Immigration and Nationality (Fees) Regulations 2012

Wednesday 21st March 2012 Grand Committee

Considered in Grand Committee

15:45

Moved By

[Lord Henley]

That the Grand Committee do report to the House that it has considered the Immigration and Nationality (Fees) Regulations 2012.

Relevant document: 41st Report from the Joint Committee on Statutory Instruments

[The Minister of State, Home Office (Lord Henley)]

My Lords, these regulations concern fees charged for visa, immigration and nationality services. The fees paid by those making visa, nationality and immigration applications must be specified in regulations made under Section 51 of the Immigration, Asylum and Nationality Act 2006. Regulations that set fees exceeding the administrative cost of processing an application must be approved by both Houses before they are made; this procedural requirement is imposed by Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004. Regulations dealing with fees at or below cost are subject to the negative resolution procedure.

The intention is to introduce two sets of regulations on 6 April that will replace existing fees regulations. The first set of regulations will deal with above-cost fees and must be approved by Parliament before it is made, and it is a draft of these regulations that is before the House today. The second set, dealing with fees set at or below cost, does not require prior approval from Parliament and has already been made. The regulations were laid before Parliament on 15 March. I recognise that having fees in two sets of regulations makes things a little complicated, and I am happy to take points on any of the fees proposals here today.

In general we are proposing to limit the majority of increases to 2 per cent. For example, we propose to increase the short-term visit visa applications by 2 per cent, as we recognise the importance of the visitor route to the United Kingdom economy. This is still about half the actual cost to the UK Border Agency of processing this type of application. Increases to fees that do not follow this approach include tier 1 general extensions of leave; these will increase by 50 per cent. This route is open only to those currently in the UK on a tier 1 general visa that is due to expire during 2013 and confers benefits including unrestricted access to the United Kingdom labour market, and ultimately the ability to apply for indefinite leave to remain. The new fee better reflects the value of these benefits.

Fees for tier 2 visas for migrants coming to the UK to work for a sponsor will rise by 20 per cent to £480; an incremental step towards our objective of aligning fees for the original entry visa with the fee paid in the United Kingdom to extend stay in this route. Thirdly, for media representatives coming to the UK to work for an overseas employer on a long-term assignment, this fee is being increased to align with the tier 2 visa fee to reflect the similarities between the two routes. Fourthly, for tier 2 intra-company transfer visas of less than 12 months’ duration and extensions under this route in the UK, this increase reflects the benefits conferred by this route.

The tier 4 visa fee is being increased to cover the full costs of processing these visas. In the current economic climate we can no longer subsidise these visas. The visa for extended family members of refugees and those with humanitarian protection coming to the UK is also moving to cost recovery. We are aligning it with similar settlement visa routes following changes that were introduced in the Immigration Rules in 2011.

Licence fees to those organisations that sponsor migrants in the UK are increasing to better reflect the administrative costs. For large organisations sponsoring employees to work under tier 2, the fees will be £1,500, while for small businesses and charities we will charge £500.

New fees being introduced include a graduate entrepreneur route in the points-based system. This route is being developed for those who have been identified by United Kingdom universities as having developed world-class innovative ideas or entrepreneurial skills but have yet to meet the requirements of the tier 1 entrepreneur route. This will allow them to develop their business in the United Kingdom

The new fees will cover extending the mobile biometric enrolment service to include applications for indefinite leave to remain, widening the range of services that we can offer our customers, and enabling those who have come to the UK under the tier 1 exceptional talent route that launched last year to extend their stay; this will ensure that we retain the skills and talents of those whom we have attracted to work and base themselves here.

Finally, the new fees will also cover providing certain stateless persons with the ability to acquire—or renounce—the status of British protected person. In addition, the fees paid by dependants of members of the Armed Forces will be frozen at current levels in recognition of our commitments under the Armed Forces covenant.

Legal migration brings economic, cultural and social benefits to the United Kingdom. We will continue to ensure that fees for immigration and nationality send a clear signal overseas that the country will go on welcoming the brightest and the best, and these proposals support that message.

We also continue to monitor the economic, equality and diversity impacts of our changes and to ensure that our fees continue to be priced at levels which make them competitive when compared with those in other countries.

I believe that these regulations provide a basis for a sustainable immigration system that noble Lords will want, and I commend them to the Committee.

[Lord Hunt of Kings Heath]

Once again, it is a delight to follow the noble Lord, Lord Henley, as we deal with orders and regulations in Grand Committee. I am grateful for his very persuasive arguments in favour of these regulations, but I have one or two points to raise.

