Considered in Grand Committee
My Lords, the Immigration and Nationality (Fees) Order 2016 sets out the immigration and nationality functions for which a fee is to be charged and the maximum amount that can be charged in relation to each of those functions. The order under discussion today seeks to make two changes to the 2016 order, specifically amendments to the maximum amount that can be charged for two application types: entry clearance as a visitor for a period of six months or less, more commonly known as a short-term visit visa; and entry clearance or leave to remain as a student.
I make it clear at the outset that the changes being discussed today do not alter the fees actually paid by customers. Specific fee levels are set out in separate legislation, namely the Immigration and Nationality (Fees) Regulations 2018, and these levels are not impacted by the amendment we are debating today. The changes in this amendment will serve to increase the flexibility in relation to fees in the future.
The maximum amount that can be charged for a short-term visit visa will increase by £35 from £95 to £130. This will align with the fee maximum for the published unit cost for this product. The maximum amount for entry clearance or limited leave as a student will be raised by £10 from £480 to £490. The relatively small increase will provide some additional headroom for student fees, particularly those that are close to the current maximum amount.
By way of background, both changes mark the first time the maximum amounts will have increased since 2016. They provide some additional flexibility for these fees in future, allowing the department to take a balanced approach when considering fee changes across visa routes.
Changes currently under consideration include adjustments to simplify the range of fees payable by customers. They include removing specific additional charges and consolidating into one overarching fee. A good example would be removing the biometric enrolment fees which are charged alongside certain applications, with those costs recovered through main application fees instead under a simpler and more transparent approach. I will of course share further details with noble Lords when I am in a position to do so.
Noble Lords will be aware that migration and borders functions are funded largely by immigration and nationality fees as part of the Home Office spending settlement to reduce the burden on the taxpayer. In order to maintain this position, it is critical that any changes are made in a way which is funded by other changes within the system. It is therefore vital that the maximum amounts set out in the fees order allow appropriate choices to be made on individual routes to support a balanced approach overall.
In conclusion, I emphasise again that we are not changing any fee levels through this order today. Any changes to specific fees would be subject to cross-government consultation and further parliamentary clearance and would be implemented through fees regulations, not this fees order. I hope that the Committee will see the need for this order. I beg to move.
My Lords, I thank the Minister for explaining the order. As she said, it increases the maximum fee that can be charged for applications for entry clearance into the UK for short-term visits of up to six months from £95 to £130 and for students from £480 to £490. Those are the maximum amounts that could be charged, but the fee is set under different regulations.
Interestingly, the reason given in the Explanatory Memorandum
“to better reflect the cost of processing applications”
applies only in the case of the visitor visa, not the student visa. Will the Minister tell the Committee the cost of processing both types of visa and how much headroom these new maxima will provide? Is it the case that the cost of the student visa is nowhere near the cost of processing the application, as the Explanatory Memorandum appears to suggest? If the current fee for student leave to remain applications is £475 and for student leave to enter applications is £348, why is it necessary to increase the maximum fee chargeable to £490 now when neither fee is currently charged at the maximum allowed? Can the Minister explain why it is so much expensive for a student to apply to remain in the UK than to apply to enter the UK? Intuitively, once a student’s details have been processed and retained, it would be easier and less costly for the Home Office to extend the visa.
The Explanatory Memorandum states that the consultation on this order took place more than eight years ago, between November and December 2013. Why has more recent consultation not taken place?
The draft impact assessment states that:
“The strategic objective is to attract talent and take back control.”
Can the Minister explain how either of these increased maxima will achieve those objectives? We have asked this question before, and we ask it again.
The impact assessment states that:
“Visa and immigration fees are set … to ensure that the Home Office has appropriate funding to provide effective Border, Immigration and Citizenship (BIC) services … and to move closer towards ‘self-funding’ and reduce the burden on the taxpayer.”
The Minister referred to the reduction of the burden earlier. Can she explain why the Home Office is unique in being required to be self-funding in the broader immigration and citizenship services it provides? Those services benefit every citizen of the UK through effective border and immigration control. Why is the health service not funded by those who use its services? Is the reason not the one set out in paragraph 8 of the impact assessment:
“The main groups affected are those migrants wishing to come to or extend their stay in the UK”?
They are people who cannot vote.
In addition, the impact assessment talks about providing
“additional scope to ensure that the department’s charging structure is flexible enough to support evolving products and services.”
Can the Minister confirm that fees are now being charged at a rate not just to fund existing services but to pay for research, development and provision of new products and services, such as the electronic travel authority?
The impact assessment says the impact of increasing fees on volumes is “highly uncertain”, yet paragraph 46 says:
“The proposed changes will generate direct benefits for the Home Office. Revenues will be higher from those applicants that continue to apply despite higher fees.”
