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Session 1999-2000
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Delegated Legislation Committee Debates

Draft Consular Fees Act 1980 (Fees) Order 2000

Third Standing Committee on Delegated Legislation

Wednesday 8 November 2000

[Mr. John Cummings in the Chair]

Draft Consular Fees Acts 1980 (Fees)Order 2000

4.30 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Peter Hain): I beg to move,

    That the Committee has considered the draft Consular Fees Act 1980 (Fees) Order 2000.

The order essentially allows both the United Kingdom Passport Agency and the Foreign and Commonwealth Office to take account of any past or future deficits and any cross-subsidisation of services when setting consular or passport fees. The United Kingdom Passport Agency and the Foreign and Commonwealth Office's fee-bearing services operate on a full cost recovery basis. They are not funded from general taxation. Consular and passport fees are set to recover the full cost of performing consular functions and issuing passports. Deficits occur when fee income is insufficient to meet the costs, and those deficits are born by the Treasury.

The order gives authority for deficits, past or future, to be included in the calculations when reviewing and setting consular and passport fees. It does not allow the United Kingdom Passport Agency or the Foreign and Commonwealth Office to increase fees to recover deficits. Parliamentary approval, through an amendment to the Consular Fees Order (No. 2) 1999, is required if the Government wish to change the fees. Neither the United Kingdom Passport Agency nor the Foreign and Commonwealth Office intend to increase passport fees this Parliament to recover deficits or for any other reason.

The United Kingdom Passport Agency and the Foreign and Commonwealth Office are negotiating with the Treasury about how past deficits should be dealt with. The deficits amount to £26 million. That is made up of £15 million historic deficit incurred by the United Kingdom Passport Agency and the Foreign and Commonwealth Office prior to April 1999 and £11 million incurred in 1999-2000, the past financial year. If the order is agreed to, it will allow efficiency savings to be used to repay the deficits.

The order also allows for child passport fees to be subsidised by adult passport fees. That occurs only with passports issued by posts overseas where the fee for adult passports includes an additional £3, which goes towards the cost of issuing child passports. The price differential is intended to reflect the differing validity of child and adult passports. Child passports are valid for only five years, whereas adult passports are valid for 10 years. Passport customers overseas would find it difficult to understand why a five-year passport should cost the same as a 10-year passport if the subsidy did not exist. The order is needed now to formalise the practice and allow it to continue.

The order is made under the Finance (No. 2) Act 1987 and in accordance with section 102(5) of that Act. I trust that it will have the full support of all members of the Committee.

4.33 pm

Mr. Richard Spring (West Suffolk): I welcome you to the Chair, Mr. Cummings. I thank the Minister for explaining the order and I assure him that we have no objection to it in principle.

I wish to pay tribute to members of our consular service who, in many respects, are the unsung heroes in our Rolls-Royce of a Diplomatic Service. When I was on holiday once, in Spain, my passport was stolen, and I well remember that the way in which the consular service dealt with the problem was outstanding. Indeed, 430,000 passports were issued abroad, which is an enormous number, and many hundreds of thousands of people are entitled to British passports on either a single or a dual nationality basis. It is a complex area and our consular service does an excellent job.

As the Minister said, there re are already differential charging methods abroad, such as £49 for an adult passport that is valid for 10 years and £29 for a five-year child passport. The differential pricing between domestic and overseas costs shows that the administrative expenses are obviously higher abroad.

The Minister also said that the consular service—or the Foreign Office—owes the Treasury £26 million, and a negotiation is under way. Has the Treasury ordered that the debt be repaid? If so, when will that happen? When does he expect the matter to be cleared up? All hon. Members have an abiding memory of the shambles of passport queues last year, which was caused by failed IT systems and the introduction of compulsory child passports.

Will the Minister confirm that £11 million of the £26 million was due to the chaos that many had to suffer as a result of long queues, while the remaining £15 million was incurred because of the additional cost of passports being issued abroad? If he will confirm those points, we will be happy to accept the order.

4.36 pm

Mr. Hain: I join the hon. Member for West Suffolk (Mr. Spring) in welcoming you to the Chair, Mr. Cummings. I also thank him for paying tribute to the consular service, which does the often demanding job of helping people who are in great difficulty abroad, as he once was. I am grateful for his support.

On the hon. Gentleman's point about the Treasury seeking to recover costs, negotiations are continuing, and we hope to reach a satisfactory conclusion. He will be aware that the Public Accounts Committee report on the problems at the Passport Agency last summer, which was issued in June, recommended that the Treasury should consider writing off previous deficits. The order was delayed so that the Passport Agency and the Foreign Office could consult the Treasury, which is a polite way of saying negotiate with them. We hope that the matter will be resolved sooner rather than later. I am grateful that he raised that point for clarification.

The £11 million deficit resulted from the problems of last summer, while the £15 million deficit was incurred as a result of the historic problems faced by overseas posts. The combined £26 million deficit must still be addressed, but it will not be recouped by increasing passport fees; it will be found in other ways.

I am grateful for the Opposition's support for the order. I commend it to the Committee.

Question put and agreed to.


    That the Committee has considered the draft Consular Fees Act 1980 (Fees) Order 2000.

Committee rose at twenty-three minutes to Five o'clock.

The following Members attended the Committee:
Cummings, Mr. John (Chairman)
Blackman, Mrs.
Bradley, Mr. Peter
Cousins, Mr.
Day, Mr.
Edwards, Mr.
Flint, Caroline
Hain, Mr.
McNulty, Mr.
Oaten, Mr.
Robathan, Mr.
Ruane, Mr.
Spring, Mr.
Wareing, Mr. Robert N.


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Prepared 8 November 2000