Clearly, the regulations are about making UKBA pay its way in the world. Does there come a point where providing additional services on a premium basis and dramatically increasing the cost of applying for particular forms run the risk of effectively selling British citizenship? How precisely does the Minister assess the value to an individual who is making a particular application? That is how the amount is now set, it seems. It is not the amount it costs to run or provide the service, but the assessment by UKBA or the Minister of the supposed value to the applicants of the benefits that accrue to them. It would be interesting to know how those figures are arrived at.

What impact does the Minister think that the increases will have on the total number of people applying to come to the UK or to stay once they are already here? Will he say a little more about how much additional money will be raised for UKBA? Some increases are higher than others, but the noble Lord referred to an average of 2 per cent. Clearly, it would be interesting to know the impact on UKBA’s income.

Another point raised in the debate on these regulations in the other place was in relation to Armed Forces personnel and charges for visas. The Minister there referred to the relationship to the military covenant. Can the noble Lord explain a little more about this issue?

Finally, I come to the impact on business and the UK economy. The noble Lord will know that the CBI has condemned the Government’s decision to increase visa fees for working migrants and their sponsors as a bitter blow to UK business. Neil Carberry, director for employment and skills policy at the CBI employers’ group, was scathing about the cost upgrades. He said:

“The shock announcement that some work permit charges will rise between 20 and 60 per cent will come as a bitter blow to businesses. Firms have yet to see the improvements in customer service they were promised, in return for the last tranche of inflation-busting rises last year”.

There are two points here. First, there is the concern that increases in fees will be made but the service will not improve. That is a very important issue that the noble Lord needs to address. Secondly, there is the impact on the UK. I do not know whether the noble Lord has had time to study the article this morning by Willie Walsh, the boss of British Airways, who talks about the attitude of business people in China investing in the UK. Essentially, the perceived discouragement of overseas business men and women coming to this country, combined with policies on airport capacity, is having a chilling effect on investment in this country from countries such as China.

I watched the Budget Statement and was very disappointed that it had very little to say about how we are going to get this country growing again. The Minister may say that that is a little wider than the Home Office’s usual brief, but how policy is developed in relation to immigration and to fees can play an important part. It would be good to know how the Minister will respond to the concern of many businesses. This is also very much related to the issue of higher education and the ludicrous restrictions made on overseas students coming into legitimate institutions in this country. All that is doing is undermining one of our most successful economic sectors.

[Baroness Hamwee]

My Lords, I, too, thank the Minister. As the noble Lord, Lord Hunt, said, some of the reactions to the increase in fees are well known. They are exactly what any Government of any colour would say—that charges should reflect the level of service and be appropriate to it. The problem is that we hear far too often that customer service is relatively poor. It was described to me as a “litany of minor problems”. If you accumulate a set of minor problems, in totality they become more than just minor.

There is a reputational issue, too. I was given the comparison of two people coming to the UK and to Germany; the one who arrived at Frankfurt would be dealt with there and then, whereas the one coming to the UK would have had to send his passport to the embassy in his country in advance. Obviously, there are different arrangements depending on different individuals but, in general, it is a very telling point. Businesses will stop and ask themselves where they should choose to go on that basis. I have been told anecdotal evidence of companies beginning to move their functions away from the UK because of the long-term path of the immigration system. It is, of course, more than just a concern about fees; it is the direction of policy and the complexity of our rules that are in question. I mention complexity in this context because those who have to find their way around the system, being charged what are perceived as high fees—and I hear the point made about the cost—have higher expectations of service. It is quite telling that many businesses engage lawyers and maybe other professionals to advise on how to cope with the system.

The Merits Committee, of which I am a member, commented in its report to the House of the limited analysis of the impact of the increases on business. The letter from the CBI published in the report was really quite measured and clear; it did not use extreme language in any way. It pointed out that in the view of the CBI,

“employers have yet to see the improvements that were promised on the eve of last year's increase, or that of 2010”,

and that,

“where UKBA is seeking to charge firms commercial rates, and is seeking a return … firms have the right to expect a higher level of service”.

I have a question that is obvious, to me, but it may be too soon to give an answer to it. What would be the effect on efficiency and level of service of splitting the border agency into two component parts? It was against this background that I rather blinked to see the proposal for a premium sponsor scheme. I put down a Motion directed to this but decided to withdraw it and simply raise the points during this debate. I have real concerns about this being the thin end of a wedge of our creating a first class and, to use a railway operator’s language, a standard class which is really second or third class. The service is private, but it is a public service as well. I reflect that if there is an attitude that immigration is not of general social value, then that impacts on the whole policy. As I said, it is a public as well as a private service.

