DRAFT IMMIGRATION AND NATIONALITY (FEES) (NO. 2) REGULATIONS

The Committee consisted of the following Members:

Chair: †Mrs Anne Main 

† Brake, Tom (Carshalton and Wallington) (LD) 

† Crabb, Stephen (Preseli Pembrokeshire) (Con) 

† Green, Damian (Minister for Immigration)  

† Huppert, Dr Julian (Cambridge) (LD) 

McCrea, Dr William (South Antrim) (DUP) 

Meale, Mr Alan (Mansfield) (Lab) 

† Mosley, Stephen (City of Chester) (Con) 

† Mowat, David (Warrington South) (Con) 

† Patel, Priti (Witham) (Con) 

† Pawsey, Mark (Rugby) (Con) 

Percy, Andrew (Brigg and Goole) (Con) 

† Sharma, Mr Virendra (Ealing, Southall) (Lab) 

† Smith, Mr Andrew (Oxford East) (Lab) 

† Stuart, Ms Gisela (Birmingham, Edgbaston) (Lab) 

† Tami, Mark (Alyn and Deeside) (Lab) 

† Wheeler, Heather (South Derbyshire) (Con) 

Winnick, Mr David (Walsall North) (Lab) 

† Woolas, Mr Phil (Oldham East and Saddleworth) (Lab) 

Annette Toft, Committee Clerk

† attended the Committee

The following also attended ( Standing Order No. 118(2):

†Macleod, Mary (Brentford and Isleworth) (Con) 

First Delegated Legislation Committee 

Monday 1 November 2010  

[Mrs Anne Main in the Chair] 

Draft Immigration and Nationality (Fees) (No. 2) Regulations 2010 

4.30 pm 

The Minister for Immigration (Damian Green):  I beg to move, 

That the Committee has considered the draft Immigration and Nationality (Fees) (No. 2) Regulations 2010. 

It is a delight to serve under your chairmanship, Mrs Main. It is also a pleasure to see the hon. Member for Oldham East and Saddleworth opposite me. I should tell him that I have taken the precaution of bringing along the record of the debate on 24 February, when he was standing here and I was there. I suspect that we shall see in the course of the next few minutes which of us can remember the other’s lines better. 

We inherited a UK Border Agency that currently spends more than £2 billion to manage the borders and to control migration, a third of which is recovered through fees on visas and nationality and immigration applications. The rest of the costs is met by the UK taxpayer. Earlier this year, my right hon. Friend the Chancellor of the Exchequer set out in his emergency Budget the position of the nation’s finances and demonstrated the very difficult choices that need to be made by all Departments. The spending review also set out a strong message about the present Government’s intention to reduce significantly the amount spent on public services. The Home Office and UK Border Agency are at the heart of that agenda and are fully committed to making the savings agreed in the spending review. 

However, to take us into the new spending review period, we need to do more on balancing the costs of supporting the immigration system between those who use it and benefit directly from it, and the UK taxpayer. The Home Office has already agreed to make savings of £367 million this year. The proposals that we are debating today form the other half of the equation by seeking to increase fees paid by migrants and their sponsors. Those fees are set out in regulations made under section 51 of the Immigration, Asylum and Nationality Act 2006 and in accordance with the powers granted 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 can set a fee for an application at a level that exceeds the administrative cost of determining the application. 

The way in which our legal powers are defined means that we must also specify fees in separate regulations under the powers in section 51 of the 2006 Act. Those regulations are to set the fees for applications, processes and services that are charged at or below the administrative cost of determining the application. They were laid in Parliament on 9 September 2010 and are subject to the

negative procedure and not debated in the House. Like my predecessors, I recognise that having fees in two different sets of regulations makes things complicated, and I am happy to take points on any of the fee proposals here today. 

For these mid-year increases, the UK Border Agency has been involved in very careful consideration and the increases are made in line with the principle of spreading the overall burden of fee increases across all appropriate routes. Where we have made greater increases in the fees, we have done so on the basis of the value to the migrant of a successful application—for example, for those who are seeking to work in the UK or to stay here permanently. Where we have held fees at the same level or increased them by a smaller amount, we have done so to help to maintain our international competitiveness and in recognition of the importance of those routes to the UK economy. 

