Immigration and Nationality (Fees) Order 2016
(Limited Text - Ministerial Extracts only)
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Lord Bates
That the Grand Committee do consider the Immigration and Nationality (Fees) Order 2016.
Relevant document: 15th Report from the Joint Committee on Statutory Instruments
The Minister of State, Home Office (Lord Bates) (Con)
My Lords, I beg to move that the Committee considers this statutory instrument. This fees order is to be made using the charging provisions in Sections 68 to 70 of the Immigration Act 2014, which consolidated and simplified the charging provisions from three previous Acts. The order sets out the maximum amounts that may be charged for broad categories of immigration and nationality functions for the next four years, which is the expected life of the order. Maximum fee amounts are ceilings which limit the amount that may be charged in subsequent fee regulations.
Like the previous order, the maximum amount for each category is set to accommodate the highest individual fee in each category. In most cases, the categories will contain a number of different, individual fees. I want to make it exceptionally clear that the maximum amounts are not targets that the Home Office will seek to charge by the end of the four-year period. These maximums will allow the Home Office to adjust fees within these ceilings in order to be responsive over the next four years to the needs of customers, the department and the taxpayer, and to meet the Government’s objective of a border, immigration and citizenship system by 2019-20 that is fully funded by those who use it and benefit most, as announced in the spending review.
The fees order will also enable us to expand the scope of our premium service fees, which will facilitate the introduction of new services in addition to those already offered. The amendments will also provide greater flexibility to deliver services directly to customers and organisations that request increased or tailored levels of support. The introduction of such premium services does not replace or seek to charge for those services that are currently provided for free. We continue to ensure that the appropriate measures are in place to enable scrutiny of our proposals, while immigration and nationality fees will continue to be transparent and set in the best interests of the United Kingdom.
The legislative framework does not allow for the Home Office to put up fees whenever it likes. The legislation requires that immigration and nationality fees proposals must be considered and approved by Her Majesty’s Treasury. They are also agreed by the cross-governmental home affairs committee and an impact assessment is produced on the proposals prior to fees legislation being presented to Parliament. We expect that most fee levels will be subject to an annual review during the four-year period and that fee level changes will be subject to the same cross-governmental approval process. The individual fee levels will be set out in negative regulations. We expect shortly to lay regulations setting out the fees for 2016-17.
We have published a fees table that shows our intentions for individual fees in 2016-17, and I will now explain our proposals. Consideration of the impact of fees on businesses, educational institutions and economic growth continues to be balanced with the government policy that users of a system should pay more towards its costs and therefore reduce the burden on the UK taxpayer. To support the Government’s approach towards recovering an increased proportion of immigration and visa costs and the transition to a self-financing border, immigration and citizenship system, we propose to apply incremental increases to most immigration and nationality categories.
The proposed increases do not impose any additional costs on business. To support economic growth, we intend to make relatively small fee increases for applications related to work, study and visit, which will increase by 2% next year. For example, the fees for short-term visit visas and tier 4 student visas would rise by £2 and £6 respectively.
A number of visa and immigration fees will continue to be set at or below the estimated processing cost. The highest proposed increases in fees in 2016 are for optional services that offer an enhanced level of convenience and for routes that provide the most benefits and entitlements —for example, requests for enhanced application services and for indefinite leave to remain.
I know that noble Lords will all support a border and immigration system that controls immigration for the benefit of the UK while improving services to customers and reducing the cost to the taxpayer. I believe that this fees order, as an enabling provision, will help us to achieve this, and I commend it to the committee.
Lord Paddick (LD)
My Lords, I thank the Minister for explaining the order. I am, however, a little confused about how much revenue the Home Office intends to generate through this mechanism. The Explanatory Memorandum states:
“This Order sets out chargeable immigration functions and maximum fee amounts which provide for immigration fees to increase at a rate above inflation”.
Understandably, it could be that in order to ensure that the cost of processing these applications—for visas or whatever—is met, the fees have to be set above inflation because the cost of processing them is increasing at a rate above inflation. No one would have any concern about full cost recovery. One would expect that a person applying for a visa would pay the full cost of providing that service.
The impact assessment talks about the Home Office having to ensure that fees for immigration and nationality services make a substantial contribution to the cost of running the immigration system. This seems slightly different from simply recovering the costs incurred. The impact assessment goes on to say that government intervention is necessary to ensure a balanced Home Office budget. It later states that,
“the Home Office estimates that 100% of the costs of front-line Immigration, Border and Citizenship operations will be recovered through fees”.
It goes on to say that it is right that,
“those who use and benefit directly from the UK migration system make an appropriate contribution to meeting its costs”.
Later it refers to the comprehensive spending review, which requires further reductions in the Home Office budget over the next four years. This suggests that fees are being increased simply to cover a hole in the Home Office budget created by the comprehensive spending review. Indeed, the impact assessment says that some fees are set above the cost of delivery. It goes on to say that significant efficiency savings are being made in the immigration system within the Home Office, but that:
“It is appropriate that any remaining shortfall”—
presumably the shortfall in the funding provided by the comprehensive spending review—
“should be met by those who use and benefit from the service”.
The Minister has just said that the immigration service works to the benefit of the UK. It is therefore not simply a case of the immigration system working for the benefit of those people who seek leave to visit the UK or to remain; it benefits all of us. Are those people who apply—that is, only those on whom the Home Office can impose a fee—going to be landed with the shortfall between the efficiency savings and what is provided by the comprehensive spending review for the immigration services? It does not seem reasonable that we should penalise those seeking visas and other services simply because the comprehensive spending review penalised the Immigration Service in that settlement.
