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Patrick Hall: With regard to overseas students, I have come across cases in my constituency where entry clearance officers have directly gainsaid the judgment of a university offering a course. That is not right.

Mr. Clarke: Serious issues have arisen in the university sector—or I should say more generally the overall education sector—regarding essentially bogus institutions that are a device for people to come into the country pretending to be students. Together with the Department for Education and Skills, we have taken strong steps to deal with that. I remain of the view that the way in which to deal with my hon. Friend's genuine concerns is to have a proper dialogue between the university sector and the Home Office about how to ensure that the visa system works in the most effective way.
 
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Mr. Jim Cunningham: As my right hon. Friend knows, I have two universities in my constituency, but I am still unclear about his comments on the abolition of the appeals mechanism if a university has only a small number of students. I do not understand how that affects other conditions and arrangements that he wants to make with universities.

Mr. Clarke: I am sorry that I was unclear. The reason for the proposals in the five-year strategy is that the appeal process is massively time consuming and expensive for the visa operational system. We want to make it as simple and straightforward as possible. We therefore included the points plan, which will make it easier for people to know—before they come to a university in Coventry or elsewhere—exactly where they stand. I believe that the proposals will lead to a far better service for the individual students at the universities that my hon. Friend represents and for universities to enable them to move more effectively.

I plead guilty to the charge that the system for universities was too inflexible. It is necessary to achieve a better state of affairs, whereby my hon. Friend's concerns can be sorted out. However, I do not believe that the appeals system is central to that.

Dr. Vincent Cable (Twickenham) (LD): Will the Home Secretary explain the high error rate on student visa decisions? It is such that the Immigration Advisory Service claims that 60 per cent. of its cases are successful on appeal. The university of Sheffield argues that, in 90 per cent. of the cases that it brought, they were either successful or the refusal was withdrawn. Since the errors are so enormous, surely the appeals system should be preserved.

Mr. Clarke: I do not recognise the figures that the hon. Gentleman cites. However, the most important way of addressing the appeals problem is to get a more accurate system of making initial decisions. The overall process that we have set out will achieve that in the ways that I have described.

Mr. Khan : My understanding is that one reason for the success of appeals in student cases is that additional information is provided on appeal, which leads to the initial decision being overturned. However, the universities have expressed a concern about whether, if the same person decides on the prospective student's fresh application, there will be prejudice against that student given the black mark against his or her name.

Mr. Clarke: I do not believe that such prejudice will exist, but the working party, to which I referred earlier, to establish the discussion between universities and the Home Office on those matters will deal with those specific points. Let me add another serious point, which relates to my hon. Friend's remarks. It is important that people who want to study here apply to come here in a timely way. There are tricky issues about late applications and the way in which they are tackled that relate to his point about information. I hope that we can reach a state of affairs whereby those decisions are taken properly.
 
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David Davis (Haltemprice and Howden) (Con): I understand what the Home Secretary is trying to achieve. Bogus colleges became a specific problem in the past couple of years. In the past year or so, the National Audit Office conducted a study of entry clearance and raised the question of the quality of decisions. Although Conservative Members are minded to accept the Home Secretary's arguments on appeals, the decision hinges strongly on improvement in quality. Will the right hon. Gentleman therefore undertake to take on board the proposals in the NAO report on the subject and inform an early sitting of the Standing Committee so that it can reach a judgment on the matter?

Mr. Clarke: I give the undertakings for which the right hon. Gentleman asks to take the NAO proposals into account and to inform the Committee. However, I can go further: because of the importance of his point, which I tried to make earlier, I am prepared to say that if we do not improve the quality of decisions, the matter should be brought before the House to ascertain how we move forward.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I emphasise the universities' concerns about the money that is brought in. However, from the perspective of the Select Committee on Trade and Industry, universities play a vital role in the long-term future economic well-being of this country by bringing people here and exposing them to our culture and our way of doing business. That pays long-term dividends when those people go back to be managers and decision makers in their countries. It is therefore vital that we have a system that ensures that as many people as possible get here as overseas students. To that end, when the Home Secretary says that he wants to make the system more transparent, efficient and effective, surely he can maintain the appeals procedure. If it is more transparent, effective and efficient, there will be fewer appeals.

