Immigration Act 2014 (Residential Accommodation) (Maximum Penalty) Order 2023

(Limited Text - Ministerial Extracts only)

Tuesday 16th January 2024 Grand Committee

Moved by

[Lord Sharpe of Epsom]

That the Grand Committee do consider the Immigration Act 2014 (Residential Accommodation) (Maximum Penalty) Order 2023 and the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2023.

Relevant document: 5th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, the first instrument for noble Lords to consider in this single debate is the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2023.

The Home Office is the first line of enforcement against illegal migration and works across government to prevent individuals without lawful status in the UK accessing work, benefits and services. Illegal working often results in abusive and exploitative behaviour, the mistreatment of unlawful migrant workers and revenue evasion. It can undercut legitimate businesses and have an adverse impact on the employment opportunities of people who are lawfully in the UK.

Employers have a role to play in ensuring that all their employees have the right to work in the UK. Since 2008, this has been underpinned by the right-to-work civil penalty scheme, under which employers are required to carry out prescribed checks on individuals before employing them. This is to ensure that they are lawfully allowed to work in the UK. If an employer employs somebody who does not have the right to work in the UK, they may be liable for a civil penalty. Employers can avoid liability for a civil penalty if the correct right-to-work checks are carried out before the individual commences employment.

The level of civil penalty for non-compliance has remained the same since 2014, diluting its impact as a deterrent to those who facilitate illegal working, including instances of labour exploitation. Accordingly, the Government intend to increase the civil penalty for employers from £20,000 to £60,000, by virtue of the Immigration (Employment of Adults Subject to Immigration Control) (Maximum Penalty) (Amendment) Order 2023.

This will ensure that the scheme continues to act as a deterrent in respect of employers who employ illegal migrants and send a clear message that only individuals with a right to work in the UK can secure employment. In the case of a first breach, the starting point is £45,000. Employers who elect to pay the penalty via the fast payment option will benefit from a further 30% reduction in the overall amount, after reductions have been applied for any specified mitigating factors.

It remains a criminal offence for migrants to work illegally in the UK, or where the individual is in the UK unlawfully. The offence of working illegally carries a maximum penalty of 51 weeks’ imprisonment in England and Wales and six months’ imprisonment in Scotland and Northern Ireland, or a fine.

The second instrument for noble Lords to consider in this single debate is the Immigration Act 2014 (Residential Accommodation) (Maximum Penalty) Order 2023, which will be in force in England only.

Since 2014, anyone offering rental accommodation in the private rented sector should carry out checks on new adult occupiers before renting to them. This is to check that the individual has the right to rent, and is commonly known as the right-to-rent scheme. Allowing those without a lawful right to be in the UK to rent property enables them to establish a settled life in the UK. This creates costs to the public purse, including through the provision of local authority support, and reduces the amount of housing stock available to those who are lawfully residing in the UK. It often allows abusive and exploitative behaviour, with rogue landlords housing unlawful migrants in unsafe accommodation.

The maximum civil penalty for landlords, including letting agents, will be raised—by virtue of the Immigration Act 2014 (Residential Accommodation) (Maximum Penalty) Order 2023—from £3,000 to £20,000. In the case of a first breach, the starting point is £10,000. Landlords and letting agents who elect to pay the penalty via the fast payment option will benefit from a 30% reduction, from £10,000 to £7,000 or from £5,000 to £3,500 as applicable. As is the case now, the maximum penalty will be levied only on an employer, landlord or letting agent who has breached one of the schemes on more than one occasion in a three-year period, where the fast payment option was not utilised and where no specified mitigating factors apply.

Employers, landlords and letting agents can also appeal a civil penalty decision if, following an objection to the Home Office, that decision has been upheld. An appeal must be on the same grounds as the objection and an employer, landlord or letting agent must make the appeal within 28 days, registering it at a county court or sheriff’s court. This allows accidental non-compliant employers, landlords or letting agents safeguards against penalties.

