Immigration and Nationality (Fees) Regulations 2014

Monday 24th March 2014 Grand Committee

Motion to Consider

15:31

Moved by

[Lord Taylor of Holbeach]

That the Grand Committee do consider the Immigration and Nationality (Fees) Regulations 2014.

Relevant Document: 22nd Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Home Office (Lord Taylor of Holbeach) (Con)]

My Lords, in moving that the Committee should consider the draft Immigration and Nationality (Fees) Regulations 2014, I will also speak to the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014.

Members of the Committee will remember that I came to the Grand Committee on 28 January to debate the Immigration and Nationality (Fees) Order 2011, which provides powers to charge for visa, immigration and nationality applications and services. I am here today to debate the specific fees charged within the scope of that order. I am happy to take points on any of the fees proposals set out in the Written Ministerial Statement of 24 February 2014, both those contained within these regulations and those in the Immigration and Nationality (Cost Recovery Fees) Regulations 2014, which have been laid separately before Parliament.

The fees proposals aim to strike the right balance between ensuring that our visa fees compare favourably with other countries and providing sufficient income to fund the system and improve services. We have sought to limit most increases to 4%. It might help noble Lords if I now describe those fees which have increased by more than 4%, which include the following. The first is the fee for dependants applying to extend their leave. We propose to remove the concession on fees for dependants applying at the same time as main applicants in the UK so that all dependants will pay the same as main applicants. This is consistent with the charging policy for applications made overseas and with separate dependant applications in the UK. Each individual within an application may receive an independent set of entitlements and will involve additional administration costs.

The second set of fees are those for UK premium services. The in-person and the priority service are optional services for people who wish to have their application expedited. The in-person fee is increased from £375 to £400 and the priority service fee from £275 to £300. We have also looked at the two-year and five-year visit visas, which will increase from £278 to £300 and from £511 to £544 respectively in order that the 10-year visit visa may be held at the current fee of £737. Long-term visit visas offer good value for money for frequent travellers, since a long-term visit visa fee is less than the cost of multiple short-term visit visas to cover the same period.

We are also introducing further concessions to encourage tourism and promote economic growth. There is to be a fee reduction for those who transit the UK without passing through border controls from £54 to £40. The fee for a visitor-in-transit visa and for those who need to enter the UK for a short period pending onward travel remains unchanged at £54.

I turn now to concessions for tier 2 applications where the applicant has a job on the shortage occupation list. It makes sense to encourage skilled overseas workers to fill these important roles until we can improve the skills and employability of the UK workforce. Some fees have been reduced in line with unit costs, including those for sponsorship, the transfer of conditions, travel documents and settlement visas for refugee dependent relatives.

I turn now to some new fees which we are introducing. The proposed fee for tier 2 leave applications for up to five years, in line with new rules that allow a tier 2 (general) or tier 2 (intra-company transfer—long term) certificate of sponsorship for up to five years is £1,028 for applications made overseas and £1,202 for in-UK applications. That is equivalent to two tier 2 applications for up to three years’ leave but means migrants only have to apply once. There is a new fee of £1,093 for dependants of Armed Forces personnel applying for leave to enter for settlement. A registered traveller service will offer expedited border clearance to regular visitors from low-risk countries; after completion of the Border Force pilot, the service will be charged at an annual registration fee of £50 per year later this year.

Following a review of nationality fees, we are introducing a revised charging structure in line with the entitlements allowed by each route. The fee for naturalisation as a British citizen will increase by 4% from £794 to £826. Registration as a British citizen provides a similar entitlement to naturalisation but, in recognition of the fact that certain people would qualify by right to apply, the proposed fee is 10% lower at £743. Applications for other categories of nationality, such as British overseas citizen and British Overseas Territories citizen, will be charged at 20% less than the fees for those applying for full citizenship. Fees for children will be 10% cheaper than the equivalent adult fee.

Finally, we are bringing fees for optional premium services for visa applications into our charging legislation. Fees will be at a single global rate rather than set locally.

