British taxpayers are effectively paying wealthy foreigners to come and live in the UK because of the generosity of the immigration system, according to the head of the government’s independent migration advisory committee.
The golden visa system allows wealthy investors, predominantly Chinese and Russians, to acquire British citizenship if they invest in British assets. It is “absolutely not fit for purpose” and brings “absolutely no gain” to British people, Professor Sir David Metcalf told a committee of MPs on Tuesday.
The “Tier 1” investor visas require investors to buy at least £2m of British assets which can include gilts, shares or corporate loans, and they can keep the interest on these investments. This means that British people are “paying them to come here” Sir David said in evidence to the home affairs select committee.
“We’re giving settlement [rights] away,” he said. “We are paying interest on the gilts, and then when they get their citizenship, we give them the money back, so British residents are paying them to come here.”
Wealthy Chinese made up nearly half of all the investor visas granted by Britain last year, and their numbers doubled year-on-year, figures published earlier this year showed. A total of 357 “golden visas” were issued by Britain to Chinese nationals in the 12 months to the end of September 2014.
The second-largest group of people coming to Britain using the investor visa system were Russians, whose numbers rose by 69 per cent year on year.
Golden visas have become increasingly popular across Europe in the past couple of years as a way of attracting inward investment. Schemes granting residence or citizenship in exchange for investment attract about $7bn a year in foreign direct investment, and that is growing at about 20 per cent a year, figures from advisory firm Henley & Partners suggest.
But critics complain that they are being used by international villains to introduce corruption.
Last year a police investigation into suspected corruption in Portugal linked to the granting of residence permits for wealthy individuals led to the resignation of the country’s interior minister. Miguel Macedo denied any wrongdoing.
Of 1,700 golden visas issued by Portugal between 2012 and 2014, 80 per cent went to Chinese nationals.
The Portuguese scheme permitted property investment, which is barred in Britain.
UK immigration minister James Brokenshire told the committee that the government had reformed the golden visa system to include “greater scrutiny”.
This includes preventing applicants from taking out loans to raise the minimum £2m required, and requiring applicants to have a UK bank account, he said; this means they must meet banks’ scrutiny regulations.
Compliance is a rapidly growing arena for banks as rules such as the “know your client” regime become more demanding.
Mr Brokenshire told the committee of MPs that he would contact Sir David to discuss his concerns about the benefits to British residents of the current system.
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