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Immigration and Nationality (Fees) (No. 2) Regulations 2010

Volume 722: debated on Wednesday 17 November 2010

Motion to Approve

Moved By

That the draft regulations laid before the House on 11 October be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.

My Lords, the UK Border Agency currently spends over £2 billion to manage its borders and control migration. Over a third of its total running costs is recovered through fees on visas, nationality and immigration applications. The remaining costs are met by the UK taxpayer. Clearly there is a balance between these two things to which I shall return.

Earlier this year the Chancellor set out in his emergency Budget the position of the nation’s finances, which revealed the very difficult choices that had to be made by government departments. Of course the decision to increase the fees is relevant to the background and the economic situation which we were left by our predecessors. The decision has been taken to take the UK Border Agency into the new spending review period in a position where more is done to balance the costs of supporting the immigration system between those who use and benefit directly from it and the UK taxpayer, who is otherwise obliged to subsidise it.

The Home Office is making savings of £367 million this year. The proposals we are debating today form the other part of the equation—that is to say, seeking to increase fees paid by migrants and sponsors.

The regulations are made under Section 51 of the Immigration, Asylum and Nationality Act 2006 and are in accordance with the powers granted in Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, as amended by Section 20 of the UK Borders Act 2007. Under Section 42, the Secretary of State can set a fee for an application at a level that exceeds the administrative cost of determining the application. The way in which the legal powers are defined means that the Government must also specify fees for applications, processes and services that are provided at or below the administrative cost of determining the application, in separate regulations under the powers in Section 51 of the Immigration, Asylum and Nationality Act 2006. These regulations were laid before Parliament on 9 September 2010, are subject to the negative process and are not being debated. I recognise that having fees in two sets of regulations makes things a little complicated and I am happy to take the points that may be raised today on any of the fees proposals.

For these mid-year increases, the UK Border Agency has undertaken very careful consideration of the issues. These increases are made in line with the principle that the overall contribution of fee increases should be spread across all routes and be in line with our broader policy to align better our fees structure overseas with the one operating in the United Kingdom. Where there are greater increases to the fees on some routes than others, we have done so on the basis of the benefit to the migrant of a successful application. Examples of benefit vary from route to route but may include, for instance, access to the UK labour market, the right to stay here permanently or the right to vote.

These increases mean that the Government can hold other fees at existing levels, or increase them only by a comparatively small amount to help maintain our international competitiveness and in recognition of the importance of these routes to the UK economy. For example, the Government recognise the importance of keeping direct costs to sponsors under the points-based system as low as possible, particularly in the current economic climate. The fees for acting as a sponsor and the certificate of sponsorship fee have been held at the same level as previously, while maintaining existing concessions for small businesses, charities, education providers and the arts and entertainment sectors.

In the same spirit, we have managed to limit the tier 4 visa increase to just £21, which is for a visa being offered below cost. It is a very small proportion of the overall costs incurred by a tier 4 student coming to the UK to study, who will pay an average tuition fee of close to £10,000 a year in higher education. The visitor visa has been increased by only £2. Tourism is obviously important to the UK economy, but it is right that the migrants contribute towards the costs of the services they use and benefit from. However, we have still kept it down and the fee recovers only about half of the total administrative cost of the visa.

The House will, I hope, be pleased to hear that these proposals also introduce a fee exemption where a person makes an application for a nationality registration relying on Section 4C of the British Nationality Act 1981. This will align better the position of those applicants born to British mothers with that of applicants born to British fathers. This is a long-standing grievance, which I have shared, and was a matter of great interest to this House. I hope that fulfilment of that commitment made by the previous Government gives satisfaction today.

This Government are committed to sending a message overseas that we welcome legal migrants and that the UK is open for business. I believe, as the Government believe, that migration brings great benefits to the UK. However, I also believe that UK citizens and newcomers to this country wish to see an immigration system in place that is sustainable and stronger in the future, and is less subsidised by the average taxpayer. The immigration system costs money and, through these proposals, the Government are seeking today a greater contribution, as I say, from those who benefit most—a little more in line with the benefits on offer—so that the traveller and migrant meet a greater proportion of the costs of the system. As your Lordships can see, we have tried to keep down the cost for those who receive comparatively little—the tourist and, indeed, the student—and put the increases primarily in those areas where there is long-term benefit for individuals who come to work or to settle here. I beg to move.

My Lords, I rise to speak on the Motion as the regulations have a direct impact on a tiny company—on whose advisory board I sit—called Pingar UK, which is developing contextual search engine technology for a number of years. We are a subsidiary or offshoot of a New Zealand company that is funding the research and wanted to have a research establishment over here. This information is highly relevant as it will explain why this government policy is a disaster that will drive small companies such as Pingar offshore.

