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House of Commons
Session 2005 - 06
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Standing Committee Debates

Sixth Standing Committee
on Delegated Legislation

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Sixth Standing Committee
on Delegated Legislation

The Committee consisted of the following Members:


Ann Winterton

†Burnham, Andy (Parliamentary Under-Secretary of State for the Home Department)
†Cawsey, Mr. Ian (Brigg and Goole) (Lab)
†Ennis, Jeff (Barnsley, East and Mexborough) (Lab)
†Gwynne, Andrew (Denton and Reddish) (Lab)
†Horwood, Martin (Cheltenham) (LD)
†Jones, Helen (Warrington, North) (Lab)
†McCabe, Steve (Birmingham, Hall Green) (Lab)
Malins, Mr. Humfrey (Woking) (Con)
†Owen, Albert (Ynys Môn) (Lab)
†Penning, Mike (Hemel Hempstead) (Con)
†Prisk, Mr. Mark (Hertford and Stortford) (Con)
†Rogerson, Mr. Dan (North Cornwall) (LD)
†Shepherd, Mr. Richard (Aldridge-Brownhills) (Con)
†Spellar, Mr. John (Warley) (Lab)
Spink, Bob (Castle Point) (Con)
†Trickett, Jon (Hemsworth) (Lab)
John Benger, Committee Clerk
† attended the Committee

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Wednesday 16 November 2005

[Ann Winterton in the Chair]

Accession (Immigration and Worker Registration) (Amendment) Regulations 2005 (S.I., 2005, No. 2400)

2.30 pm

Mr. Dan Rogerson (North Cornwall) (LD): I beg to move,

    That the Committee has considered the Accession (Immigration and Worker Registration) (Amendment) Regulations 2005 (S.I., 2005, No. 2400).

I should like to address my remarks principally to the effect that the regulations will have on the horticulture and agriculture sectors of the economy. As we know, those sectors are under threat in terms of recruiting skilled and unskilled workers, and it is vital that measures introduced by the Government reflect that reality. We must support those who manage the landscape and produce food and other crops, especially as those sectors are under great pressure. The regulations that we are debating seem to be based on the need to subsidise bureaucracy rather than to handle the issue more sensitively.

The scheme involves the charge to workers from the accession 8 countries. Where it affects agriculture, in particular, I refer to casual labour and mainly horticultural concerns.

Steve McCabe (Birmingham, Hall Green) (Lab): It occurs to me that at Prime Minister’s Question Time today the leader of the Liberal Democrats raised the point about the Child Support Agency and its problems with not covering costs and with failing to recover sufficient money to meet the cost of administration. Will the hon. Gentleman tell me what the difference is between that principle and the one that he espouses?

The Chairman: Order. That intervention was a bit wide of the subject.

Mr. Rogerson: I am happy to refer to the fact that as well as opposing the measures before us, my party opposes the Child Support Agency and its unnecessary and ill thought-out bureaucracy.

Mr. John Spellar (Warley) (Lab): If I may rephrase the question, is the hon. Gentleman saying that there should be a subsidised service and a subsidised flow of labour into the country? Is he proposing subsidised migration?

Mr. Rogerson: I am not proposing subsidy. I was referring to subsidised bureaucracy. Poorly paid workers, most of whom are on the minimum wage, come into the country for short periods and are in
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effect asked to subsidise the Government’s efficiency in administering the scheme. It was introduced recently, and many people, such as the Association of Labour Providers, feel that it is unnecessary. The regulation of people coming to work in this country is managed by other legislation, and employers have a responsibility to ensure that anyone they employ is legally entitled to work in this country.

Mr. Spellar: Will the hon. Gentleman give way again?

Mr. Rogerson: I should like to make some progress.

Mr. Spellar: Well, it is a Committee: it is not the Chamber.

The Chairman: Order. The hon. Gentleman is not giving way.

Mr. Rogerson: I am grateful to you, Lady Winterton.

Returning to the matter in hand, and moving away from the Child Support Agency, I am surprised to hear Government Members wishing to refer to the agency—[Interruption.]

The Chairman: Order. I wonder if we could have a little less background noise. This is an important order, and we should listen to whichever Member catches my eye.

Mr. Rogerson: I am grateful to you once again, Lady Winterton.