The fee increases that have been made include the increase in the fee for the family settlement visa. That fee better reflects the accelerated route to settlement under that category, as the majority of applicants need not apply for further temporary leave to remain in the UK before settlement. The fee will also be better aligned with fees that we charge on economic routes where applicants pay separately for a visa and any further leave to remain in the UK. 

We are also increasing the fee for long term visit visas. Applicants benefit from the convenience of not having to make multiple visa applications, with each one requiring biometrics to be taken. We believe that that route continues to offer excellent value to the customer. 

We propose increases in the fees for indefinite leave to remain and leave to remain applications. Those increases are in line with our broader policy better to align our fees structures overseas and in the UK and better to reflect the benefits of the route where the entitlements can include permanent residency in the UK. 

We propose that fees for applications at a public enquiry office in the UK increase to reflect the added benefit that customers receive from that optional service, which enables them to get a quicker decision than if they applied by post. 

The fee for dependants applying to extend their leave in the UK at the same time as the main applicant will increase from approximately 10% of the main applicant fee to between one fifth and one third of the main applicant fee. That continues our agreed policy to align better our UK-based fee structure with that applied at visa posts overseas—where all dependants already pay the full fee—and better reflects the fact that each individual within any given application bears a processing cost to us, as well as sometimes an independent set of entitlements for the individual concerned. 

Fees for nationality applications have been increased in line with our strategic policy to help to spread the overall contribution of fee increases across all routes. We are also introducing a fee waiver where a person makes an application for a nationality registration in reliance on section 4C of the British Nationality Act 1981, to align better the position of those applicants born to British mothers with that of applicants born to British fathers. That was a commitment made by the previous Government that I am happy to fulfil today. 

We have made increases to the fees paid by migrants who come to the UK under tier 1 and tier 2 of the points based system. Those increases are in line with our broader policy to align better our fees structure overseas and in the UK, and to reflect better the benefits and entitlements of these routes. However, I recognise the importance of keeping direct costs to sponsors under the points based system as low as possible, particularly in the current economic climate. As such, I propose to continue to hold the fees for acting as a sponsor and the certificate of sponsorship fee at the same level, while also maintaining our existing concessions for small businesses, charities, education providers and the arts and entertainment sectors. I am committed to sending a message overseas that the UK is open for business. We welcome the brightest and the best, who we all know contribute significantly to the UK economically, culturally and socially. I believe that migration brings great benefits to Britain, but I also believe that UK citizens and newcomers to this country want an immigration system that is more sustainable and stronger. 

Tom Brake (Carshalton and Wallington) (LD):  The Minister said earlier that he wanted to reflect the value to the migrant in the fees. I understand that, but he does not seem to be making the same connection in relation to the value to the sponsor. Will he explain why that is the case? 

Damian Green:  It is important to strike the right balance with any fees increases and, indeed, any fee charging. My hon. Friend will be well aware that if we want to continue—as we do—to attract the brightest and the best people who bring skills and talents to this country that would not otherwise be available, it is important to pitch the fee level for the sponsors in a way that does not discourage that process altogether. We are seeking to achieve that balance. Obviously, being able to sponsor someone acts as a benefit to the sponsor. However, we recognise—I am sure my hon. Friend does, too—that this is a challenging economic time all over the world and that particular pressure is being felt by UK industry. I would not wish to be overburdening UK industry at this time, but he is right to point out that we need to strike a delicate balance. I believe we are striking the right balance now. 

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab):  I recall discussing the first half of the regulations in Committee, when a question arose about the fees imposed for inquiring about or progressing an application. If the inquiry comes from a solicitor, they will have to be paid by the applicant, but if the inquiry comes from an MP, they will not. Will there be similar problems with these applications? Are there fee structures for an application in process? Who will pay those, and how will that affect MPs’ inquiries? 

Damian Green:  I remember that debate, which occupied a predecessor in Committee for what felt like several days. 

Ms Stuart:  My right hon. Friend the Member for Oxford East raised the issue. 

Damian Green:  Indeed, I think that the right hon. Member for Oxford East was the origin of that question. I am not conscious that such problems relate to the measure, but if they do, I will write to the hon. Lady

and other Committee members to inform them of the matter. Indeed, by the miracle of human technology, I can inform her that we expect the migrant to pay the fee charged. That was the issue at the root of that long debate that we had all those months ago. 

In conclusion, providing effective immigration that controls the numbers of people coming to the UK costs money. 