Tomorrow night, I will take part in a conference call with the New Zealand company in which we will almost certainly decide to move out of this country because of the immigration policy and the visa policy. A company employee took a degree at a Welsh university. He is a Hong Kong citizen. He obtained an 18-month postgraduate visa to do further development work, but that has expired. In the summer, we applied to get the visa extended, but we got caught up in the mish-mash of everything when the new immigration cap of 24,100 visas was suddenly introduced. We needed a certificate of sponsorship.

We got the certificate of sponsorship just in time, which was amazing since we employ hardly anyone over here and the chap in question will really be the first serious employee. That was the right thing to do. However, we were given a zero visa allocation. All the time that we put into the matter was completely wasted because we cannot sponsor him. We have now been told that, for £1,000, we might get a visa after all. The decision has been taken that, as a small business, we cannot afford to pay out £1,000 on a gamble. As another director of the company said, “It is a lottery”, so there is absolutely no point in doing it.

I am intrigued that the Explanatory Memorandum’s paragraph 11, “Regulating small business”, states:

“The legislation does not apply to small business”.

The very reason that we will have to relocate offshore is because, indirectly, the legislation does apply to small business. We will probably try to relocate the research arm in either Singapore or Hong Kong. Pingar is not the only company that I know of in this situation. Many people are considering relocation. I am afraid that the Government’s immigration policy is about the most stupid thing that they could have done for small business.

I have heard, and read in the papers, about the new entrepreneurship visas that are about to be issued. I would love to know how to get one for the chap, if we can. We do not have long to make up our mind. He is currently abroad as, under the law, he is required to be. In the next week or two, we have to decide where he should move to. I should be delighted to hear from the Minister how these new entrepreneurship visas will work. Why should we pay £1,000 to enter a lottery to see whether we can exist in this country?

I thank the noble Baroness for her careful explanation of the regulations. The noble Earl, Lord Erroll, has taken us into a rather wider debate. His comments were very interesting and I hope that we will be able to hear more about that issue. There is great concern that the way in which the current cap is operating is doing real damage not just to British business and industry but to the arts and academia, as we have discussed in the House on several occasions in the past few weeks. I hope that we will receive an early announcement from the Government that they will look at the policy again and make it more flexible.

Having said that, we support the general principles that the noble Baroness has outlined. We recognise the challenge of balancing the burden of the administration of the system between the migrant and the taxpayer. My reading is that the burden on the migrant is increasing slightly, although not significantly. Perhaps the noble Baroness can confirm that. I should also be grateful if she could say what impact the fees increase is likely to have on the number of applications. Has an analysis been carried out of the possible impact on at least the main categories of application and whether there will be any unwelcome impact on regular migration when fees are increased? The Minister rightly mentioned some of the benefits of migration, which I must say was welcome.

Has an analysis been carried out of where there is clear benefit to our country from the skills that have been brought in and of our costs and prices as compared with those of other countries, such as Australia, European Union countries and the US? To extend the theme that was mentioned by the noble Earl, we need to be mindful that this country is a great global trading nation. We must be wary of any action that we take that would undermine the ability of UK companies to attract the best people. That has been one of our great strengths over the past 30 years, which it is important that the policy on immigration should not undermine. It is worrying to hear of small companies looking to, say, New Zealand for R&D purposes because of the constraints of the current system.

I would also be grateful if the Minister could confirm whether the increase in the cost of visas, particularly settlement visas, is part of a more general policy to bear down on numbers. Is the price increase part of a general policy of reducing net immigration? Perhaps the Minister would also refer to the matter of the migration impact fund, which was raised by my right honourable friend when the regulations were debated in a committee of the other place. I understand that the visa fee increases of the previous year took into account a £50 million contribution from migrants to that fund, which was intended to pay for projects in constituencies with a sudden increase in the number of immigrants. The Government have decided to abolish the fund, but the amount to cover the fund is staying within the visa fee. If the Minister could give us an explanation of that, it would be extremely welcome.

Will the Minister also provide a little more explanation of the alignment between fees in country and fees out of country, which she referred to in her introduction? Is the goal to have equalisation? Given the policy of looking at the proportion or cost of the administration of the fee, what measures will be put in place in that regard?

I note the significant increase in the fee for dependants. We do not oppose that, as there is a huge benefit to the dependant, but is that increase part of a deliberate policy to deter immigrants from bringing in dependants? Is it in line with the reductions of the rights of dependants, such as work rights, as part of the scheme, or is it just a method of raising extra resources when there is pressure on budgets?

