Final nail in the coffin for the Points Based System? Upcoming UK immigration changes
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The Home Office have made it clear in their Statement of Changes of 7 March 2019 that they will be looking to end the points-based system. A new Appendix W will be added to the Immigration Rules in which the Home Office states that 'it is anticipated that other categories for workers will be added to this Appendix as the immigration system is reformed over time'.
We summarise some of the headline changes below.
EU Settlement Scheme
The Statement of Changes provides for the full opening of the EU Settlement Scheme on 30 March 2019. From 9 April 2019 applications can be made from outside the UK, including by eligible non-EU national family members of EU nationals who were in the UK as at 11pm on 31 December 2020 (in a 'deal scenario') or 11pm on 29 March 2019 (in a 'no-deal scenario'). Eligible non-EU national family members will be able to apply for a Family Permit to join or accompany their family member to the UK.
Appendix EU has been amended to include those with derivative rights to reside in the UK such as the non-EU national primary carer of a British citizen or the primary carer of an EU national child. There is no indication of any provision as yet for frontier workers, although the Government has said that their rights will be protected in either a deal or no-deal scenario.
Appendix W
• Start – up: This category will be introduced on 29 March 2019 and is for people seeking to establish a business in the UK for the first time. Applicants must have an innovative, viable and scalable business idea which is supported by an 'endorsing body'. Leave to remain will be granted for two years and does not count towards settlement in the UK, but applicants may progress into the Innovator category.
• Innovator: This category will be introduced on 29 March 2019 and is for more experienced businesspeople seeking to establish a business in the UK. Applicants must have an innovative, viable, scalable business idea which is supported by an 'endorsing body'. With some exceptions, applicants must have funding to of £50,000 to invest in their business. Applicants can apply for settlement after three years in this category and they can extend their stay indefinitely for as long as they meet the requirements.
Those who held leave in the Tier 1 (Entrepreneur) category before 29 March 2019 can extend in that category until 5 April 2023 and can apply for settlement until 5 April 2025.
Endorsing bodies
To qualify in the Start-up or Innovator category, applicants must be supported by an 'endorsing body' listed on the gov.uk website, which has not as yet been published, and will include UK higher education institutions and organisations with a proven track record of supporting UK entrepreneurs and which are supported by a UK or devolved government department.
The endorsing body will be required to assess applicants' business ventures against the endorsement criteria set out in the Rules and conduct regular check-ups to ensure that the person's business is making reasonable progress. They must withdraw endorsement if the person no longer meets the criteria. This is a big responsibility and we wonder how many organisations will be prepared to take this on. Potential entrepreneurs may lose out if there is a lack of willing endorsing bodies or if there is no endorsing body with knowledge and experience in the applicant's business sector.
Settlement
The requirements for an Innovator to qualify for Settlement are stringent including showing that at least two out of a list of requirements have been met which include that: 'the number of the business's customers has at least doubled within the most recent three years and is currently higher than the mean number if customers for other UK businesses offering comparable main products or services' or that: 'The business has created at least 5 full time jobs for resident works which have an average salary of at least £25,000 a year (gross pay, excluding any expenses)'.
Requirements such as these may be difficult to prove and these stringent settlement requirements may impact on the number of entrepreneurs willing to bring their talents to the UK. Applicants can continue to extend their stay indefinitely if they do not meet the settlement requirements, but this will be subject to their endorsing body continuing to regularly check and confirm that their business is making 'reasonable progress' or that they are pursuing a new venture which meets the endorsement criteria.
Tier 1 (Investor)
Significant changes have been made to the Tier 1 (Investor) route in an attempt to tighten it up following recent criticism over the character of some applicants using the route. Applicants will be required to show that they have either held the funds of £2 million for the last two years (instead of the previous 90-day requirement) or prove the source of the funds.
UK banks must confirm that they have carried out due diligence and Know Your Customer checks and most significantly applicants will no longer be allowed to invest in UK Government bonds unless they held leave in this category before 29 March 2019 and they are extending before 6 April 2023. The rules around investment in UK companies are stricter.
Some applicants may no longer consider the route viable if they view that the restrictions on the types of eligible investment are too onerous.
Conclusion
The changes spell a move away from the points-based system and towards a more simple drafting style in the immigration rules which is welcome. However this spells the tightening up of investor and entrepreneur routes which may have an impact on the numbers who are willing to take a punt on the UK and to invest their funds and talents here. The question is whether the UK should be opening up rather than restricting these routes in the current economic environment. If you have any questions please contact Gillian McKearney.