The British business investment visa: A new model for investment migration in the UK

The UK suffers from persistent low investment which is holding back economic growth. Levels of business investment were at 11.1 per cent of GDP in 2023, placing the UK near the bottom of the G7. Small businesses in particular struggle to access early-stage equity finance to help them to scale up.

The UK currently does not have an investor migration route after it was closed in 2022. These are migration pathways for high net worth people who make significant capital investments. Just as skilled worker and global talent visas are designed to boost growth through people’s skills and labour market contribution, investor visas are designed to inject new capital into the economy. In principle, investor visas could therefore provide one avenue to help with the UK’s investment problem.

Past investor visas have often failed to live up to economic expectations. This is because schemes such as the UK’s tier 1 investor visa have failed to generate genuinely additional investment. The design of previous schemes has meant that investors tended to direct funds into low-risk assets that were likely to attract investment regardless, limiting their economic impact.

There are alternative designs for investor visas which are more likely to be economically successful. These might involve either a direct donation to the treasury or a pooled fund controlled by the government, which would then choose how to make investments.

However, investor visas come with potential security risks. Investment by residence schemes are vulnerable to misuse by malign actors, including via money laundering, investment fraud, and government corruption. Investment by citizenship schemes are even riskier, because they can enable criminals to obtain new identity documents and enhanced visa-free travel. Strategies for mitigating these risks include creating a specialist agency or operational unit to manage the visa, introducing multi-tier vetting, and capping overall numbers.

We therefore propose a new approach to investment migration in the UK focussed on maximising economic benefits and minimising the risks of abuse. Our recommendations are based on three key objectives.

1. Driving additional investment into innovative, high growth, and higher risk areas of the economy.
2. Mitigating money laundering and illicit finance risks.
3. Creating a targeted and tightly managed migration pathway.

Based on these objectives, we recommend that the UK introduces a one year pilot of a British business investment visa (BBIV). Unlike the UK's previous investor visa, which largely channelled funds into low risk assets with limited economic impact, the BBIV would direct investment to focus on innovative and high-growth sectors. There would be a minimum holding period of, for instance, 10 years and a rate of return set at significantly lower than market rates. There would be no fast track to citizenship and applicants would have to meet standard residency rules to live in the UK permanently.

The BBIV would involve a £5 million investment. Applicants would be expected to invest through a pooled investment vehicle overseen by the British Business Bank (BBB), the UK’s state owned economic development bank. They would make an initial investment of £3 million followed by £1 million when the visa is renewed after two and a half years and another £1 million after five years. Based on the strategic mandate of the BBB, these investments would be aligned with the government’s industrial strategy goals.

Our analysis suggests that this visa could provide meaningful economic benefits. Based on 100 new successful applications per year, annual inflows into the investment vehicle would stabilise at around £425 million once the scheme matures. If the BBB were to deploy additional capital at a scale of £425 million annually, we estimate this would generate approximately £300 million in private investment and around £900 million in additional GVA. Based on previous BBB estimates, this would support around 4,000 jobs across high-growth firms and sectors.

The government should introduce robust measures to minimise the risks of abuse of the BBIV. These include:

• creating a BBIV integrity fund from visa fees, which would resource a new operational unit in the Home Office staffed with trained professionals with relevant expertise to conduct due diligence checks on visa applications
• banning certain nationalities from using the visa where they are identified as posing a high cross-border money laundering risk
• capping overall numbers to ensure systems are not overwhelmed and to reduce the risk that malign actors are inadvertently admitted
• offering no fast-track route to citizenship. This would also address the principled objection that citizenship could in effect be ‘bought’ by the wealthy.

Finally, the visa pilot should only be extended subject to a review by the Independent Chief Inspector of Borders and Immigration (ICIBI) after its first year of operation. Only if the pilot is found to pose minimal risks of abuse should it be extended; otherwise it should be closed. At a later stage, the Migration Advisory Committee (MAC) should also be commissioned to evaluate the economic impact of the visa route. Together, we consider that this policy package offers the best prospects for a new investment migration route that supports inward investment and economic growth, while providing clear safeguards against money laundering and illicit finance.