Will the Minister also reassure me that no fees or charges will be imposed on Members of Parliament or Members of your Lordships' House who make inquiries about the progress of an immigration application, on behalf of a constituent, in the case of an MP, or of someone who has approached a Member of your Lordships' House, as happens from time to time?

I have no doubt that the noble Baroness will be able to respond to these questions, orally or in writing. She may take it that we support the general principles, although I share the noble Earl's concern about the wider aspects of the cap, which are doing great damage to British business at the moment.

My Lords, I followed the speech of the noble Lord, Lord Hunt, very closely and will try not to repeat what he said, but I, too, have a number of questions.

The noble Lord, Lord Hunt, asked how our fees compared with those of a number of other countries. I would be particularly interested in those of EU countries, because that is the context in which we should look at ourselves.

Wider policy objectives are referred to in the Explanatory Memorandum. Paragraph 8.2 gives the example of attracting specific groups of migrants who are beneficial to the UK. Like both the previous noble Lords, I find it difficult to separate that from the wider issues of immigration policy. Perhaps the Minister could amplify on that, without taking us into a bigger debate, which we will no doubt have very soon.

Can the Minister tell the House how the monitoring of the impact of the fees, which the Explanatory Memorandum promises will be monitored closely, will be done? Will it be a matter of looking at trends? Important as the examples that we have heard are, those examples would probably not feature very much, if at all, in the statistics. However, sometimes anecdotes are useful.

Like the noble Lord, I am happy to support the approach that has been taken in the regulations.

My Lords, a number of points have been raised in the debate, which I will try to answer.

One of the first points was on the question of a sensitivity analysis of the elasticity of demand for visas and whether price affects take-up. Partly because the impact of the fee in relation to the benefits gained is relatively marginal, there is little or no convincing evidence that the increase will have such an effect. Indeed, we have had cases—this may be regarded as perverse—in which an increase in the fee actually led to an increase in demand. The reverse is also true, as a reduction in the fee has coincided with—I do not know whether it led to—a reduction in demand. We do not have convincing evidence of a direct elasticity relationship. However, it is clearly important that we monitor what goes on, and we intend to do that. It is fair to say that there is a continuous monitoring process. In the wake of price increases, it is right and sensible that we should be particularly careful about the monitoring of their effect, and we will certainly do that.

On the competitiveness of the UK visas system with other regimes, comparisons are fairly difficult because, as Members on the Benches opposite will know, no two national systems are exactly the same. However, I will try to give some comparisons. Two comparisons that are perhaps relevant include comparator countries in the European Union, which the noble Baroness will be interested in, and some of our Anglophone competitors. France and Germany operate simplified immigration systems. In Germany, applications include a Schengen visa—comparable to a UK short-term visa—for which the fee is €60, which this month is roughly £51. France offers a Schengen visa for the same fee or a long-term visa to remain for more than 90 days, for which the fee is €99 or roughly £85. The comparable figure in the UK is £70. Overall, therefore, we mostly reside in the middle range, although we are possibly nearer the upper end for the charges for some long-term visas. I am happy to give the noble Baroness more detail in a table if she would like. To give another example, Australia charges a total fee of £1,074 for a tier 2 visa, which is a longer term visa, whereas the equivalent figure for the UK is £1,750. Ireland is much more expensive. From looking at these figures, you would not immediately say, even with the increases, that the UK is out of line with comparator migrant countries.

On the question of fees inside and outside the country, this is where one enters the Hampton Court maze of the fees structure, as the permissions for raising fees inside and outside the country are different. However, I can say to the noble Lord that equalisation is not the objective. We are raising the fees in those contexts in which we are allowed to do so and where we are able to do so without regard to whether we are going over the limits of the cost. We do not intend, or indeed have as an objective, that the fee increases or the fee structure should contribute to, or be part of, immigration policy. The issues are separate. Therefore, if noble Lords have any thought that the fee increases might somehow be a covert immigration control, I can assure them that that is not the case.

I am quite certain that we will not be charging MPs or Members of your Lordships’ House for inquiries.

Finally, on the question of the migrant impacts fund, it is indeed the case that a contribution from the visa fee previously went to feed that fund, which has now been abolished. The money will now contribute to the cost of the visa and will mitigate increases that we would otherwise have had to make.

I am grateful to noble Lords for their support for—if I understand the mood of the House correctly—the price structure that is being put in place.

Motion agreed.