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Immigration (Health Charge) Order 2015

Volume 760: debated on Tuesday 10 March 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Immigration (Health Charge) Order 2015.

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments, 27th Report from the Secondary Legislation Scrutiny Committee

My Lords, the NHS is one of our greatest assets and we are committed to keeping it free at the point of delivery. However, the current entitlement rules are overly generous and unfair to the UK taxpayer. Currently, all non-EEA nationals granted stay for more than six months may qualify for free access to the NHS from the day they arrive.

Use of the NHS by overseas visitors and migrants in England alone is estimated to cost up to £2 billion a year. Of this, the NHS spends nearly £1 billion a year on non-EEA temporary migrants from whom no cost is currently recovered. This facility is not generally reciprocated when our own nationals go to work or study overseas. The Government do not believe that the NHS should sustain this largesse. That is why we took action in the Immigration Act 2014 to change the legal framework in this area. This leads us to the purpose of today’s debate.

The Immigration (Health Charge) Order requires that non-EEA temporary migrants who make an immigration application to come to the UK for more than six months, or who apply to extend their stay in the UK, make a direct contribution to the NHS via payment of an immigration health charge. The Home Office will collect the charge as part of the immigration application process and payment of it will be mandatory. Temporary migrants will pay, upfront, an amount that covers the entire period of their permission to stay in the UK. Where an application is refused, rejected or withdrawn, the charge will be refunded.

In setting the amount of the charge, we have considered the range of NHS services available to migrants, the valuable contribution migrants make, and the need to ensure that the UK remains an attractive destination for global talent. Taking these factors into account, we have set the charge at £200 per annum, per migrant. This represents around 25% of the average per capita cost to the NHS of treating them. Those who pay the charge will be able to use the NHS in the same way as permanent residents.

During the passage of the Immigration Act, there was much debate in this House on the implications of this charge for international students. The Government remain committed to attracting and enabling the brightest and best overseas students to study at our world-class universities. In 2013-14, the number of full-time new entrant students from outside the EEA at our universities rose by 6%. However, we cannot overlook that international students make extensive use of the NHS, at a cost of around £430 million a year. The Government believe it is right that students should make a proportionate financial contribution.

International students and their dependants will benefit from a discounted charge rate of £150 per person, per year. This amounts to just 1% of the total cost of studying in the UK. It is also well below the price they would pay under mandatory private health insurance requirements operated in competitor countries.

In the debates in this House on the Immigration Act, a number of concerns were also raised about the potential impact on vulnerable groups. My noble friend Lord Taylor of Holbeach, in his previous capacity as Home Office Minister, sought to address these concerns. He explained that the Immigration Act provides the power to exempt certain categories from the requirement to pay the immigration health charge. He also explained the difference between the charge and the separate NHS overseas visitor charging regulations for secondary care treatment for which the noble Earl, Lord Howe, and the devolved Administrations are responsible.

Let me take this opportunity to reiterate the important safeguards in this area. Those who pay the charge will receive free NHS treatment for the duration of the lawful stay that they have been granted. The order provides various exemptions from the requirement to pay the charge. These include exemptions that reflect our obligations under EU law and other international agreements and exemptions for vulnerable groups. Visitors will be exempt from the health charge but will remain subject to the separate system of overseas visitor charges under NHS regulations in the four UK nations and must pay for their treatment. The NHS regulations contain a number of charging exemptions for vulnerable groups and particular treatments for infectious conditions in the interests of protecting public health. It is also a key principle that medical treatment which is urgent or immediately necessary in the judgment of a clinician is never withheld from anyone, irrespective of their chargeable status.

The proceeds of the charge will go directly from the Home Office to the health departments in England, Scotland, Wales and Northern Ireland. The Government estimate that the charge could raise as much as £1.7 billion additional funding for the NHS over 10 years. With that, I commend the order to the Committee.

My Lords, I am grateful to my noble friend the Minister for introducing the order for consideration by the Grand Committee today. As pointed out by my noble friend, the Committee will recall that the House looked at this matter in great detail when we approved the principle during the passage of the Immigration Act last year. Our task today is to ensure that the Minister is properly and appropriately implementing the legislation. I am sure that the noble Baroness, Lady Smith of Basildon, will be as forensic as she usually is.

