rose to move, That the draft regulations laid before the House on 30 January be approved.

The noble Lord said: My Lords, the Government are determined to continue to drive through the real improvements to the immigration system that we said we would deliver. We have made substantial progress in recent years, and we are seeing the results. These are: record numbers of foreign national prisoners deported last year; fingerprint checks now in place for all visas for those travelling to Britain; and asylum applications being processed more quickly than ever before. This year, we are delivering further radical changes to the United Kingdom’s immigration system, including the introduction of biometric ID cards for foreign nationals and the implementation of a new Australian-style points-based system.

This year, we will have spent over £2 billion on securing our borders and managing the immigration system, and £630 million will have come from fees paid by those using the system. It is right and fair both to the users of the immigration system and to the general public in the United Kingdom that those who benefit most from the system contribute proportionately more to its true end-to-end costs. In setting current fee levels, we established the important principle of setting the fees for our applications and services on the basis of the value to the applicant. We are continuing to apply that principle in setting fees for this year. In order to do this, we are using the powers under Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, which have been amended by Section 20 of the UK Borders Act 2007.

When my noble and learned friend Lady Scotland stood here last year, it was clear that the additional income being generated by the new approach to setting fees would deliver an important boost to the resource spent on enforcement activity. Some fees increased significantly to help deliver the additional resource but also to allow us to keep other fees below normal cost-recovery levels. This year, we are holding most fees steady or increasing them in line with inflation. This includes four of the fees that are covered in the regulations being discussed today: an application for a visa, including as a work-permit holder or a long-term visitor, which will rise from £200 to £205; an application for a certificate of entitlement to right of abode, which will similarly rise by inflation from £200 to £205; an application for a settlement visa, which will rise by inflation from £500 to £515; and an application for leave to remain made at a public inquiry office in the United Kingdom, which will remain at £595. I am sure that noble Lords will take full advantage of the further opportunities to discuss the wider points-based system when we return to the House to set these fees later in the year.

Today we are setting fees for new products—tier 1 and sponsorship—including the fee for an application for a visa under tier 1 general of the new points-based system, where we are consolidating the existing two-stage highly skilled migrant programme process into a single stage and a single fee of £600—the same as the sum of the current fees—and the fee for an application for leave to remain under tier 1 general, where the single fee will also mirror the existing combined fee of £750. Where migrants are already part-way through the highly skilled migrant programme process when we implement tier 1 general, we will charge lower fees in recognition of the fact that they have already paid a fee. These will be £200 for a visa and £350 for leave to remain. We are also introducing a new fee for which there is no existing comparator fee. That is the fee of £1,000 for medium or large businesses to make an application for a licence to sponsor skilled migrants wanting to enter the United Kingdom under tier 2 of the points-based system.

Sponsorship is at the heart of the new system. Employers and other bodies wanting to bring in migrants to the United Kingdom will have to take on certain duties and responsibilities, and we will police sponsors to ensure that they are fulfilling them. Where we have concerns, we will take action to ensure that there is no risk to the integrity of the immigration system. We anticipate 15,000 businesses applying for a licence in the first year of operation, of which 4,500 will be medium or large businesses. We expect to raise £4.7 million from all licence applications, with medium and large businesses subsidising the proposed licence application fee of £300 for small businesses and charities.

The fees proposed for a licence application are fair and proportionate and are set at levels that should not represent a barrier for a legitimate business wishing to employ a skilled migrant worker. The higher fee will apply only to businesses not recognised as small businesses by the definitions set out in Companies Act legislation. Typically, this fee will apply only to businesses with more than 50 employees. The licence will be valid for four years, effectively costing just £250 a year. That is a fraction of the costs incurred in recruiting and retaining a skilled worker with salary expectations in excess of £25,000 a year. The effective annual cost is also comparable to certain other statutory licence schemes, such as the £245 annual fee payable for a licence from the Security Industry Authority. We believe that it is right that small businesses and charities should pay a lower fee, which is only possible if larger businesses subsidise this. We have consulted key stakeholders on our proposals, including the business community. The proposal to cross-subsidise the fees for small businesses has been welcomed in particular.

