Standing Committee E
Thursday 16 May 2002
[Mr. Alan Hurst in the Chair]
Fee for work permit, &c.
Mr. Humfrey Malins (Woking): I beg to move amendment No. 299, in page 45, line 39, after 'fee', insert
'of no more than £150 per application'.
The Chairman: With this it will be convenient to take the following amendments: No. 300, in page 45, line 40, at end insert
'but no fee shall be payable by non-profit organisations.'.
No. 313, in page 46, line 7, at end insert
'and shall make provision for exemption for non-profit organisations'.
Mr. Malins: Since Labour took power in 1997, work permit regulations have been relaxed and simplified. That has had the dual effect of making it easier for employers to bring to the UK non-European economic area nationals, especially those in sectors with skill shortages, and of reducing the need for employers to seek legal assistance when making such applications. We welcomed those measures, as did various industry representative groups such as the Computing Services and Software Association and the Confederation of British Industry.
With that background, we are slightly perplexed by the recommendation to charge employers who need to make work permit applications. It seems contrary to the Government's assumed aims for several reasons. First, there is a danger that high charges will discourage some small and medium-sized businesses that have a genuine requirement to employ individuals from non-EEA countries from going through the formalities involved in applying. That could damage the businesses that are then unable to fulfil skills requirements. It may also encourage some employers to employ people outside the regulations, for example on visit visas. That practice is already widespread.
The second possible consequence is that because of the increased risk associated with making work permit applications, employers may be more likely to resort to using legal professionals to make the applications, thereby increasing costs again. That will give a major advantage to companies that have in-house legal departments, and will needlessly discourage companies with smaller profit margins and turnovers.
We are not blind to the possible benefits of introducing fees. It is estimated in the Bill that fees for the expected 175,000 applications next year will raise about £15.8 million, which will reduce the burden on the taxpayer. However, we are concerned about proposals to move that £15 million burden on to the shoulders of employers, who are already having to pay increased national insurance contributions. Another
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possible benefit could be to discourage applications that are either fraudulent or likely to fail, but that might not happen. At the moment, among the worst offenders in the fraudulent use of work permits are recruitment agencies that masquerade as employers and body shop people to the UK. Introducing charges would have little or no effect on dissuading them from continuing, as the mark-up that they get from body shopping is so high that a fee would not be noticed. They will just pass the fee on to their unwitting candidates, as is often the case with legal fees.
Our final concern is about the Secretary of State's discretion to make an exception in certain applications. The aim is to raise £15.8 million through the scheme, and it estimated that there will be 175,000 applications next year, but we do not know whether all employers will share the burden equally. The Home Secretary may be considering excluding the health care and teaching sectors from the charges, so what level of charges should we expect for the other sectors? If the Secretary of State decides to exclude other industries as time goes on, how will that affect the companies that need to make extension applications? If the Secretary of State does not intend to exclude those sectors from charges, is it a good use of resources to be spending time moving entire funds from one branch of government to another?
However, as industry and skills requirements change, we do not oppose the provision to enable the Secretary of State to use his discretion on such matters, and we want to avoid yet another new Bill being presented in just a few years time. I urge the Secretary of State to consult widely on the issue, and recommend that he considers excluding from these charges small businesses with perhaps fewer than 20 employees, or with a turnover of less than £1 million. He may also want to consider making the first five or 10 applications in a 12-month period free of charge. We therefore propose that the charges do not exceed £150, so as not to put a massive burden on small and medium-sized enterprises. That figure is significantly lower than that of the United States or France. However, the Republic of Ireland and Germany followed our lead in relaxing work permit regulations, from which they have greatly benefited. They have not felt the need to introduce fees. We support the introduction of fees with some misgivings, but believe that the burden on business will not be too great if a maximum fee is introduced at this stage and if there is consultation on the other points raised.
Amendment No. 300 would insert:
''but no fee shall be payable by non-profit organisations.''
Several non-governmental organisations have expressed strong support for that proposal. The Immigration Law Practitioners Association in particular believes that a distinction needs to be made between profit-making and non-profit-making organisations on the fees charged for work permits.
Simon Hughes (Southwark, North and Bermondsey): Good morning. It is a delight to be back with the Committee. I know how much everyone missed me on Tuesday. My hon. Friend the Member
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for Sheffield, Hallam (Mr. Allan) will return soon, and the full complement will be back in harness.
I endorse everything that the hon. Member for Woking (Mr. Malins) said on the amendments, which have our support as hon. Members will see from the amendment paper. When the Government consult on fees, they should consider the point that there should be no additional penalty for recruiting for the public services, and possibly for the charitable and voluntary sectors. There are various add-on penalties, not least due to the recent Budget changes to national insurance and to housing costs in areas of high housing demand. Anything that discourages public services, especially the health and education sectors, from bringing people in to work in their area should be avoided. I hope that the Government will make a clear policy statement about that.
What breadth of people do the Government envisage will be covered by the clause? There has been a welcome policy change from including only those people who are highly qualified to including those who may not technically be as widely qualified, but whom the labour market needs. We must be careful to avoid significant fees for work permits. We need many people to do jobs which, to be honest, are not at the most highly paid end of the market. Work permits greatly discourage them and those who act on their behalf.
I want to reinforce the point made by the hon. Gentleman, and add that we are all aware that the labour market contains good and bad practitioners. Many of the bad practitioners find any excuse for add-on costs, so we should be careful not to give them that opportunity. That is why an upper limit for the fees would be appropriate. I share the hon. Gentleman's view that there should be a provision for fees in secondary legislation, because of the flexible labour market. The method of charging may need to be varied, depending on how the market responds.
If, having advertised a specific job in this country, an employer cannot get anyone to do it, he is allowed to employ non-EC nationals, who are taken on for four years as a condition of their employment. They are expected to go home at the end of that period unless they can satisfy the requirement that no one else in the market is capable of doing the job. Can the Minister tell the Committee and those outside with an interest in the matter what the Government expect to be the normal initial period of permission, what period the fee will cover and what will be the criteria for renewal?
I can give the example of Australian constituent who was employed in docklands to do specific computer work. At the end of his four years he had become hugely valuable to his company. It is nonsense for that company to have to go through the process of re-advertising and to take someone on from scratch, and it is a penalty on industry. People who have established their validity and value must be allowed to continue in employment. It would be helpful if the Minister could state the Government's policy in that respect.
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The Parliamentary Secretary, Lord Chancellor's Department (Ms Rosie Winterton): As hon. Gentlemen said, the purpose of the clause is to enable the Home Office to charge employers a fee when considering applications for work permits. That will focus the cost on those who benefit from the service. The work permit arrangements are used by a relatively small number of businesses, but the burden of operating the scheme is borne by all UK taxpayers and businesses. Introducing a fee for the work permit would mean that the users of the service pay for it. UK businesses tell us that the speed of our service is an important advantage to them when compared with the service to businesses elsewhere. Expanding the use of the work permit criteria places an ever-increasing burden on the general taxpayer, and stretches the resources of Work Permits (UK) so much that service levels are difficult to maintain. Charging for the service will help to maintain our present world-leading service. The change will bring us into line with other western countries; our turn-around times compare favourably with other countries, such as Canada and the United States, which already charge. They take from three to six months to consider cases.
Applications for work permits have increased from 70,000 in 1999–2000 to an estimated 135,000 in 2001–02. Despite that increase, the standard of service provided by Work Permits (UK) is exceptionally high. Almost 90 per cent of completed applications are considered within one day of receipt.