I recall last year enjoying privately teasing some noble Lords who were involved in the higher education sector by asking them to promise me that they would not use these provisions as a selling point in their organisation’s prospectus. The plain fact is that we are capping health charges for overseas students at £150 per annum. If you tell someone that something is free, they will probably not believe you. If you tell an overseas student that their healthcare is capped at £150 per annum, they will think that it is a bargain. I think that it would help the Committee if the Minister, when she replies to the debate, would tell us how leading academic institutions in the United States of America treat healthcare costs.

A constant refrain last year was the suggestion that the Government wanted to reduce the number of overseas students by a variety of means. When I was in the Government, we were very keen on reducing the number of bogus students, but I never saw any evidence suggesting that we wanted to do anything other than encourage genuine students. Ironically, soft power is being debated in the Chamber this afternoon and overseas students are a very important component of our soft power portfolio. The Minister has already told the Committee that the number of full time, non-EEA students rose by 6%. That does not suggest that the Government’s action is deterring overseas students from coming here and, of course, they are very welcome.

My Lords, I thank the noble Baroness for her explanation. It is helpful to have a bit more detail than there is in the order. Again, I struggled trying to tie up the information in the impact assessment, because there seems to be a range of figures. I think that the noble Earl was being complimentary when he referred to me as forensic, although I am not sure he is always trying to be complimentary when he says that. I struggled when I tried to understand some of the figures in the impact assessment, especially when I compared them with the figures in the impact assessment of the previous order that we have just debated.

First, I should like to put on record that we do not oppose the principle of the health charge, which the noble Baroness will recall from the many long debates we had on the Bill. We understand that those who use the system should contribute to it and that remains our position; it has not changed at all. However, the noble Earl said that we should ensure that the charge is properly and appropriately implemented and that the evidence on which decisions are based is robust. The Minister will have seen the report from the Secondary Legislation Scrutiny Committee which questioned whether the order created perverse incentives and questioned the level of the charge.

I have a few questions for the Minister to enable me to understand how the order will work in practice and to ascertain some of the figures. First, on the level of fees, the legislation and the order do not talk about an absolute figure, but say what it is likely to be in the region of. Does she have any certainty about the level of fees? Are they likely to be significantly higher than those that have been discussed previously? Are there any projections of when those may be reviewed? What consideration and consultation will take place?

Page 6 of the impact assessment refers to a Department of Health publication on those migrants using the NHS who did not pay for the services they received, and those who received healthcare for which they may not have qualified. Part B, entitled “Rationale”, on page 6 states:

“Underlining these concerns, the Department of Health published, in 2013, the findings of a comprehensive study into migrant use of the NHS. The study estimated the total cost of EEA and non-EEA visitors”—

both are included in the study—

“and temporary migrants accessing NHS services in England alone to be between £1.9 billion and £2 billion per year”.

I think the figure for non-EEA persons is around £950 million.

The table on page 4 of the impact assessment indicates that the Government estimate the total income from surcharges to be around £195 million. However, the summary of the benefits on page 2 of the impact assessment seems to provide a different figure altogether, but perhaps I am misunderstanding something—I have struggled to understand the different figures provided. Page 2 refers to the key monetised benefits of the main affected groups. I am particularly interested in the evidence behind these figures. Income to government from an immigration health surcharge is estimated at around £1.7 billion. Reduction to public service and welfare provision is put at around £172 million. Increased employment opportunities for UK residents is put at around £29 million and reduction in Home Office processing costs is put at around £4 million. So there must be built into the figures an assumption that a number of people will not pay the health surcharge and therefore will not receive visas—otherwise, how could there be increased employment opportunities for UK residents and a reduction to public service and welfare provision? Therefore, that must be built into the assumptions that are made, but I am not sure on what evidence those assumptions are based. Indeed, the Secondary Legislation Scrutiny Committee talks about a perverse incentive. Is there a perverse incentive given that those who are unlikely to want medical treatment may feel that they have to pay a lot of money whereas those who think they are likely to need medical treatment may think that they are getting a better deal? That is a strange situation and it is difficult to ascertain the correct figures.

