Considered in Grand Committee
My Lords, I beg to move that the Committee has considered the draft Immigration and Nationality (Fees) Regulations 2011.
As your Lordships will recall, I came to the Committee on 7 February and subsequently obtained approval to charge for visa, immigration and nationality services under the Immigration and Nationality (Fees) Order 2011. At that time I said that specific fee levels would be set in separate legislation using the affirmative procedure. That is the purpose of today’s debate.
The fees paid by those making visa, nationality and immigration applications are set out in regulations made under Section 51 of the Immigration, Asylum and Nationality Act 2006 and 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 that exceeds the administrative cost of determining the application. The way our legal powers are defined means that we must also specify fees in separate regulations under the powers in Section 51 of the Immigration, Asylum and Nationality Act 2006.
These regulations are to set the fee for applications, processes and services that are provided at or below the administrative cost of determining the application. These regulations were laid before Parliament on 16 March 2011, are subject to the negative procedure and are not debated at all in this House. I recognise that having fees in two sets of regulations makes things a little complicated, but I am happy to take points on any of the fees proposals here today.
In general, we are proposing to limit the majority of increases to less than 10 per cent. For example, we propose to increase the sponsorship application fees by 3 per cent and will maintain our concessions for small businesses and charities who want to sponsor migrants. The increases in these fees will be the first since the points-based system was introduced in 2008.
Increases to fees that do not follow this approach are fees for dependants applying to extend their leave in the UK at the same time as the main applicant. Currently these fees are set between one-quarter and one-third of the corresponding main applicant’s fees. We propose increasing this ratio to half of the main applicant fee. This continues our agreed policy to better align our fees in and out of the UK, where all dependants already pay the full fee. This will better reflect the processing cost to us for each individual within any given application, as well as sometimes an independent set of entitlements.
Also, the fees paid overseas for those seeking entry through tier one post-study work will increase by more than 30 per cent. This will bring the fee paid by migrants overseas closer to that paid by those who applied for this route in the UK. The vast majority of applications made under the post-study work route are made in the UK.
Also, there will be further increases to fees for visa applications under tiers four and five of the points-based system; these routes continue to be charged below the administrative costs of processing the applications.
New fees being introduced include fees for amending a previously issued nationality certificate, other than when this amendment is being made to correct an error made by the UKBA, for providing certain stateless persons with the ability to acquire the status of a British protected person, and for the registration as a British citizen for the children of foreign national soldiers serving in the UK armed forces. This would align our fees legislation to reflect the rule changes that have simplified such registrations.
New fees are also being introduced for tier two intra-company transfers coming to the UK for less than 12 months, where the applicants pay a lower fee than those coming for more than 12 months.
We welcome the economic, cultural and social contribution made by legal migrants to the UK. We continue to ensure that the fees for immigration and nationality demonstrate that the UK is open for business and retains its position as an attractive destination. We also continue to monitor the economic, equality and diversity impacts of our changes and to ensure that our fees continue to be priced at levels which make them competitive when compared with those in other key countries.
I believe these regulations provide a basis for a sustainable immigration system, which all noble Lords will want. I commend them to the House.
My Lords, I am most grateful to the noble Earl, Lord Attlee, for his careful explanation of the order that is in front of us.
This order is drawn to the special attention of the House by the Merits Committee, but it does not say what is unusual about the order or what distinguishes it from other orders covered by the same report; particularly the three orders dealing with amendments of fees for other services. According to its terms of reference, there are four grounds on which the Merits Committee may draw the attention of the House to an instrument, draft or proposal, and in this case your Lordships may think that the only ones that might apply—or should apply—are,
“that it is politically or legally important or gives rise to issues of public policy likely to be of interest to the House”.
Assuming that is the case, the only matters of substance raised in the delegated legislation Committee of another place were the effect of the order on Bangladeshi and Chinese restaurants, and the question of whether UKBA would be able to cope with the workload of dealing with applications.
Since the Government have taken steps to reduce the number of immigrants the burden will be eased, but the 5,200 cut in UKBA staff is more than proportional to the reduction in the number of cases that they are expected to process.
The predicted effect of the fee increases on applications varies between zero and 2.5 per cent in the case of an application by a tier four student to change his course, which has been free in the past but is now to cost £386. On top of that, the requirements for tier four applicants have been tightened up further. Applicants from outside a university, for example, will have to present a test certificate from an independent test provider of their competence in English to level B2. It would be surprising if these new requirements did not have a larger deterrent effect, and I would be grateful if my noble friend could give us his estimate of the drop in the number of tier four applicants expected from the Home Secretary’s announcement last month. We need this to be able to assess the expected increase in the average productivity of immigration officers dealing with tier 4 cases, and hence to get a feeling of whether the reduction in UKBA staff numbers can be managed without damaging the quality of their decisions.