The fees proposed here are fair and proportionate. They recover the costs of considering the application and help contribute to the true end-to-end costs of the system. I beg to move.

Moved, That the order laid before the House on 30 January be approved. 9th Report from the Joint Committee on Statutory Instruments.—(Lord West of Spithead.)

My Lords, the regulations are largely uncontroversial. We accept the principle that there should be reasonable charges for people wanting to come into this country. It is only reasonable if they do so that they should make a contribution before they come in.

The cross-subsidisation of the fee charges is, as I understand the Minister, largely to support charities and small companies. Will the Minister confirm that? I was not sure when I read the draft statutory instrument what the cross-subsidisation would relate to.

The Government have estimated that this will raise an additional £43.2 million—I think that is what the Minister said—over the next five years. Presumably those are annual charges and annual updates, so is the £43.2 million the estimation for five years or for one year? What do those extra fees go to? The Minister said rather enigmatically that they went to border security, but how? What is the contribution made? What is the implication of the £43.2 million not being achieved if, for example, fewer people than expected come through the legal route into this country?

My Lords, we are grateful to the Minister for his explanation of the regulations. The way in which the Government are using the powers in Sections 51 and 52 of the Immigration, Asylum and Nationality Act 2006 and in Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004 to set fees for immigration services that are higher than a cost-recovery basis has been discussed on several occasions, as I hope the Minister’s notes will have reminded him: in our consideration of the original fees order last March; on the regulations that followed in the same month; on an amendment to the UK Borders Bill in July; and most recently on the amendment order relating to the points-based system in December. Some of the concerns that we expressed on those occasions have not, I am sorry to say, been entirely resolved this evening.

The regulations specify the fees to be paid for a sponsorship licence as £1,000, other than for a small sponsor, which is a charity or a company with fewer than 50 employees. That is welcome in so far as it means that Bangladeshi and Chinese restaurateurs will not be required to pay this fee, as I understand it, although a further statutory instrument is coming down the track that will affect them. My first question is why the fees for small sponsors were not included in these regulations, as that would have saved parliamentary time and the proliferation of statutory instruments, which grow in number every year.

Secondly—I am glad to see the noble Baroness, Lady Warwick of Undercliffe, in her place, because she will be interested in this, too—can the Minister confirm that institutions of higher education are to be treated as small sponsors, irrespective of their size, because they are charities? In December in the debate on the amendment order, we mentioned calculations that Universities UK gave to us, in which it was assumed that its members would have to pay the £1,000 to be sponsors, and it would be useful if that could be clarified. It was feared that the cumulative effect of the higher-than-cost-recovery fees would be to deter students from coming to the UK, and, although it would probably be too early to detect any such effects from the previous statutory instruments, I hope that the Minister will encourage feedback from any institution of higher education that has any knowledge or experience of the matter. Have the applications been affected at all by the fees that are already in place?

On the charges for entry clearance in tier 1, the highly skilled migrants, investors and international graduates who have completed their studies in the UK would presumably be well able to afford the £600 being charged for entry clearance because they expect to earn higher incomes by coming to this country. However, the previous fee for highly skilled migrant approval, which was set before these regulations and came into effect last April, was £400, so this fee, as I work it out, is a 50 per cent increase in less than a year. I wonder whether that is simply a bit of profiteering, or whether there is some objective reason for that large increase.

On entry clearance for settlement, the fee was increased from £260 to £500 last April, so that, although the new fee is only a modest increase of 3 per cent, it comes on top of a previous steep rise. Many of those who come here as spouses or dependent children will not enter the work force—at any rate, not immediately when they arrive—so that can be a substantial barrier to family reunification. When the fees were raised the last time, it turned out that representatives of spouses had not been consulted. After the announcement, however, I had several letters which I drew to the attention of the then Minister—I think that it was the noble and learned Baroness, Lady Scotland—protesting about the huge end-to-end cost of bringing a spouse into this country, which I calculated was the highest in the world. Was the noble Lord, Lord West of Spithead, aware of those representations, and were they taken into consideration in deciding the new charges?

