Passport (Fees) Regulations 2018

Lord Stoneham of Droxford Excerpts

Thursday 15th March 2018 Grand Committee

[Lord Stoneham of Droxford (LD)]

My Lords, I thank the Minister for her explanation of these regulations and we are broadly supportive of the idea, in particular the move to online and the proposal for a price incentive to encourage people to apply in that way. I am sensitive to the concern about people who do not have online access, but I expect that the Government will take appropriate action to make sure that they are supported.

I wish to make three points. First, if this was the private sector, one would have peak and trough pricing. I should like to know what the peaks and troughs for passport applications are. In the summer there are always problems when people want to renew their passports, and presumably there is a lull in the winter when fewer people are travelling. One of the costs to the public sector, that of retaining peak staffing, could be assuaged if more people are encouraged to apply for their passports when the demand is lower. Have the Government considered that and are there great peaks in the workflow?

Secondly, while I understand that people must pay the cost of issuing a passport, what proportion of the costs of maintaining our borders and our consular activities overseas are we aiming to meet through passport renewal? We all know that there is a national interest in our borders and in having consular services overseas because they perform other functions besides looking after British passport holders, so obviously a key proportion of the costs of those services should come out of general taxation rather than simply being met by people who apply for passports. What proportion of the costs of these services will this measure contribute and what is the Government’s ultimate aim here?

Finally, one thing that Brexit will do is to increase the cost of our borders because it will require extra people to man them. Are those renewing their passports going to have to pay for the cost of Brexit or will it come out of general taxation? My view is that it is the Government who are creating this extra cost; they should therefore pay for it out of taxation. They should not be trying to put the extra costs of Brexit on to those who apply for passports. We should not forget that the economy benefits hugely from tourism so it is in our interest to improve the current border controls, which many people regard as slow and inefficient. What are the Government doing to make improvements in, for example, the flow of people through our border controls, which I am sure they have an interest in since they are now seeking an additional source of revenue to pay for them?

[Baroness Williams of Trafford]

I thank both noble Lords for their questions. I turn first to the contribution of the noble Lord, Lord Stoneham. He asked about peak and trough pricing, but then suggested that the extra costs of maintaining the border should be met through general taxation. We have considerably improved the technology and intelligence around our border and we think that we will be able to meet any additional burdens created through Brexit. The fees application regulations before us are not about Brexit; they are about putting in train something that was decided in the Immigration Act 2016, and thus I think before Brexit was even a twinkle in the general public’s eye.

As to what proportion of money will go to the border, we expect that about 40% of the current full cost to the Home Office of UK passengers leaving and entering the UK will be funded by passport fees after these increases. We did consider peak and trough schemes, and looked at variable pricing, but the cost of that would outweigh the benefits.

[Lord Stoneham of Droxford]

Why?

[Baroness Williams of Trafford]

That was the analysis—the costs would outweigh the benefits of doing it.

The noble Lord, Lord Kennedy, asked about the £12.50 increase. That of course is for the paper application. The analysis shows that a premium service is more expensive, paper being not the cheapest way to deliver passports or indeed other items. That is reflected in that fee increase. As for full-cost recovery, the noble Lord and I have had many an exchange on such local government matters. He asked me to take it to MHCLG. I will, but I suspect the reason for not having full-cost recovery, as with all local government things, is so that things do not become overpriced. MHCLG always sets them under full-cost recovery, but I shall certainly take that back.

The noble Lord, Lord Kennedy, also asked about digital inclusion, particularly for poorer people and people without access to libraries. The Government totally recognise this point. The digital strategy uses 3,000 libraries across England to provide a trusted network of accessible locations with trained staff and volunteers, free wi-fi, computers and other technology. In addition, people can use a friend’s or colleague’s computer to do this. Just because you have not got a computer in your home, that does not disfranchise you from applying online.

I reiterate my support for the noble Lord, Lord Kennedy, about being charged at cash machines. It is something that really irritates me. I accept that sometimes the only cash machine in a location is a paid-for one and that some of the fees really are quite outrageous. I think that is about it. Have I answered everything or does the noble Lord, Lord Kennedy, want to come in?

[Baroness Williams of Trafford]

I concur with the noble Lord.

[Lord Stoneham of Droxford]

Before the Minister sits down, can I go back to the two points I raised? I would like to see the peaks and troughs, and presumably monthly figures are available. I would be quite interested to see them. Secondly, I do not think that the Government should easily be able to get away with the assumption that there is no cost from Brexit when it comes to border controls. That is almost fantastical and I do not think anybody would believe it. It would be useful to know how many of the 130 million people going through our borders actually have EU passports as opposed to UK ones. We know the quantity of people who are doing that. I go back to my original question. If you assume that passport renewals will pay for 40% of the border costs and if the costs go up because of Brexit, does that mean we will have higher proportionate passport renewal costs over time in order to keep to that percentage?

[Baroness Williams of Trafford]

I cannot answer some of those questions but I know that HMPO will have done an analysis of the figures. I was trying to say, but I do not think I was doing it very articulately, that we have a variety of technological, intelligence and other methods of predicting people crossing the border and of looking for the needle in the haystack, which is the person who is crossing the border illegally or someone who might be on our watch list. Our technology and intelligence have improved significantly. We have e-gates and other methods such as heartbeat monitors at the border. I do not disagree with the noble Lord that volumes might go up, but we have better methods of predicting and detecting illegal crossings of the border. On the other point about numbers, I will write to the noble Lord.

