The Parliamentary Under-Secretary of State for the Home Department (Meg Hillier): I beg to move,

People, particularly members of the Committee, know that the Government are undergoing the biggest shake up of Britain’s borders for more than 45 years, and we are determined to drive through the real improvements to the immigration system that we have said we should deliver. I will not repeat what current and previous immigration Ministers have said on that, but our fees for migrants aim to reflect the benefit to the applicant and reduce the impact of the cost to the UK taxpayer.

We have recently laid immigration rules and, indeed, laid the rules today for tiers 2 and 5 of the points-based system. The regulations we are debating today deal with setting fees for parts of the points-based system. In setting fees for this year, we are continuing to apply the principle on the basis of the value of the applicant. In order to do so we are using the powers set out in section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, which was amendment by section 20 of the UK Borders Act 2007. In simple terms, we are seeking a greater contribution from those who benefit the most, and that includes the fees covered today.

Perhaps it might help if I give a summary of those fees. We will be talking about the Council of Europe social charter countries, and tier 1 as a general category and as a transition application, which is intended for those who were perhaps halfway through their application when the points-based system was introduced. We will also discuss tier 2 for all categories, tier 1 for post-study leave to remain for personal applicants, and multi-tier sponsor licence fees. The latter relate to sponsors who have perhaps sponsored someone at a lower level, are seeking to increase their sponsorship licence to include a higher tier, and need to pay the additional fee in its place.

For the tier 1 post study leave to remain fee, we propose a £600 fee for an application to be made in person at a public inquiry office. We propose a reduced entrance clearance fee for workers from states that have ratified the 1961 Council of Europe social charter, which will be 90 per cent. of the fee.

Mr. Tim Boswell (Daventry) (Con): I am a relative newcomer to this area, although I am on the Parliamentary Assembly of the Council of Europe. Is that provision unique to the social charter, or are there are any other concessions or administrative requirements set by the frame of membership of and accession to the Council of Europe, rather than, for example, the European economic area?

Meg Hillier: I will go into that in a little more detail later, but we currently have a slightly different approach to that group of people. Previously, we did not charge them a fee for doing that. We propose a 90 per cent. fee because we think that that strikes the right balance between cost recovery and the need to ensure that those who use and benefit from the system pay for it.

The multi-tier sponsor licence fee will be £600, and that is in cases involving a medium or large sponsor, which tends to be a bigger company that already holds a tier 4 or 5 licence, so they would be lifting it to a higher-level licence to take in sponsor applicants in the higher tiers.

As we know from the work that we have done, the facility for applying in person is highly valued by customers. The first applicants under the points-based system will be able to make an application in person under our phased implementation of that system. We estimate that that route will have generated an income of £2.6 million by March 2009.

The 10 per cent. fee reduction that the hon. Member for Daventry asked about is offered to workers who are nationals of states that have ratified the Council of Europe social charter. In reality, that applies to Turkey, Croatia and Macedonia, so nationals of those countries applying for entry clearance will get that. We think that we have set the fee at a reasonable rate in the context of our relationship with those countries, and to recover the sums required.

We have also removed the fee exemption for workers under the 1996 Council of Europe revised social charter, which means that workers from Albania, Andorra, Armenia, Azerbaijan, Georgia, Moldova and Ukraine will now pay the standard entry clearance fee. To some members of the Committee who have been following this issue, that might seem odd, given that only in April did we introduce the fee exemption, but on reflection we think it right to make the amendment now, so that we maximise our income from those benefiting from our services, while managing the risk of potentially spurious claims from applicants who could claim at any time without incurring any fee. The fear is that that would increase the costs to the UK taxpayer without an equal increase in revenue. The change is entirely within the extent of our obligations under the Council of Europe social charter, and it is a reasonable balance to have struck. We are examining any other changes that can be made overall to fee structures from April next year, at which point we can introduce anything that we have considered in the interim that may need to be included.

Mr. Graham Brady (Altrincham and Sale, West) (Con): The hon. Lady said that the fee structure varies according to the perceived value to the applicant. Will she give the Committee a little more detail about how that value is assessed and explain the relationship between the actual level of the fee and the quantity of that value?

Meg Hillier: We have to strike a number of balances—a matter that I am happy to go into with the hon. Gentleman. We must cover the cost of the end-to-end immigration system in this country. Under Treasury rules, we are allowed to set the fees that we do to recover £100 million a year more than we spend on the process. It is important to achieve a balance across the whole so that we have fees that meet international market requirements.

Let us consider, for example, student fees. Were we to charge the actual cost to the individual student, many students would pay their money, take their choice and try to study in another country where the fees were lower. With each issue, we have to strike a balance in the context of the international marketplace in which, effectively, migrants choose to work, as well as making sure that the UK taxpayer is not disbenefited and that we balance the benefit to the individual worker. We have looked at that in several ways, and organisations such as the Migration Advisory Committee help to advise on the benefits both to individuals and to the UK economy.

Tom Brake (Carshalton and Wallington) (LD): The Minister may have received, as I am sure other hon. Members have, an e-mail from Alison Harvey, the general secretary of the Immigration Law Practitioners’ Association. She made an interesting point about actual cost, and about whether members of the Committee can find out from the hon. Lady the actual average cost of processing the different applications, so that we can make a comparison with what is being charged.

Meg Hillier: The actual cost to the UK is about £2 million a year, and we recover about a third of that from visa fees. Although some individuals may worry and argue about the cost, we must achieve a balance overall in respect of financial input into the immigration system.

Tom Brake: I thank the Minister for giving me the overall figure, but I wanted to home in on the cost of individual tier 1 applications and so on. I wanted a breakdown per different type of application.

