Introducing the Home Office's Scale-Up Route

At the heart of the government's Innovation strategy is the desire to reverse 'brain drain' by the introduction of visa routes to attract the most talented and innovative candidates to the UK. The Home Office has recently released a Statement of Changes to the immigration rules setting out the detail of these new visa routes.

One such route is the Scale-Up route which will open on 22^nd August 2022 as part of a drive to attract the best talent to the UK.
 

Why is there a new Scale-Up route and who is eligible?

Studies have shown that the performance of SMEs are firmly linked to economic growth, with SMEs accounting for over 95% of firms and 60-70% of employment in OECD economies. Their relatively small size makes them more flexible and responsive; Smaller businesses are better able to try out innovative initiatives at speed due to a strong pool of talent and less red tape and bureaucracy.  

Scale-ups, in particular, are experiencing increased difficulty in acquiring appropriate talent. The Kalifa Review of UK Fintech found that overseas talent represents more than 40% of the people employed by UK fintech industry and that 85% of fintech startups and scaling firms are willing to relocate outside of the UK to get talent.  The StartUp Institute states that the sectors demonstrating the highest annual employment growth rate are finance and insurance, administration and support services, and information and communication.

The government is keen to give scale ups a helping hand and has therefore created a visa route specifically designed for them. A scale up is high-growth company that: 

• can demonstrate an annual average revenue (turnover) or employment growth rate of more than 20% over a three year period 
• had at least 10 employees at the start of the three year period

Many companies wishing to sponsor international talent will not fit within this definition, including (1) start-ups who are the beginning of their journey in the UK; (2) seasoned companies who have already been through a period of growth which falls before the last 3 years; and (3) at present companies which expect a period of strong growth in future but have not already have it do not quality but it's possible companies which can demonstrate imminent growth could be added to the route.   

Companies not falling within the route but who are wanting their employees to have the option to stay long-term in the UK will be restricted to the Expansion route for those setting up new entities, or for companies already trading here, the Skilled Worker route unless the person is eligible in a non-sponsored route such as Global Talent.

What are the main requirements?

The Scale-Up route will require the company to apply first for a Sponsor Licence. The person will be granted a 2-year visa but will only need to be sponsored for the first 6 months. The person must be in a highly skilled role and earning at least £33,000 per year; and at least £10.58 per hour; and at least the going rate for the occupation code in which they are sponsored.

After the initial 2-year period the person can extend into the unsponsored route. To extend in this route, they must have been sponsored for at least 6 months, and they must have earned at least £33,000 per year for at least 50% of the duration of their previous visa e.g. at least 12 months of their permission if they had a 2-year visa.  

We are waiting for further details about the route which will be published in Home Office guidance. We understand that it is likely that the Immigration Skills Charge will not apply to the route as opposed to the Skilled Worker route where this does apply. This would amount to saving for sponsoring companies of £1,820 for a 5-year visa per person for small or medium companies or £5,000 for a 5-year visa per person for large companies.

It seems likely that companies would need to provide accounting information to declare that they meet the definition but that at some future point the Home Office will pull this data directly from HMRC or Companies House.

What are the advantages?

They key advantages of the Scale-Up route are:

1. The likely savings on the Immigration Skills Charge, although this has not as yet been confirmed in sponsor guidance.
2. Reduced sponsor duties and bureaucracy as individuals will only need to be sponsored for shorter periods of time.
3. Similarly to the Skilled Worker route, time spent on the route counts towards settlement.
4. There may be a Fast Track route in place, which could mean faster processing times for the Sponsor Licence application than in the Skilled Worker route.

For companies which fall within the scale-up definition, the Scale-Up route is likely to be a winning option and will hopefully go some way to plug far-reaching skills gaps. Companies who use this route will not be able to rely on sponsorship as a means of retaining workers as after 6 months they can easily move jobs. Employers will therefore have to think of other tactics or compensation to retain talent.

Given the ongoing pressures on the system the Home Office are facing with COVID-19, Brexit and now the Ukraine war, we may be some way off the fast-track streamlined visa system they are hoping to bring in which could impact on visa timings in this route.