My Lords, special arrangements for foreigners from outside the EU, the EEA and Switzerland who were willing to invest—actually, only to loan by investing in government bonds—a minimum of £1 million were introduced by the Conservative Government in 1994. The introduction of a tiered categorisation for visas in 2008 placed them in tier 1.
The Migration Advisory Committee issued an extremely critical report in 2014. The chairman’s foreword is strongly written. It says that,
“the main beneficiaries are the migrants”,
although,
“the law firms, accountants and consultancies that help organise the affairs of such investors”,
argue that their arrival is “self-evidently beneficial” to the UK—that is, these advisers to the very rich act as a lobby to bring more very rich in—“But”, the chairman continued,
“we do not need such investment to fund the deficit”,
and, if we were hoping that they might become entrepreneurs in the UK,
“we already have an entrepreneur route”.
The foreword goes on that,
“it would be injudicious for the UK to enter into a ‘race to the bottom’, matching special offers recently introduced by, for example, Malta, Portugal, and Antigua”—
and, I might add, St Kitts and Nevis.
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In 2014, the last year for which I have figures, 1,173 main applicants entered by this route, together with a further 1,827 dependants. That is a total of 3,000—quite enough to attract the critical attention of Migration Watch. By comparison, only 91 succeeded in entering under the exceptional talent category, together with 29 dependants, and 127, with 200 or so dependants, under the graduate entrepreneur category. So our system appears to favour the super-rich over the talented and the enterprising.
It is a remarkably privileged route. Those who put in £5 million or £10 million get accelerated passage to permanent resident status within three years and two years respectively. In order to qualify for permanent resident status, they have to live in the country for only 185 days a year beforehand, so they can leave their mansions in London empty for half the year. They are promised a decision on their visa application within three weeks, unlike the 12 weeks or more of waiting required for ordinary applicants. I understand that it is possible to move from student visa status to tier 1 investor status without being required to leave the UK, again unlike ordinary poorer students. At least, that is what it says in a prospectus from one of the law firms which advises such rich investors, recommending that they might like at that point to transfer a couple of million pounds to each of their children in order to help them make the transition.
Sixty per cent of the successful applicants in this category between 2008 and 2014 came from two countries: Russia and China. A steady flow of wealthy Russians has been overtaken by a rising number of Chinese. Here, I turn to the Transparency International report of October 2015, Gold Rush: Investment Visas and Corrupt Capital Flows into the UK. I should mention
that Transparency International is a highly respected body, financially supported by, among others, several European Governments. It notes that,
“this visa scheme, as it currently operates”—
that is, after the very modest adjustments made in response to the MAC report the previous year—
“presents a major money laundering risk for the proceeds of corruption entering the UK”.
Checks on the sources of the wealth invested in UK gilts are perfunctory. Until April 2015, applicants were not required to open a UK bank account until after they had been granted a visa, so the Home Office operated what has been described as a blind faith system of believing the declaration given by the applicant. Post-visa checks are delegated to the private banks with which applicants open an account. No investigations have been led by UK law enforcement authorities against money laundering within the UK related to acts of corruption in Russia or China, so the Home Office has preferred not to ask how clean the money coming in has been. The report concludes that,
“there are significant opportunities for the corrupt to launder money through the UK with a significant degree of impunity and poor quality of reporting … to law enforcement”.
The Home Office accepted some of the MAC’s recommendations—mainly that the minimum investment should be raised from its 1994 level of £1 million to £2 million now. Other recommendations, including that there should be a fixed and limited number of such visas—the MAC suggested 100—with sealed bids to ensure that the Government gained the market value and that each applicant should be required to donate £500,000 to a UK good causes fund to demonstrate their contribution to British society, seem to have been ignored. The noble Lord, Lord Bates, promised, in a Written Statement in October 2014, that:
“The Government will also consult further on what sort of investment the route should encourage in order to deliver real economic benefits, and other improvements to the route. A consultation document will be published in due course”.—[Official Report, 16/10/14; col. WS 49.]
I have been unable to locate the promised document and look forward to the noble Lord, Lord Bates, informing us of where we can find it.
It is characteristic of the Government’s friendlier attitude to the super-rich than to the rest of us that it has concluded that the price mechanism—the immigrant skills charge—is right for tier 2, but is not right for tier 1, though competitive bidding for a limited number of places would seem an ideal way to test the market value of such visas. That suggests that the Government are treating the rich differently from the rest of us. I am sure they would not like to give that impression.
There are wider considerations about the impact of this scheme on British society and values. The MAC report notes that,
“the distribution of income matters”,
and that this drives greater inequality and worsens the pressures at the top of London’s housing market. Transparency International suggests that,
“golden visas damage public trust in the institution of citizenship”.
However, I am not sure how much importance the Conservatives attach to the idea of an inclusive community
of British citizens with equal rights. That is another idea which I hope the Conservatives would not like to get around.
I hope the Minister and the Home Office have taken note of the Canadian Government’s cancellation of their comparable scheme in 2014 in response to growing fears about the rising number of Chinese applicants and their suspected use of the scheme to use Canada as a safe haven for their money rather than as a place to live. Has the Home Office considered whether it should follow the Chinese example, or is it more concerned to compete with Malta and Antigua? There is something essentially grubby about selling the right to residence in Britain to wealthy foreigners, without questions asked. The right-wing media, and much of the Conservative Party, go on at length about the need to defend British sovereignty against any encroachment from Brussels or the Strasbourg European Court of Human Rights, yet here are the Government promoting the sale of visas to dodgy foreigners from dodgy countries. It is demeaning and indefensible.
I note that the Prime Minister is planning to hold an anti-corruption summit in May 2016 and has already invited representatives of a large number of reputable states. I am not sure about Russian and Chinese participation. No doubt the non-governmental community that monitors corruption will wish to challenge the apparent gap between Mr Cameron’s rhetoric and his Government’s practice. The tier 1 investor category looks like a prime candidate for abolition, unless the Home Office can persuade us that it intends to tighten checks and reduce numbers.
I look forward to the Minister’s response. Unless we receive satisfactory responses, and much more information, I will hope to persuade the House to support the abolition of this category on Report as a constructive way of reducing immigration and limiting the risks of importing crime and money laundering from overseas. I beg to move.