an immigration officer checking a passport at Terminal 1 at Heathrow Airport

A proposal to auction off 100 “premium” UK visas a year to wealthy foreigners has been met with angry warnings that Britain would be “trading” settlement to the highest bidder.

The Home Office’s independent immigration advisers on Tuesday suggested overhauling the current “investor visa” system – whereby foreigners buy Gilts worth £1m to £10m in return for fast-tracked settlement – because it provides little or no economic benefit to the UK.

Instead, the Migration Advisory Committee advocates a “sealed bidding” process, with a minimum £2m investment plus a £500,000 donation to a “good causes fund” to be distributed among schools, hospitals and charities.

Any extra money raised over the £2.5m auction reserve price would be channelled into the fund as a philanthropic gift. The plan is under consideration by home secretary Theresa May.

The existing investor visa has proved particularly popular with Chinese, Russian and Middle Eastern individuals, with 560 applications in the year to September 2013.

Charlie Pring, immigration senior counsel at law firm Taylor Wessing, warned ministers that accepting the auction proposal would mean “the risk of a perception that [the government] is trading British citizenship to the highest bidders without proper controls”.

But Sir David Metcalf, committee chairman, dismissed such criticisms.

“Some people say: ‘Isn’t it awful to sell off visas?’ Well, it is better than giving them away, which is what we are doing now,” Sir David said. “At the moment the Brits get very little out of this and the investors get an awful lot.”

The committee calculates that the current scheme results in about £500m of Gilts investment a year and says “this would barely fund two days’ worth of the national deficit”.

They are also sceptical of suggestions that visa applicants contribute to the economy by buying expensive property and hiring staff, on the basis that there is so much competition for luxury housing and services that these would be snapped up by other customers if the investors were not in the UK.

Private education – much sought after by overseas parents – was the only area of the economy the committee identified as a beneficiary of spending by incoming investors.

But the committee’s modest view of the economic impact of investor visa holders goes against recent research suggesting London’s super-rich spend an estimated £4bn a year on goods and services in Britain.

Ramidus Consulting, an economic consultancy, found wealthy incomers were “major contributors” to the UK economy.

Sandra Jones, consultant at Ramidus and an associate at the Centre for London think-tank, said foreign buyers of a £15m London home, for example, were likely to spend between £4m and £5m a year on goods and services. “And that is over and above any investment required to meet the terms of the visa application,” she said.

Household staff were one of the top expenses identified in the research, which surveyed estate agents, luxury services providers and lifestyle managers. While the migration committee thought the economic benefits of hiring staff were “not immediately evident”, Ms Jones said: “There are thousands of jobs created for household staff every year. This goes directly into the UK economy.”

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Letter in response to this report:

I’d be willing to sell my citizenship / From Mr Peter Verstage

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