Immigration (Health Charge) (Amendment) Order 2023
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Lord Sharpe of Epsom
That the Grand Committee do consider the Immigration (Health Charge) (Amendment) Order 2023.
Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, the health charge reflects the cost to the NHS of providing healthcare to health charge payers. The increase supports the sustainability of our NHS, ensuring vital NHS services are funded and allowing wider NHS funding to be directed towards other priorities in the system.
The health charge was introduced in April 2015 to ensure that migrants contribute directly to the comprehensive and high-quality NHS services available to them from the moment they arrive in the UK. We all recognise the great contributions migrants make to help grow our economy and support our NHS; it is also important that those who use and benefit from our public services, such as the NHS, make a sufficient financial contribution towards the cost of these services.
The health charge is paid by temporary migrants applying for a visa to enter the UK for more than six months. It is paid up front, separate to the visa fee, and covers the full cost to the NHS of providing healthcare to those who pay it. Once paid, a charge-payer can access NHS services in broadly the same manner as permanent residents without having made any prior tax or national insurance contributions. Where additional NHS charges are paid, these are consistent with those paid by a UK resident, such as prescription charges in England.
Since its inception the Health Charge has generated more than £5.1 billion for the NHS. The funds generated are shared between the health administrations in England, Scotland, Wales and Northern Ireland, using the now-familiar formula devised by Lord Barnett.
The health charge must be set at a level that broadly reflects the cost to the NHS of treating those who pay it. The current rate, introduced in 2020, as determined by the Department for Health and Social Care, does not currently do this. The new rate of health charge replaces that agreed in 2020 by this House; it reflects the increases in healthcare expenditure and revised assumptions of migrant use of healthcare services. Using more recent and representative data better reflects NHS service use by health charge payers.
The order amends Schedule 1 to the Immigration (Health Charge) Order 2015. The full rate of the charge will increase to £1,035 per person per annum, with the discounted rate for students, their dependants, those on youth mobility schemes and under-18s, increasing to £776 per person per annum. These levels are currently set at £624 and £470 respectively.
Lord Sharpe of Epsom (Con)
I thank both noble Lords for their contributions to this shortish debate. I will do my very best to answer all their questions and commit to write if there are any that I cannot answer.
Those who move to a new country expect to pay towards healthcare. Countries around the world have a range of systems in place to do this, in line with individual healthcare models. It is right that we continue to prioritise the sustainability of the NHS and that temporary migrants make a financial contribution to NHS services available to them in the UK. Payment of the health charge provides near-comprehensive access to our health service, regardless of the amount of care needed, even for those with pre-existing health conditions.
I shall try to address all the issues raised. The health charge should broadly reflect the cost of treating those who pay it. However, the rates for students and their dependants, applicants to the youth mobility scheme and children under 18 will remain discounted. The increased rate of the health charge is comparable to the cost of private medical insurance here and abroad, which is a common requirement for individuals wishing to migrate to many other countries.
I think both noble Lords referred to the Secondary Legislation Scrutiny Committee. We thank it for considering the order and providing a detailed report on the legislation. Before I go into the methodology, I reassure the Committee that the Government have undertaken robust and detailed analysis of the annual cost to the NHS of treating health charge payers to determine the increased cost of the health charge. Increases to the health charge are based on the most recent data representing charge payers’ use of NHS services, more accurately determining the current cost to the NHS of treating health charge payers. The Government acknowledge the delay in providing responses to the Secondary Legislation Scrutiny Committee. Unfortunately, this was unavoidable, due to factors such as the changes in ministerial teams and the need for assurances of the responses between departments.
I turn to the methodology and the DHSC calculation. As set out by the Chief Secretary to the Treasury on 13 July, the health charge rates have remained unchanged for the last three years, despite high inflation and wider pressures facing the healthcare system. The increases to the charge reflect the higher costs in healthcare budgets since 2020. Additionally, the assumptions for how intensively charge payers use healthcare services in different settings have been revised to use more recent and representative data intended to better reflect migrants’ use of these NHS services. While the health charge is increasing, it is still considerably lower than the comparable average cost per capita of providing healthcare for the average UK resident, which currently stands at approximately £2,700 per person per annum.
I am aware of concerns around the combined cost of the health charge and visa fees and the impact that this may have on families and young people. The draft order maintains the reduced health charge rate for children, but the Government remain clear that migrants must pay the health charge when they make an immigration application and should plan their finances accordingly. The cost of the health charge and application fees are available online and should not come as a surprise. However, it is also recognised that, in some instances, people who are required to pay the health charge may not be able to afford it. In such instances, on family and human rights immigration routes and where it is backed by clear and compelling evidence provided by the individual, the health charge may be waived.
Where a fee waiver application is successful, the application fee and the health charge will be waived. Migrants who are granted a partial fee waiver are required to pay the application fee only; the health charge is waived in full. All the information about fee waiver applications is publicly available on GOV.UK and has been for a long time.
Evidence suggests that migrants are aware of the fee waiver process due to the volumes of migrants on eligible routes utilising fee waiver applications. For example, in the year ending September 2023, there were 46,470 visa fee waiver applications, which I would argue does not constitute “hardly any”. The Government are also committed to supporting vulnerable cohorts; there are a range of exemptions from the payment of the health charge, including for individuals in protected cohorts. That includes asylum seekers, looked-after children and victims of modern slavery and trafficking. This draft order extends the range of exemptions to migrants applying to the statelessness immigration route and to the Ukraine regime. In answer to the question from the noble Lord, Lord Coaker, about the statelessness route, it is basically for migrants who are unable legally to reside in any other country—so very similar to refugees.
