UK academic supports call for UK immigration to auction investor visas

Will Hutton, a noted UK author, economist, journalist and academic, has said that the UK should 'auction residential visas to the world's super-rich'. The proceeds should be spent on building houses, training the young and unemployed and creating jobs. This would send out the message that 'immigration is beneficial'.


Mr Hutton is the principal of Hertford College Oxford. He was the editor of the left-of-centre Sunday newspaper The Observer for four years and has written several books about politics and economics. On Sunday 2nd March 2014, he wrote a piece for the Observer in support of a report by the UK government's Migration Advisory Committee (MAC).


On 25th February 2014, the MAC released a report on the Tier 1 (Investor) visa. The report was commissioned by the UK's Home Office. The MAC was asked to examine the visa and make suggestions on how it could be improved.

 

 

Open for business

The report found that the Tier 1 (Investor) visa probably plays a small role in showing the world that the UK is 'open for business' but does not seem to provide any real economic benefit to the country.
 

To qualify for a Tier 1 (Investor) visa applicants must score 75 points in a points-based test. To score 75 points you must either

• make an investment of at least £1m of your own money in a UK regulated financial institution or
• Have £2m in assets and have at least £1m held in a UK regulated financial institution and disposable to be used in the UK.

 

There is no requirement that Tier 1 (Investor applicants should speak English nor that they should prove that they have sufficient funds to support themselves in the UK.

 

 

Spouse and dependent children

If they can fulfil one of the two criteria above, they will qualify for a visa. The visa lasts for three years and four months and can be renewed. Visa holders can apply for visas for their spouse and dependent children. Those who invest £1m can apply for permanent residence visas after five years.


Those who invest £5m can apply for Indefinite Leave to Remain (ILR) after three years and those who invest £10m can apply for ILR after two years.


But the MAC found that these investments were of little benefit to the UK government. Even if the investment I made in UK government bonds (gilts), the money is only lent to the government. As the government has no difficulty in selling its bonds in any event, this is of little benefit.

 

 

MAC suggestions

The MAC suggested that the government should

• Double the minimum qualifying investment for investors from £1m to £2m and
• consider selling 100 'premium' investor visas each year. These could be sold at auction with a reserve price of £2.5m. Around £50m of this could be invested in a 'good causes fund'

The chairman of the MAC, Professor David Metcalf, told journalists 'When people say 'Isn't it awful to sell visas', I reply that it is better than giving them away, which is what we're doing now'.

 

 

Chauffeurs and Dior suits

In his Observer article, Mr Hutton agrees with the professor. He says that those who come to the UK on investor visas do little for the UK economy, 'They might hire the odd chauffeur or buy a Dior suit, but the main consequence has been sky-high central London property prices'.


In fact, Mr Hutton says, the government should go further. It should create a fund of £500m from the sale of Tier 1 (Investor) visas, Tier 1 (Entrepreneur) visas and from selling off some work permits to companies wanting to employ foreign skilled workers.


All of this, Mr Hutton says, would have the effect of popularising immigration in the UK. Opinion polls repeatedly show that the great majority of the UK population favours a reduction in immigration. Mr Hutton blames this on the anti-immigration, anti-European Union UK Independence Party and its leader Nigel Farage.

 

 

'Blame the EU'

Hutton says Mr Farage 'has singlehandedly done more to stir anti-immigrant, anti-openness sentiment than any recent politician'. Mr Hutton says that 'long-standing British virtues are under siege and at risk'. He says that Mr Farage encourages UK voters to 'blame the EU, in particular, and immigrants, in general, for our self-made problems'.


He said 'Making serious money from immigration won't reverse this, but it might tilt the balance – and perhaps buy some time while EU inflows subside. It's worth a shot'.


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Australian immigration say student visa applications up

More than 74,000 international students applied for Australian student visas in the three months to September 2013, according to Australian immigration. This is the highest figure for four years and seems to show that Australia has recovered as a favoured destination for international students after a three year slump in popularity.


Australia became extremely popular as a destination for international students during the first decade of the 21st century. In 2002, 274,000 international students began study in Australia.