The second instrument for noble Lords to consider in this single debate is the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2014. Noble Lords will be familiar with the civil penalty scheme to prevent illegal working from recent debates on the Immigration Bill. We are pursuing a broad package of reforms to tackle illegal working. The noble Baroness, Lady Smith, and I see a common objective in dealing with this scourge. Some measures are in the Bill, such as strengthening debt recovery and streamlining objections and appeals. Other measures concern changes to secondary legislation, including today’s proposal to increase the maximum penalty from £10,000 to £20,000 for each illegal worker.

We can only deliver a comprehensive response to illegal immigration if we work with UK employers to deny employment to those without the right to work in this country. Illegal working is the main incentive for illegal immigration and often involves exploitation and unfair competition. The civil penalty scheme encourages employers to comply with their obligations to check the right to work of all employees, without criminalising those who make a mistake. Under the scheme, an employer can establish a statutory excuse by undertaking specific document checks. The legislation provides a separate criminal offence for those who knowingly use illegal labour.

When an illegal worker has been identified and the employer has no statutory excuse, a financial penalty will be levied according to a statutory code of practice. Employers will have the right to object and, separately, to appeal to the court against the civil penalty. The maximum penalty was set six years ago at £10,000 for each illegal worker and has remained the same since. The Government are concerned that this penalty framework no longer provides a sufficient deterrent and does not reflect the full economic advantage derived from using illegal labour or the wider costs to society.

We intend to make the scheme tougher on rogue employers by increasing the level of the maximum penalty to £20,000 for each illegal worker. As is the case now, the maximum will be levied only on those who breach the legislation on more than one occasion.

We are also strengthening the penalty scale to ensure that higher penalties are applied where employers fail to conduct proper right-to-work checks. A revised draft code of practice that specifies the factors to be considered in determining the amount of the penalty will shortly be laid before the House. The scheme will continue to incorporate sensible penalty reductions for those employers who actively co-operate with the Home Office when failings in their recruitment processes come to light.

Legal migration brings economic, cultural and social benefits to the UK. We will continue to send a clear signal overseas that this country welcomes genuine visitors and the brightest and best migrants. I believe these instruments provide a basis for a sustainable immigration system that will command public support and I commend them to the Committee.

[Baroness Smith of Basildon (Lab)]

My Lords, I am grateful to the Minister for his explanation. In some ways the orders are fairly straightforward. The Minister will be pleased to know that we certainly support their principle and do not intend to oppose them. However, it would be helpful to have further clarification on detail. The Minister is smiling because he knows that I always seek further clarification and he would not expect me to do otherwise.

We have just finished the Committee stage of the Immigration Bill and it is helpful to have this debate against that backdrop. Many of the issues we have been discussing in the Bill have common themes with these orders.

On the first order, I understand that there is a flat 4% increase across the board. I tried very hard when the Minister was speaking to try to do some calculations in my head but the maths was beyond me at such short notice. It is projected that some increases will be more than 4% and some will be less. Is the Minister able to give me more detail? I do not expect it today; I would be happy with a more detailed breakdown in writing of the figures he gave for the percentage increases for different kinds of visas, given that it is supposed to be a 4% increase across the board.

I understand that this is an income-generating measure. I entirely agree with the Minister’s point that those who benefit should pay the cost; I have no difficulty with that. However, when reading the impact assessment I struggle to understand how much of this is to cover a shortfall in Home Office funding from the Government and how much is to cover the costs and ensure that this is self-financing. The impact assessment makes it clear that funding for the immigration system is going to reduce over the five-year period of the current comprehensive spending review. Over the CSR period financial planning requires the Home Office to deliver the maximum amount of fees agreed with the Treasury under the CSR. Any income above that amount is surrendered to the Treasury’s Consolidated Fund. I am trying to understand how much additional income the Minister thinks would be generated from the fees being proposed in this order today, as well as the impact of those increased fees.

I have already said that we support the principle. However, during the passage of the Immigration Bill the impact of the Government’s immigration policies on overseas higher education students has generated considerable discussion in your Lordships’ House. I would be keen to know what information is available to the Government and how robust the evidence is on whether foreign students are going to be deterred by the increase in fees. I know there are figures on applications in the impact assessment, but I am not sure how those are arrived at. More information about the process used and clarification of the figures would be helpful.

15:44

Two higher education representative bodies have raised concerns with the Government. One of the bodies—GuildHE—says that,

“proposals designed to generate more income from immigration services could serve to deter international students and staff and, ultimately, lead to reductions in income in these areas for the Government while inflicting serious damage both on the higher education sector and on the wider economy”.