The rationale of the order is that fees should be set at the correct level to ensure that the income generated contributes adequately towards the costs of running the immigration system. The impact assessment estimates that UKBA income will rise by £65 million as a result of the fee changes proposed, but what will the total income be, and how close will the UKBA be to balancing income with expenditure after the cuts have taken place? I apologise to my noble friend for not having given notice of the questions that I am asking as I would normally do; I just did not have the time.
I understand that the Government have decided to defer implementing the proposed cuts in the UKBA until they have disposed of the remaining legacy cases. Will my noble friend confirm that? How many of those cases were still on the books at the latest convenient date, and what has been the average rate of completion of those cases since the start of 2011? They have always been pretty vague about when the legacy cases are going to be completed. I should have thought, as we were approaching the end of the process, that it ought to be possible to be a bit more precise now.
Under what conditions may the fees themselves be waived? For example, the fees for the registration of a minor as a British citizen are rising significantly. This is money that is intended not just to cover the administrative cost of the application but to make a profit for the UK Border Agency. If a child is prevented from registering as a British citizen for no other reason than a fee, designed to make profits for the UKBA, how does that meet the “child’s best interests” principle under the convention on the rights of the child, to which the Government are a signatory?
I have had a letter just now from Cambridge Assessment, which I think is a firm that is well known to the UKBA for supplying services in English-language skills. It expresses concern that those who cannot pay fees may not be able to learn crucial skills that they need to find work and play a positive role in their communities, as we would all wish. I have not had a chance to discuss this in detail with Cambridge Assessment, but the firm has asked me for a discussion and I am intending to meet it and go into these points in more detail. Has the Minister considered the effects on people who do not contribute to society because they are unable to find the fee for the English-language test?
Another important question relates to the ministerial authorisation on race discrimination, which was covered by a letter on 21 March from the Immigration Law Practitioners Association to the Minister, Damian Green, of which I have seen a copy. This permits the refusal of applications on grounds of specified nationality and the making of additional requirements or examinations that would not be required of another nationality and that may lead to refusal. The applicant will not know, because the specified nationalities will not be made public. He or she will have paid the fee —which is much higher than in previous years and is increasing again—but may be refused by reason of his or her nationality and not on the strength of his or her application. Perhaps the noble Earl would comment on that.
The ILPA letter also makes the general point that if the UKBA is to make a profit from charging fees, it should deliver a commensurate service. For instance, its service standards include timeframes within which applications should be dealt with, but it constantly fails to meet them. There is also the grossly unfair practice of refusing an application that would have been approved under the rules in operation at the time it was made because the rules changed some time later. The least that should happen in those circumstances is that the fee should be refunded.
My Lords, I, too, am grateful to the noble Earl for his introduction and detailed and helpful explanation, and for agreeing to answer questions not necessarily confined to this order. As he said, the fees contained in the order are set in the context of the Immigration and Nationality (Fees) Order 2011, which we debated some weeks ago.
I was interested by the remarks of the noble Lord, Lord Avebury. I have not taken it that this has been drawn to the special attention of the House. There are three categories in the report: instruments drawn to the special attention of the House, other instruments of interest and instruments that are not drawn to the special attention of the House and which presumably are not thought to be of interest either. That probably explains why the Merits Committee has not given any further explanation of its consideration of this. I suspect that it has an intrinsic interest in the fees structure arising from the decision of the Government to move to a flexible charging model aimed at allowing the UKBA to generate sufficient revenue.
The noble Lord raised very apposite questions. The noble Earl, Lord Attlee, will not be surprised if I mention the context in which we debate this, and the responsibilities of the UKBA. The agency is expecting a reduction of 5,000 staff. Almost every day, Ministers talk about the new responsibilities of the UKBA. I have raised this matter on a number of occasions but have yet to receive a response to my concern about whether the UKBA is in a position to take a massive reduction in the number of its staff when it is having new responsibilities constantly placed on it. Perhaps the noble Earl will comment on that.
We have already discussed the principle of the fees increase. This is our opportunity to look at some of the detail, and I will ask the noble Earl a few questions. Annexe 5 contains an interesting estimate of the decrease in annual applications. The estimate appears to be related in part to elasticity assumptions contained in Annexe 4. I note that on page 12 of the impact assessment there is some discussion of the methodology of estimating the decrease in applications. I will not tempt fate or put the noble Earl through agony by asking for an explanation of the methodology, but perhaps he would comment on how robust the methodology is, and how accurate are the estimates in Annexe 5. As the noble Lord, Lord Avebury, suggested, they will have a knock-on impact on the resources that will be made available to the UKBA.
