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

It is a pleasure to serve under your chairmanship today, Mr. Sheridan, and to discuss the regulations on charging for immigration and nationality services. The regulations are part of the Government’s changes to and shake-up of the immigration system. The improvements and new services are not free, and our policy is that the burden of payment should not fall exclusively on UK taxpayers. For 2009-10, we estimate that we will spend about £2.2 billion on securing our borders, and managing the migration system.

There is widespread agreement with the Government’s policy that those who benefit from the services that we provide should contribute to the cost of them. About 30 per cent. of the total cost of securing our borders and managing our immigration system is recovered through fees for applications for the services that we offer. The remaining costs are, of course, met by taxpayers.

The regulations are made under section 51 of the Immigration, Asylum and Nationality Act 2006 and in accordance with the powers in section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004, as amended by section 20 of the UK Borders Act 2007. Under section 42 of the 2004 Act, the Secretary of State may set a fee for an application at a level exceeding the administrative cost of determining the application. We set the fees above cost to subsidise some of the lower fees, and to contribute to the extra £100 million for enforcement.

The way in which our legal powers are defined means that we must also specify fees in separate regulations under section 51 of the Immigration, Asylum and Nationality Act 2006. Those regulations are subject to the negative process and are not debated, as was pointed out to Members during a previous debate on the powers. They set the fees for applications, processes and services provided at or below the administrative cost of determining those applications. I am happy to take on board today any points raised about those fees, subject to your permission, Mr. Sheridan, as they are outwith the specific regulations before us.

When we set the fees, we take into account a broad range of factors. We welcome the contribution that legal migrants make to the economy and cultural life in the UK, and we have ensured that the proposed fees will maintain the UK’s position as an attractive destination for work, study, visits and cultural exchanges. We have considered the fees in other countries, and set our fees at levels that will not damage the UK’s international competitiveness. We have also ensured that the charging system is fair to those using the system in terms of the price paid for consideration of their application. We think it is right that those who benefit most from the immigration system should pay proportionately more towards the cost of the system; a highly skilled migrant under the points-based system or someone applying for British citizenship receives greater benefit from their application, so it is right that they should pay a higher fee.

We have conducted extensive research into what level of fees migrants would be prepared to pay in return for the valuable entitlements they receive, and that research has concluded that the fees are only one, often marginal, factor among many others, and that there is no evidence of any correlation between fees and volume of demand. We believe that factors other than our proposed fee increases have a significantly bigger impact on numbers.

Simon Hughes (North Southwark and Bermondsey) (LD): The Minister says that he or his civil servants carried out research, but the notes that we have received, and which I guess he will have seen, from those who represent universities and colleges, say that there was no consultation with them about the proposed increases. If that is true, and it seems self-evident that it was, why was there no consultation with the very organisations that must process all the applications?

Mr. Woolas: I am grateful to the hon. Gentleman for raising that question, which gives me the opportunity to reassure him that the external groups we consulted did indeed include Universities UK. I know that because it complained, initially, about several factors as well as the fees, such as the duration of the student visa.

There was a full public consultation exercise on charging for immigration and nationality applications from 30 October to 22 December 2006, supported by the publication of a consultation on a new charging regime for immigration and nationality fees. That consultation document was made available on the Home Office website. The formal Government response to the public consultation was published on 7 March 2007 and established the principle that from April 2007 onwards the UK Border Agency would be operating a flexible pricing approach to the setting of fees for immigration services.

That is the background. I think that the hon. Gentleman was referring to this year’s specific student fee increases, on which we of course consulted with wider external bodies. If he wants to return to the issue I can provide him with more reassurances. There was a robust debate about the issue and many hon. Members engaged in correspondence about it when I put forward my draft proposals.

Simon Hughes: Obviously I have not been party to what has occurred; I merely put on record what Universities UK has said to me and, I assume, other hon. Members, in the briefing:

There is a note about

the note elaborates on that. Whatever consultation happened two years ago, there appears to have been no further specific communication about the amount of the increase and its effect.

Mr. Woolas: We did engage with Universities UK and other educational organisations, including the association for private universities and colleges, about the specifics of the fees. There was not a formal consultation with Universities UK about them, but hon. Members will know that we made our proposals clear and, as I have said, there was significant and robust discussion about them. As to the specifics of student fees—the hon. Gentleman may want to pick me up later if he catches your eye, Mr. Sheridan—I was keen to point out to colleagues in Whitehall and in the universities that much greater factors were the exchange rate changes and the tuition fees themselves. Student visa fees make up a small part of the total.

Perhaps I may finish my explanation of the regulations, so that hon. Members may contribute; I will then try to answer further specific questions from the hon. Gentleman and other hon. Members. As I was saying, for each fee we analysed the estimated impact of the price increases on demand, and we built the revised volume demands into the fees modelling. That is a difficult exercise, because the elasticity of demand is different for each of the different areas of service for which fees are provided. Of course there are many more external factors, which our research suggested were more important than the fee itself in determining whether an application would be made.

It is also true that the proposed fees balance the wider policy aims of the Government. For example, we set the student visa fees, which we have just debated, below the cost of providing those services to help with our initiative to increase student migrants coming to the UK, and in response to the earlier consultation and feedback on it that we have just been talking about. We have also held steady the sponsorship fees paid by businesses, and maintained lower fees for small businesses and charities, in recognition of the views of UK businesses and charities and the benefits that we derive as a whole from migrant employment.