Dr Julian Huppert (Cambridge) (LD):  I understand the principle of cross-subsidisation, but that relies on there being a reasonable number of the more expensive visas. What analysis has been done to look at what will happen with the proposed immigration cap and the amount of cross-subsidisation that will be available? Will that leave the Home Office short, either due to less money coming directly, or because the less-subsidised elements are being capped— 

The Chair:  Order. May I caution the hon. Gentleman? He is straying somewhat from the scope of the regulations. Perhaps the Minister will be helpful in his reply. 

Damian Green:  I always seek to follow your guidance, Mrs Main. The short answer is that, if fewer people apply for visas, less money comes in. Balancing the different routes appropriately is a continuous process. As I have explained, there are two different sets of regulations under two different Acts to deal with those fees where we over-recover the cost, and those where we do not recover enough. That will continue to be the point. The fee proposals ensure that, while we reduce costs, we maintain income levels as we shift the contribution for the migration system from the UK taxpayer to the migrants who benefit. 

We will continue to monitor the impact on the fees income as the migration limit policy firms up. We believe that it is right to strike a balance between reducing our costs and ensuring that migrants who use the system make an appropriate contribution alongside the UK taxpayer. That underlying principle was important before we had the migration limit, and it will continue to be important once that limit is in place. The proposals seek a greater contribution from those who benefit the most, which is more in line with the value that such applications bring to those who apply. That means that migrants will meet a greater proportion of the costs of providing the service than they currently do, thereby obviously reducing the contribution from the general UK taxpayer. The increases are a vital step towards a fairer and more effective immigration system, and I commend them to the Committee. 

4.42 pm 

Mr Phil Woolas (Oldham East and Saddleworth) (Lab):  It is a pleasure to serve under your chairmanship, Mrs Main, during this short but important debate. I thank the Minister for his kind words, and I endorse what he has said. My research in preparation for the sitting was greatly helped by his speech of 27 February this year. The Minister is consistent, and he should be congratulated on that. 

It is important to lay out the justification for the fees. The Labour party supports the general principles that have been outlined, especially the first point about

balancing the burden of the administration of the system between the migrant who is paying for a service and the taxpayer who also benefits in kind. The Minister seems to be increasing the burden slightly—although not significantly—on the migrant. That seems to be a deliberate act, and I should be grateful if he confirmed whether that is the case. 

Notwithstanding the point about cross-subsidy, we need a balance of judgment. We do not know about the elasticity of demand and supply for visas, and if the price were doubled, we do not know what the impact would be. In some categories, price increases in the past have, perhaps perversely, led to an increase in the number of applications. I would not expect an analysis to have been carried out in every category, but has some analysis of the possible impact been done in the main categories? Has the Minister taken into account whether there is an unwelcome impact on regular migration when fees are increased? Is there a temptation for people to avoid the system as a result of the fees being too high? Does that come into his considerations? 

Has the Minister carried out an analysis, particularly where there is a clear benefit to our country of the skills that have been brought in, of the comparative costs and prices? First, what do visas cost in comparable countries such as Australia, European Union countries and America? Secondly, is he continuing the policy when looking at salaries for the points-based system entrants or potential entrants, especially in the light of the interesting research that was published at the weekend on tier 1 destinations and whether the entrants are in skilled or unskilled jobs, and examining the relative salaries in the countries of origin? 

The Chair:  Order. May I gently caution the hon. Gentleman that he is perhaps straying into the wide debate of whether the regulations are desirable. I should be grateful if he did not expand that point too far. 

Mr Woolas:  I accept your ruling, Mrs. Main. However, in the regulations, you will see that there are certainly above-inflation increases in the points-based system in tier 1 and tier 2 in two regards. How does the Minister compare the salary of, for example, someone working in New York with someone working in New Delhi? Obviously, a crude currency calculation would not take into account the relative wages. 

Will the Minister confirm whether the increase in the cost of the visas, particularly in regard to settlement, are part of the Government’s policy to bear down on numbers? That is really the same lesson as the one about elasticity. In other words, is he using the price increase as part of his general policy of reducing net immigration? One area of conflict between us is about the future of the migration impact fund, because the visa fee increases in the previous year took into account a £50 million contribution from the migrant to the migration impact fund. That was intended to pay for projects in constituencies with a sudden increase in the number of immigrants. The Government decided to abolish the migration impact fund, but it seems that the fee to cover that fund is staying within the visa fee. I can understand the case for the migration impact fund and for the fact that the migrant should contribute towards it, but it is difficult

to justify to the migrant why he or she has to pay for a contribution to something that does not exist. If I were being partisan, I could describe such a policy as a stealth tax. Can he confirm the policy is as I have outlined it? 