The scheme involves a charge to workers, and it is important to remember that the charge is borne by those lowly paid workers. The scheme was introduced with an initial cost to each worker of £50. However, in September it was announced that the Government would raise the cost by 40 per cent. to £70, as we shall debate today. That figure represents a huge burden. When all tax and deductions have been taken into account, it could mean two to three days pay for a worker who must register for the scheme.

Helen Jones (Warrington, North) (Lab): I am listening carefully to the hon. Gentleman. Since the proposed increase is to cover the cost of administering the scheme, is he proposing instead to make taxpayers already living and working in this country subsidise it, or to sack some of the staff who administer it?

Mr. Rogerson: I am proposing that the Government review the way that the scheme is operated, in order to look for efficiencies. Also, before they consider passing on an even higher burden to the workers involved, the Government should restrict themselves to the already high £50 charge, introduced when the regulations were brought into effect.

Mr. Spellar: Will the hon. Gentleman give way?

Mr. Rogerson: I would like to make some progress.

We all know that supermarket buying places strong pressure on the agriculture and horticulture sectors. Food producers have to keep their costs low just to stay in business. They rely, therefore, on short-term
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labour for peak periods in order to carry out their business. Some may think the Government reasonable in seeking to recoup the costs of the scheme in such a way, as hon. Members have attempted to point out. However, the rising cost—40 per cent. in one leap—is not based on an inevitable or unavoidable process, but on problems with the nature of the scheme.

Reported problems include double-checked applications—usually the employers check the applications of the workers coming across, before submitting them—while some applications are double-checked twice. In some cases, as many as one in 10 are returned. Often employers receive four communications connected with each application. They receive an acknowledgement and then the returned passport of the worker in question—when submitted in batches, sometimes of 50, each passport is returned individually. The employers then receive the card for the worker, as well as further correspondence.

The rising cost was brought in without great consultation over the summer. We will no doubt have had many applications being submitted in the early part of the autumn and in late summer in which people were submitting a £50 charge, unaware that the £70 cost had been introduced. That will result in more applications being returned, increasing the costs.

Helen Jones: I am somewhat bemused by the hon. Gentleman’s argument. If he is saying that the employers in the scheme could not notice that the charge had gone up, how can we rely on them to have checked with their workers and filled in all the forms correctly?

Mr. Rogerson: My point is that, when a responsible Government introduce legislation, they usually consult those involved and ensure that everyone is aware of the charge. However, the Government brought this legislation in quickly.

I believe that letters went out to various organisations, such as the National Farmers Union, the day before the announcement was made. They then had a short period in which to consult their members and to ensure that everybody knew. During that period, before the new charge began on 1 October, there were undoubtedly applications submitted in good faith with a £50 payment. Such applications will have had to have been returned, providing an extra headache and generating more bureaucracy in administering the scheme.

I understand that there is a widely held belief that the scheme is not being administered effectively. My hon. Friend the Member for Cheltenham (Martin Horwood) hopes to make a few points later about how to make improvements.

The point of the debate is for hon. Members to express their concern about the way in which the regulations were introduced and the burden being placed on lowly paid workers, who have come here to contribute to the British economy and to support a vital sector. I have focused on the agriculture sector, but other hon. Members may wish to raise the effect on other sectors of the economy.

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Mr. Spellar: The hon. Gentleman talks about the lowly paid, but then said that the charge could equate to two or three days’ money. Are these people not being paid the legal minimum wage?

Mr. Rogerson: It depends on how many hours the workers are working. There are other deductions, so I am talking about after tax. If they are being paid the minimum wage, then £70 is a fair whack to take early on during their work in the United Kingdom.

Mr. Spellar: Is the hon. Gentleman saying that such people are not being paid the minimum wage by the farmers or agents, which would be against the law? If that is what is happening in his constituency, the matter ought to be investigated.

Mr. Rogerson: The point that I was making is that even when the minimum wage is paid—which all responsible employers pay—workers may well lose two or three days’ pay as a result of having to contribute to the increased cost. For that reason, and because of the lack of consultation before the regulations were introduced, there is an argument for not introducing them. Therefore, we shall oppose their introduction.