Coming back to the point about evidence, table 8 on page 18 of the impact assessment refers to the average cost per year per migrant of public sector spending, including education and social services, and gives figures for tiers 1, 2, 4 and 5 and for families and others. However, the figures in table 14, on page 27 of the previous impact assessment for the fees order seem very different from the figures in this impact assessment. I appreciate that they are two different orders and two different impact assessments. The source of one table is national population projections based on the statistical bulletin for the Office for National Statistics and the other one is a Home Office analysis. I think that it would be helpful to have one consistent approach to providing information on what the costs of individual migrants are or are likely to be. I found it quite difficult to have two tables looking at the same kinds of issues but giving completely different figures in different ways—one from the Home Office and one from the Office for National Statistics.

The impact assessment talks about the costs. A lot of migrants paying the health charge will of course be working and paying tax. Is that factored in? Are those tax payments and national insurance payments factored in to any of the calculations, for example, on employment? If we look at the assessment of the amounts, we see that the increased employment opportunities for UK residents will be worth around £29 million. Does that take into account any tax or national insurance no longer being paid by migrants?

We support this order and did not oppose the principle of the policy when it came before your Lordships’ House in the Bill. However, we need to be clear that we are making assumptions; I appreciate that they are assumptions, but there should be robust evidence behind them. If we are looking at enormous sums of money going to the NHS, which are then going to be distributed around the country according to the Barnett formula, we have to ensure that we have the correct figures and that the evidence is robust.

I thank my noble friend Lord Attlee and the noble Baroness, Lady Smith, for their questions. I will take them in reverse order. My noble friend makes the comparison between fees for students in this country as opposed to some leading universities in America. I can inform the Committee that, in Harvard, it costs £600 a year and could cost up to an extra £1,500 per annum if you are a student there. The difference is quite significant between what we are able to charge in this country and what a student attending Harvard might be expected to pay. He also made a good point about the increase in the number of students, which I think he referred to in our previous debate.

The noble Baroness, Lady Smith, talked about a perverse incentive. In fact, that was the very question that I asked myself. If there were a perverse incentive, it exists at the moment because healthcare is absolutely free. In setting the amount of the charge, the Government have considered several things: namely, the cost to the NHS of treating temporary non-EEA migrants and the range of health services available without charge to migrants; the valuable contributions that migrants make to the UK; and the need to ensure that the UK remains an attractive destination for global talent. Taking those factors into account, the charge has been set at £200 a year with a discounted rate of £150 a year for students. We think that this represents a proportionate contribution to the NHS, rather than a full cost recovery. The charge has been set at a rate that is designed to strike the balance between providing a better deal for the UK taxpayer and ensuring that the UK is maintained as a destination of choice for global talent. There is a balance to be struck.

The noble Baroness, Lady Smith, also asked about review upon implementation. The operation of the health charge will be reviewed six months after implementation. I think that that will provide an opportunity to look at whether the charge is set at an appropriate level. She also asked why taxpaying migrants must pay the charge. We believe that those subject—

That was not my question at all. I asked whether any tax paid by migrants for working was taken into account in any assessments that were made as part of the impact assessment. I was not querying whether they paid the charge, just whether it was calculated under the impact assessment.

Yes, my Lords, it is, so I will not pursue the point that I was making before.

As regards how we arrived at the figures—the noble Baroness talked about the surcharge raising £195 million —that excludes the cost of administering the scheme, which is why the figures probably seem a little anomalous to her. All temporary migrants subject to the surcharge will have to pay it or they will not be granted a visa or permission to stay. Basically, there will not be evasion of the charge.

The noble Baroness also talked about the fact that in the impact assessment there is a mention of increased employment opportunities for UK nationals. That reflects a situation where the introduction of the health charge results in a modest decrease in the number of foreign nationals coming here.

I hope that I have answered all the noble Baroness’s questions. I thank my noble friend—

There was the question I asked at the beginning about whether the charge is likely to be any higher, given that the figure in the legislation is not an absolute one.

My Lords, I am making an assumption that because the impact of the charge will be reviewed after six months, that will be the point at which a decision such as that would be made. However, if it is any different, I will write to the noble Baroness.

Motion agreed.