I note that, in new Regulation 20C, no fee is payable where an application is for the purpose of family reunion under Part 11 of the Immigration Rules, which deals with asylum. Will the Minister confirm that a person who is being granted asylum or humanitarian protection is therefore entitled to bring a spouse and children here without payment of any fee? What has been the practice until these regulations?

When the higher-than-cost charges were first introduced, there was a formal consultation process, although no indication was given in that consultation of what the fee levels were likely to be. I suppose that, having got away with the huge increases that were then imposed, the Home Office now considers itself at liberty to charge whatever the traffic will bear. Is that why the Explanatory Memorandum gives the reader no indication of how the fees were determined? As it turns out, Parliament should have imposed some obligation on the Government to justify any fee levels that were to be proposed, instead of giving them carte blanche in the original legislation. The best that we can do now is to request the Government, as I do now, to have an audit of the revenue yield of the fees compared with the cost of providing the services in question. I hope that the Minister can at least agree to that modest proposal, so that Parliament can see in the end whether overall the fees that we are being asked to sanction are reasonable.

My Lords, I thank noble Lords for their input. As always in our discussions of statutory instruments there are a small number of noble Lords in the Chamber, but key points are always made that are very valuable.

The noble Baroness, Lady Hanham, talked about cross-subsidisation. As I said, the support is for firms that employ fewer than 50 people and for charities. That is what the cross-subsidisation is aimed at. We felt that £300 was a fair and proportionate amount for them. We had a dialogue with them about that figure, and they seemed very content. Indeed, the large firms were also content that there should be some balance here, rather than the smaller firms paying the £1,000.

The noble Baroness referred to the £43.2 million. The amount is for the next five years. In the next financial year, the figure will be about £8.7 million. I thank her for broadly supporting the thrust of this. There is no doubt that, when we consult the British public on this, they feel that people should contribute to the costs of the flow of immigrants. That seems to be a popular step.

The noble Lord, Lord Avebury, raised a number of issues, the first relating to sponsorship and to encouraging people to get into this country. There were concerns about whether student flow into the country would be damaged. Students will know that they are going to a bona fide establishment. We will produce a list of establishments that are accepted. We will look after students coming into this country in the correct way and will make sure that the correct things are done. Therefore, they will benefit from this.

The noble Lord also raised the issue of fees for small businesses, including regulations made under Section 51, which is the power that we are using for that. The regulations set fees for above cost or for cross-subsidising.

We welcome feedback on student sponsorship and the list of establishments. We have regular dialogue with the stakeholders, including the joint education task force. We hope that we will get some good feedback on that point.

On new Regulation 20C, no fees will be charged for asylum seekers. We are aware of representations about the cost of a spouse visa and the need to ensure international competitiveness for family rates. We can confirm that there will be no fee for an asylum or humanitarian protection family member, spouse or child.

We have looked at the end-to-end costs of fees, how we arrived at them and how they were administered. We have rounded up just above that level and have increased for inflation. I hope that noble Lords will let me go away and look at the audit, and perhaps I can write on that when I am more aware of all the implications.

My Lords, before my noble friend sits down, perhaps I may raise one or two other points. Universities will be the largest volume users of the new points-based immigration system due to the large numbers of international students, staff and visiting international staff that we welcome to our universities every year. I declare my interest as chief executive of Universities UK.

Because we will be the largest users, we have taken a very active part in the discussions with the Home Office about the new system. The discussions have been lively and sometimes we have agreed with the direction of travel. At other times we have disagreed. Let me say from the first that universities welcome many aspects of the new system. We are very keen to ensure that genuine applicants can navigate the immigration system successfully and easily, but also that those seeking to abuse the immigration system are deterred.