2.41 pm

Mr. Mark Prisk (Hertford and Stortford) (Con): I welcome you to the Chair for our deliberations, Lady Winterton. I do not think that I have been guided by you in such matters before and I look forward to you steering us in your usual manner, ensuring that we do not stray. I am sure that hon. Members from all parties will welcome that guidance.

As we can see, the statutory instrument is short, but—and this could be said about the current speaker—it is nevertheless still significant. Liberal Democrat Members wish to raise particular issues, but I want to allude to several important details. I hope that the Minister will be able to answer some of my questions and those of other Committee members during his reply.

The regulations affect prospective workers from several different states, as I am sure the Minister will say in his response. Most people are familiar with the question of workers coming from Poland and Lithuania. It would be helpful if the Minister would tell us the proportion of registrations during the past year from each of the affected states. Some people have suggested that the figures from Poland might comprise half the number and it would be helpful for our consideration of the matter to understand the balance of those proportions.

The regulations are based on the Government’s estimates of the number of people seeking to register to work in this country. However, one of the problems underlying this statutory instrument is the fact that the Government’s estimates have proven to be highly inaccurate. Originally we were told that the number of applications was about 10,000. In an answer to my hon. Friend the Member for Woking (Mr. Malins) on 20 June, the Department informed us that although it
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had been thought to be 10,000, the figure was now 176,000. I am now led to believe, not least from reading the explanatory notes, that there have been 231,000 applications.

There are a number of problems with the figures that underpin the regulations. Why have they varied so radically? Some Committee members will presume that the estimates were based on inaccurate assumptions. If so, what were those assumptions? What has changed to make the figures rise from 10,000 to 231,000 in the space of several months? Does the Minister expect the figures for the next quarter to rise or fall?

Regulation 2 seeks to raise to £70 a fee that currently stands at £50. As the hon. Member for North Cornwall (Mr. Rogerson) suggested, that is a 40 per cent. increase, which is significant by anyone’s reckoning. It is especially odd given that it has come so soon after the scheme started. If we were two or three years down the track and matters had changed, it might be a reasonable assumption that the fee should be adjusted. However for it to be changed so soon, and by so much, is peculiar.

The explanatory notes say that the start-up costs were not included. I assume that to be the Government’s principal reason for suggesting that they got their figures wrong. I do not understand how, in setting up a scheme, they could exclude the set-up costs. Is the Minister going to tell us that those were not included in the scheme that came before him, and that therefore the omission was already embedded in his Department’s proposals, or did he choose to question his officials on the matter? It would be helpful to us if we could understand how a fundamental error—ignoring the start-up costs of a scheme that they have introduced—could occur. It seems a most peculiar omission.

I would be grateful if the Minister could tell us how much we are talking about. In these deliberations, it is easy to talk about percentages and averages and so on. It would be helpful to know how much of our constituents’ money we are dealing with. Is it £10 million, £20 million or £50 million? I do not know. I am sure that members of the Committee would appreciate it if the Minister enlightened us on that matter.

Item 8 of the explanatory memorandum is crucial to the working of the regulations. I am sure that members of the Committee will have noted that it states that the

    “fee is payable by the individual applicant”,

and that

    “A Regulatory Impact Assessment has not been prepared for this instrument as it has no impact on business, charities or voluntary bodies”.

That is not the view of business. I draw the Committee’s attention to the National Farmers Union parliamentary briefing, which was issued just yesterday. It states:

    “In our view the Worker Registration Scheme adds further, unnecessary, regulation, administration and cost to individuals and employers.”

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I am bemused because if one does not undertake a regulatory impact assessment, how does one know that there will be no impact? Why have the Government chosen to assume—rather superficially, if I may say so—that the regulations will have no impact on the employers involved? There will be the direct cost of the fee and all the administrative costs. At the very least, does the Minister recognise that the statement in the explanatory memorandum is not accurate? There will be an impact and I therefore hope that he will be good enough to recognise that the statement is not correct.

My last point—which relates to the opening remarks by the hon. Member for North Cornwall—is about the £70 fee. There is a reasonable argument, which we should test in this Committee, for saying that the fee might prove to be a deterrent to some people. That raises a fundamental issue for the worker registration scheme. If the fee does prove to be a deterrent—and I suspect that it may—is there not a danger that the unintended consequence of the statutory instrument will be to encourage the development of a black market in workers? I suspect that no one in the Committee would wish to see that. It would be bad for the individual, the employer and those who work in the conventional economy. I have to say that it also has the potential to be bad for social and community relations.