I understand that the increased maximum for a student visa is small, and a small proportion of the overall cost of studying in the UK, but the increase in the maximum for a visitor visa is significant. Only last week I was in Cape Town talking to South Africans about the deterrent effect of the current UK visitor visa fee, even without the potential increase that this order would allow.
The order gives the Home Office the potential to increase the fees for visa applications, impacting on overseas visitors and potentially damaging our tourism and education sectors. At the same time the Home Office, rather than taking back control of our borders, has added 10 more countries to visa-free entry, while retaining visa-free entry from EU and EEA countries. The Government seem determined not to be seen to be giving EU or EEA citizens any advantages post Brexit, but in order to maintain this ideologically driven stance they have thrown open our borders to even more countries. It seems that the Home Secretary would rather be tough with migrants than with the Treasury over the Home Office funding settlement. I look forward to the Minister’s response, either now or subsequently in writing.
My Lords, the noble Lord, Lord Paddick, asked a number of the questions that I was planning to ask. I am aware that there is a wider debate on immigration fees and the Government’s policy of making a profit on certain groups, such as Commonwealth veterans or those paying for optional premium services. That wider debate is being carried out on the Nationality and Borders Bill as we speak.
I am aware that in this SI we are talking about two specific cost increases to the cap. Specifically, I noticed the note in the impact assessment that the optional premium services are
“charged above cost … to meet customer demands and to limit fee increases in other areas.”
Is the Minister able to say how much extra money is made through these optional premium services? By how much does that reduce other costs?
Another point, which was touched on by the noble Lord, Lord Paddick, is about tourism. Does the Minister recognise the importance of supporting the tourism industry? As she will know, there was an interesting Question in the Chamber earlier this month about school parties coming from France. I think she will have picked up the general sense of frustration in the House that school parties from our nearest neighbours are not coming. I understand the point about Covid, but nevertheless I hope she picked up the general sense of frustration in the House at the answers she gave to that Question.
The noble Lord, Lord Paddick, explored another point by asking the Minister to give a wider explanation about the need to provide extra headroom on the fees. As he asked, what is the cost of processing the fees? How much headroom is the Minister seeking in this SI? I understand the reasoning behind it, but what is that headroom and what is the processing cost?
The other point that I wanted to make—to pick up a point also made by the noble Lord, Lord Paddick—was about the general move to self-funding, which is a clearly stated aim by the Government. The noble Lord went on to question why this element within the visa system should be moving to self-funding when other large departments have not had that constraint put on them. I would be interested to hear from the Minister a philosophical defence of that position, given that we benefit from immigrants. That point is acknowledged, so why should the department be moving towards self-funding?
I thank both noble Lords for the points they made. I will first answer the last question on why we should be moving towards self-funding. We have been self-funding since as far back as I remember and it has always been the case that those who use our border and immigration services should contribute towards the cost of running them. It is not something that absolutely everybody in the country avails themselves of, unlike the NHS, which we all pay for through taxes. That is my best guess as to why we charge contributions towards the cost of border and immigration services.
Both noble Lords asked about the costs of the short- term visit visa. The incremental growth between 2015 and 2019 was from £85 to £95, and there have been no increases since 2019. The fee is currently £35 less than the published unit cost, which is £130. The current maximum amount of £95 has not changed since it was set in 2016. The impact assessment for this order suggests that an increase, even to the new maxima, would not have a significant impact on demand: 41,000 fewer applications. Against a baseline of 1.72 million, this represents about a 2.4% reduction in 2022-23, with a net benefit to HMG of £55 million. That is additional revenue minus costs, including the impact on the Exchequer of reductions in inbound tourism. There is little evidence to suggest that previous fee increases have had a notable impact on volumes.
The fee is broadly comparable to those of competitor countries, although the differing benefits offered by these products make direct comparison quite difficult. For example, the Schengen visit visa is cheaper at £67 but is valid for three months, compared with six months for the UK short-term visit visa. The comparable US visa is £117 but is valid for 10 years.
The noble Lord, Lord Ponsonby, asked about the premium service. It is entirely optional and costs between £15 and £48. As I say, it is optional. To answer the question of the noble Lord, Lord Paddick, the fees are set under the charging powers in the Immigration Act 2014. The estimated unit cost of the in-country student main applicant and dependant applications are £252 for a child student and £153 for an overseas applicant. As I say, the cost and the fee are quite different. I explained at the outset that the fees contribute to the cost of the border.
I think the noble Lord, Lord Paddick, asked me a couple of other questions that I did not manage to write down in time, so if there is anything outstanding I will write to him. At this stage, I beg to move.