It also asks the valid question why fees paid by applicants under tier 4 should be set anywhere above cost recovery level. It would be helpful to have more information on that. The figures for overseas students show that the number of visas issued to Pakistani students was down 55% on the previous 12 months, and that for Indian students it was down 21%. I know that the noble Lord has heard these arguments several times in Committee on the Immigration Bill but noble Lords are concerned that universities should not be disadvantaged by any other measures that the Government may take, given that they have already taken a bit of a hit with the falling number of overseas students. I would appreciate it if the Minister would address that point.

The Tourism Alliance’s response to the consultation called for tourist visas to be set at a competitive level to Schengen visa rates. I assume that analysis has been undertaken of the impact on tourist numbers, but if more information on that is available, it would be helpful to have it. The Employment Lawyers Association argued in its consultation response:

“Any increase in fees should only be implemented if it is certain that service standards can be maintained and/or achieved”.

This is also an issue we discussed in the debate on appeals in the Immigration Bill. If the Minister can give assurances about an improved level of service with an increase in fees, that would also be welcome.

I was interested in the Minister’s comments on illegal immigration. He referred to our concerns that the Government should take measures to tackle illegal immigration and those employers who abuse both British and migrant workers by not fulfilling the proper terms and conditions of employment, paying lower wages and trying to bypass health and safety provisions. When he said that we shared a common objective in dealing with this, I was somewhat surprised to hear him refer to a surge in numbers. If he can say something more about that, it would be helpful. He frowns at me but he used the phrase “a surge in numbers” when he talked about illegal immigration and illegal employment. It would be helpful to be given any figures he has on that, albeit it always seems to me that figures on illegal immigration are somewhat less than robust.

The Minister will not be surprised to hear that we support the order, but having read through it, the Explanatory Notes and the impact assessment, I have a few questions which it would be helpful if he could answer. My questions concern the same issues as I raised on the Immigration Bill—that is, the evidence base for decisions that are taken; the impact the measures proposed by the Government will have; and the practicalities of implementing them. The reason for increasing penalties on the illegal employment of migrants was originally to act as a deterrent to employers so that they would not employ illegal migrants, and to punish those who broke the law. As I said, this practice is bad for UK citizens and can often mean a race to the bottom in terms of wages and employment conditions. Therefore, it is in everyone’s interest that we tackle this issue.

The impact assessment was helpful. However, for the legislation to be effective it has to be enforceable and fully enforced. The impact assessment states that around 10,000 penalty notices have been issued from the introduction of the relevant legislation in February 2008 to the end of last year. Is it possible to have an annual breakdown of the number of penalty notices issued in each of those years from February 2008 through to the end of 2013? I anticipate that when the legislation was first introduced, there would have been a slow start but that the number of prosecutions would have picked up by 2013. If the Minister does not have the annual figures with him today, it would be helpful if he would write to me with that information. In those six years, the penalties levied amounted to more than £90 million. On appeal, that fell to £70.8 million. I would like some clarification on how that figure is broken down.

Less than £30 million of that money has been collected. According to the debate in the other place, as well as the impact assessment, £20 million has been written off. The Minister in the other place, James Brokenshire, when asked about it said that £7.2 million of the written-off money related to companies that had been dissolved. I should like an assurance that some work will be done on that because an issue in consumer law is that although no action can be taken when a company is dissolved, the directors or their wives can crop up as directors of other companies so that, in effect, the company continues but with different directors. Are directors of dissolved companies kept track of to see whether they go on to set up anywhere else where they may continue the practice of illegally employing migrants? When the Minister in the other place was asked about the remaining £12.8 million that had been written off, the only response he could give—I read this several times to make sure that I had it right—was:

“I am quite sure that there will be a number of different reasons”.—[Official Report, Commons, 12th Delegated Legislation Committee, 19/3/14; col. 11.]

What are they? Why has £12.8 million in penalties been written off? If it is not because companies have been dissolved, disappeared or broken down, what are the reasons? It was not helpful for the Minister in the other place to say that. If the noble Lord can enlighten us about what the reasons are, it would be helpful.

