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Immigration (Health Charge) (Amendment) Order 2023

Volume 834: debated on Tuesday 12 December 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Immigration (Health Charge) (Amendment) Order 2023.

Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

My Lords, the health charge reflects the cost to the NHS of providing healthcare to health charge payers. The increase supports the sustainability of our NHS, ensuring vital NHS services are funded and allowing wider NHS funding to be directed towards other priorities in the system.

The health charge was introduced in April 2015 to ensure that migrants contribute directly to the comprehensive and high-quality NHS services available to them from the moment they arrive in the UK. We all recognise the great contributions migrants make to help grow our economy and support our NHS; it is also important that those who use and benefit from our public services, such as the NHS, make a sufficient financial contribution towards the cost of these services.

The health charge is paid by temporary migrants applying for a visa to enter the UK for more than six months. It is paid up front, separate to the visa fee, and covers the full cost to the NHS of providing healthcare to those who pay it. Once paid, a charge-payer can access NHS services in broadly the same manner as permanent residents without having made any prior tax or national insurance contributions. Where additional NHS charges are paid, these are consistent with those paid by a UK resident, such as prescription charges in England.

Since its inception the Health Charge has generated more than £5.1 billion for the NHS. The funds generated are shared between the health administrations in England, Scotland, Wales and Northern Ireland, using the now-familiar formula devised by Lord Barnett.

The health charge must be set at a level that broadly reflects the cost to the NHS of treating those who pay it. The current rate, introduced in 2020, as determined by the Department for Health and Social Care, does not currently do this. The new rate of health charge replaces that agreed in 2020 by this House; it reflects the increases in healthcare expenditure and revised assumptions of migrant use of healthcare services. Using more recent and representative data better reflects NHS service use by health charge payers.

The order amends Schedule 1 to the Immigration (Health Charge) Order 2015. The full rate of the charge will increase to £1,035 per person per annum, with the discounted rate for students, their dependants, those on youth mobility schemes and under-18s, increasing to £776 per person per annum. These levels are currently set at £624 and £470 respectively.

Furthermore, the draft order amends Schedule 2 to formalise existing exemptions from payment of the health charge for migrants applying to the statelessness immigration route and those applying to the Ukraine schemes. I know this move will be welcomed across this House, as it places these exemptions on a legislative footing and provides clarity for applicants.

It is worth remembering that the charge does not apply to those who apply to settle in the UK, recognising the strength of their long-term commitment to our country and the contributions they have made while living here. Furthermore, safeguards exist. The Government recognise that the cost of the health charge may be unaffordable for some. On family and human rights routes a fee waiver application can be made, and a full fee waiver will be granted if it is determined that the applicant cannot afford the visa fee and the health charge. A partial fee waiver can be granted if it is determined they can afford the visa fee but not the health charge as well.

The health charge is designed to benefit the NHS and support its long-term sustainability. The government manifesto committed to increasing this charge to NHS cost recovery levels. The order delivers that commitment, and I commend it to the Committee and beg to move.

My Lords, I am grateful for the Minister’s introduction to this statutory instrument, but he raises more rather than fewer questions for me. First, I point out that it would perhaps have been helpful to have debated together this SI and the Immigration and Nationality (Fees) (Amendment) (No. 2) Regulations 2023, debated on Monday 4 December, as many of the arguments raised by the noble Baroness, Lady Lister of Burtersett, and others in her regret Motion debate also apply here. The Home Office may see them as separate but, for the migrant, it is part of a large increase in the visa taxes that they and their dependants have to pay up front.

This SI, alongside all the other legislation that the Government are introducing in relation to immigration, shows that, frankly, the current system is broken. These damaging new rules mean that British employers cannot recruit people they need; more families will be separated by unfair and complex visa requirements; and public confidence in the system has, frankly, been shattered.

One sector particularly severely affected will be our universities and research councils—I declare an interest, as I worked in that sector for 20 years. They will struggle to recruit the best international students because the cost for students, whether undergraduate or graduate students, post-docs or even senior research associates, will rise, because the fees charged by this Government are becoming a real barrier.