In summary, these draft orders aim to change the behaviour of rogue employers, landlords and letting agents; to eliminate any financial gain or benefit from non-compliance; to tackle the harm caused by regulatory non-compliance where appropriate; and to deter future non-compliance. I therefore commend them to the Committee.

[Lord Lilley (Con)]

My Lords, these regulations are a regrettable consequence of our failure to prevent—it is extremely difficult to prevent—deter or remove illegal immigrants from this country. I hope that the Rwanda Bill, which we will consider shortly, will belatedly change that situation.

The reason why I have chosen to intervene briefly in this debate is to seek information. When I was the Secretary of State for DSS, I was told that it was impossible to work legally in this country without a national insurance number—a NINo. You cannot get a national insurance number unless you can demonstrate the legal right to work. It then emerged that there were far more national insurance numbers than people of working age in this country. Various explanations were put forward—they were numbers of people who had emigrated and the numbers were not rescinded, and so on.

First, I want to know whether that issue has been cleared up. Can my noble friend the Minister confirm that it is necessary to have a national insurance number to be employed? The employer has to ask for it and obtain it; it will then go into the system and, if the number is invalid, it will be thrown out. Secondly, is it possible in any way to obtain a national insurance number if you do not have the legal right to work? Are those two aspects effective in preventing illegal immigrants obtaining legal employment or accessing benefits? I appreciate that they will not stop people employing people illegally and failing to report that to the authorities, the tax authorities and so on.

I appreciate that my noble friend may not have the answers to those questions here and now but it would be helpful if we could clear this up and put on the record the precise effectiveness of national insurance numbers in dealing with these issues.

--- Later in debate ---

I will comment briefly on the question raised by the noble Lord, Lord Lilley, about whether people are checked for their legal right to work before they receive a national insurance number. I do not know what answer the Minister will give, but if he wants to give a more detailed written answer, I would be very interested to read it. In my experience in magistrates’ courts, there is often no relationship between people who have national insurance numbers and those who have no status to work here. In fact, I have been told—it may well be inaccurate—that they are separate systems, which is the reason the Government are bringing in the extra checks we are talking about in these two orders. Nevertheless, this is just tittle-tattle I have heard in magistrates’ courts, and I would be interested to hear what the Minister has to say.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank all noble Lords for their contributions to this debate. We can deliver a comprehensive response to tackle illegal migration only if we work with UK employers, landlords and letting agents to deny employment and housing to those without the right to work in this country. Illegal working and renting are the main incentives for illegal migration and often involve exploitation and unfair competition. The civil penalty scheme encourages employers, landlords and letting agents to comply with their obligations to check the right to work and rent of all employees and occupiers, without criminalising those who make a mistake.

Legitimate employers, landlords or letting agents will not face higher costs through increased penalties. The scope of the penalty regime has not changed. Those who continue to act in a legitimate manner, by checking and recording the documents of their employees or tenants, will not be affected by the strengthened penalty regime. I was interested in the comments from the noble Lord, Lord Ponsonby, on consultation. Given what I have just said, who would the noble Lord consult with—those who are legitimately employing and renting or those who are not? I would have thought that would make the consultation a little problematic to set up.

I will try to answer all of the various questions asked of me. On my noble friend Lord Lilley’s question, as I understand it, a national insurance number is not a prerequisite for the right to work. You can prove the right to work alongside another document, such as a birth certificate. This is a DWP matter, so I will commit to taking this to the DWP and ask that department to write on the specifics of his question.

All noble Lords have asked perfectly sensible questions about whether the schemes are discriminatory, because there are risks of that sort of thing. On 21 April 2020, the Court of Appeal found the right-to-rent scheme to be a proportionate means of achieving its legitimate objective of supporting a coherent immigration system in the public interest. As a result, the court considered the scheme to be justified and not in breach of the prohibition on discrimination in Article 14 of the European Convention on Human Rights when read with Article 8, which is the right to respect for private and family life.

