The Minister for Borders and Immigration (Mr. Liam Byrne): I beg to move,

I shall spare the Committee too long an introduction to the regulations and pick up issues in my closing remarks. The Government are making pretty comprehensive changes to our immigration system and border security this year. I shall not detail the catalogue of changes; suffice it to say that they do not come cost free. Indeed, we shall spend about £2 billion on the Border and Immigration Agency and its related work this year. It is right that some of that burden is shared by those foreign nationals who benefit from our immigration service and border security. An important principle involves the fact that about £630 million will come from the fees paid by those who use the system this year.

The second important principle that we established in our debates last year is that, when we are providing services or products such as visas, we should not necessarily charge only for the actual cost of delivering the service, but consider the value that we are creating to the individual or the company concerned and charge on that basis. That principle is at the centre of our debate.

Last year, I said that my goal over the next two or three years was to double the budget that was spent on the enforcement side of the business. The money that we propose to raise from the fees will help towards that effort. However, I recognise that many of the increases to fees that we made last year seemed big, and I therefore propose that fee increases are kept to an absolute minimum this year. When we consider the range of products and services for which the Border and Immigration Agency charges, we see that most of the charges that we are proposing this year represent inflationary increases to the prices that were on the books last year.

However, two or three services do not have comparable products. This year, we are introducing a points system that will involve a new visa for tier 1 (general). We shall consolidate two steps of the highly skilled migrant programme. We propose a visa fee that is the equivalent of the price of the two stages that existed before. Secondly, the fee for leave to remain under tier 1 will mirror the existing combined fee of £750.

Thirdly, there will be a new fee for sponsorship. That is the most significant change. Sponsorship is a concept that is integral to how the points system works. In effect, we are asking organisations, whether businesses or colleges, to play a part in helping us to police the system, such as by telling us if people do not turn up or are away for extended periods.

We propose to create two levels of fee—one for big businesses and another for small organisations. I used to run a small IT business employing people from abroad, so I have brought some of that experience to the decision that has been made. For medium and large businesses, we propose a fee of about £1,000 to register for a licence that will allow them to sponsor skilled migrants to the United Kingdom. We will charge smaller businesses only £300. From those measures, we propose to raise about £4.7 million. We anticipate that about 15,000 businesses will apply for a licence in the first year of operation, 4,500 of which we expect to be medium and large businesses. The lion’s share will be made up of small organisations.

The licence will be valid for four years, so that it effectively costs £250 a year for a large organisation. That is a fraction of the costs that are involved in recruiting and retaining skilled workers with some expectations, which can cost in excess of about £25,000 a year. That is broadly in line with other licence fees. For example, a Security Industry Authority licence costs about £250 a year.

The structure of the sponsorship fees that we have proposed will allow us to keep the burden lighter on small businesses and charities, and we have obviously consulted widely among our usual stakeholders, including organisations such as the CBI and universities, in drawing up such provisions. The fees are fair and proportionate; the money that we recover will help us to run a more robust immigration system in the future, and I commend the statutory instrument to the Committee.

Damian Green (Ashford) (Con): It is always a pleasure to serve under your chairmanship, Mrs. Dean. I thank the Minister for his explanation and for sparing us the standard part of the speech; I hope, at least in part, to reciprocate. I want to ask a number of detailed questions, but I shall be brief, partly because we have spent several sittings in Committee discussing the Government’s increases to visa fees in recent months.

I am sure that the Minister would acknowledge that many people are finding the fees expensive, particularly those already in this country who have to change their status or their spouse’s status; they are the ones who are objecting most strongly to the increases that have been imposed in recent years. I suspect that his postbag and e-mails are full of correspondence from those who are complaining. The Opposition support the principle of reasonable charges for people who want to come to this country; it is fair that those who want to come to live here and benefit from that should be asked to pay for the processing of the paperwork and contribute towards subsequent enforcement. Nor do I have any objection to some degree of cross-subsidy, so that some fees can be set at affordable levels and can therefore benefit the country.

In the documents attached to the regulations, the Government are clear about the new fee structure, and they mention an additional £43.2 million income from fees for the Government over five years. I hope that the Minister can tell us the basis for that figure and what the Government propose to do if there is a shortfall—will the budget for border enforcement be protected, or will it be dependent on the fee revenue? That seems to be a fairly crucial question.

The Minister mentioned overall numbers for the BIA. He said that, this year, it is spending about £2 billion, of which £600 million comes from fees. I assume that that £2 billion therefore includes the public expenditure of £1.4 billion that appears in the Red Book and that that is the total budget. Will the Minister disaggregate a little and tell us what is the total enforcement budget for the BIA and for the various other bodies that are engaged in enforcing our borders? As he knows, seven and possibly eight different bodies are engaged in different kinds of enforcement activity. Given the context of the extra money that the Government are seeking to raise from visa fees, it would be instructive for the Committee to know what the total enforcement budget is.

I would be grateful to the Minister if he addressed one of the central points, which is whether these increases in fees are actually designed to cut the numbers applying. Is this an attempt to control the numbers coming in, or is it simply, as he says, an attempt to pay for the various enforcement measures? In the evidence base in the papers drawn up by the Home Office that accompany the regulations, the Government say that the policy objective is

That would seem a sensible principle. I am interested, therefore, in whether that principle applies simply to the statutory instrument or to the Government’s wider approach. In the context of announcements made last week, that seems slightly puzzling. How is that principle consistent with the Government’s plan in their Green Paper, to place an extra tax on migrants who will not be at the top of the income scale? There seems to be an inconsistency between the regulations and what the Home Secretary placed before the House in her Green Paper last week.