It is with genuine concern that I say that I hope that the Minister can convince us that he does not believe that the fee will prove to be a deterrent to the people that he hopes to see registering under the scheme. I look forward to his reply. I am sure that, under your guidance, Lady Winterton, we will be able to tease out some of these important issues and I am grateful to you for the opportunity to make this short contribution.

Martin Horwood (Cheltenham) (LD): I, too, am pleased to contribute for the first time under your chairmanship, Lady Winterton. I am sure that you will handle Members from both sides with the firmness and resolution that may be necessary.

I support the opposition of my hon. Friend the Member for North Cornwall to the increase. Given the tone of some of the debate already, it is important to restate the importance of migrant labour to some sectors of the economy. Speaking for Cheltenham, where we have nearly full employment, it is vital that immigrants from eastern European countries, in particular, support some aspects of local society. The NHS depends heavily on migrant workers, and the local private care sector also depends on immigrants from eastern Europe. Nursing homes such as St. Faith’s, which is an excellent example of good practice in the private care sector, depend heavily on migrant workers. The regulations seek to impose a severe increase in cost on those workers and perhaps on businesses that wish to support them.

Gloucestershire Action for Refugees and Asylum Seekers, an organisation I commend to the Minister, told me today:

    “Increasing the charge from 50 to 70 would affect real people in a meaningful and damaging way”.

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Steve McCabe: What have asylum seekers got to do with it?

Martin Horwood: The organisation supports both groups.

Helen Jones: I want to be clear whom we are talking about. My understanding is that the regulations refer to EU nationals who come to the UK to work, and not to asylum seekers or refugees, who are dealt with under completely different regulations.

Martin Horwood: The hon. Lady has been confused by the organisation’s title, which is Gloucestershire Action for Refugees and Asylum Seekers. GARAS is approached by migrant workers from eastern European countries that are members of the European Union. Because it is not funded to work with migrant workers from within the EU, it is unable to support workers from, for example, the Czech Republic in the way it would like. [Interruption.] It is not exactly taxpayers’ money, as GARAS is also charitably and voluntarily funded. [Interruption.] If the hon. Member for Birmingham, Hall Green (Steve McCabe) wishes to intervene, he should make his intervention properly.

Many people come from countries such as the Czech Republic to the UK in the hope of finding work immediately. They often come with their family and with little money, and they therefore have immediate cash-flow problems. They expect the process to be reasonably straightforward. GARAS, because of its remit, cannot support those families through loans, as it would with asylum seekers or refugees. It recently had a case of two Czech brothers, both with families, who had moved to the UK. They had three children between them, who had families of their own. The Czech Republic was not yet a member of the EU at the time of their application, so they had to send their passports to the Home Office, which promptly lost them. As a result, they could not register and have run out of cash.

These are hard-working families who want to work. They have only recently received back their passports, yet they face the prospect of finding work and having to pay the £70 fee. They cannot, because they have run out of money. An extra burden is being placed on such people.

An additional problem is that employers have a poor understanding of the scheme. I mentioned the example of the private care sector, which is not overflowing with money and works on quite narrow margins. If a small business attempts to support prospective employees, but those employees cannot afford the fee, it is unreasonable for the small business to be landed with a charge that has increased by 40 per cent.

The Parliamentary Under-Secretary of State for the Home Department (Andy Burnham): The charge lands to the individual, but I want to ensure that the hon. Gentleman knows one point. The fee is payable only after a person has been employed for one month.
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Therefore, no barrier exists to starting work. People can start work and apply for registration after they have started work and started being paid.

Martin Horwood: I thank the Minister for that. I am aware that the charge applies after people have started work, although I understand from GARAS that not all companies, or even employees, are fully conversant with the regulations. They often misunderstand that the charge applies only after people have started work. Some employers misunderstand it as a permission to work, which it is not. I agree with the Minister. The order is, however, an example of the Government being insensitive to small businesses’ needs. Many small businesses will support their employees on this, as will the National Farmers Union. Although the fee is not technically a charge on the employer, in practice it impacts on small businesses.

