Blunkett plans £500 immigrant charge

David Blunkett plans to place a £500 immigration application charge on the 900,000 foreigners who come to work, study or join family members in Britain each year.

The surcharge is likely to raise up to £500m, a quarter of the £1.8bn annual bill for the immigration and asylum system, and it is seen as part of a wider ministerial drive to make people pay for government services. Home Office officials believe the proposal is justified because the migrants will make a "windfall gain through being granted access to the UK labour market".

A Home Office assessment document says the intended effect was "to raise revenue from the increasing numbers of applicants who apply to enter the UK for economic or social reasons". It added: "It is both fair and economically efficient that Government, in raising revenue, should look to appropriate some of the windfall gain that migrants derive."

At present the Government can only charge for the actual cost of processing applications. The charge for a work permit is already due to rise from £95 to £125 in April but the surcharge would mean the total cost would be £625.

The plan, which is included in the latest Asylum and Immigration Bill, is expected to provoke protests from MPs and businesses that rely on migrant workers. Asylum-seekers will be exempt, but the fees will also be paid by the 18,000 people each year who need "leave to remain" stamps transferred to their passports.