I also refer the noble Earl to page 13 of the impact assessment, where the consequence of the fees increase is expected to cost the UK economy £24.4 million in 2011-12, and £89.4 million over the next four years. My reckoning from the tables contained there is that the net result, taking account of the extra income through the fee charges, is a very small benefit of around £4 million per year. Can the noble Earl confirm that? To me, this means that the benefits are therefore extremely marginal. They might be advantageous in relation to Home Office funding and the funding of the UKBA, but because of the consequences to the UK economy, the overall profit and loss account seems to come out even. On that basis, can the noble Earl comment on whether this is really an appropriate way forward?
I would be grateful if he would clarify the figures in the table on page 13 of the impact assessment, which I was confused by. These show revenue expected to be raised from fee changes in 2011-12 to be £24.1 million, yet in the first paragraph on page 14 of the impact assessment it is stated that the UKBA’s annual income is estimated to rise by £65.4 million as a result of the fee changes. I am sure I am being dense here—there must be a relationship between those two figures, but I could not see what it was. It may be that one of those figures is a netted figure, but rather like the noble Lord, Lord Avebury, I would be grateful for some clarification of those figures.
Also, I would like to ask the noble Earl about the implication of the fee rises on fees charged by other countries to British citizens going out to those countries. I raise this because I was at an occasion organised by the Birmingham Chamber of Commerce last Friday, when someone in the discussion raised a question about reciprocal arrangements. A company sending a large number of employees to work in China, I believe, raised the point that it will now have to pay higher fees because the Chinese will put the fees up to reciprocate those charged by the UK. Is this an accurate assessment of the position, and has the additional cost to UK businesses operating abroad been factored into the Home Office calculations of the net cost and gain to this country, particularly when it comes to the economic assessment?
Finally, I refer the noble Earl to paragraph 12.1 of the Explanatory Memorandum and the proposal to monitor the impact of fees. I welcomed the comments in his opening speech when he emphasised that his department would be monitoring the fees. Yesterday he said that everything is kept under review by the Government, as indeed it is—many a time have I told the House that a matter is under review—but I got the impression that this was a rather more active review. Can the noble Earl give a little more information about that, and say whether it would be possible to make some reports to Parliament on the progress of that review from time to time? I think Noble Lords would find that helpful: in terms of the impact and whether the assessment has been right regarding the reduction in the number of people coming here as a result of the fees increase; with some wider issues such as some of the points raised by the noble Lord, Lord Avebury; and with the issue of whether the calculations relating to resources to UKBA have proved to be reasonably accurate.
My Lords, I thank all noble Lords for the considered debate given to these regulations. I am grateful to the noble Lord, Lord Hunt, for his comments about the Merits Committee reports. I am sure he is right. I will write on any vital points I do not cover in my response.
The noble Lord, Lord Avebury, asked a number of very good questions. He asked about students switching courses. Tier four migrants who applied for leave from 5 October 2009 have to apply and pay a fee to the UK Border Agency to change sponsor as part of a new leave application. Students who applied for leave under tier four of the points-based system between 31 March 2009 and 4 October 2009 would now have to pay the UK Border Agency when they want to change their educational establishment. Currently the UK Border Agency considers the requests from these students when they wish to change their educational establishment and approves or refuses them accordingly. There is a cost to the UK Border Agency for undertaking this work but no fee is charged. In the current economic climate we think it is right that these costs are met by the applicant. It is right that applicants pay this fee as there is a cost to the UK Border Agency of assuring that this switch of establishment does not infringe on the students’ immigration status. Last year we received about 18,000 such applications, although we anticipate a much lower level this year. The proposed fee of £160 will be lower than the £386 that those who were granted leave based on applications dated from 5 October 2009 are required to pay. Changes to the immigration rules will be announced before this fee is introduced. This is part of our process of making sure that those who come here to study are not coming here to work.
The noble Lords, Lord Avebury and Lord Hunt of Kings Heath, talked about some of the reductions in the UK Border Agency. We are aiming to maintain service standards in terms of time and quality as we reduce costs but improve productivity. We are achieving this through investment in technology, moving to electronic rather than paper applications and case files, improved workflow management, and more efficient security-checking arrangements. These fee proposals will ensure that, while we are reducing costs, we are increasing income levels as we shift the contribution for the migration system from the UK taxpayer to the migrants who benefit.