I offer the Minister one possible solution. He may wish to clarify whether registration could be done straightforwardly online. I recently attended a debate on e-government, at which he said that he aspired to have 100 per cent. of Government application forms available online. Were the application for a registration certificate put online, the scheme’s costs and the need for higher charges might be reduced. I would be interested to hear whether the form is available online and whether the paper forms and other processes could be made the fall-back position for a much cheaper online scheme.

Mr. Prisk: The hon. Gentleman has, quite rightly, mentioned small businesses, which, sadly, hon. Members on the Benches opposite all too often forget. The serious danger is that the legitimate business that wants to do the right thing will feel the need to comply with the regulations, only to see itself undercut by businesses doing the wrong thing. Has the hon. Gentleman considered that? Does he agree that a further danger is that the regulations will encourage the black economy to grow?

Martin Horwood: The hon. Gentleman makes an extremely valuable point, with which I agree. There is a real risk of that happening. I would go so far as to say that his earlier point about the regulatory impact assessment was equally well made, and the Minister should be aware of it and respond.

Despite the implication by Government Members, there is no objection in principle to schemes covering their costs through charges, but in government there sadly is not necessarily an automatic relationship between the two. Otherwise, the only reason for income tax would be to cover the costs of the Inland Revenue. There is an absolute responsibility on the Government for any increase in charges to be reasonable, but a 40 per cent. increase in one year is simply not reasonable. It is bad for the hard-working families we are discussing, who want to work and do the right thing, and it is bad for small businesses.

Mr. Spellar: Will the hon. Gentleman answer whether it should be the applicants who pay? We can consider whether the costs are the right costs, but once
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that has been established should it be the applicants who pay or should it be taxpayers in Smethwick in my constituency or, indeed, those in Cheltenham?

Martin Horwood: I am not sure whether the right hon. Gentleman has ever been in business; I have, and I have been an employer. Let us suppose that I wanted to employ someone and no local British employee and no one from western Europe was available. The only applicant was from eastern Europe, had very little money and said that they could not afford to take the position unless I, the employer, paid their fee. The employer should pay that fee as a matter of good practice, not because the regulation demands it; that is to be expected.

Mr. Spellar: So, my taxpayers would pay.

Martin Horwood: No, to be specific the business would pay the fee. As my hon. Friend the Member for North Cornwall pointed out, we are talking about covering the cost of a scheme that is bureaucratic enough to require the cost in the first place, so we are hearing a rather circular argument from the right hon. Gentleman.

The 40 per cent. increase is bad for hard-working families and small businesses, and we should oppose it.

2.57 pm

Mr. Richard Shepherd (Aldridge-Brownhills) (Con): One objectionable feature of the regulations is that they were laid before Parliament on 1 September 2005 and came into force on 1 October 2005. The House was not sitting on either date, so what we talking about is retrospective validation of an action that the Government have taken in respect of a very significant increase in the charge. I deplore the use of the parliamentary recess to lay statutory instruments and to have them come into effect. In such cases, most Members of Parliament have no opportunity to start gathering the facts on the relevant measure.

My second observation is that the fee was set in relation to 1 May 2004. On 1 October, as has been pointed out, there was a 40 per cent. increase, which is said to be needed to recover the costs. We have no working paper, but no doubt the Minister will show us why the costs are now identified as 40 per cent. higher than they were first estimated to be. That raises quite serious questions about the effectiveness of the Department in identifying the burden of the cost and about whether the increase is a responsible measure. On the face of it, this has not been a competent exercise from the beginning.

There is also the alarming possibility that the fee will be reviewed before 1 April 2006. I hope that the Minister will tell us which way that is going. The explanatory memorandum says that the fee will be reviewed, but as there has been a review already and a 40 per cent. increase, and given what has been said by those who have spoken so far, it looks to me as though the Government are not certain about the costs of the
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exercise in any event. This measure is a stab in the dark. The figure is more than they thought originally. Forty per cent. might or might not cover it. We shall come back to the matter. That is what I fear, and I would like the Minister to tell us why the Government are still laying statutory instruments that cannot be debated before they come into force.

3 pm

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