Nick Clegg is to call for a bail-like system of security bonds to tackle abuse of immigration visas.
In his first speech on immigration as deputy prime minister, Mr Clegg will say applicants from “high risk” countries would pay cash guarantees to be repaid when they leave.
He has asked the Home Office to pilot the idea.
It comes as Mr Clegg’s Liberal Democrat colleague, Vince Cable, hits out at the coalition’s immigration policy.
In an interview with Parliamentary magazine The House, the business secretary disowns the government’s target of reducing net migration to below 100,000 by 2015, saying it is a Tory and not a Lib Dem policy.
He suggests Tory ministers are being disingenuous to quote it as an example of the government getting to grips with immigration, as they did at the recent Eastleigh by-election, because it refers to non-EU migration only.
Sources close to Mr Cable say he had “long chat” on immigration with Mr Clegg on Thursday and there is “not a cigarette paper between them” on immigration and is “110%” behind the cash bonds policy.
In his speech, Mr Clegg will pledge to “lay the foundations for an immigration system that embodies this nation’s instincts and its values” of tolerance and openness.
But he will also attack Labour’s “mismanagement” of the system, highlighting visa “overstayers”, people coming to the UK for holidays or as students and remaining in the country illegally, as one of the biggest problems facing it.
To tackle this issue, he has asked the Home Office to run a pilot of “security bonds”, which echoes an idea floated by the previous Labour government but never implemented.
It is understood the cost of the bonds would vary but are likely to be in the region of four figures.
“The bonds would need to be well targeted – so that they don’t unfairly discriminate against particular groups,” Mr Clegg will say.
The deputy prime minister will also reveal plans to increase cash penalties for “unscrupulous” employers who knowingly hire illegal immigrants because they are cheaper.
The maximum fine is £10,000 per illegal worker – Mr Clegg will call for the penalty to “double” and has asked the home secretary to “look into the right amount”.
Mr Clegg and Mr Cable have both distanced themselves from the coalition’s net migration target in the past.
But Mr Clegg makes a point in his speech of praising the coalition’s progress on taking control of the immigration system, saying: “Since we came into government, net migration has fallen by a third.”
Mr Cable strikes a more critical tone in his House magazine interview, saying of the net migration target: “It isn’t government policy, it is Conservative policy.
“And it’s also not true because that policy purely relates to non-EU people.
“We have obviously no control over the European Union and that is actually where much of the movement comes.
“And a lot of the public anxiety which is experienced in by-elections and elsewhere has actually been about people from Eastern Europe.
“Now, you can argue whether that’s a good thing or a bad thing but it’s got nothing to do with the non-EU, which is the area which is controlled by government.
“The reducing to under 100,000 is not government policy and it would be unattainable without, if it was attainable enormous damage would be done, notably through overseas students, which is one of the biggest components, actually.”
He also uses the interview to confirm that he will be standing for re-election as an MP in 2015 and he has the “energy and stamina” for a whole Parliament and compares ageism, of the kind he says was faced by former Lib Dem leader Sir Menzies Campbell, to racism.
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