The noble Lord, Lord Avebury, also made the point about balancing income and expenditure. In 2011-12 the UK immigration system is expected to cost over £2 billion. Our proposals will ensure that we recover approximately 36 per cent through fees from applicants and the services. These additional fee increases are expected to raise approximately an extra £90 million. Of this figure we expect to generate around £65 million from income fees set at levels where they exceed the administrative cost of processing an application. The rest of this figure will come from fees set at or below costs. The remaining costs are met by the UK taxpayer. The Committee should not forget that.
The noble Lord, Lord Avebury, talked about children born to foreign members of the UK Armed Forces. We believe that all those individuals who are required to register for British nationality should pay a fee to reflect the value of the entitlement that citizenship bestows. We only need to think of current events where Her Majesty’s Armed Forces are repatriating people stuck in difficult situations all around the globe. We already offer significant concessions to those family members by enabling their children to bypass the requirements placed on children of other migrants to obtain settlement in the UK before an application for citizenship can be made. This offers a more accelerated and hence cheaper route to citizenship than that available to family members of other migrants. An application to register for British citizenship is the free choice of the individual, or their parent in the case of children, and is not a requirement placed by the UK Government on a migrant asking to stay. It is charged at £540. By contrast, the fees required to reach a point where a child born overseas to a migrant worker could claim citizenship would be at least £2,322.
The noble Lord, Lord Avebury, asked about legacy cases. We estimate that we will have completed these by July 2011. He also asked about refunds for refused applications. The fees are set for the work involved in considering the application, not according to its outcome. He also asked about refusal of nationality. He will understand that this is a debate about fees, so I will write to him on that point.
The noble Lord, Lord Hunt, made an extremely important point about international comparisons. He suggested that perhaps the Chinese would start charging us higher fees. We regularly review the fees charged by the UK against those charged by comparator economies across the globe, and I imagine that the Chinese do the same. However, migration systems and fees are complex. Direct comparisons of price can be difficult because we cannot always compare like with like. Visa fees vary considerably between comparable economies and depend usually on the particular circumstances of the applicant, such as their current location, their category of stay and their relationship to the settled person. Visas can be issued for different lengths of time, can allow more than one visit and can confer particular entitlements to work or bring in dependants. Some countries charge an additional fee for dependant applications.
My Lords, that point was very helpful. Does the noble Earl accept that if costs go up—and the general trend is that UK fees are going up—although it is difficult to equate like for like exactly, there might be a knock-on impact on British businesses trading abroad because if fees go up here, they will go up there?
My Lords, there might be a small effect, but when one considers how much people will pay—thousands—to gain illegal entry to this country, the cost of a legal visa is relatively small.
We believe that our fees compare favourably with those of key competitor countries and offer good value, particularly when one considers the benefits and entitlements of a successful application. Where visa fees charged by the UK are more expensive than those of other countries—for example, fees for visit visas—we tend to offer better entitlements to applicants. For example, the Schengen visa is a three-month, single-visit visa, whereas the UK short-term visit visa is multiple-entry and valid for six months.
I will make some international price comparisons. For a short-term visit visa for up to six months, the UK charges £76, Australia £65, Canada £66, New Zealand £67 and the USA £96. The Schengen visa is cheaper, but it is single-entry and valid only for three months. For tier 1 exceptional talent, the UK charges £800, Australia £1,080 and Canada £662. For a tier 1 investor, the UK charges £800 and Australia £2,132. I could go on, but I would weary the Committee.
The noble Lord, Lord Hunt, asked about the robust methodology of the impact assessment. The methodology that we applied for estimating the impact of elasticity of demand was agreed by cross-government economists and by the independent Regulatory Policy Committee. We do not believe that fee increases at the level we propose will have a significant impact on the volume of demand.
The noble Lord, Lord Avebury, asked about the fee for the English language test, which is not included in the powers being debated here. He asked for an explanation of the income figures in the impact assessment. The additional fees increases are expected to raise approximately £90 million. Of this, we expect to generate around £65 million in income from setting fees at a level that exceeds the administrative cost of processing applications. I apologise for repeating the figures.
I apologise for asking the noble Lord, but my confusion is that in the table at the bottom of page 13 under the cost benefit analysis it says that:
“Benefits … Revenue raised from fee changes for those who continue to apply (PV)”
is £24.1 million. However, over the page on page 14 it says:
“UKBA’s annual income is estimated to rise by £65.4 million as a result of fee changes”.
Are those two different definitions?
My Lords, I am confident that the analysis is robust. I think it best that I write to the noble Lord with the exact situation, but it is quite a complicated analysis. The Committee should be assured that the brightest and the best will continue to be welcomed to the UK as will those who seek to come here to visit or to invest. We will also continue to monitor the impacts of our proposed changes. I believe that these regulations provide a basis for the sustainable immigration system that noble Lords want and I commend them to the Committee.