By 2009, there were nearly 500,000 people in Australia with student visas. While this was welcomed by many Australians, others complained that many students, from India in particular, were using forged academic qualifications to gain entry to the country and were coming to Australia not as students but as permanent migrants.

 

 

'A migration outcome'

An Australian government report, the Knight Report, into immigration at the time found that 'Some less reputable institutions set up courses with no serious educational purpose but basically designed to get fees from students en route to a migration outcome'.


Facing pressure at home, the Labor government of Julia Gillard introduced far greater checks on student visa applicants and also increased the amount of money that a student needed in order to gain entry to Australia.


At the same time, the global financial crisis and a strong Australian dollar made it harder for international students to afford to study abroad.

 

 

Attacks on Indian students

On top of this in 2009, there were a series of high-profile attacks on Indian students in Melbourne. There were approximately 150 attacks over the course of a year. All these factors meant that demand for Australian education from India dropped off dramatically.


Since 2010, Australia has sought to undo the damage done in the previous two years. Higher education is Australia's second biggest export and the country could ill-afford to see it damaged.


'Streamlined visa processing' for potential students who wish to enrol at certain 'trusted' institutions has reduced the number of checks that an applicant must face.

 

 

22 more trusted institutions

So far, the trusted institutions are all universities but Australia's new Coalition government has said that it will roll out the streamlined program to a further 22 institutions, none of which are universities.

This, the government hopes, will have the effect of expanding the sector yet further.


In October 2013, the Australian immigration minister, Scott Morrison, and the education minister Chris Pyne announced that students from a number of key markets would be able to apply for a student visa with up to $A40 000 less in the bank'.


This will happen because Australian immigration currently requires applicants from some countries considered to be 'high risk' to be able to show that they have a great deal of money in their account before they can study in Australia. The highest risk countries are in Assessment Level (AL) 5. The new system will reduce the number of Assessment Levels to three.

 

 

Applications up

Greg Evans of Universities Australia, told The Guardian that applications from India were up by 7% in 2013 on 2012. Applications from Nepal are up by 29% and from Vietnam by 42%. He said that he believes that the sector can recover to reach the level it was at before 2009.


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Row breaks out in UK government over immigration

Open dissent has broken out in the UK's Coalition government over immigration. The UK's political system usually requires members of the government to 'toe the party line'. This means keeping personal opinions private and speaking publicly in support of government policy. However, in the last few days, ministers have launched a war of words over immigration policy.


In particular, a war of words has broken out between the Business Secretary Vince Cable and the Immigration Minister James Brokenshire over the government's pledge to reduce immigration to 'tens of thousands' a year by 2015.


Mr Cable wrote an article for the London newspaper The Evening Standard on 3rd March 2014. Mr Cable said that London 'illustrates the broadly positive impact of immigration on Britain'. He added '34% of the city's population is foreign-born'.

 

 

'Outcasts' quickly become assimilated

He said that successive waves of immigrants have arrived in London as outcasts but have quickly become assimilated into the general population. He said that, historically, immigration was more or less evenly counterbalanced by the number of people choosing to leave the country and live elsewhere.


However, in the last fifteen years, he said, immigration has outstripped emigration by about 200,000 people per year. He acknowledged that this has caused some legitimate concerns but urged UK politicians to 'start by sticking to the facts' when debating immigration in public.


He said

• The level of immigration into the UK is not particularly high by European standards and is balanced by levels of UK emigration. He said 'roughly two million Brits reside on the Continent, about the same as continental Europeans living here: one of the liberating achievements of the EU'.
• Foreign nationals tend to pay more in tax than they claim in benefits
• Immigrants tend to be better educated than Britons
• Foreign students contribute £9bn to the UK economy annually
• 'Benefits tourism' is not prevalent. Only 3% of those on jobseekers allowance are from the EU

 

 

'Tens of thousands'

Mr Cable then criticised the government's target of cutting net immigration to 'tens of thousands' per year. This target is based on a promise made by UK Prime Minister David Cameron in 2010. Mr Cameron promised, on a television show, to cut net immigration into the UK from the then level of around 250,000 per annum to 'tens of thousands a year' by 2015.