The Government say that they wish to raise an extra £100 million above administrative cost recovery to fund the true end-to-end costs of the immigration system, from initial application to enforcement and compliance activities. Can the Minister tell the Committee whether, as I assume, £100 million is an annual figure, and whether such levels are achieved at the moment? The new regime will clearly favour people who come from more affluent countries and will be more likely to afford such visas. Will the Minister tell us whether that is a purpose of the policy or simply an accidental side effect? The underlying point is that the need for more money to fund better enforcement is a symptom of the long-term failure of our border controls, and I am glad that the Government are, at least implicitly, admitting that long-term failure. Members of the Committee must hope that the policy starts failing a little less badly in the years ahead.

Tom Brake (Carshalton and Wallington) (LD): It is a pleasure to serve under your chairmanship, Mrs. Dean, for the first time, I believe. In his opening remarks, the Minister spared us a long spiel about the changes that the Government are making. I do not want to comment on that—indeed, Mrs Dean, you would not allow me to—beyond saying that we support key planks of the Government’s proposals in relation to, for instance, a points-based immigration system.

The hon. Member for Ashford made a number of pertinent points, and I hope that the Minister will respond to them in detail. Perhaps the most pertinent of them was about how far enforcement will be linked directly to the fees, and whether there is a connect between them to the extent that enforcement might be stepped up if the fees are greater or stepped down if they are less than expected.

In his opening remarks, the Minister said that two fundamental principles were at stake. The Liberal Democrats also believe that there are two fundamental principles. First, in our view, the differential charges that the Minister proposes to introduce are not differential enough in discriminating between small, medium, large, very large and very profitable businesses. Perhaps the Minister will consider revisiting that.

Secondly, and perhaps most importantly, one of the Government’s aims must be to ensure that local employees in the UK are able to do such jobs at some point in the future. Perhaps there should be a clearer linkage between the fees raised and the funds that are available to invest in training UK-based work forces to enable them to compete. The Government should ensure that there is a reduced need for skilled workers to come from outside the EU to take up positions that could be filled appropriately by people who are already in the UK. Regrettably, because of the lack of a clear differential between the fees that will be charged and the absence of a linkage between those funds that are raised and those that are available to train the work force here, I may be alone, but I cannot support the Government on the regulations.

Mr. Byrne: I was about to welcome the contribution of the hon. Member for Carshalton and Wallington; he started with an eloquent endorsement of the stronger resident labour market protection that will come from the introduction of the points system. He will be delighted to know that I plan to publish a blueprint on the key tier—tier 2, which is for skilled workers—a little later on this year. I hope to do so in the next two or three months. We will be able to debate the resident labour market tests that we propose and the implications of raising the points score to such an extent that some workers, who many thought of as being skilled, may not be able to come into the UK in the future. I shall keep what the hon. Gentleman said this afternoon close at hand for the debates that are to come.

I wish to pick up a couple of points made by the hon. Member for Ashford. He suggested that it would be helpful if we set out in more detail the proposals for enforcement spending and how we think that it should increase over the next few years. That is not something on which I want to give chapter and verse today, not least because we are currently combining the detection division of Her Majesty’s Revenue and Customs with the Border and Immigration Agency, together with the UK visa operation that is coming from the Foreign Office. I do not want to give an over-hasty and potentially misleading picture of what resources in that new organisation will be devoted to such business, both in percentage and absolute terms. However, it is important that the House has sight of that, so I shall produce such as analysis as soon as I can.

The hon. Gentleman made a good point about what will happen if there were a shortfall in the projections. The money that we plan to raise from licence fees, in particular, is only about £4.7 million, so it is not a significant pot of money. If we under-raise on fees, the shortfall must be made up from inside the Home Office departmental expenditure limit. As the Committee will recognise, there is pressure on us to get the projections absolutely right, otherwise the centre of the Home Office will have to pick up the gaps.

I want to separate the contribution that migrants make to the UK as a whole from the contribution that they and the organisations that benefit from their being here make towards the enforcement of the system. The scope of the regulations relates to how we raise a fair contribution to that enforcement. In the past, we typically raised fees with a narrow view of what the administration of the system really involved. We looked at the costs of processing the application and worked out how to apportion the fees in relation to the charges to the individual concerned. The process of enforcement is an integral part of the administration of any system that is as complicated as the immigration system, which is why I want a greater share of the enforcement budget raised from fees.

There is a separate question about transitional pressures created on public services by a rapid change in communities. Last year, I said that a rapid change in some communities has created feelings of unsettlement. Public services are sometimes put under transitional pressure, which is why the Green Paper makes the case for asking for an additional contribution from migrants before they become citizens to help public services in some parts of the country to deal with those pressures.

The scope of the regulations is narrow and confined. It is concerned only with the contribution that migrants and sponsoring organisations ought to make to the broader process of both administration and enforcement as part of that overall strategy. Many of the changes that we are proposing this year are important not only to correct the pressures that have built up on Britain’s borders in the past, but to ensure that we have strong, robust and integrated border security for the future.

Question put:—

The Committee divided: Ayes 8, Noes 1.

Division No. 1 ]

Battle, rh John

Buck, Ms Karen

Byrne, Mr. Liam

Campbell, Mr. Alan

Lucas, Ian

Moran, Margaret

Taylor, Ms Dari

Wright, Mr. Anthony

Brake, Tom

Question accordingly agreed to.

Resolved,

Committee rose at ten minutes to Five o’clock.