This week, Times Higher Education quoted Shashi Singh, who obtained his PhD at the prestigious Indian Institutes of Technology, which is on a par with the absolute best in the world—fewer than 4% of applications to study there are accepted. He is now a senior research associate in molecular biology at the University of Glasgow School of Infection and Immunity, and exactly the sort of world-leading scientist we should be encouraging to stay. He said:

“Last month, I paid £6,000 for settlement of my wife and daughter. When postdocs’ salaries are around £40,000 a year … that’s a huge strain on your family budget”.

He explains that the family cannot afford a car or taxis, because that

“money is needed to buy food or has already been used to pay for visas”.

This year, he, his wife and daughter would have paid a total of £1,718 for their annual health charge. Next year, with the 66% increase, it rises to a total £2,846.

I noticed in his introduction that the Minister said very clearly that the fee was separate to the visa fee. The problem is that those being charged do not feel that it is separate. The graph in the Explanatory Memorandum shows that in fact hardly any fee waivers were granted over the past three years.

In 2021-22, international students contributed £41 billion to our economy. That means that every 11 non-EU students generate £1 million-worth of net economic impact for the UK economy. This covers fees and payments for living costs such as rent and food. The problem is that post-docs such as Shashi will consider not coming to the UK at all. This is exactly the target group whom the Government should be supporting, not trying to deter. Their contribution to their university and their local community, the quality of their research and paying taxes are everything that this Government should aim for with their repeated mantras about “world-beating research”, yet it seems that the current Prime Minister has already forgotten Boris Johnson’s global talent scheme. Will the Minister explain how we will attract and retain the brightest of academics, whether students or post-docs, to deliver world-beating research when the Government are charging them these very large sums for a number of visa taxes?

Frankly, the increase in the health charge is the most extraordinary this year. The Secondary Legislation Scrutiny Committee’s fifth report sets out a range of concerns relating to it. It states that the Government’s methodology is “unconvincing” and does not explain with evidence the justification for this large increase. A more cynical person might feel that “made up on the back of an envelope” would be more appropriate. Certainly, if you read the detail of the Explanatory Memorandum, it is extremely difficult to find the method. The Home Office’s explanation is that there are three elements to the calculation: the overall cost of the NHS, the total population and then a “factor” that adjusts for the fact that migrants tend to use the NHS less than the average person because they are younger on average. So you divide overall cost by the population then multiply by the migrant costs factor to provide an estimate of the cost of the average migrant to the NHS.

The SLSC reiterates the point that the reason the amount has increased so much is because on one of those three data points the Home Office has substantially increased the migrant cost factor, but with no evidence. It is no good turning to the Explanatory Memorandum to the instrument because that provides no details on why the charge is to be increased at a rate well in excess of national health spending. The latter has increased by 25% since the last increase in the health charge, whereas the health charge is increasing by more than two-thirds, as I said earlier. Will the Government undertake to publish the full methodology before this SI is enacted and certainly before it is implemented?

Worse, the impact assessment on page 5 of the SI bundle states:

“Baseline volumes of visa applications are based on Home Office internal planning assumptions. The volumes used are highly uncertain and may not match actual numbers in future published statistics. The impact of increased IHS on volumes is based on assumptions of price elasticity of demand for visas”.

Will the Minister say what “price elasticity” means and how it has helped the Government come to the proposed increase? Surely it must not mean an excuse for charging whatever sum the Government want to increase it by a year, but without that empirical evidence of the background data, it is almost impossible to determine this.

There is a place for immigration and nationality visa fees but they should remain affordable, and if they have to go up, the increase must not be higher than inflationary levels. It is vital for our economy that British employers must be able to hire the workers they need, and those who choose to come to the UK to work or study should be welcomed for the skills and contributions that they bring, no matter how short a time they are here for. Most do not stay; they remain for a limited period only. Everyone should be able to have confidence that the immigration system is functioning properly. Our Benches would make migration work for the UK with merit-based work visas instead of an arbitrary salary threshold, which is a further problem.

