The Home Office's plan for a levy on immigrants to fund extra public services will only amount to a "drop in the ocean", MPs have said.
Home Secretary Jacqui Smith plans to allow police and local councils hit with immigration-related costs to bid for cash from a fund raised by a levy on citizenship fees.
But the all-party Communities and Local Government Committee said current proposals would provide only a tiny fraction of current spending.
It could even be unfair because not all migrants would be forced to cough up, they added.
"The money that this fund will generate is very limited. Press reports suggest that the fund would raise only £15 million.
"If this figure is correct it is a drop in the ocean in comparison to the needs of local government -- equating to only 0.001% of total local government expenditure in 2005/06, and the fund is suggested to cover all local public services, including the police and the NHS, not just local government."
The Home Office said this week that the fund would actually generate "tens of millions" of pounds.
The MPs added: "Though the principle of asking migrants to pay towards local services is sound, the fund will not be paid into by all migrants.
"This raises questions about the equity of the scheme - why should international migrants alone pay extra to fund local services under pressure from all migrants?"
The report said the Government should instead set up a contingency fund, as suggested by the Local Government Association which has repeatedly called for £250 million to be made available.