Mr Cameron was then the leader of the main opposition party, the Conservatives. At the election, the Conservatives did not win an overall majority but were the largest party in the House of Commons.

After negotiations, the Conservatives formed a coalition with the smaller Liberal Democrats.


The Liberal Democrats have traditionally been much more in favour of immigration than the Conservatives. Nonetheless, the 'tens of thousands' pledge became government policy.

 

 

Coalition has no 'tens of thousands' target

But in his article, Mr Cable said that the 'tens of thousands' pledge was a Conservative one. He said 'Let me be clear – the Coalition Government has no such target. It is a Conservative manifesto pledge and frankly, if they had any sense, they would drop it'.


He warned 'either they will have egg on their faces next year as the target is missed or they will undermine the UK economy as they try to meet it'.


On Thursday 6th March 2014, in his first major speech as immigration minister, Mr Brokenshire, said 'Vince Cable has made a number of statements about immigration in the last week and, to be frank, a lot of them were simply incorrect. You have to wonder why he keeps asserting these falsehoods'

 

 

Immigration can 'force down wages'

Mr Brokenshire said 'he [Mr Cable] said rising immigration is 'good news'…Mass immigration puts pressure on social cohesion, on public services and infrastructure… it can force down wages and displace local people from the job market.


'The winners are the haves like Vince, but the people who lose out are from working class families, they're ethnic minorities and recent immigrants themselves. Try telling them that rising immigration is good news'.


Mr Brokenshire said that Mr Cable was wrong about almost everything he said about immigration. In a surprisingly personal and blunt attack, he accused Mr Cable of being 'condescending' and a failure to stick to the facts.

 

 

Cable should 'stick to the facts'

He said that Mr Cable should abide by his own suggestion and 'stick to the facts' on immigration.


Since then, the Liberal Democrat leader Nick Clegg has accused the Conservatives of being 'obsessed' with the 'tens of thousands' target over which, he says, they 'have no control'.

Lib Dems will stress benefits of EU

'The Lib Dems on the other hand will stress the benefits of EU membership and try to win votes that way.


'This sort of disagreement will become more and more common in the last year of the Coalition Government as the parties try to differentiate themselves before the 2015 General Election'.


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Immigrant entrepreneurs found 14% of UK start-up businesses

14% of start-up businesses in the UK were founded by immigrant entrepreneurs, according to a newly released report. The report says that there are 456,073 immigrant entrepreneurs working in the UK who have founded 464,527 businesses which employ 8.3m people.


The report calls on the government to 'fly the flag for Britain' by 'encouraging entrepreneurs from all corners of the world to settle and launch businesses in the UK'.


The Report; Migrant Entrepreneurs: Building Our Businesses, Creating Our Jobs, was prepared by the Centre for Entrepreneurs and DueDil, a company that provides online information on UK companies.

 

 

Immigrants more likely to start companies

It says that immigrants are more likely to start businesses than native Britons and are likely to do so at a younger age. 17.2% of non-UK nationals have started their own business as opposed to only 10.4% of Britons. They also do so at a younger age. They generally do so at the age of 44.3 years, whereas British entrepreneurs set up in business at the age of 52.1, on average.


Damian Kimmelman, the founder of DueDil, is an American-born immigrant himself. Writing in the online paper Huffpost, Mr Kimmelman said 'In my experience, this country is really welcoming to foreign entrepreneurs. I got my visa within two days, which would have been unthinkable in America.'

 

 

'Hostility' towards immigration a risk to UK economy

But the report is clearly concerned that the UK is less than welcoming to some migrant entrepreneurs. Luke Johnson, the chairman of the Centre for Entrepreneurs, wrote an introduction in which he warns of 'hostility' towards immigration.


He says 'The current tone of hostility towards immigration – even within mainstream political debate – could prove damaging for future job creation in the UK, especially in high-growth entrepreneurial sectors'.


The report's authors call on all UK political parties to reaffirm their commitment to the Tier 1 (Entrepreneur) visa and the Tier 1 (Graduate Entrepreneur) visa and urges them to 'make the intellectual case to the public as to why there should be no cap on entrepreneur visas'.


