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Fourth Standing Committee
on Delegated Legislation
Tuesday 11 June 2002
[Mrs. Marion Roe in the Chair]
Draft Consular Fees Act 1980 (Fees)
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Denis MacShane): I beg to move,
That the Committee has considered the draft Consular Fees Act 1980 (Fees) Order 2002.
The order is made under section 102(5) of the Finance (No. 2) Act 1987(a), and was laid before the House on 13 May 2002. It allows UKvisas, a joint Foreign and Commonwealth Office and Home Office unit, to take account when setting visa fees of any past deficits incurred in the costs of running the entry-clearance operation, and to cross-subsidise between different entry-clearance services. The draft order contains a fixed expiry date, as it is hoped that by 31 March 2004 its powers will no longer be necessary.
Michael Fabricant (Lichfield): If the Minister is hoping that all costs will be recovered by 2004, what is his estimation of the consular fees that will have to be imposed in order to recover the vast deficits that have arisen over the past few years?
Mr. MacShane: I was coming to that.
UKvisas proposes to increase fees by between 8 and 10 per cent. The standard visit visa will go up by £3 to £36; the five-year, multiple-entry visas by £8 to £88; settlement visas by £20 to £260; and long-term, non-settlement visas by £25 to £75. A separate consular fees order is required to set the increased visa fees. That order is made by approval of the Privy Council, and the Committee will wish to note that UKvisas proposes that the fee increases should take effect on 1 July 2002.
Mr. Chris Smith (Islington, South and Finsbury): In specifying what my hon. Friend expects the fees to be, he will note that paragraph (3) of the statutory instrument enables past deficits to be recovered in the fees charged. There is some concern outside the House about how far back the provision for the collection of past deficits might go. Will the Minister give a clear assurance that there is no intention on his part or that of the Government to recover deficits prior to 2000?
Mr. MacShane: I am happy to give that assurance. The Immigration Law Practitioners Association raised the matter; I pay tribute to the important work done by immigration lawyers on behalf of many of our constituents. We are talking about a deficit of about £4.7 million–£3.3 million for 2000–01 and an estimated £1.4 million for 2001–02. It is that deficit, which goes back only to 2000, that the order seeks to put right. The order will expire in 2004. I hope that that allays the concerns of my right hon. Friend and others who have raised the matter.
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Michael Fabricant: The Minister has just said that the deficit in total is £4.7 million. Given that some of the increases are quite large for people in third world and developing countries who make applications, how confident is he that the deficit of £4.7 million will be met, as the elasticity of demand will probably result in fewer permit or visa applications being made?
Mr. MacShane: On the contrary, given the attractiveness of the UK to visit, study or settle, I have no grave fears on that account. The proposal has been planned on the basis of accountancy and legal advice.
The Treasury placed an obligation on the Home Office and the Foreign and Commonwealth Office that the visa system be self-financing. UKvisas, which manages the worldwide visa operation, is required by the Treasury to operate on a self-funding basis. It has to set fees to recover the full costs for each financial year of the entry-clearance operation in the UK and overseas. Where fee income does not cover those costs, any deficit is met by the Exchequer. The increase in visa fees will ease that burden on the taxpayer. It will also provide the necessary staff and equipment to meet increasing demand for visa services.
I make a point on all my overseas trips of visiting the consular or visa section of our embassies and high commissions. The men and women employed in such sections do a very good job. The extra money that we hope the proposal will raise will allow that job to be carried out more professionally and calmly, and will provide a better service for those seeking to visit the UK.
Visa fees have not risen since 1995. The increases that UKvisas proposes keep it within its service delivery agreement with the Treasury not to increase fees in real terms compared with the 1997 baseline. Applicants now get better value for money. Since October 2000, the standard visit visa has permitted multiple rather than single entries during its period of validity. Current deficit levels are due, first, to an increase in demand and rising costs overseas; secondly, to the cost of implementing changes to the immigration rules introduced in October 2000 and the resulting reduced income; and, thirdly, to changes to internal FCO costing methodology, which led to the re-basing of entry-clearance costs.
UKvisas is taking a number of measures to reduce costs and increase productivity. However, those alone will be insufficient to tackle the deficit. The increases will enable UKvisas not only to recover its costs, but to deliver more staff in visa sections and to modernise equipment and information systems. Those improvements will help it to improve delivery of the Government's commitment to a fast, efficient and effective visa service. I trust that the draft order will have the full support of all members of the Committee.
