Hamish McRae: Opening our doors to talent makes sense

Economic Studies

Message from Britain to foreigners: we want you if you are rich but we are not quite so keen if you are only a university student.

It is not quite as stark as that, but it is a strange juxtaposition, is it not, that we should be relaxing our visa rules for high net-worth individuals who wish to move to Britain at the very same time as we are tightening up on students who want to study here. It is all the odder when you consider that universities are a huge export earner. But it is, in a way, a parable for our global times. It reveals the tensions caused within a mature developed economy by, on the one hand, the desire to capture a share of the rising wealth of the emerging world, and on the other, the need to cope with the social tensions caused by large population movements. It also – and this is more encouraging – demonstrates some of the strengths of a mature developed nation such as our own.

We don't yet have details but it seems the Home Office will relax further the rules on visas for rich foreigners from outside the EU. They are already exempt from the cap on immigration, but from April they will qualify for permanent residency more swiftly (after two years if they bring in £10m, three years for £5m and five years for £1m), and they will only have to spend half the year here instead of nine months at present. The rationale is that our present terms are not competitive compared with some other countries, and that these people will bring in entrepreneurial skills as well as hard cash.

Maybe the best way to see this is to say that we are recognising that inward investment now comes as much from individuals as it does from companies. We are open to inward corporate investment from the emerging countries – look at the way the Tata Group has revived Jaguar Land Rover – while being more ambivalent about "selling" British residency. Yet nearly half of the world's new billionaires come from the emerging world. It is worth acknowledging, too, that this newspaper has been sustained for more than a decade by two owners from outside the UK, from Ireland and from Russia.

And the universities? Well, they are making their case and vigorously so. Some 9 per cent of their income comes from students from outside the European Economic Area, so they have to try to protect it. There have of course been abuses – fake colleges set up to get "students" into Britain – and that is intolerable. But our universities are such an important aspect of our international competitiveness that it should be possible to put some resources into making sure the visa system does not discriminate against genuine applicants.

Then there is the wider issue of what happens to students after they have finished their courses. One of the huge benefits that the US has from its non-American student body is the entrepreneurship that they bring to the country and then deploy there after they have finished their courses. Many of the most successful business start-ups in the US are founded by this group of people. Indeed as the balance of the world economy shifts towards the emerging world, the more connections a developed country has with these economies the more likely it is to prosper.

And that brings the argument full circle. There is a temptation, particularly after the recent economic downturn, to eulogise the economic vibrancy of the emerging world and contrast it with the sclerosis of the developed world. We talk of a global recession but in the two largest emerging economies – China and India – there was no recession at all. Anyone who travels much outside of Europe and North America will be aware of the extent to which we have lost influence. Why should they listen to us when they are so much more successful than we are?

We need to be sensitive to that and I am not sure we listen enough. But at the same time we should look at what people do as well as what they say. The fact remains that a lot of those who have done well in the emerging world want to have a base in Britain. The UK is the second-most popular destination, after the US, for foreign students.

We can make what we like of the reasons for this. For some of those high net-worth individuals it may just be that having UK permanent residence is an insurance policy. There have, apparently, been a lot of applications from Egyptians in recent days. For others it may be the sheer scale and variety of the UK non-national community. For others it may be cultural ties and opportunities. For students it is pretty clear: at the top end British universities are the only ones that can give the US elite schools a run for their money. We had more scholarships for foreign students so we could be sure we were getting the best candidates.

Whatever the reasons, it is a fact that the UK is a place people want to come to. They want to go to the US, to Canada and Australia too. Other European destinations have their attractions for different segments of the international community.

This is a hugely competitive world, and there is huge competition for talent. Being something of a magnet for talent must surely be a strong suit in the hand of cards we are trying nationally to play. We have, as a country, a right to try to choose people who will play their part in the national enterprise, rather than those who come for what they can take out, or worse, come to do us harm.

But in adjusting our visa requirements this should not be a numbers game. We need to be subtle, thoughtful and intelligent – qualities that in the past have not been as evident as perhaps they should have been.