No cap on Tier 1 (Entrepreneur) visas


In fact there is no cap on entrepreneur visas at present though there is an annual cap of 2,000 on the number of graduate entrepreneur visas.


The report points out that recent opinion polls have shown that the UK public is less hostile towards foreign entrepreneurs than towards immigrants in general. It cites two recent polls which showed that, while 68% of those polled believed immigration should be reduced, 44% believe that foreign entrepreneurs 'make a positive contribution to the UK'.


The report says that 'Britain relies heavily on entrepreneurial migrants to launch businesses, create jobs and grow the economy'.

 

 

Entrepreneurs from 155 countries in UK

Entrepreneurial foreigners have come from 155 countries around the world to start UK businesses. Nearly 50,000 have come from the Republic of Ireland. There were also large numbers from India, Germany and the USA.
 

The top home-countries for foreign-born UK entrepreneurs were

1. Ireland
2. India
3. Germany
4. USA
5. China
6. Poland
7. France
8. Italy
9. Pakistan
10. Nigeria
11. Australia
12. Netherlands
13. Norway

 

 

Most migrant businesses in London

Most migrant businesses are in London; 187,899 businesses, around 40% of the total. There are also many more in towns around London such as Harrow, Ilford, Twickenham and Kingston upon Thames. Once these are taken into account, Greater London is home to nearly half of all migrant business start-ups.


Other notable centres of immigrant enterprise are Birmingham, the UK's second largest city, Manchester and Reading as well as Cardiff, the capital of Wales and Belfast in Northern Ireland.
 

Foreign-born entrepreneurs operate in all sectors of the economy from hospitality to information technology. The highest number of migrant-founded companies can be found in the following sectors

1. Construction 47,813
2. Consumer goods and services35,491
3. IT28,320
4. Manufacturing and heavy industry23,359
5. Management consultancy15,123
6. Media and entertainment14,563

 

 

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UK immigration committee recommends Tier 1 visa-auction

The UK's Migration Advisory Committee (MAC) has recommended that there should be changes to the Tier 1 (Investor) visa because they say it is of questionable benefit to the UK taxpayer. One of their recommendations is that the UK should auction off 100 premium investor visas each year in a sealed auction.


The UK has had an investor visa since 1994. The Tier 1 (Investor) visa was instituted as part of the UK's five-tier visa system in 2008. The MAC's chairman, Professor David Metcalf has previously questioned the value of the Investor visa route.


The MAC report says that 'the underlying policy objective of the Tier 1 (Investor) route is not readily apparent'.

 

 

Tier 1 (Investor) visa good for wealthy non-Europeans

The report, which was released on 25th February 2014, says that the people who get the best deal from the Tier 1 (Investor) stream are wealthy citizens from outside the European Economic Area who get to qualify for permanent resident status fairly quickly for a fairly reasonable cost.


Those that meet the residency requirements over a period of five years (or less in some circumstances) and pass the life in the UK test can then apply for citizenship.


At a press at the release of the report, Professor Metcalf told journalists 'The present system, it seems, is designed to minimise the gains to UK residents and maximise the gains to the migrants'.

 

 

'The UK is open for business'

The MAC does say that the Tier 1 (Investor) visa doesn't seem to do any harm to the UK and sends out a signal that 'the UK is open for business'.


The UK instated its first investor visa in 1994. The Tier 1 (Investor) visa currently allows wealthy foreign nationals to qualify for temporary resident visas if they invest a minimum of £1m in an approved investment in the UK.


Generally, Tier 1 (Investor) visa applicants make the qualifying investment in UK government bonds or 'gilts' though they can invest in other investments such as shares providing the investment is held in a regulated financial institution.

 

 

Permanent residence

A Tier 1 (Investor) visa lasts for three years and four months but can be extended for a further two years. Tier 1 (Investor) visa holders can apply for permanent resident visas after holding their Investor visa for 5 years however, if they invest £5m, they can apply three years after that investment and if they invest £10m, they can apply two years after the investment is made.