The Minister made play on what he described as the better alignment between fees in-country and fees out of country. Will he expand a bit on that for the Committee? Is it his goal to have equalisation? Given the policy of looking at the proportion or the cost of the administration of the fee, what measures will he want to put into place? My next question might be a bit beyond the Committee’s remit, but for future reference will he say whether the processing of visa applications overseas is to be subject to further administrative change, perhaps through the spoken of system? 

I am pleased that the Minister intends to equalise the descendancy point between mother and father under section 4C of the British Nationality Act 1981. I welcome that announcement. On the costs to sponsors, will he confirm that he was referring to sponsors in the points-based system as opposed to the visitor, or non-PBS, system? The Government have commented on the sponsor fee before, outside the context of the PBS. 

Of course, as we move towards the implementation of probationary citizenship, the indefinite leave to remain category—one of the major categories in relation to fees—will wither on the vine over time. Has the Minister made an analysis of the impact that that change will have on income to the agency? I do not believe that that is covered in the impact assessment that he kindly provided. 

Finally, I note that there are some significant increases in dependants’ fees. The Opposition do not oppose that—there is a huge benefit to the dependant—but is the increase part of a deliberate policy to deter immigrants from bringing dependants? Does it come in line with changes in the reductions to the rights of dependants, such as work rights, as part of the scheme; or is it simply a way of raising extra resources, recognising the pressure on budgets? 

I hope that the Minister can provide answers to those few questions. We support the general principles that he has put forward, and I am grateful to him for the information that he has provided so far on an important policy. 

4.51 pm 

Tom Brake:  I do not intend to detain the Committee, hon. Members will be pleased to hear. It is a pleasure to serve under your chairmanship this afternoon, Mrs Main. Whether one is sitting on the Government or Opposition Benches, many pertinent questions need to be asked, and the hon. Member for Oldham East and Saddleworth has asked many of them. 

I want to focus on something that the hon. Gentleman touched on, and that is international comparisons. Notwithstanding the research that was revealed at the weekend about tier 1 and people not going into the expected sort of employment, there are still people whom the Government will be keen to attract. I should like to hear whether international comparisons of price have been made. Is there no need to be concerned that the changes may stop people coming to the UK? 

Mr Woolas:  The hon. Gentleman makes an important point, which he has made before. Of course, currency differences and fluctuations are important when comparing salaries. Is he asking about that, as well? 

On the tier 1 issue, we do not of course know whether those found in the Minister’s research to be in unskilled work remain in such work. Does the hon. Gentleman think that tier 1 should be protected because of that? 

Tom Brake:  I do not think that the Minister would like me to make coalition Government policy on the hoof on his behalf, and I am sure that he will adequately address that. However, differences between salaries in different countries are important, and that issue was raised, probably in this very room, several months ago. I am sure that the Minister intends to respond on that point. 

4.53 pm 

Damian Green:  I am grateful particularly to the hon. Member for Oldham East and Saddleworth for his constructive approach to the debate. I spent some years being teased, particularly by his predecessor, for not opposing fee increases; and I am glad I did not. I thought that the hon. Gentleman asked some most interesting and penetrating questions, which need to be asked, about fee increases—some of which I found quite familiar. 

I think that I can answer all the hon. Gentleman’s questions. On the first, the increase in the fee burden as a result of the changes being considered today is £25 million. He will be aware that at the moment about £800 million is raised from fees by the UK Border Agency. It is a relatively small increase, but with the current state of the public finances it is extremely necessary. 

The hon. Gentleman asked about the elasticity of demand, and the effect in relation to that, and my hon. Friend the Member for Carshalton and Wallington also touched on that. There is no evidence that increasing fees suppresses demand. Obviously, we constantly monitor our in-take to help to ensure that we are providing a good and affordable service to our customers. When we set the fees, we remain committed to ensuring that the UK continues to be an attractive destination for migrants coming to work or study. 

