Asylum seekers to pay £10,000 towards living costs under new UK law

Means-tested scheme included in immigration and asylum bill condemned by charities for placing tax on refugees

Asylum seekers will be ordered to pay about £10,000 to cover their state-funded living costs or be denied settled status in the UK under a new law to be considered by MPs on Tuesday.

The means-tested scheme, compared by officials to student loans and included in the immigration and asylum bill, has been condemned by charities for placing a tax on refugees fleeing war, torture and famine.

The amount of money raised will be “relatively small”, because less than 15% of refugees earn more than £20,000 five years after being granted asylum, an immigration expert said.

Shabana Mahmood, the home secretary, has disclosed the plans, with Labour under intense pressure to reduce the £4bn spent each year on asylum accommodation and support.

“Receiving asylum support is a right, but it is also a responsibility. Once people can contribute and repay the generosity of the British people, we expect them to do so,” she said.

Asylum seekers are expected to have to repay a total of about £10,000, but the home secretary will be able to adjust the charge, the Home Office said.

If deemed to have sufficient funds, a successful asylum seeker will be asked to hand over a flat rate charge.

“Migrants will be required to pay off the full amount before being eligible for settlement,” the Home Office said.

Imran Hussain, director of external affairs at the Refugee Council, said: “Imposing what amounts to an extra tax on refugees, who the Home Office accepts have arrived here after fleeing persecution, torture and war, is unfair, impractical and makes it much harder for families to rebuild their lives and stand on their own feet.”

“The reason why many need asylum support is because the Home Office itself bans asylum seekers from working while their claims are being assessed … This new financial burden would only harm those who arrive on our shores with nothing.”

Zoe Dexter, housing and welfare manager at the Helen Bamber Foundation, said: “This proposal is simply more performative cruelty from the government. It is an announcement without the detail or, more importantly, a credible plan to tackle chronic delays in the asylum system.”

Whether the scheme is cost-efficient will depend on the choice of income threshold and how many people come under it.

In 2023, an estimated 13% of people granted refugee status five years earlier were earning at least £20,000, with the rest either not working or on lower earnings. The national living wage is just under £25,000.

Madeleine Sumption, director of the University of Oxford’s Migration Observatory, said: “The data suggests that unless thresholds were significantly below the minimum wage, a relatively small share of people granted asylum would earn enough to make contributions to the scheme.

“Overall, the impact of the scheme on public finances is likely to be relatively small, because it is a means-tested payment for a very low-income population,” she said.

The scheme could also discourage successful asylum claimants from finding work or push them towards alternative accommodation, she said.

“It is possible that the scheme could have some other impacts, such as discouraging asylum seekers from taking up accommodation if they can find other support, or discouraging them from working once they get refugee status because they face a higher effective tax rate,” she said.

The Guardian asked the Home Office to provide a full cost breakdown of the scheme and the approximate income thresholds at which asylum seekers will be expected to begin paying back cash.

The core operational budget of the student loan scheme is £44m a year and the threshold is an income of £26,900 a year.

A Home Office spokesperson said details such as thresholds would be set out in secondary regulations, and the department would not be able to cost the scheme properly until these details were decided.

The immigration and asylum bill is expected to direct how article 8 of the European convention on human rights is applied in immigration and deportation cases and set out plans to strengthen age assessments.

The modern slavery framework will also be amended to stop the late presentation of claims, Whitehall sources said.