Tech startups' wish list: Easier visas, tax breaks and fewer rules around the sharing economy

Entrepreneurs have set out a manifesto for change, but just because it's good for startups does that mean we should implement it?
Written by Steve Ranger, Global News Director

We're meandering towards the next general election in the UK, which means various interest groups are offering their wisdom to politicians about what needs to be done to help their respective industries.

The latest wish-list comes from the Coalition for a Digital Economy (Coadec) a group that campaigns on behalf of digital startups in the UK with supporters including entrepreneurs, developers, VCs, and angel investors, and which is sponsored by Google among others. The manifesto is written by Coadec's executive director Guy Levin who previously worked as an economic adviser to the then shadow chancellor George Osborne.

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A number of the ideas have some merit: for example, offering tax relief to venture capitalists to encourage them to invest more in young companies, while reducing taxes on entrepreneurs may be of some help to companies that complain about the lack of funding available in the UK. Some, like boosting broadband speeds or spending more on training teachers to teach tech, are uncontroversial.

Other ideas in the manifesto include offering tax breaks to developers who volunteer to teach programming in schools (although it's worth noting many companies already allow and encourage staff to volunteer in schools without any incentive) and making it easier for government to buy from smaller businesses, which is spot on. Setting up a legal framework for Bitcoin and other cryptocurrencies is eye-catching if unlikely.

But other ideas seem to reflect a deeply metropolitan view of the startup world: for example, complaints about the lack of affordable office space have little currency outside of Hoxton.

And the argument behind some of the other requests is less clear cut to me. Coadec calls on the government to make it easier for startups to hire from overseas, something it describes as "exceptionally complex and bureaucratic".

Currently if a startup wants to hire programmers or developer from outside the EU it must be willing to pay more than £22,800 and advertise the role in the UK for 28 days to demonstrate that there were no suitable local workers. Coadec argues this "complexity, time and cost is damaging" and said the salary threshold is a barrier for many startups, which often pay low salaries but offer equity instead. As such, it wants the government to remove the salary threshold for digital workers, and exempt these roles from the requirement to advertise as well.

While this can help startups get moving more quickly and cheaply, it's unclear that there is skills shortage in the UK. And even if there is, the best way to deal with it is probably not to hire developers from abroad on low salaries (which could depress the market for local talent) but the make sure that young people are given the right digital skills they need. It would also be hard to limit any relaxing of visa rules to startups alone.

In fact, a startup looking for skills might be better moving elsewhere in the UK (and score cheaper rent, too) which would benefit regions not so blessed with tech jobs right now. In that case, a call for tax breaks for startups willing to move to areas of high unemployment would be a better demand to make, as would a request for more apprenticeships, offering another way of fixing any skills shortage.

Coadec also wants the next government to take a more hands-off approach to allow what it calls "permissionless innovation" to flourish, by not jumping in to regulate a new technology. It "should try to create the space for innovation rather than taking a precautionary approach in all instances," the manifesto adds.

It says one area where regulation can be a barrier to innovation and the growth of startups is the sharing economy, which according to the manifesto presents a massive opportunity for the UK as it allows consumers and businesses to unlock "dead assets" like spare rooms and parking spaces.

"Technology has changed the level of regulation that is needed. For example, laws and regulations from a pre-digital age do not take into account the value of user ratings and social trust, GPS tracking, or verified online IDs. The next government should hold a 'Red Tape Challenge' style review into regulatory and legislative rules that affect the Sharing Economy, with a presumption that regulations should be removed where technological solutions allow," the report says.

But many are now somewhat more cautious about the sharing economy; it's increasingly being recast as less about trust and sharing and more as a consequence of a tough financial climate which is forcing people to try to make money outside of their normal working day. Sharing economy pioneers such as San Francisco are already debating the unexpected side-effects of these innovations.

For the government to step back from regulating before the broader consequences are clear would seem to be very much premature. What some see as positive disruption others may see as deregulation and confusion, creating freedom for some, but uncertainty for many.

There are a number of pressing digital issues the next government needs to deal with, probably the most important is making sure that the benefits of the emerging digital economy are shared across all groups and all regions in the country, which this manifesto doesn't especially address.

Certainly London's nascent startup economy has had some positive consequences, creating jobs and helping to regenerate an unlovely part of East London for starters. And undoubtedly more can be done to help with that, and politicians should take the needs of the technology industry seriously. But it's also important for politicians to keep in mind that the short term demands of startups may not always be entirely in line with the greater, longer-term needs of the country as a whole.

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