16:00

I was also concerned there was no specific consultation on the premium sponsor scheme. I know that it was originally proposed in 2009 and there was a generally favourable response then, but there may well have been a different context in terms of how employers felt about the service at the time. It is fair to say that the reaction now seems to be rather reserved until we see what will be delivered and what value for business there will be in joining the scheme. Clearly, there has to be significantly more than is offered under the current arrangements and I think that we need some clarity.

One thing that bothers me is that the customers of the new premium scheme will not sign up until they know what is on offer. The border agency will not commit itself until it knows what its likely income is and what it will be able to afford. There is a space to be watched there, but one that rings some alarm bells in my own mind.

All this is against a background of more and more tightening for employers as well as individuals and I want to ask about the reasons behind two changes in the immigration laws that are about to come into effect. I warned the Minister that I would do so. The first is on graduate recruitment and the closing of the tier 1 post-study work category and the introduction of the graduate entrepreneur route. That is intended to apply, I understand, to a smaller pool of exceptional graduates. I recognise that that is another route for an employer wishing to sponsor a graduate, but that application cannot be submitted until after graduation as distinct from the current completion of studies. I would be interested to know whether this is about numbers or something more. New graduates who set out immediately on an entrepreneurial route are to be applauded, but I do not think there can be many of them.

Secondly, the cooling-off period of 12 months strikes me as an unfortunate description because in consumer areas it is about changing one’s mind and saying no. Somebody wanting to change employer who leaves the UK will not be able to apply to re-enter until 12 months after the previous tier 2 general permission has expired. This would mean that an individual sent to the UK on an assignment under the intra-company transfer tier, whose sponsor wishes to hire him permanently, cannot apply under tier 2 general until 12 months after the ICT permission has expired.

I do not know how realistic that is. It seems on the face of it likely to prove an obstacle to employers and thus an obstacle to a particular area of economic success. It was not something that I believe was recommended by the Migration Advisory Committee, so why, in the difficult context that we are discussing, have the Government proposed it?

[Lord Avebury]

My Lords, my noble kinsman said that he was going to continue welcoming the brightest and the best, yet some of the announcements that he has made seem to go directly contrary to that, particularly the huge increases in fees for tier 1 general and tier 2 visas for coming to the UK. I suppose that we should give a partial welcome to the graduate entrepreneur scheme. I should like to ask the Minister, in pursuance of the points raised by my noble friend, whether it is aimed at people who have graduated from a UK university. Will they proceed directly from their studies to the graduate entrepreneur route, or will they be required to go back to their own country and make the application from there? Will people who graduate from universities overseas be able to enter the United Kingdom ab initio along this route without having been in a UK institution of higher education previously?

In his Written Ministerial Statement of 9 February, the Immigration Minister, Damian Green, said:

“We have continued with our strategic approach to charging; setting certain fees above cost on the basis of the value of the service”.—[Official Report, Commons, 9/2/12; col. 47WS.]

Both the noble Lord, Lord Hunt, and my noble friend Lady Hamwee have questioned whether there is a proper relationship between these two variables. As I have already said, some of the fees are very high and some were admittedly way above the unit cost estimate. On what basis does the UKBA, or the Home Office, assess the value of the service? What account, if any, do they take of such matters as the appeals success rate and the findings of the chief inspector’s report in determining the quality of the service provided? For example, the chief inspector in his global review of entry clearance made several critical findings. He looked at a sample of the cases decided at all the UKBA’s entry clearance decision-making centres—around 1,500 cases in total—and found that the evidence submitted with the application had not been considered properly in 483 cases, which was 33 per cent of the sample, and that in a further 201 cases, which was 14 per cent of the sample, the lack of evidence held on the UKBA file meant that it was not possible to assess whether the evidence submitted had been considered properly. The chief inspector also found that, in 235 cases—16 per cent of the sample—applications had been refused on the basis that the applicants had failed,

“to provide information which they could not have been aware [was required] at the time of making their applications”.

In 475 cases, there had been a review by an entry clearance manager, and, of those, in 141 cases—30 per cent—the chief inspector found that poor-quality decision-making had not been picked up by the entry clearance manager.

These criticisms indicate that the quality of service being provided is abysmal and that it is sheer exploitation to charge over the cost. In fact, it could be argued that the cost is seriously inflated by the high proportion of wrong decisions, and that the charges should be related only to the costs of decisions properly reached.