At the moment, however, the real issue is how many of our migrants are going to face this enormous surcharge in the NHS fee, which has not been justified in any of the documentation provided by the Home Office.

My Lords, as always, this SI is important. Many of the debates that led to the current system took place elsewhere. We need to seek to understand the instruments that are then put in place to make a reality of other government policies. I agree with much of what the noble Baroness, Lady Brinton, helpfully outlined. I also thank the Minister for his introduction.

This SI increases the charge payable by some migrants to access the NHS. The headline figure, for those people paying the main rate, will increase from £624 to £1,035—a large increase of 66%, compared with the 25% rise in NHS costs over the same period. There is a reduced rate for those under the age of 18, which increases from £470 to £776. Like the noble Baroness, we do not necessarily oppose the increases, or an increase, but what is the Government’s justification for such a large increase, which is well above the NHS rate of inflation over the same period? We are comparing 25% to 66%, which is quite a significant disparity. The Minister will need to justify to the Committee why the Government have seen fit to do that. Can the Minister say any more than he has done about what happens to those who cannot afford the charge? Can he confirm that it is a one-off charge, not an ongoing one? I assume it is, but I would be interested in that being clarified.

What updated evidence are the Government using to justify this figure? What assumptions do they use in their papers regarding the use of services argument? The Government explain that they believe the increase will help to deter some migrants applying to enter or remain in the UK. Again, where is the evidence for that? Is it the right policy to use health charges to try to deter migrants coming into the UK? If the Government believe that it will deter them, have they made any estimates of the numbers that will be deterred, or is it just a statement that some will be deterred without any estimate? Do any working papers in the Home Office give us an assessment or understanding of what that will be? The noble Baroness asked some of these questions. Have the Government made any assessment of the impact of these changes on business?

What is the Government’s answer to the Secondary Legislation Scrutiny Committee’s criticism that they used questionable methodology in determining and justifying the increase? Why is that committee wrong in its assessment of some of the methodology the Government used?

It is important to understand the figures. What is the Government’s estimate of the number who pay the charge currently and how much it raises, alongside future projections? I think the Minister said that it currently raises £1.7 billion, if I understood what he said. What is the projected figure over the next period?

The Explanatory Memorandum outlines and clarifies various exemptions. The Minister and the noble Baroness said something about some of the exemptions to paying the health charge. Can the Minister outline for the record what some of these clarifications and exemptions mean? How many actually receive any sort of waiver? As the noble Baroness pointed out, it appears from the charts as though hardly anybody receives a waiver or an exemption. Some clarity on that would be helpful.

Paragraph 2.2 of the Explanatory Memorandum talks about a number of different things that it would be helpful for us to understand. It talks about those on the Ukraine and statelessness immigration routes. I understand what the Ukraine immigration route is, but what exactly is the statelessness immigration route? It then talks about exemptions for “certain NHS workers”. Who are those “certain NHS workers”? Has this changed at all with this instrument—in other words, has the exempted list of certain NHS workers been extended or reduced?

It also talks about exemptions for “specified protection cohorts”. Can the Minister outline what a specified protection cohort is? One of the problems with migration, immigration and asylum is that sometimes it all gets mixed up—including in my own mind. Just to be clear, what is the status of Afghans, those from Hong Kong and others who come here under various schemes?

We have accepted the principle of immigration health charges and do not necessarily oppose this SI but, as the noble Baroness, Lady Brinton, and I have said, a number of questions need answering. Health charges need to be fair both in the level they are set at and in how they operate. The justification for such a large increase and the operation of the scheme alongside it are of extreme importance, which is why we have put various questions to the Minister.

I thank both noble Lords for their contributions to this shortish debate. I will do my very best to answer all their questions and commit to write if there are any that I cannot answer.

Those who move to a new country expect to pay towards healthcare. Countries around the world have a range of systems in place to do this, in line with individual healthcare models. It is right that we continue to prioritise the sustainability of the NHS and that temporary migrants make a financial contribution to NHS services available to them in the UK. Payment of the health charge provides near-comprehensive access to our health service, regardless of the amount of care needed, even for those with pre-existing health conditions.