Mr Brokenshire also said that there were measures in the Immigration Bill to deal with this point on the collection of penalties but I am not sure what they are. It would be useful if the noble Lord could address how the Bill will address enforcement and the collection of civil penalties. We start with the £90 million, which was reduced on appeal; then £12 million was written off for other unspecified reasons; and, finally, less than £30 million has been collected. That still leaves over £20 million in penalties unaccounted for. The Minister in the other place said that the debts were being pursued. How long are they being pursued for before they are written off? How much more is likely to be written off? If it is the case that the money is being pursued and the full £20 million will come in, I would be very happy to hear that. However, I am concerned that we could be writing off large amounts of money when there is clearly an issue. If employers think that the law is not enforceable and they do not have to pay the fines—simply because they can shut down the firm, the fine will be written off or for “other reasons”, according to James Brokenshire—the law is not particularly effective. How long ago were those penalties which have been written off or awaiting collection imposed? How long do we have to wait before payment?

The point that I am trying to make is similar to one I made about the Immigration Bill. The law is effective only if it is properly enforced. If we are writing off huge amounts of penalties owed to the taxpayer, there is a serious problem with the effectiveness of the legislation before us. I hope that the noble Lord can reassure me on those points and I look forward to his response.

[Lord Taylor of Holbeach]

I thank the noble Baroness for her support and general welcome for these measures. I appreciate her comments and have, for me, a surprisingly large number of answers. I hope that the Committee will bear with me on them.

First, I must say that I did not refer to “a surge” but “a scourge” of illegal migration. I hope that the record shows that because that is what I meant to say. I do not want to get my notes muddled up and will therefore deal with the fees regulations first and then talk about the order on illegal working. I have a fair amount of information and will make sure that the noble Baroness receives details of the percentage increases, which actually were set out in the Written Ministerial Statement of 24 February. I am sorry that I do not have a copy of it to hand but will certainly make sure that I send it to her.

Secondly, the noble Baroness asked how much of the income generated is to cover a shortfall. She is quite right: we use this money to help support immigration services in general, which are quite expensive. If we want effective immigration control which efficiently delivers a speedy resolution of difficult cases, we have to make sure that we have the right resources to do it. The fee increases are expected to raise approximately £50 million per annum.

The noble Baroness went on to talk about that familiar subject: student visa fees and student numbers. If I appeared a little breathless when I came into the Committee, it was because I had been talking to a certain noble Lord about this very issue. I do not seem to be able to move around the House without talking about it. Our view is that there is no direct relationship between the visa fee and volume demand at this price level because the major costs are not visa fees or even the health charge that noble Lords have spoken about. Independent research suggests that visa pricing is only a marginal consideration for students and the UK is one of the most desirable places to come to study. This is an argument I have been making in the Immigration Bill. University applications are up 7% as of last September. We know that there is a problem in the Indian subcontinent as a whole, and that is reflected in the Australian experience. Elsewhere, numbers are almost the same. We have had a considerable surge in the numbers from China, which has more or less offset the decline from India. We are confident we have got the balance right.

Visas are not used as a method whereby we limit migration. We have not targeted tier 4 applicants. The 4% increase that applies to other fees also applies here, so it is a standard across-the-board increase. We set fees based on the value of the successful application to the migrant and, to that extent, it is a market-led calculation.

I think the noble Baroness welcomed the increase in fees as long as it was going to maintain or, if possible, improve service standards. We have put measures in place. There has been considerable organisational change in the old UK Border Agency. UKVI is now in-house in the Home Office, and our performance against service standards is improving. In the past year we have made great progress in reducing the stocks of in-country case work and backlogs. A straightforward application made today would be dealt with within service standards.

The noble Baroness asked whether we have considered joining Schengen or have considered our relationship with the Schengen visa system.

[Baroness Smith of Basildon]

I was not suggesting that we join Schengen. I was just taking about the comparative costs of visas.

[Lord Taylor of Holbeach]

Our visa product is competitive with Schengen in price and entitlement. We are running a pilot in China trialling ways to encourage tourists to apply for a Schengen visa and also to travel to the UK. This allows selected travel agents—that is fairly straightforward in the Chinese experience—to make offline applications for tour groups using the same form as they use for Schengen. We are trying to facilitate the use of Schengen applications in China and are monitoring that because some people say that having to make two applications for separate visas is a deterrent. However, I am pleased that the noble Baroness is not suggesting joining Schengen. In fact, I have to say that I did not think that she had said that, either—but my papers suggested that she might have done.

