Considered in Grand Committee
My Lords, the purpose of this statutory instrument is to set passport fees for the first time under the primary charging powers provided by the Immigration Act 2016, which allow the Home Office to reflect not only the costs of considering an application and issuing a passport but any other function of the Secretary of State in connection with UK passports. This includes the costs associated with British citizens leaving and entering the UK.
Over the last year the average turnaround time for the vast majority of the estimated 7 million passport applications that HM Passport Office handled was in the region of seven days. This excellent performance has resulted in high levels of customer satisfaction. The Institute of Customer Service has once again ranked HMPO as the top performing public services organisation in its recent customer satisfaction index survey. The service has improved its customer satisfaction index scores over each of the last five years and, for the first time, also appears in the top-50 list of high-scoring organisations on the customer satisfaction index survey, along with Amazon and John Lewis.
The full costs associated with processing applications and issuing passports are funded by income from fees charged for passport services, but the number of passengers arriving at the UK border continues to rise, with about 130 million passengers currently arriving each year, of whom about 70 million are UK passport holders. This leads to a significant cost for the Home Office, which is currently largely funded by the Exchequer.
Reflecting the costs to the Home Office associated with passengers leaving and entering the UK in passport fees means that we can reduce the burden on the Exchequer and move towards operating on a “user pays” basis for the overall service provided by the Government to UK passport holders. It is obviously important that we recover any additional costs in a balanced way that incentivises the use of a more efficient online application process, which we intend to become the standard passport application channel. So, while we propose to increase most passport fees, people who submit their application online will, for the first time, be charged a lower fee than if they submit their application via post. This reflects the fact that it currently costs more to process a postal application. It also supports the wider commitment to improve online services to meet the needs and expectations of customers who increasingly use digital channels to access government services.
We intend to increase the fees for an online adult passport by only £3, which is broadly in line with inflation. This will mean that the current adult fee will be £75.50, which is still below the £77.50 fee charged for an adult passport between 2009 and 2012. An online child passport fee will increase by the same amount and will be set at £49. Fees for adult and child passports applied for via post will each increase by £12.50 to £85 and £58.50 respectively, to reflect the additional cost of processing postal applications.
With more than 90% of adults in the UK having access to the internet and third parties being permitted to apply on a person’s behalf, the vast majority of people should face no obstacle to applying for their passport online. However, Her Majesty’s Passport Office is developing further help for those who wish to apply online but need some additional advice or support to do so. It is working to deliver an assisted digital leaflet for relevant support groups to enable them to help their clientele to apply online. This will also ensure that their online application route is built in such a way as to be extremely simple to use and to be compatible with various aids, such as screen readers, that people might use to make their interactions with the passport service easier. An advice line is available for those who wish to discuss their requirements with representatives of the organisation.
The Committee will be aware that HMPO provides excellent priority services for applicants who wish their applications to be processed faster, or who prefer to apply in person. It is right that applicants should pay more for a priority service and we intend to move the fees for those services towards full-cost recovery sooner than for online or postal services, given their optional nature and the additional benefits that a customer receives by using them.
Finally, within these regulations we are holding a new and specific power that allows the Home Office to consider waiving fees for replacement passports where they have been lost or destroyed during an incident considered a national emergency or crisis, or where the UK Government have activated exceptional assistance measures overseas. This will allow the Government to ensure that they can provide the appropriate level of support to vulnerable people in emergency situations and crises.
We are committed to ensuring that this Government continue to move towards a position where the border, immigration and citizenship system is funded by those who directly use it. Moving to a position where passport application fees include the costs of UK passengers leaving and entering the UK is part of this. The additional income raised from the proposed increase in fees will help to protect vital front-line services and ensure that we continue to operate a world-class border system. I commend the regulations to the Committee.
My Lords, I thank the noble Baroness, Lady Williams of Trafford, for explaining to the Grand Committee the purpose behind these regulations this afternoon.
First, I have absolutely no problem with full-cost recovery. Generally speaking, it is not a bad thing to aim for in a variety of services. I have been calling for it for planning applications for a very long time, but the Government have stubbornly refused it. Perhaps the Minister would be kind enough to mention to her noble friend Lord Bourne of Aberystwyth and the Ministry of Housing, Communities and Local Government that this is a good thing to do, because I cannot get that government department to consider doing even one council pilot on full-cost recovery. They just will not have it—so if the Home Office is doing it, perhaps they will look at a pilot.
Having said that, the rise of £12.50 in one go is a little steep. It may have been better to phase it in over time. Inflationary rises in the cost of services are what we have come to expect and I generally accept them. I do not have a problem with there being two levels of fees, taking account of the costs of processing applications. I get that point. But while I know the Minister referred to the “vast majority”, we are still talking about millions of people who are not in that vast majority. They are not e-enabled for a variety of reasons. They might not have access to a computer or have the skills to use the facilities; equally, they may have a computer and the skills but be in an area where the broadband coverage is so poor that they cannot do it anyway. The Minister might suggest in a moment that they should go to a library, but she will know that the number of libraries in Britain is much reduced from what it was 30, 20 or even 10 years ago. So that will not always be the solution to the problem—again, there is an issue there.
The power to have the fee waiver is sensible and I am very supportive of it. But one thing that the Government should guard against is an issue that exists in a variety of local government services. It is that if you are an ordinary, decent and law-abiding citizen, why do you have to pay more for services just because you are poor? I noticed that that was not addressed in the impact assessment. There is lots about what the Government are going to do, but I cannot find any reference to why somebody poor has to pay more. That issue needs to be looked at across government. It goes across business, too, and other areas, and it irritates me.