Lord Coaker (Lab)
The Minister has just correctly defined statelessness and protected cohorts. To those who wrote the Explanatory Memorandum, all this is perfectly obvious, but for people like me and many others who read it, it would be extremely helpful if, instead of putting “protected cohorts”, they could add “such as” and do the same for “statelessness”. It would be helpful if that was done sometimes in an Explanatory Memorandum.
Lord Sharpe of Epsom (Con)
The noble Lord makes a very strong case for footnotes, and I hope that my officials are paying attention to that.
On the questions raised by the noble Baroness, Lady Brinton, about the deterrent effect on migrants, the UK continues to welcome talented individuals from around the world who want to study and work here. It is difficult to isolate the impact of the health charge increase on visa demand, due to the 2020 increase coinciding with the Covid pandemic and EU exit, but evidence from visa applications over the period following the increase to £624 does not suggest any significant impact on application volumes. Visa application volumes are monitored and there remains a substantial demand for visas across the majority of the immigration routes. All fee levels across the immigration system, including the health charge, are kept under review and evaluated where appropriate.
The Government’s science and technology framework sets out 10 key actions to achieve the goal of becoming a science and technology superpower by 2030. The global race for science research, technology and innovation is becoming increasingly competitive. The Government are committed to making the UK the best place in the world to work for top scientists, researchers and innovators, and we are delivering the biggest increase in public R&D investment, including training our next generation of doctoral and post-doctoral RDI talent, having already committed to investing £20 billion in R&D in 2024 and 2025.
Baroness Brinton (LD)
I know that we are not discussing this today, but I referred to the increase in the income threshold to £38,500. If that is the case, why was it set at that level, when post-doc salaries start at £35,000, immediately making that important group of people unable to come here?
Lord Sharpe of Epsom (Con)
I was about to say that the Government launched the global talent network in 2022 to support recruitment of exceptional talent in priority areas, such as artificial intelligence, with direct support and information on attractive opportunities in the UK. The noble Baroness is right that this question is not germane to this instrument. We dealt with the increase in salary levels last week. I cannot remember the precise exemption for doctoral students, but there was a PhD exemption.
Lord Sharpe of Epsom (Con)
I will have to come back to the noble Baroness—I cannot remember.
Baroness Brinton (LD)
Perhaps the Minister could write to me afterwards. I am talking about post-docs, who arrive with a PhD on a salary of £35,000. They now have a problem because of the level at which this has been set. The point I was making is that this large increase and the other visa fee increases make the whole thing impossible. That is the real worry of universities.
Lord Sharpe of Epsom (Con)
As I said, I will write, because I cannot remember the precise details and I do not want to say anything that I will have to correct.
It is also important to highlight that, although current comparisons can be made, other countries do not have healthcare systems that are directly comparable to the NHS. However, when comparing the total healthcare costs and the costs as a proportion of salary, analysis shows that the health charge at its new rate is broadly equivalent to that in Germany.
We are not trying to deter migrants and reduce net migration by increasing these charges. The health charge simply reflects the cost to the NHS of providing health- care to health charge payers. It supports the sustainability of the NHS. It is not a tool to reduce net migration. It is a public sector fee and cannot exceed the cost of providing treatment for health charge payers. The health charge cannot be used for any purpose other than to fund healthcare for health charge payers.
Migration volumes have increased since the current health charge rates were introduced in 2020. The direct impact that the health charge increases have had on migration are difficult to determine due to the factors that I mentioned earlier and the impact of the Covid pandemic coinciding with the recent increases, but they certainly do not appear to be statistically significant, although that is probably over-egging it a little.
Regarding the Government’s assessment of the impact of the current rates of health charges on visa volumes, no formal review has been undertaken to assess their impact on immigration. That is partly due to the 2020 increase having coincided with the pandemic and EU exit. However, we monitor visa application volumes, which have been at record highs, as noble Lords will be aware, across the majority of immigration routes. All fee levels across the immigration system, including the health charge, are kept under review and evaluated where appropriate. To answer the specific question about price elasticity, it is basically about migrants’ willingness to apply for a given visa given an increase in price. This is derived from published academic research. I can provide links as required.
In terms of impact assessments, we have considered this; a full regulatory impact assessment estimating the impact of the IHS increase was published alongside the legislation. The Government have considered the impact that increases to the health charge will have on visa volumes, as I said. The regulatory impact assessment published alongside this estimates the potential impact on visa volumes using different scenarios. The Government have considered the impact that the health charge increases will have on specific types of immigration. The regulatory impact assessment estimates the impact on migrants and visa volumes for each individual liable route. As I said, the immigration health surcharge is not a net migration policy. The published regulatory impact assessment provides estimates for the potential impact on visa demand under different scenarios.
I think I have answered most of the questions asked of me. I will write on those that I have not answered and the specific points raised during the debate. I finish by saying that the NHS was founded to care for every citizen in their time of need. We have to cherish and preserve that principle, but it is right that migrants granted temporary permission to be in the UK make a financial contribution to the running of NHS services available to them during their stay. On that basis, I commend the order to the Committee.