The report notes that the visa is growing in popularity. In 2008, when the UK's five-tier immigration system was set up, about 100 Tier 1 (Investor) visas were issued. That figure has risen to about 500 a year in 2013. The presence of wealthy people and their families in the UK probably does create a small economic benefit, the report says, though it would be difficult to quantify.


But the report says that the investment made by Investor visa applicants is 'a loan not a gift' so is of little financial benefit to the government which is able to sell UK gilts to investors very easily in any event.

 

 

Premium visas

This is why the MAC recommends auctioning off some 'premium' visas each year. The professor told journalists 'When people say 'Isn't it awful to sell visas', I reply that it is better than giving them away, which is what we're doing now'.


The report also notes that the minimum qualifying investment; £1m, has not been increased since 1994. In the twenty years since then, the value of £1m has more or less halved.


The MAC recommends that the minimum qualifying investment should, therefore, be doubled to £2m.

 

 

Recommendations

The committee's other recommendations are

• Investors should be encouraged to invest in something other than gilts. The MAC recommends that investors should be able to invest like investors in general
• Applicants should not be able to use funds that they have borrowed as a qualifying investment
• Residence requirements for applicants making larger investments should be relaxed. Currently, Tier 1 (Investors) must be in the UK for 185 days per year to qualify for resident status. This should be relaxed for those making larger investments to 90 days per year. As yet, few people make higher investments because there is little benefit to them in doing so. They will qualify for permanent resident status in the end in any event.
• The government should auction off a number, perhaps 100, of 'premium route' investor visas each year to applicants who will submit sealed bids. There should be a minimum price of £2.5m. This money would not be a loan but a purchase price. Any money raised should go to good causes. Applicants would still need to be cleared by due diligence checks before receiving UK resident status.
• The government should consider an accelerated citizenship process for premium visa applicants.

The Home Secretary will now consider the MAC's findings and will respond later this year.


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Canadian citizenship rules make integration more difficult

A new report from a Canadian think tank alleges that recent changes to the Canadian citizenship regime favour some immigrants over others and run contrary to the Canadian multicultural ethos.


The report, Becoming Canadian, was written for the Institute for Research into Public Policy by Dr Elke Winter. The Institute is Canada's oldest non-partisan think tank. Dr Winter says that the Conservative government of Stephen Harper, elected in 2006, has introduced changes to the citizenship process that favour educated, and possibly white, immigrants.
 

Dr Winter says that when it came to power, the Harper government

• Issued a new citizenship guide,
• Introduced anti-fraud measures to prevent fraudulent citizenship claims
• Designed a new citizenship test
• Modified the Canadian citizenship test and
• Increased the language requirements for citizenship

 

 

Harder to obtain citizenship

The Canadian government said that these measures were designed to 'enhance the value of Canadian citizenship' but Dr Winter says that their effect has been to make it harder to get citizenship, particularly for those who do not speak French or English as a first language and those with lower levels of education. There is some suggestion that non-Europeans are disadvantaged too.


Dr Winter says that, because Canada is still a country that grows its population primarily through immigration (67% of the annual population growth comprises naturalized rather than new-born Canadians) the immigration rules and procedures are extremely important to the way in which the country develops.


Since 2006, she says, the number of people becoming citizens annually has fallen sharply. In 2008, 176,572 people were made citizens. In 2012, only 113, 142 did so. At the same time, the number of citizenship applications has risen sharply (from 242,400 to 317,440). The waiting time for a citizenship application to be processed has risen from 25 to 35 months.

 

 

New rules favour educated Europeans

Dr Winter argues that, by linking citizenship to language ability and a Canadian citizenship test that tests applicants on Canada's British past, the country undervalues some migrants and privileges educated, European migrants over Asian and African ones.


'Even if lowering the overall number of permanent residents who become citizens is not a purpose of the new policy measures, slowing down access to Canadian citizenship is a de facto outcome' the report says.
 

Dr Winter says that the government's measures have been designed to

• Control immigration
• Increase social cohesion
• Increase national security and to
• Improve new citizens' economic and social integration

 

 

Results are 'more stratified by socio-economic background '

However, she finds that, either intentionally or otherwise, 'this approach has produced results that are 'more stratified by socio-economic background, and arguably by ethnocultural origin that the original model'.


