My speech begins with the line that I have listened carefully to the arguments. I think the arguments have been well made. I will try to set out for the benefit of the Committee the rationale behind this and then answer some of the specific questions. I underline the Government’s commitment to ensuring that the United Kingdom remains an attractive destination for legitimate international investors. The tier 1 investor visa route allows migrants to make a significant financial contribution to the UK, either through the purchase of share or loan capital in UK businesses, or through UK government bonds. The route does not recognise the purchase of property as a qualifying investment.
The proposed amendment would not only result in the immediate loss of millions of pounds of capital inflow, but deliver a powerful global message that foreign investors are no longer welcome in the UK. This is a message the Government have no desire to send. The Government are clear in their commitment to ensuring that the investor route delivers benefits to UK taxpayers and it remains an important component of the UK’s visa offer for high value migrants.
Acting on an independent Migration Advisory Committee review of the tier 1 investor category, the Government introduced a package of reforms in
November 2014. These included taking additional powers to refuse applications where the funds have been obtained unlawfully, where the applicant is not in control of the funds and where the granting of the application would not be conducive to the public good. The Government also raised the investment threshold from £1 million to £2 million and removed a provision which allowed investments to be funded through a loan. Since April last year the immigration rules have also required that prospective tier 1 applicants must open a UK bank account before their application for a visa is allowed. This ensures they have undergone financial due diligence checks before they are granted an investor visa.
I thank the noble Lord, Lord Wallace of Saltaire, for raising his concerns that visas of this nature have no place in a sovereign nation and rather argue that this may be the preserve of tax havens. It would be correct to observe that some so-called tax havens operate citizenship-by-investment schemes, whereby wealthy individuals may be able to effectively purchase a second nationality in return for a sizeable donation, often paid directly to the host Government. I make it absolutely clear that the UK’s tier 1 investor visa is not such a scheme. The UK’s investor visa offers no guarantee of an extension, beyond the initial two or three-year term, let alone settlement, or citizenship. At each of these points, applicants must not only demonstrate that they have continued to hold the appropriate qualifying investments, but are also subjected to further robust checks.
Let me deal with some of the points that have been raised and provide a bit of additional information. The noble Lord, Lord Howarth, asked about precautions. I think my answer addressed some of the points he raised about due diligence, which is carried out in the process of securing the bank account. Also, the United Kingdom maintains some of the toughest anti-money laundering laws in the world and is respected as such. The general grounds for refusal in immigration rules enable the Government to refuse investor visas where the applicant’s presence in the UK is not conducive to the public good, which means that we carry out checks on their criminal background. Under a pilot scheme, investor visa applicants are required to provide criminal record checks from their country of residence as a condition of applying for the visa.
As a result of all the changes that we have introduced, and which significantly toughen up the approach—this may speak to the point that the noble Lord, Lord Wallace, raised—in the last quarter for which figures are available we granted only 46 such visas compared to 274 in the corresponding period in the previous year. That is a reduction of 83%. Before the noble Lord, Lord Green, gets to his feet, let me say that some of that may have something to do with the general economic situation in some of the key countries from which people would normally apply for these visas. However, it might also reflect that the toughening of the rules is having the desired effect.