Meg Hillier: As I have explained, we have to recover fees for the end-to-end immigration process. I went into a lot of detail in response to the intervention from the hon. Member for Altrincham and Sale, West about how we try to strike that balance. Rather than charge the actual cost for each tier, we try to achieve a balance overall; otherwise, we would be reducing the competitiveness of UK universities in terms of recruiting students from abroad. That is one example, but there are others. I pledge to look into such issues for the hon. Member for Carshalton and Wallington, and to see what information I can provide in writing to him and to other members of the Committee, if that is helpful.

Mr. Boswell: If, as I think the Minister has conceded, there is an element of cross-subsidy for market reasons, will she ensure that, whatever the fees actually charged to the individual, they are reasonable in administrative law terms in respect of the costs incurred of that individual’s application, and report to us on that?

Meg Hillier: I am very happy to reassure the hon. Gentleman that we always aim to be reasonable in respect of such costs. As we know, there are benefits to many applicants in accessing the various services that the UK offers, including the UK workplace, and the fees reflect that benefit overall. It is always a difficult judgment. When speaking to audiences, many people raise the issues of fees, but many also recognise the benefits that they receive for those fees. It is therefore a moot point, but we get the balance right, and I am glad to have the broad support of Opposition Members on this issue.

I believe that I have covered the sponsor licence fee. It is an unusual category of application for which we expect volumes to be negligible, so we are not expecting a lot of people to be affected by that. The fees proposed here are all fair and proportionate. They recover the costs of considering the application and make that important contribution to the end-to-end costs of the system which, if they are not paid for by people going through the immigration system, have to be recovered elsewhere by the UK taxpayer. As representatives of the UK taxpayer, I am sure that we all agree that we need to make matters fair.

The changes proposed today are a vital step as we move toward a fairer and more effective immigration system, and I commend the regulations to the Committee.

Damian Green (Ashford) (Con): Those who are veterans of the fees regulations will know already that there is a certain ritualistic aspect of this discussion, which the Minister has adhered to. We appear to be getting increasingly regular introductions of fees as the points-based system comes into being. However, we are now at the stage at which we are changing existing provisions, which is alarming.

Like the hon. Member for Carshalton and Wallington, I have seen the e-mail from the Immigration Law Practitioners Association. It is slightly alarming—Ministers ought to be alarmed about this as well—that it now describes the system as incomprehensible. If the specialist lawyers in the field regard the Government’s new legislation as incomprehensible, I would suggest that the general public are entitled to be genuinely alarmed.

The Minister knows that we support the idea of reasonable charges for people who want to come to this country. It is fair that those who want to come and benefit from living here should be asked to pay for the processing of their paperwork and to contribute towards the subsequent enforcement of our immigration rules. We have no problems in principle, but we are surprised about the rapid change, particularly regarding the exemption for workers who are nationals of states covered by either the Council of Europe social charter or the revised social charter.

The Minister attempted to explain why the exemptions that were introduced barely a year ago have to be changed so rapidly. However, I did not quite follow her argument, so I would be grateful if she would address that in her concluding remarks, not least by telling us why the exemptions have to be changed so quickly. Have the number of applicants been so great that a change is seen as a necessary deterrent? She said that exemptions should not apply with regard to a treaty that we have not ratified, but that situation also applied last year, so why introduce a change this year?

I will be grateful if the Minister addresses one or two other questions. She will be aware that her Department advised to the Prime Minister that a recession would lead to rising crime and put strains on community cohesion, which I am sure is true, regrettably. However, in that same memo, there was pertinent concern about the fees that we are discussing. The document states that

Can the Minister say whether she has reassessed the anticipated levels of fee income now that the country is clearly heading into a recession? What contingency plans is the Home Office making? She said how important this fee income is. If it is going to reduce, clearly some Home Office activities will be under threat.

It would be pertinent to the debate if the Minister could explain where the money will come from, if the income falls short of expectations. Will it be cut from other parts of the UK Border Agency, or other parts of the Home Office budget? Will the fees for those who still want to come here have to rise still further? If they do have to rise further, presumably we will be back here again for yet more increases and changes to the fee structure. The Minister has already said, in her explanation for charging over and above the costs of processing, that she is attempting to assess the benefits to those who come here, and also to maintain Britain’s competitiveness in the global market for desirable immigrants who can contribute something. It is noteworthy that she made a good point about how clearly Britain welcomes foreign students, but she cannot put the fees up too much for them because they have alternatives.

It seems that we could draw the conclusion, therefore, that the Government will try to set fees by the individual sectors, by each tier and, presumably, country by country, since they are now discriminating between different types of country in these regulations. The amount of detailed calculation that the Government will have to do to meet that balance for every country and for each individual tier of the points-based system seems ambitious—I will put it no higher than that. Ministers are prone to suggest that our idea of having a straightforward annual limit on the number of work permits issued would be “arbitrary”. However, I think that the fees that they will be setting for individual tiers, with different fees for different countries depending on which Council of Europe charter they have signed, will mean that Ministers will end up taking far more arbitrary decisions than we ever dreamt of.

I have one last question for the Minister, and I am again grateful to the ILPA for drawing this to our attention. It claims:

It points out that family members applying for entry clearance for settlement pay £515 even though many of them will not have the skills or qualifications to earn high salaries, whereas tier 1 migrants pay only £95 more than that and, by definition, will be able to afford it. ILPA suggests, and I think that it is right, that it would be helpful if UKBA provided information about the actual costs of different applications in order to show the extent of cross-subsidisation and the level of profit made.

Although we have no objection in principle to the idea of charging, or indeed to the idea of charging more than the actual cost, there are several detailed questions that I hope the Minister can address.