A similar view might be taken of the way in which many students have been treated recently when a college’s licence is suspended or revoked, through no fault of their own, but also other migrants whose visas are summarily curtailed. The case of Patel, on the fairness of revoking a sponsor licence, is but one recent example where the Upper Tribunal (Immigration and Asylum Chamber) has needed to issue a reported determination, reminding the UKBA of the general duty of fairness in decision-making, particularly in cases of students whose sponsor’s licence has been revoked and who face, through no fault of their own, losing their immigration application fee and incurring substantial other expenses as a result. The key finding in the Patel case was that, where the applicant was both innocent of any practice that led to the loss of sponsorship status and ignorant of such loss of status, common- law fairness and the principle of treating applicants equally meant that each applicant should have an equal opportunity to vary their application by being afforded a reasonable time in which to find a substitute college on which to base their application for an extension of stay to obtain the relevant qualification. In the curtailment cases, express Home Office policy is to afford 60 days for such an application to be made.

In previous debates on fees orders, I have raised the question of refunds. For example, in March 2010, I said:

“There should be timeframes for deciding 100 per cent of the cases and, if deadlines are missed, there should be refunds to the individuals concerned”.—[Official Report, 4/3/10; col. 1647.]

The then Minister, the noble Lord, Lord West, replied:

“On refunds, we charge for consideration of the application and so do not offer refunds—the consideration is a cost to us as well”.—[Official Report, 4/3/10; col. 1651.]

I should like to ask my noble kinsman the Minister to reconsider that policy. Why should someone who receives an abysmal service nevertheless have to pay for it? The Upper Tribunal (Immigration and Asylum Chamber) has recently issued the following general guidance in a reported decision:

“Fairness requires the Secretary of State to give an applicant an opportunity to address grounds for refusal, of which he did not know and could not have known”.

That indicates that the tribunal is seeing examples of what the chief inspector has found in situations other than the entry clearance cases on which the chief inspector was reporting.

I hope that my noble friend will concede that, in any normal business, a supplier simply would not get away with overcharging for services which are manifestly of such poor quality as this, and that the fees in this order are an abuse of monopoly power.

[Lord Henley]

My Lords, I have been asked quite a number of questions and will endeavour to answer as many as I can. I apologise in advance for those that I miss and will in due course write to noble Lords to pick up anything that I fail to deal with.

The noble Lord, Lord Hunt, made the allegation that we were simply selling British citizenship. I do not accept that, but I think that it is right that, when setting fees above the cost, it is perfectly permissible to look at the value to the applicant of a successful application while maintaining the United Kingdom as an attractive destination to work, study or visit. That is why we set the fee for a short-term visit below cost, while a tier 1 or settlement fee is set above cost to reflect the value of a successful application. That is certainly not going down the line, as the noble Lord was suggesting, of selling British citizenship.

The noble Lord then asked about the effect of the fee increases on the number of those coming in. We believe that our fees continue to represent good value for money; indeed, the visa fee is only a small proportion of the overall cost that any individual would pay if they decided to come to the United Kingdom. There is no evidence to suggest that the fee proposals will undermine ongoing plans to promote the United Kingdom as an attractive destination. We do not think that they will have the effect that the noble Lord seemed to imply.

The noble Lord also asked what additional income would be available to UKBA. I can give him an assurance that something in the order of £40 million will be raised. I also make it clear to my noble friend Lady Hamwee and my noble kinsman Lord Avebury, who spoke about service standards within the UK Border Agency, that the agency is exceeding most of its service standards. However, it is important that it generates income to be able to continue to improve standards as is appropriate and to invest in making the United Kingdom border secure and effective while providing the right service for individuals as they come in.

The noble Lord, Lord Hunt, then moved on to the question of the Armed Forces, which I briefly touched on in my opening remarks. We have reviewed the entry clearance visa fees that apply to dependants of serving Armed Forces personnel who come to the UK to join their serving family member. The entry clearance fee for these dependants is being held at 2011-12 levels. This is in recognition of the service to the country of members of the United Kingdom Armed Forces and in support of the Government’s commitment and duty of care to members of the Armed Forces under the new Armed Forces covenant.

16:15

The noble Lord and the noble Baroness, Lady Hamwee, touched on the question of the impact on business and the various criticisms made by the CBI. The noble Lord asked me to comment on the Budget, and I will just say that that is slightly beyond my level at the moment. I can assure him that I read the article by Willie Walsh, which gave some justifiable criticism not just for the Home Office but for all parts of the Government, particularly in relation to his comments about airports. However, I do not think that the noble Lord would want me to go down that route.