Given the action that we are taking to be more selective, we expect the number of migrants coming to the UK from outside the European economic area to fall during the next financial year and, for different reasons, from inside the EEA as well. This year’s fees take account of that to ensure that the UK Border Agency can continue to offer a world-class service. Our overall aim is to ensure that income from the fees makes an appropriate contribution to the end-to-end costs of the immigration system, thereby reducing the burden on the UK taxpayer. Our method of fees setting balances a number of complex factors. Members will be aware of the new migration impact fund, which is funded from the moneys that we raise through the over-and-above-cost fees, as part of the agreement.

Finally, I should like to address a point raised by my right hon. Friend the Member for Oxford, East (Mr. Smith) in the recent debate on fees orders—if ever there were a lesson on having senior Members on Statutory Instrument Committees, that was it. My right hon. Friend, who was supported by a number of hon. Members from all parties, made a strong point. I undertook to take advice, which I have done, and I am delighted to pass on that advice briefly to the Committee.

The point at issue was the new service. We were seeking power from the House to charge for a fee for some new services, one of which is the issuing of certification notices determining the status of a person, whether a certificate to show that one is a citizen of the UK or, in some instances, to show that one is not. A letter setting out the immigration status of a person from a Minister in response to a letter of inquiry from a Member of Parliament has no particular legal status in and of itself; it is the same as any other piece of correspondence in that it sets out the Minister’s view of the position. Because the letter is from a Minister to Parliament, it can be expected that it does not mislead—because to do so would be in breach of the ministerial code. It will be assumed that what the Minister says is correct. Such a letter might therefore have some evidential weight attached to it by a third party. The issue then is not about the legal effect of a letter: it is a practical issue about whether someone would place any reliance on such a letter. It is for that third party or institution to decide whether they would accept a letter from a Minister or an MP as evidence of a person’s status or not. That is to say that, in effect, producing a letter from a Minister or an MP saying that this or that person has a driving licence, for example, is not the same as producing the driving licence itself. The additional security provided by having the actual certificate is required. We will make that clear in our policy statements and letters when we begin to issue them.

With that explanation, I hope that I have the Committee’s support for the regulations. I commend them to the Committee.

Damian Green (Ashford) (Con): The Minister has described the discussions in the previous Committee as the first half and said that setting the fees in detail would be the second half. He will remember—he has just mentioned it—that the first half of this performance degenerated into chaos, due to the many questions about the exact legal status of a ministerial letter with regard to the status of an individual. I assume that that is why, having suffered some heavyweight shelling from behind him—

Mr. Simon Burns (West Chelmsford) (Con): And from the Opposition.

Damian Green: Indeed. I am coming to my hon. Friend.

I have observed, as I am sure that my hon. Friend has, that there is even more heavyweight reinforcement—if it were possible—in this Committee than in the previous Committee, with two former Cabinet Ministers present. However, I am sure that the Minister is hoping for a quieter time.

Let me start with the Minister’s explanation, for which I am grateful, because it was clear that neither he nor the rest of the Committee members understood the import of the change. He has made it clear that a ministerial letter saying that it is a Minister’s belief that somebody has a particular status that may or may not entitle them to a job is simply a Minister’s view, and that, although a Minister would not seek to mislead, so people may put some weight on such a letter, a ministerial letter is not a legal document.

I want to mention the practicalities. If an employer is trying to decide whether somebody has a right to work and that person says, “I have been in this country for some time. I believe that I have the right to work,” and if their Member of Parliament has a letter from a Minister saying, “As far as we know this person has a right to work,” then, in practical terms, that person may not shell out large amounts of money to get a legal document, because most employers will be convinced by a letter on Home Office paper passed through their own local MP. I suspect that the effect will be that many people will not bother to get the legal document. I invite the Minister to address that likely scenario in his closing remarks. As soon as people discover—as they do—that they do not have to pay the fee but can get a free letter from their MP instead, many of them will take that route. Therefore we will be in precisely the impasse that reduced the previous Committee, including the Minister, to a state of some confusion.

To be fair, the Minister has tried to answer the question, which other hon. Members and I raised in the previous Committee, about what sensitivity analysis had been done in respect of the effect of the rise in fees on the numbers coming here in future years. The Minister has made it clear today—he did so then, too—that it is not his intention to use the level of fees specifically as a deterrent to people coming here. He says that research by his Department backs that up, which is interesting. Will he place that research—or at least a summary of it—in the House of Commons Library, so that hon. Members can judge the interaction between fee levels and applications at every level? He is right to say that there is not a simple algorithm, because the calculation will be different for people with different incomes and different levels of expectations of income when they come to this country. It would be useful if that research were made public to hon. Members.

Like the hon. Member for North Southwark and Bermondsey, I have read with interest the Universities UK briefing, which is clearly a subset of the wider concern that the increases in fees will act as a deterrent. Universities UK not only strongly opposes the increase, but flatly states that the changes have been made without any consultation with the higher education sector. The Minister has said that it was not a formal consultation, but that the universities were consulted. In that case, I am sure that Committee members will go back to Universities UK to find out what it means, not least because it has said that the

I know that the Minister does not want to send out that message. If the universities think that he is sending that message, there has, at the very least, been a serious failure of communication.

I want to take up the point made by Universities UK about the IT system, because individual universities have impressed it on me. Universities UK is worried that the new system that will underpin the changes has not been tested properly. If the IT does not work, and if applications from people on the other side of the world start going wrong, it could be catastrophic for British universities in a competitive international market for the best students.

The Minister does not need me to rehearse the various IT disasters that have afflicted the Government.