So far, there is no evidence to suggest that there is any link between visa fees and the volume of demand, and we do not believe that increasing fees in this way will suppress demand. There have been a number of research projects in this area, all of which suggest that visa pricing is a fairly marginal consideration for migrants choosing to come to the UK. I think that that also answers the hon. Gentleman’s other question, about whether this increase will drive people into seeking illegal routes. We do not believe that that will be the case. 

That brings me on to the second central question that the hon. Gentleman raised, which was also raised by my hon. Friend, about the international comparisons. It is obvious that every individual country’s migration systems and fees tend to be complex, so direct comparisons of price can be difficult; we cannot easily compare like with like. However, inasmuch as we can make comparisons, I can report that our fees certainly continue to be extremely competitive. 

There was much discussion, because of the research that we put out last week, about tier 1. To give some concrete examples, the Australian equivalent of tier 1 costs £2,117 as opposed to the UK tier 1 visa, which costs £750. The average across a range of highly developed affluent countries is just more than £1,000—£1,042, in fact—so we are cheaper than those countries. The cheapest of these comparators is the Netherlands, at £623. 

I am perhaps testing your patience, Mrs Main, but I would like to go on to tier 2. The cost of the Australian equivalent is £1,074; the average across the highly developed affluent countries that I mentioned is £499, and the UK tier 2 visa is £350. The USA equivalent is the cheapest, at £301. So I hope that hon. Members from all parties in the Committee are reassured that we are not pricing Britain out of world markets for the brightest and the best; I certainly would not want to do that. 

The hon. Member for Oldham East and Saddleworth asked why we set the same fees regardless of the applicant’s nationality. As I am sure he is aware, it is simply the case that we do not want to discriminate against some nationalities, and differential fees based on the nationality of the person or their country of residence would not necessarily recognise the financial circumstances of the individual applicant. Put crudely, rich people from poor countries can apply and poor people from rich countries can apply. So it would obviously be discriminatory to set different levels on a national basis. 

The next pertinent question that the hon. Gentleman asked was whether this change was essentially just a way of driving numbers down. No, we do not set fees to reduce the numbers of people entering the UK. Fees contribute to the cost of the UKBA migration operations and they are balanced at levels to reflect the value of the product to the customer, or the benefit that they bring to the UK. 

The hon. Gentleman asked about the migration impact fund and indeed he is right about it; that fund came to an end on 1 October. The decision to end that fund was taken because, in the light of the overall fiscal position and the need for urgent action to tackle the deficit, the Government concluded that the MIF was not a priority funding stream. However, the Government have protected core local government spending, reduced ring-fencing and ended the costly central reporting requirements. So from now, local authorities themselves will be able to decide how best to address the impacts of immigration in their own area. Also, the Government consider that it is the right approach to ask migrants to bear more of the cost of the overall migration system, which is why we are increasing the fees. I should say that the income from immigration application fees will continue to contribute to the fund until the implementation of the new fee proposals, because costs have been committed to and incurred by project providers and obviously those costs need to be recovered. 

The hon. Gentleman asked about alignment of the in-country and out-of-country application systems. We would certainly like to unify the fee structure in future and I am happy to write to members of the Committee on the future costs of the visa system. 

The hon. Gentleman asked a general question about charging. It is absolutely the case that we are not penalising migrants with this change. As I have said, we are simply trying to balance the system more effectively. 

The hon. Gentleman also asked about dependants. It is simply wrong to say that the regulations will penalise them unnecessarily. Our information shows that fewer than 20% of applications for the majority of routes included one or more dependants, but, obviously, we will continue to monitor that. The dependant fee will impact a minority of applicants, but it is right that we seek a greater contribution from migrants—one that is a little more in line with the benefits of working and staying in the UK. We are certainly not trying either to encourage or discourage people from bringing dependants with them. 

In conclusion, the fees are in the best interests of the UK. They take place against a difficult financial context for the UK Border Agency and the Government as a

whole. We will continue to welcome the brightest and the best, but it is right that migrants meet the majority of the costs of operating the secure and effective immigration system that they use, and thereby reduce the burden on UK taxpayers generally. As such, I commend the statutory instrument to the Committee. 

Question put and agreed to.  

Resolved,  

That the Committee has considered the draft Immigration and Nationality (Fees) (No. 2) Regulations 2010. 

5.1 pm 

Committee rose.