On the question of illegal working, I have the figures, which show an increase in particular years. They started off at 1,722 in 2008-09; the next year, they were 2,339, while in 2010-11 they were 1,898 and in 2011-12, 1,342. In 2012-13, they were 1,270 but last year, up to 28 February—we are still in 2013-14—the number was 1,862. I shall make sure that the record has the figures available.

16:00

[Baroness Smith of Basildon]

I did not quite catch them, but I shall read the record in Hansard. Does that suggest that from 2010 until last year, the figures for actions against those who employ illegal workers went down?

[Lord Taylor of Holbeach]

Yes, that is certainly the case. They dropped in that period and they have now increased markedly, so the latest figure is on track to be the second highest since the scheme was introduced.

We are taking steps to increase our focus on illegal working. With the creation of the Immigration Enforcement Directorate last year, we have already seen a significant increase of 47% in illegal working operations in 2013, compared with 2012, and a corresponding increase in civil penalties involved. Around 10,000 civil penalty notices were issued to employers since the start of the scheme until the end of 2013. The gross value of penalties levied during that time is in excess of £90 million, but the net recoverable value is £70.8 million. During the period from 2008 to 2013, almost £30 million was collected. Civil penalties to the value of £20 million were written off. The noble Baroness is right to draw attention to that factor. That happened during the previous Labour Government as well as during this Government, often because the companies evade the penalty by dissolving their business. The remainder is still subject to recovery; we are still pursuing some of these people—but we are using the Immigration Bill to make it easier to enforce civil penalty debts in the courts. The change will accelerate the process of enforcement, reduce costs and provide clarity.

[Lord Hussain (LD)]

I wanted to clarify one point. What consideration has been given to how to implement the penalties on small employers whose sole income may not be as much as the penalties being introduced of £20,000?

[Lord Taylor of Holbeach]

Whether you are a small or large employer, it is clearly illegal to employ people who are not entitled to work here. The penalty regime is designed to provide the enforcement authorities with flexibility in how they apply the scheme. The whole point of the exercise is not to drive people out of business but to prevent businesses that gain an economic advantage by employing illegal workers from gaining that advantage and to discourage them—and to make sure that they have proper checks in place, small or big business, to make sure that they have proper records in these cases.

I would argue that in some ways it is easier for a small employer to have a rigorous regime, because people are more likely to be working alongside each other in small businesses than in larger organisations. We are trying to work with business. I hope that my noble friend will agree with me that the employment of illegal labour is a scourge that needs addressing and that, whether it is in large or small businesses, we are right to deal with it. They are treated equally, and we allow payments in instalments to reflect the impact on the business. I should just mention that.

[Baroness Smith of Basildon]

If the Minister has other points to make on the questions I asked about the penalty notices then I may be jumping the gun, but so far he has only repeated the information that I spoke of and has not given any of the information that was asked for in the debate. One question was about the money written off. The Minister in the other place said that £7.2 million was written off when companies were dissolved. I asked in particular whether we did any checks on the directors of those companies to see whether they set up other companies. I also asked what the £12.8 million remaining out of the £20 million written off was for. In the other place, the Minister, James Brokenshire, just said it was for “different reasons”. When we are writing off £12.8 million, I do not think that that is an adequate reply.

[Lord Taylor of Holbeach]

I cannot really add directly to the information that the noble Baroness already has but will certainly write to her on the matter. We are tackling phoenixism—the arrangement whereby a business is here today, gone tomorrow and there again the following week. We are intervening to prevent companies dissolving to evade penalties, which is a common enough phenomenon, and we act with the Insolvency Service to disbar directors who are clearly not prepared to abide by the law in this area. As I said earlier, the Immigration Bill accelerates debt recovery by enabling us to register the penalty as an order of the court. This avoids lengthy court processes, as we can insist on payment on a much easier basis than by having to use the court.

I have tried to answer a number of the questions but may not have answered them all. To the extent that I have failed to do so, I will make a point of writing to the noble Baroness and to my noble friend so that they are in the loop on this matter. I beg to move.

Motion agreed.