Mr. Clarke: I do not want to be dismissive or rude, but the general point is self-evident. It is critical for the economy that large numbers of people continue to want to study in this country in a variety of ways. It is important for the foreign policy reasons that the hon. Gentleman suggests as well as for economic reasons. Most importantly, however, British educational institutions, particularly the universities, must remain an attractive proposition—in what is, incidentally, a highly competitive marketplace—for people seeking to come to this country. Furthermore, so far as the Home Office is concerned, it is important that we deal with the applications of people coming to this country in the most effective and efficient way possible, which is what we are doing in these provisions.

Mr. Chris Mullin (Sunderland, South) (Lab): Is it not the case that a significant number of the students from other countries who are accepted by British universities do not show up, and that others who do show up disappear rather quickly afterwards? Has it not also been the case, at least in the recent past, that some universities are in denial about this problem?

Mr. Clarke: I would not be anything like as vicious and sharp in my use of language as my hon. Friend, but
 
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he accurately describes the state of affairs. The big issue involves a change of culture that runs right through the whole five-year strategy. We need to understand that responsibility for the migration and asylum system in this country is a matter not only for the Home Office and its agencies but for those who benefit from that migration. We are trying to form a partnership with the universities so that everyone can acknowledge their responsibilities in regard to dealing with the problem. I accept my hon. Friend's point, and I have set out what we are trying to achieve.

Keith Vaz : Will my right hon. Friend give way?

Mr. Clarke: My hon. Friend is always immensely persuasive, so, unfortunately, I shall give way.

Keith Vaz: I am most grateful to the Home Secretary for his generosity. I thought that he said something very useful this afternoon—[Laughter.] Actually, he said many useful things, but one in particular was his expression of willingness to meet representatives of the universities. Will he meet a delegation of university vice-chancellors to talk about the partnership that could be created to deal with the issue of abuse? Will he ensure that either the Minister with responsibility for entry clearance or the Foreign Secretary are also present at that meeting, because these decisions are taken at posts abroad?

Mr. Clarke: Yes, I can give my hon. Friend the commitment that he requests. Actually, a number of such meetings have been held already, between universities and officials and Ministers from the Home Office, and Foreign Office Ministers. This is an important dialogue, because these matters involve a change of culture. We shall have to work hard to change the Home Office culture, but everyone else will have to change as well.

Now I really must make some progress. On the first pillar, clauses 42 to 44 provide a power to prescribe procedures to be followed and fees to be paid when making particular applications under the immigration rules. The purpose of that is that, in addition to improving the management of the current system, these provisions will support the implementation of the new points-based system for managed migration. On the new asylum process and refugee integration, clause 38 amends the statutory framework creating the refugee integration loan to reflect the change in policy announced in the five-year strategy granting refugees an initial five years' leave to remain.

The body of the Bill addresses two aspects of what I have described as the "third workstream". A key provision in the Bill will effectively tackle illegal working by punishing those who use workers who are not legally allowed to seek paid employment in the UK. Clauses 11 to 20 create a new civil penalty for employers of illegal workers and set out how the scheme will work. In particular, clauses 11 and 12 set out the circumstances in which a penalty may be issued to an employer found to be using illegal workers, the requirements that employers must fulfil to be able to prove that they have taken reasonable steps to assure themselves that
 
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employees or prospective employees are entitled to work in the UK, and the grounds on which an employer can object to the issue of a civil penalty.

Clause 15 requires a code of practice to be issued covering the criteria to be used in determining whether a penalty should be issued, and the amount. The maximum amount to be paid per employee would be £2,000. Clause 17 creates a new criminal offence of employing a person knowing that they are not legally entitled to work in the UK. It provides that the maximum penalty for conviction following indictment is two years' imprisonment and/or a fine. It is critically important that we drive out those illegal employers who keep people here, often in the most appalling conditions, and we must ensure that we deal with them in the most effective way. These measures are designed to achieve just that.

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