In terms of what we do within the UKBA, the fees that we charge and the service that we provide, we believe that our fees compare favourably with key competitors in other countries and offer very good value when considering the benefits and entitlements of a successful application. A recent analysis undertaken by the Australian Department of Immigration and Citizenship supports the Oxford Economics assessment that visa application demand is quite inelastic with respect to moderate changes in visa charges. The Australian analysis shows that the cost of a visa is very low relative to the total monetary value of the business and the high desirability of the product. Historical analysis shows little, if any, correlation between changes in visa prices and volume growth in visa applications. Therefore we do not accept that there will be the effect on business that has been claimed, and we reject the criticisms by the CBI. The United Kingdom Border Agency issues successful sponsor applicants with a licence that allows an employer or, for that matter, an educational service to bring migrants to work or study over a period of four years—and that is not an annual fee. So to refer to this as “a bitter blow” to working migrants and their sponsors does seem to be rather over the top.

If I may, I will move on to some of the concerns about consultation put forward by my noble friend Lady Hamwee. She asked what consultation we had undertaken before introducing these changes, particularly in relation to what she called the first-class and standard-class service. We consulted informally with a number of licence sponsors, representative bodies and other government departments about the proposal for a sponsor premium service, and that enabled us to confirm that a number of high users of the system would be willing to pay for an enhanced service from the UK Border Agency. We have gained, we believe, a clear understanding of which benefits would be welcomed in addition to the standard sponsored package. I do not accept the suggestion that the new premium service is just a way of making additional income. We have listened to the potential customers of UKBA and they have told us that they would be willing to pay for it. We think that is a matter that we should accept.

[Baroness Hamwee]

I hope that I did not put it in quite the stark terms in which he reflected it back to me. I was concerned, rather than making any allegations, because there are no details yet of a scheme to which I can respond. Is it intended that, when there is more clarity following the work to which he has referred about the particular services that might usefully come within such a scheme, there will be a further round of consultation, discussion or conversation—call it what you will—before the scheme is finalised? What I have picked up is the feeling that there is a real lack of clarity and that it is difficult for employers to respond at present.

[Lord Henley]

My Lords, I apologise for that misunderstanding of the point being made by my noble friend. I cannot give her an absolute guarantee that there will be further consultation, but I will certainly make sure that she is provided with the appropriate clarity that she seeks. We would obviously want to make sure that employers have that clarity as well, because if they do not they will not be able to make use of the system.

I turn to my noble friend’s questions, of which I was grateful that she gave me notice. First, with regard to the tier 1 post-study work closure supplemental, as my noble friend accepts, the focus of the debate should be on fees, but we have to look at the matter in the wider policy context for immigration. The tier 1 post-study work route will close on 6 April; currently it provides graduates with unrestricted access to the labour market for two years. A UKBA survey revealed that 30 per cent of those with post-study work leave were in low-skilled employment or unemployed. In a time of high unemployment in the UK, it was right that we should close that route. From 6 April graduates who wish to remain in the UK and work will need to apply through tier 2 and the points-based system and need to be sponsored by a licensed tier 2 sponsor. The minimum salary threshold for tier 2 is £20,000 or the appropriate rate for the job as detailed in the tier 2 codes of practice, whichever is the highest.

My noble friend also asked about the advice from the Migration Advisory Committee and what we had or had not asked it. The committee was asked to advise on appropriate economic criteria for settlement and recommended a simple pay threshold as a good indicator of skill. The cooling-off period that we referred to, which my noble friend asked about, was not part of its remit, but that was covered in the Government’s consultation document on employment-related settlement, tier 5 and overseas domestic workers. We believe that it was right to include in the changes to Immigration Rules laid on 15 March, as part of the package of changes intended to break the link between work and settlement and to reposition tier 2 as a primarily temporary route, a 12-month cooling-off period for tier 2 migrants.

I think that I have dealt with most of the points. I wanted to get on to the general criticisms of my noble kinsman—that is, my noble friend Lord Avebury—about service standards and the question as to whether refunds would be paid. As I made clear earlier, we believe that the UK Border Agency is meeting most of its targets. I accept that there will be failings on occasions; that is always the nature of things. The UKBA monitors and publishes its own service standards and makes them available on the website. It is committed to improving the service that it provides; that is why I talked about the investment and why the fees are important. It will take steps to address issues that may prevent it from achieving its service standards.

My noble kinsman then finally asked whether refunds could be paid for bad decisions. He quoted a response from the last time he tried to get something on this from the previous Government, from the noble Lord, Lord West. I do not always agree with everything that came from opposition spokesmen when they were in government, or otherwise, but on this occasion I am in full agreement with the noble Lord, Lord West, and there has been no change in policy. I hope that that deals with most of the points.

Motion agreed.