Mr. Alan Duncan (Rutland and Melton): I thank the Minister for explaining how the order will work. I add that the Opposition share his delight in his remaining in his job after the recent reshuffle.
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We happily endorse the basic principle of the order. We are always in favour of honest and straightforward accounting. We believe that charges for functions such as the issuing of visas and permits should reflect their costs. Obviously there is no point in running such a service at a loss. Our concern is that there may be some devil in the detail. I am grateful to the Minister for addressing our main concern, particularly in response to the right hon. Member for Islington, South and Finsbury (Mr. Smith), which is the apparent open-ended nature of the liability that payers of visas applications will have to bear. I note that there is essentially a deficit of £4.7 million to be recouped, and that that goes back no earlier than 2000. The fear of many on the Committee was that the open-ended risk would be unquantified and that we might see a sudden, dramatic increase in the charges applied to applications.
Andrew Selous (South-West Bedfordshire): My hon. Friend talks about not wanting large increases, but I think that he would agree that the scale of those described by the Minister is significant: from £8 to £88, from £25 to £75, and one huge jump to £260. The Minister talked about cross-subsidisation. Does my hon. Friend agree that the Government should pay due regard to the ability of those in certain countries to pay the fees? The sums of £75, £88 or £260 may not be beyond the reach of a citizen of Australia, Canada or America, but they may be wholly outside that of a citizen of India or Bangladesh, even from a lifetime's earnings. Will my hon. Friend press the Minister to consider that important point?
Mr. Duncan: I am grateful to my hon. Friend for steering me toward the areas on which I seek more specific answers from the Minister.
I echo the Minister's remarks about the Immigration Law Practitioners Association, which sent all members of the Committee a succinct and persuasive briefing that raises my hon. Friend's question. I especially want to question the Minister on settlement fees, which reach a magnitude that makes a significant difference to the plight of the applicant. An increase of approximately £200 for fees that are nearer £300 is sizeable. Will he say whether that fee is payable when settlement is subsequently not granted? The sums mount up if someone applies and then wishes to reapply, or applies for one member of the family and hopes that another member of the family may apply. We are soon well into four figures in sterling which, as my hon. Friend says, is a lot of rupees. The sums can become substantial for someone who simply wishes to process an application to see whether they can settle in the United Kingdom. The sum of £60 may be of no consequence to a business man, but accumulating fees in excess of, say, £1,000 for a family would matter greatly to it.
I seek a proper explanation from the Minister of whether the fee would be payable in the event of an unsuccessful application. The increases may not appear to be much when expressed as 8 or 10 per cent, but I want him to reconfirm that the Government will not increase the sums of £250, £260 or £270 to a level that penalises the applicant. Will he also comment on whether the fee will be, say, £250 for a
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family or each person? Will he say how the scale of fees will work, and especially how it will affect a family from the Indian sub-continent, to whom these sums make a great difference?
I also ask the Minister to explain how cross-subsidy will work in practice. I understand that if losses are made on visas or settlements, the Government may want to use the profit from one to subsidise the deficit of the other. However, will the calculations on what is permitted under the order be ring-fenced by the economics of an embassy or high commission? Will the cross-subsidy be permitted between the various functions only in, say, India, or will it be global and cover all the United Kingdom's consular activities? If it is the latter, how can the cross-subsidy effects permitted under the order be apportioned equitably to different countries? The Minister may also be able to comment on how that would work when a visa facility shuts, as happened at the high commission in Islamabad recently. How will the economics be affected if another high commission or country has been issuing visas, perhaps over the internet?
The devil is in the detail, although the Minister reassured us on some of our major concerns. Will he confirm that there is a 10 per cent. cap, or will we find in the next few months that the broad-brush figures of which he has no doubt fairly advised us are an underestimate in some cases? Costs in some countries may be peculiar, and the fees far out of kilter with those charged elsewhere. Is he prepared to confirm the cap on the increases? Are there any countries in which the fees charged are so out of kilter with the costs that we will see massive local increases? Are any countries so awry? Have any fallen so far behind in relating their charges to their costs that as a result people in those countries will face some unexpected increases? I hope that he will be able to address those questions and assure us that the cross subsidy will be equitable and that there will not be any extraordinary quirks that lead to dramatic increases.
Will the Minister reconfirm that the Government are looking at recouping only £4.7 million? Will he give the Committee a rough idea of how many applications in the various categories will have to carry the apportioned £4.7 million, so that we can get a feel for the magnitude of the arithmetic with which we are having to contend? If he gives us the assurances that we want, the official Opposition will be content not to oppose the order.