In particular, we welcome the following aspects: that is, student visas linked to a specific education institution, which is an enormously helpful step forward; recognition, through the sponsorship arrangements, that universities are in the best position to judge academic suitability; better information on the progress of people through the immigration system; greater use of online processes; and the new Post Study Work category within the highly-skilled tier of the system that will allow international graduates to apply to stay in the UK for up to two years after graduation.

We welcome the proposals to keep initial student visa fees at a level below cost recovery, although we are still concerned at the high cost of extension applications, and we welcome the proposals for lower sponsor licence fees for charities, as universities are charitable organisations.

However, I should like to draw three remaining concerns to my noble friend’s attention in relation to the implementation of the new system. First, on the IT support to the new system, there has been no opportunity for the higher education sector—I repeat that it is the highest user of the new system—to provide input into the development of the new IT system to support the points-based approach. As organisations which may receive 3,000 or 4,000 new international students every academic year, we must be able to ensure that our records system can “talk” to the new Home Office system. Otherwise, we will be forced down a very inefficient and insecure route of duplicating data entry.

Secondly, on the reporting process, all HEIs agree with the principles of reporting on their international students and staff in terms of compliance with the immigration rules. However, we must aim to ensure that the data returns required by the Home Office align with those required by other parts of government. To do otherwise would be to ignore the better regulation agenda and to force HEIs to have a series of relationships operating on different timescales rather than a single timescale.

Thirdly, the current proposals on the position of visiting international staff would create needless bureaucracy for universities by insisting that all visiting staff have to seek sponsorship from a third-party organisation and not from the university where they will be based. This seems very strange when universities are willing to sponsor these people and are sponsoring thousands of students and permanent staff. The proposed system would be less secure as the third-party organisation would have to monitor these people, but would not be physically located near them, unlike the university where they are based.

I am very pleased that the Home Office has listened to higher education’s arguments and has shown that it is aware of the need to ensure that we maintain the UK as an attractive destination for study and for cultural visits as well as for work. In the spirit of the consultative discussions already established with the Home Office, I hope that my noble friend can reassure me on the points that I have raised.

My Lords, I thank my noble friend Lady Warwick for those three points. Perhaps I should have made them more clearly; I have an interest in that I am a chancellor of a university and perhaps I should have identified some of those issues. On IT systems, it is an extremely good point that the PBI system needs to be able to link and work with the other systems. I understand that there is a meeting on 28 February with the officials responsible for this and a number of university IT people to get a better understanding of how our system works. I do not think, sadly, that there is a single university IT system across the whole of the UK, and that will go a long way to helping to resolve some of these issues. However, one must bear in mind that to maintain the integrity of the border and immigration controls, any IT system will need a level of security which may prevent BIA being able to undertake all the suggestions that no doubt universities will have. We will have to work on that.

My Lords, while I understand that the security requirements would not allow the universities to interrogate the Home Office system, surely it is not the same the other way around. If the universities want to supply information to the BIA, what security problems would that yield for the Home Office?

My Lords, the noble Lord is absolutely right. There will not be a problem that way around, but there could be issues about security regarding alignment, which we will have to develop at the meeting on the 28 February and beyond. The noble Lord is right that there is no reason why data of a lower classification cannot be fed in.

I absolutely agree and understand how important alignment of returns will be. None of us wants to increase admin and, wherever possible, our requirements will align with those of other government departments. But they are for a wholly different purpose, so we cannot guarantee that. I know that there was a useful meeting with Universities UK on 15 February, and I thank my noble friend Lady Warwick for her work with that group. We will look to have a further meeting in the next couple of weeks to try to agree our requirements and help out in that area.

We understand the concerns about visiting international staff and the requirement for one overarching sponsor. We are working through the policy of who the sponsor will be and we remain very happy to discuss concerns which were highlighted in that question. The Government believe that the fees are an appropriate charge to the users of these services. Rather than relying wholly on the public purse to meet the costs of applications and processes, they should be met partly in this way as well. There is a general agreement that those who benefit most should contribute most to the end-to-end costs of the system. As such, I commend this instrument to the House.

On Question, Motion agreed to.