Can the Minister reassure the Committee that these fee increases will not be used to target certain categories of applicant? There could be a potential for discrimination if that were the case. How much of the shortfall in the Home Office funding for the Immigration Service do the Government expect to make up by increasing the fees? Are we talking about the overall Home Office funding shortfall, the shortfall in front-line immigration services or the shortfall in the services that provide visas and so on?
Lord Bates
I am grateful to noble Lords for their questions, which I will seek to address. Before I do so, it may be helpful to reiterate the broad principles which we are dealing with here. First, we are trying to create a self-financing model—the noble Lord, Lord Paddick, said that he supported that—which was contained in the comprehensive spending review. The mechanism that we are talking about in the order comes from the Immigration Act 2014 and gives a degree of certainty and understanding to people on the ranges for which they are planning. The broad element is that we want this mechanism to become self-financing, but within that there is a differential, and the noble Lord, Lord Rosser, invited us to explore this. Of course there is a difference of approach when we are looking at students, for example, whom we want to encourage to come here to bona fide universities. We want to maintain their costs at a competitive level to encourage them to come, as with people coming on visitor visas. However, some of the other charges involve cases where there is less obvious benefit across the whole of the UK and more benefit to the individual concerned. We are saying that in those circumstances the additional fees will go towards keeping the costs down over the four-year period.
I shall deal with some of the specific questions in no particular order. The noble Lord, Lord Rosser, asked whether having more premium services equates to a poorer standard of service for everyone else. He will not be surprised to hear that that is not so. In-country casework delivery to customers has improved over the last year with service standards being met consistently across all routes. These are optional services that improve customer choice. On customer choice, we know that some of our customers want a faster and more personal service, so we are expanding and improving our premium services—for example, customers who need a faster decision or need to have their passport returned before a decision has been made on an application because they need to travel in the near future; customers who prefer face-to-face services; and customers who want access to premium services without travelling to UK Visas and Immigration premises. These are all examples of premium services that attract a premium fee.
The question was asked, are the fees being used to deter applications? No; again, we cannot use fees to deter applications. We are introducing a policy and operational measures to reduce immigration abuse and inward migration. We continue to welcome the brightest and the best to the UK. There is no evidence of a relationship between changes in fees and the volume of applications for various visa products.
The noble Lord, Lord Paddick, asked how much revenue we intend to generate throughout the lifetime of the order. We expect around £600 million of border, immigration and citizenship system costs, excluding asylum support and customs, to be funded by the Exchequer at the present time. We have also made significant savings, which the noble Lord referred to. Compared to 2010, the Home Office will have delivered savings of around £3 billion in 2015-16. This includes savings and efficiencies in operating the immigration system. Of course that has to be placed in the context, which I am sure the noble Lord welcomes, that we protected the police budgets during that time. There was a great deal of speculation about that but we did it, and I think it is broadly welcomed by everyone. However, it means that the essential progress towards maintaining a tight control on costs and administration needs to be kept up.
The noble Lord, Lord Paddick, asked whether fees are being increased to plug a hole in the Home Office budget. Through making savings and improving efficiencies, we expect to reduce the Exchequer funding requirement by over half by 2019-20—that is, from £600 million down to £300 million. We expect to increase income from fees by circa £100 million in 2016-17. That will mean that the borders, immigration and citizenship income will be circa £1.8 billion in 2016. We estimate that we will need an additional circa £250 million of income from fees by 2019-20 to meet our self-funding objective.
The noble Lord, Lord Rosser, asked whether this would be based on an applicant’s ability to pay. There are costs to the immigration system in processing and assessing such claims and the ability to assert certain rights. Therefore it is right that we have a system that can cover these costs. We will never require—I underline this point—a fee that would be incompatible with the European Convention on Human Rights, and indeed there are many fee exemptions. Specific exemptions from application fees are provided to several groups with limited means for applications made within the UK—for example, asylum applications, children who receive local authority support, stateless people and victims of domestic violence. The Home Office will not require a fee where this would be incompatible with an applicant’s convention rights.
The noble Lord, Lord Rosser, asked about the proposed maximum: does the maximum amount of £400 within the order suggest that the Government have abandoned their intentions for the cost of administrative review to be cheaper? Individual fees are grouped into broad categories in the order so that the maximum amount must allow for the highest fee in that category. The maximum amounts have increased to provide scope to increase immigration and nationality fees to achieve the objective of the borders and immigration system being fully funded. This should not be taken as intent to increase the administrative review fee to the maximum within the border category. I think that that is not exactly spot on regarding what the noble Lord asked; he made a more general point, which was to ask whether, in presenting these orders over four years, when we have put a ceiling in place we do not expect to come back and ask for that ceiling to be raised. That is entirely right, and that degree of certainty on this can be given, which will allow people to plan accordingly.
Lord Rosser
I think the Minister said that it would not be correct to say that one purpose of the fees—I am sure it is not the only one—might be to deter numbers of applications, but am I not right in saying that the impact assessment talks on page 13 about an expected reduction of around 10,000 migrants per year? Now, I may be taking that out of context and I accept that that may be the case, but it seems to me that the last paragraph on that page envisages that there might be a reduction in the number of migrants as a result of the content and purpose of the SI.
Lord Bates
That is well spotted by the noble Lord, Lord Rosser; that is there, although of course the impact assessment relates to broader policy on migration. The noble Lord will be aware that the Government remain committed to trying to put downward pressure on migration levels to the UK, and it was as a reflection of that broader number, which is an assumption used in the Red Book and in the CSR, that we are making that conclusion. We are not drawing a direct link between these fee levels and that level of reduction; that is the broader policy that the Government are pursuing.