I shall try to address all the issues raised. The health charge should broadly reflect the cost of treating those who pay it. However, the rates for students and their dependants, applicants to the youth mobility scheme and children under 18 will remain discounted. The increased rate of the health charge is comparable to the cost of private medical insurance here and abroad, which is a common requirement for individuals wishing to migrate to many other countries.

I think both noble Lords referred to the Secondary Legislation Scrutiny Committee. We thank it for considering the order and providing a detailed report on the legislation. Before I go into the methodology, I reassure the Committee that the Government have undertaken robust and detailed analysis of the annual cost to the NHS of treating health charge payers to determine the increased cost of the health charge. Increases to the health charge are based on the most recent data representing charge payers’ use of NHS services, more accurately determining the current cost to the NHS of treating health charge payers. The Government acknowledge the delay in providing responses to the Secondary Legislation Scrutiny Committee. Unfortunately, this was unavoidable, due to factors such as the changes in ministerial teams and the need for assurances of the responses between departments.

I turn to the methodology and the DHSC calculation. As set out by the Chief Secretary to the Treasury on 13 July, the health charge rates have remained unchanged for the last three years, despite high inflation and wider pressures facing the healthcare system. The increases to the charge reflect the higher costs in healthcare budgets since 2020. Additionally, the assumptions for how intensively charge payers use healthcare services in different settings have been revised to use more recent and representative data intended to better reflect migrants’ use of these NHS services. While the health charge is increasing, it is still considerably lower than the comparable average cost per capita of providing healthcare for the average UK resident, which currently stands at approximately £2,700 per person per annum.

I am aware of concerns around the combined cost of the health charge and visa fees and the impact that this may have on families and young people. The draft order maintains the reduced health charge rate for children, but the Government remain clear that migrants must pay the health charge when they make an immigration application and should plan their finances accordingly. The cost of the health charge and application fees are available online and should not come as a surprise. However, it is also recognised that, in some instances, people who are required to pay the health charge may not be able to afford it. In such instances, on family and human rights immigration routes and where it is backed by clear and compelling evidence provided by the individual, the health charge may be waived.

Where a fee waiver application is successful, the application fee and the health charge will be waived. Migrants who are granted a partial fee waiver are required to pay the application fee only; the health charge is waived in full. All the information about fee waiver applications is publicly available on GOV.UK and has been for a long time.

Evidence suggests that migrants are aware of the fee waiver process due to the volumes of migrants on eligible routes utilising fee waiver applications. For example, in the year ending September 2023, there were 46,470 visa fee waiver applications, which I would argue does not constitute “hardly any”. The Government are also committed to supporting vulnerable cohorts; there are a range of exemptions from the payment of the health charge, including for individuals in protected cohorts. That includes asylum seekers, looked-after children and victims of modern slavery and trafficking. This draft order extends the range of exemptions to migrants applying to the statelessness immigration route and to the Ukraine regime. In answer to the question from the noble Lord, Lord Coaker, about the statelessness route, it is basically for migrants who are unable legally to reside in any other country—so very similar to refugees.

The Minister has just correctly defined statelessness and protected cohorts. To those who wrote the Explanatory Memorandum, all this is perfectly obvious, but for people like me and many others who read it, it would be extremely helpful if, instead of putting “protected cohorts”, they could add “such as” and do the same for “statelessness”. It would be helpful if that was done sometimes in an Explanatory Memorandum.

The noble Lord makes a very strong case for footnotes, and I hope that my officials are paying attention to that.

On the questions raised by the noble Baroness, Lady Brinton, about the deterrent effect on migrants, the UK continues to welcome talented individuals from around the world who want to study and work here. It is difficult to isolate the impact of the health charge increase on visa demand, due to the 2020 increase coinciding with the Covid pandemic and EU exit, but evidence from visa applications over the period following the increase to £624 does not suggest any significant impact on application volumes. Visa application volumes are monitored and there remains a substantial demand for visas across the majority of the immigration routes. All fee levels across the immigration system, including the health charge, are kept under review and evaluated where appropriate.

