting salary for a postdoctoral researcher stands at around £36,000 annually – below the new threshold. Worryingly, according to the Royal Society, the majority of postdoctoral science researchers in the UK are foreign-born. The new restrictive visa regime will make attracting and retaining scientists much more difficult. 

The skills of these people are highly sought after by every major power. As science and technology have become more important, inventing and innovating have become increasingly difficult. It wasn’t a coincidence that the US president Joe Biden included immigration as a key part of developing artificial intelligence in America. Similarly, Xi Jinping is implementing policies to persuade Chinese graduates from all over the Western world to return home.

There is still time for the situation in Britain to be improved. First, the salary threshold for recent graduates of British universities should be lowered. The UK invests in these students and the investment can only pay off if their skills remain here. The only way for them to stay must not be to become management consultants – the UK’s innovative start-ups need talent. 

Second, equity ownership should count towards the salary threshold. For young firms, giving ownership of the company is a common way to attract talented individuals to get on board without high salaries. The UK’s immigration framework must factor this in so that start-ups can compete for talent against the dominant actors.

Third, academic institutions and research facilities should be kept outside the new salary thresholds. The government must work with universities and umbrella organisations such as the Royal Society to define which institutions this includes, and keep its borders open for talented researchers. 

Britain can be a science and technology superpower – it already has Europe’s largest tech sector and some of the world’s best universities. Immigrants are essential to making them work. However, the government risks hurting the country on both fronts. Rather than obsessing over migration figures, the UK should get creative to continue attracting and retaining top talent. 

[See also: The UK must choose: the past, or our future]

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