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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