The Government’s science and technology framework sets out 10 key actions to achieve the goal of becoming a science and technology superpower by 2030. The global race for science research, technology and innovation is becoming increasingly competitive. The Government are committed to making the UK the best place in the world to work for top scientists, researchers and innovators, and we are delivering the biggest increase in public R&D investment, including training our next generation of doctoral and post-doctoral RDI talent, having already committed to investing £20 billion in R&D in 2024 and 2025.

I know that we are not discussing this today, but I referred to the increase in the income threshold to £38,500. If that is the case, why was it set at that level, when post-doc salaries start at £35,000, immediately making that important group of people unable to come here?

I was about to say that the Government launched the global talent network in 2022 to support recruitment of exceptional talent in priority areas, such as artificial intelligence, with direct support and information on attractive opportunities in the UK. The noble Baroness is right that this question is not germane to this instrument. We dealt with the increase in salary levels last week. I cannot remember the precise exemption for doctoral students, but there was a PhD exemption.

Perhaps the Minister could write to me afterwards. I am talking about post-docs, who arrive with a PhD on a salary of £35,000. They now have a problem because of the level at which this has been set. The point I was making is that this large increase and the other visa fee increases make the whole thing impossible. That is the real worry of universities.

As I said, I will write, because I cannot remember the precise details and I do not want to say anything that I will have to correct.

It is also important to highlight that, although current comparisons can be made, other countries do not have healthcare systems that are directly comparable to the NHS. However, when comparing the total healthcare costs and the costs as a proportion of salary, analysis shows that the health charge at its new rate is broadly equivalent to that in Germany.

We are not trying to deter migrants and reduce net migration by increasing these charges. The health charge simply reflects the cost to the NHS of providing health- care to health charge payers. It supports the sustainability of the NHS. It is not a tool to reduce net migration. It is a public sector fee and cannot exceed the cost of providing treatment for health charge payers. The health charge cannot be used for any purpose other than to fund healthcare for health charge payers.

Migration volumes have increased since the current health charge rates were introduced in 2020. The direct impact that the health charge increases have had on migration are difficult to determine due to the factors that I mentioned earlier and the impact of the Covid pandemic coinciding with the recent increases, but they certainly do not appear to be statistically significant, although that is probably over-egging it a little.

Regarding the Government’s assessment of the impact of the current rates of health charges on visa volumes, no formal review has been undertaken to assess their impact on immigration. That is partly due to the 2020 increase having coincided with the pandemic and EU exit. However, we monitor visa application volumes, which have been at record highs, as noble Lords will be aware, across the majority of immigration routes. All fee levels across the immigration system, including the health charge, are kept under review and evaluated where appropriate. To answer the specific question about price elasticity, it is basically about migrants’ willingness to apply for a given visa given an increase in price. This is derived from published academic research. I can provide links as required.

In terms of impact assessments, we have considered this; a full regulatory impact assessment estimating the impact of the IHS increase was published alongside the legislation. The Government have considered the impact that increases to the health charge will have on visa volumes, as I said. The regulatory impact assessment published alongside this estimates the potential impact on visa volumes using different scenarios. The Government have considered the impact that the health charge increases will have on specific types of immigration. The regulatory impact assessment estimates the impact on migrants and visa volumes for each individual liable route. As I said, the immigration health surcharge is not a net migration policy. The published regulatory impact assessment provides estimates for the potential impact on visa demand under different scenarios.

I think I have answered most of the questions asked of me. I will write on those that I have not answered and the specific points raised during the debate. I finish by saying that the NHS was founded to care for every citizen in their time of need. We have to cherish and preserve that principle, but it is right that migrants granted temporary permission to be in the UK make a financial contribution to the running of NHS services available to them during their stay. On that basis, I commend the order to the Committee.

Motion agreed.