Nonetheless, she concedes that 'Canada has remained a world leader in converting immigrants into citizens, with more than 75% of permanent residents being granted citizenship'.


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UK and EU move towards new immigration clash

A new proposal from the UK's Coalition government to limit access to social welfare payments by EU citizens has been branded illegal by the European Commission. This pronouncement escalates a war of words between the EU and the UK over the free movement of European workers.


The UK's Work and Pensions Minister, Ian Duncan Smith, has decreed that, from March 1st onwards, EU migrants to the UK must normally be able to show that they have earned at least £150 per week for at least three months before they can claim UK benefits such as Jobseekers Allowance (unemployment benefit).


Mr Duncan Smith said that EU citizens who had been in work but had not earned £150 per week for the required period would be tested to see whether they had been in 'genuine and effective' employment or they would be denied benefits. The EU's definition of a worker includes a requirement that the work engaged in must be genuine and effective.

 

 

Minimum earnings threshold

But on 19th February 2014, a spokesman for the European Commission told journalists that using 'a minimum earnings threshold' to decide who would be eligible for benefits would be contrary to European law.


The spokesman said that the EU's definition of a worker was 'any person who carries out genuine and effective work for which he or she is paid under the direction of someone else'. He continued 'The Court of Justice's case law makes it clear that…a definition of a worker according to the amount he or she earns is not compatible with EU law.


The UK government insists that its definition of work is in accord with EU law. It says that the fact that those earning less than £150 per week will be able to prove that they qualify as 'workers' by showing that they engage in 'genuine and effective' work means that they are abiding by the EU's definition of 'a worker'.

 

 

EC will scrutinise measures 'very closely'

The European Commission says that it has asked the UK government to send the full details of its proposals to the Commission. The spokesman said 'The European Commission will scrutinise very closely the latest measures announced by the UK to ensure their full compliance with EU law'.


This is merely the latest episode in a running battle between the UK and the EU over immigration. The UK's Coalition government has introduced numerous changes to prevent the scourge of 'benefits tourism'; that is, EU citizens coming to the UK to claim UK benefits rather than to work.


The European Commission insists that the threat of 'benefits tourism' is 'a myth'. On 10th February, the European Commissioner for Employment, Social Affairs and Inclusion, Laszlo Andor, gave a speech in Bristol, (UK) in which he laid out data which show that EU migrants to the UK are actually far less likely to claim benefits than UK citizens and were more likely to be better educated and to be in work.

 

 

EC attacking UK for demonising EU migrants

Mr Andor, along with other senior European Commission figures, has attacked the UK's government for demonising EU migrants and for ignoring the facts when formulating policy. If their intention was to make the UK government change course, it seems to have had no effect.


In fact, it may be that Mr Cameron's government is actually seeking out arguments with the European Commission for electoral purposes.


The UK has struggled with membership of the European Union since it joined in 1975. Most of the press is virulently anti-EU and there is a sizeable proportion of the electorate that would like to leave the EU or, at the very least, hold a referendum on the UK's EU membership.

 

 

Cameron's Conservatives under attack

Prime Minister David Cameron is leader of the right-wing Conservative Party, traditionally the home of voters who are dissatisfied with the UK's EU-membership.


However, in recent years, the single-issue pressure group The UK Independence Party has scored significant electoral gains. Polls show that UKIP currently scores a fairly steady 12% support in opinion polls.


UKIP is thought to gain most of its support at the expense Mr Cameron's Conservatives Party. Mr Cameron is said to fear that UKIP can cost him the next general election in 2015 by splitting the right-wing vote and allowing the left-wing Labour Party to win more seats.

 

 

Conservatives have become more Eurosceptic

On top of this, Mr Cameron's own party has become much more negative about Europe since 2010 when most of the newly elected Conservative MPs were ardently 'Eurosceptic'.


Therefore, it may well be in Mr Cameron's interests to create an argument with 'Europe' to boost his Eurosceptic credentials ahead of the European elections in May 2014.


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