I know this is nothing to do with the noble Baroness, but if you go to an area that is not as wealthy as somewhere else, you find that the less wealthy area has no cash machines and that you have to pay £3 or £4 to get your £10 note out. If you are a genuine, ordinary, decent, law-abiding person, why is it that, just because you have less money than someone else or live in a poorer area, you have to pay more? The Government should always be mindful of that as a policy issue across a range of things. Having said that, I have no particular issue with the regulations and I am happy to agree to them.
My Lords, I thank the Minister for her explanation of these regulations and we are broadly supportive of the idea, in particular the move to online and the proposal for a price incentive to encourage people to apply in that way. I am sensitive to the concern about people who do not have online access, but I expect that the Government will take appropriate action to make sure that they are supported.
I wish to make three points. First, if this was the private sector, one would have peak and trough pricing. I should like to know what the peaks and troughs for passport applications are. In the summer there are always problems when people want to renew their passports, and presumably there is a lull in the winter when fewer people are travelling. One of the costs to the public sector, that of retaining peak staffing, could be assuaged if more people are encouraged to apply for their passports when the demand is lower. Have the Government considered that and are there great peaks in the workflow?
Secondly, while I understand that people must pay the cost of issuing a passport, what proportion of the costs of maintaining our borders and our consular activities overseas are we aiming to meet through passport renewal? We all know that there is a national interest in our borders and in having consular services overseas because they perform other functions besides looking after British passport holders, so obviously a key proportion of the costs of those services should come out of general taxation rather than simply being met by people who apply for passports. What proportion of the costs of these services will this measure contribute and what is the Government’s ultimate aim here?
Finally, one thing that Brexit will do is to increase the cost of our borders because it will require extra people to man them. Are those renewing their passports going to have to pay for the cost of Brexit or will it come out of general taxation? My view is that it is the Government who are creating this extra cost; they should therefore pay for it out of taxation. They should not be trying to put the extra costs of Brexit on to those who apply for passports. We should not forget that the economy benefits hugely from tourism so it is in our interest to improve the current border controls, which many people regard as slow and inefficient. What are the Government doing to make improvements in, for example, the flow of people through our border controls, which I am sure they have an interest in since they are now seeking an additional source of revenue to pay for them?
I thank both noble Lords for their questions. I turn first to the contribution of the noble Lord, Lord Stoneham. He asked about peak and trough pricing, but then suggested that the extra costs of maintaining the border should be met through general taxation. We have considerably improved the technology and intelligence around our border and we think that we will be able to meet any additional burdens created through Brexit. The fees application regulations before us are not about Brexit; they are about putting in train something that was decided in the Immigration Act 2016, and thus I think before Brexit was even a twinkle in the general public’s eye.
As to what proportion of money will go to the border, we expect that about 40% of the current full cost to the Home Office of UK passengers leaving and entering the UK will be funded by passport fees after these increases. We did consider peak and trough schemes, and looked at variable pricing, but the cost of that would outweigh the benefits.
That was the analysis—the costs would outweigh the benefits of doing it.
The noble Lord, Lord Kennedy, asked about the £12.50 increase. That of course is for the paper application. The analysis shows that a premium service is more expensive, paper being not the cheapest way to deliver passports or indeed other items. That is reflected in that fee increase. As for full-cost recovery, the noble Lord and I have had many an exchange on such local government matters. He asked me to take it to MHCLG. I will, but I suspect the reason for not having full-cost recovery, as with all local government things, is so that things do not become overpriced. MHCLG always sets them under full-cost recovery, but I shall certainly take that back.
The noble Lord, Lord Kennedy, also asked about digital inclusion, particularly for poorer people and people without access to libraries. The Government totally recognise this point. The digital strategy uses 3,000 libraries across England to provide a trusted network of accessible locations with trained staff and volunteers, free wi-fi, computers and other technology. In addition, people can use a friend’s or colleague’s computer to do this. Just because you have not got a computer in your home, that does not disfranchise you from applying online.
I reiterate my support for the noble Lord, Lord Kennedy, about being charged at cash machines. It is something that really irritates me. I accept that sometimes the only cash machine in a location is a paid-for one and that some of the fees really are quite outrageous. I think that is about it. Have I answered everything or does the noble Lord, Lord Kennedy, want to come in?
I know this is slightly straying off the regulations before us today, but that irritates me. Like the noble Baroness, I can obviously go somewhere else and not use the machine, but sometimes people do not have that ability or that benefit. It is the same of course with people who have to go to the newsagents to get electricity for their meters. There is an issue here. Why do we accept that if you are poor but law abiding, hard-working and doing your best, you have to pay more for things when other people have them more cheaply? That is a general issue and a general point.
Before the Minister sits down, can I go back to the two points I raised? I would like to see the peaks and troughs, and presumably monthly figures are available. I would be quite interested to see them. Secondly, I do not think that the Government should easily be able to get away with the assumption that there is no cost from Brexit when it comes to border controls. That is almost fantastical and I do not think anybody would believe it. It would be useful to know how many of the 130 million people going through our borders actually have EU passports as opposed to UK ones. We know the quantity of people who are doing that. I go back to my original question. If you assume that passport renewals will pay for 40% of the border costs and if the costs go up because of Brexit, does that mean we will have higher proportionate passport renewal costs over time in order to keep to that percentage?
I cannot answer some of those questions but I know that HMPO will have done an analysis of the figures. I was trying to say, but I do not think I was doing it very articulately, that we have a variety of technological, intelligence and other methods of predicting people crossing the border and of looking for the needle in the haystack, which is the person who is crossing the border illegally or someone who might be on our watch list. Our technology and intelligence have improved significantly. We have e-gates and other methods such as heartbeat monitors at the border. I do not disagree with the noble Lord that volumes might go up, but we have better methods of predicting and detecting illegal crossings of the border. On the other point about numbers, I will write to the noble Lord.
Committee adjourned at 3.26 pm.