The scheme is capable of being operated proportionately by landlords and letting agents in all cases. The very purpose of the statutory code of practice on avoiding unlawful discrimination when conducting checks recognises and seeks to address the risk of discrimination. While there may be discrimination on the part of a minority of landlords and letting agencies, that is because they have chosen not to comply with the spirit of the scheme, whether for their own perceived administrative convenience or some other economic advantage.

We have made it easy to carry out checks digitally, with no requirement for landlords, letting agents or employers to understand the types of documents renters and employees have. In some cases, it is actually easier to bring a migrant into employment or a residential tenancy agreement than a British citizen. We continue to work closely with the rental sector through landlord representative groups and have recently contacted Citizens Advice for further engagement. A considerable amount of work and thought has gone into this and it is governed under the code of practice, which is on GOV.UK.

The noble Lord, Lord German, asked about the economic impact on lawful migrants entering the country. Employers, landlords and letting agents may favour to employ and rent to British and Irish nationals, who they see as low risk as they do not have time-limited leave and do not require further checks. The lawful migrant may therefore choose not to enter the UK. But the Home Office has published the statutory code—it is on GOV.UK—on how to avoid unlawful discrimination when undertaking checks. The guidance clearly stipulates that employers, landlords and letting agents are advised to provide individuals with every opportunity to demonstrate their right to work or rent. They should not discriminate on the basis of nationality, or any of the other protected characteristics. It is clear that those who discriminate are breaking the law.

Employers, landlords and letting agencies are encouraged to familiarise themselves with the guidance and the statutory codes of practice. It is considered that any indirect discrimination in this limb is justified as a proportionate means of achieving a legitimate aim: operating and enforcing a fair immigration system, protecting taxpayer-funded services and protecting vulnerable migrants from exploitation by seeking compliance with regulation.

I have already dealt with the consultation. However, I should also say that the Home Office is not under a duty to consult but, since the proposals to increase the civil penalties were announced in August, it has undertaken proactive, wide-reaching communications with employers, landlords and letting agents. Home Office officials have supported over 30 forum events as of 12 January and reached over 11,000 stakeholders in the sectors. It is clearly wrong for stakeholders to say they have not had an opportunity to be made aware of the Government’s intentions.

We used an economic note instead of an impact assessment because the costs for non-compliant landlords, employers and letting agents were not taken into account, so the better regulation threshold was not met. Our published economic note shows that a total increase of around £16 million might be expected over five years after higher penalties come into force. This is the central scenario and measures receipt changes for the right-to-work and right-to-rent schemes combined. There is uncertainty on this figure for several reasons, including the number of civil penalties issued and the recovery rate to expect for civil penalties of higher values than seen historically.

On enforcement activity, between January 2023 and November 2023, more than 1,400 right-to-work civil penalties were issued; that is an increase of 40% on the same period in 2022. The value of the right-to-work civil penalties issued was more than £26 million, which is 45% more than in the same period in 2022. Between January 2023 and the end of September 2023, 10,509 enforcement visits took place, of which 4,721 were illegal working enforcement visits. In 2022, 6,865 enforcement visits took place, of which 2,808 were illegal working enforcement visits. Illegal working enforcement visits have increased by more than 40% in 2023 from the same period in 2022.

The noble Lord, Lord German, asked where the funds go. They are collected from civil penalties and are required to be paid into the Consolidated Fund after deductions from processing costs.

I think I have dealt with all of the questions. I have committed to write to my noble friend Lord Lilley on the DWP-related matters. Addressing illegal working and renting not only protects the domestic labour and housing market but identifies unscrupulous employers, landlords and letting agents who exploit vulnerable migrants. Equally, it ensures that only those in the UK legally with permission to work and rent are able to do so. On that basis, I commend these orders to the Committee.

Motions agreed.