Motion agreed.

Committee adjourned at 3.26 pm.

Economy: Growth

Lord Stoneham of Droxford Excerpts

Thursday 21st June 2012 Lords Chamber

[Lord Stoneham of Droxford]

My Lords, the essential task and purpose of the coalition is to reduce the government deficit and restore growth. The nature of our partisan politics exaggerates the differences between the Government and the Opposition. Divisions also lead us to overlook what the real dividing lines and problems are. The biggest problem is that the big drivers of the economy between 2000 and 2009 were private borrowing and public spending. Tim Morgan in a recent publication The Quest for Change and Renewal shows that growth in construction, real estate and finance sectors was 42% and growth in health, education and public administration was 28% while the rest of the economy was languishing at -5%, and the real output from manufacturing was plunging by 26% to remain at 12% of GDP.

This suggests that a huge proportion of the economy is currently incapable of growth due to the overdependence on sectors relying on private borrowing and public spending. It is not surprising that we are having difficulties finding a way out. When combined with the huge explosion of private household debt, which individuals are now rebalancing as precautionary motives take hold, it is not surprising that growth remains illusory. There are no short-term fixes.

I want to address my remarks to the importance of the housing sector to restoring growth, and I declare my interest as chair of Housing21. Housing is a great driver of growth. One new house adds at least one new job in construction and two-and-a-half to three jobs with all the associated purchases in the economy. Twenty per cent of the output of housing is sourced through manufacturing. One of the great disappointments of the previous Government is that, despite the boom they created, only 233,000 houses were being built at the top of the boom, and the number has now fallen to below 100,000.

Housing is very cyclical. As demand rises, it soon reaches supply constraints, not just land, but the capacity of the industry to build quickly and cheaply enough. We need to improve capacity. This is a long-term, not short-term, task. A recession and its economic difficulties are often the best time to achieve change in business and to prepare businesses for the future. No good will come if we simply cut back capacity by reducing cost in the short term. Housing has a huge impact on the wider economy and our social objectives. The noble Lord, Lord Best, my friend and colleague in the housing sector, always uses the example of building 100,000 retirement homes. This not only enables 150,000 people to move to more suitable accommodation, but assists 350,000 people to move to the larger accommodation that is released by those moves, and there are associated benefits in savings on health and social spending and in family morale, not to ignore the economic spending as new homes are set up.

There is growing awareness of the importance of housing in the recovery from the previous equivalent economic catastrophe between 1929 and 1932. Recently this has been highlighted in a CentreForum publication by Nick Crafts and in a speech earlier this week by Vince Cable. Those of us brought up on Keynesian teaching all assumed that recovery at that time came from New Deal economics and rearmament. No it did not. They had a devaluation of 25%, which helped, as now. They followed an orthodox fiscal policy of getting the deficit down. Debt at that time was 180% of GDP, and the servicing costs of that debt were 8% of GDP against 3% now. They followed a policy of cheap money. Interest rates fell from 10% to 1%. The only real difference in the 1930s was that then there was no banking crisis and no credit crunch. In addition, there was a network of mutual building societies and locally facing banks ready to fund mortgages at low interest rates. The Government remained in fiscal balance from 1929 throughout the 1930s and from 1932 the economy started to grow by 3% per annum until the end of the decade, and one of the drivers of that was the doubling of housing development to 300,000 houses a year using cheap money.

What can the Government learn from this and what can they do? There are three lessons and five actions. Institutions must start to lend again so that housing borrowers can take advantage of low rates. Confidence has to be rebuilt. A continuing expectation of low rates is essential to the private sector but also important to housing associations and councils. The role of the state, both nationally and locally, must be in partnership with the private sector to incentivise and indeed leverage recovery using the strengths of its own balance sheets without necessarily adding to the deficit.

Turning to the actions required, housing strategy must encompass all forms of housing and not be preoccupied with owner-occupation, as important as that is. There is a huge need for more private rented, affordable and social housing. Partnership activity between the sectors lowers costs and risks and enables flexibility at the margins when houses that cannot be sold can be rented or used for social housing. Keeping housing in silos encourages social apartheid and raises the cost of housing provision. Mixed developments help cross-subsidisation of social housing.

The Government should consider using quantitative easing measures to directly benefit housing development rather than simply improving the balance sheets of banks. A 1% easing of interest rates could lower the cost of financing housing by 20% to 25%, which is very significant over a 30-year repayment period. It could also reduce the need for subsidising social housing directly. Housing associations are already forsaking banks for bond issues to finance their developments. Examining new sources of funding could facilitate more development.

Not enough progress has been made, despite promises that it was going to be, in sourcing pension funds and institutions looking for suitable long-term investment providing real returns, particularly in private rented housing. Certainty on rent policy and even the development of government guarantees would be better than direct government investment. A whole series of government schemes already provides very significant funding: the Growing Places Fund for infrastructure; Get Britain Building for development finance; freeing up public sector land initiatives; the New Homes Bonus. We have to push on these but we must be prepared to consider that we might have to spend £1 billion to produce 40,000 to 50,000 homes if all else fails.

Finally, as I said in the housing strategy debate I initiated earlier this year, the Government need to be ambitious. There needs to be a housing tsar in government to galvanise the private, public and voluntary sectors to drive these policies and to raise our sights from building 100,000 homes this year—if we are lucky—to over 200,000 in 2015.

I always thought it was that great liberal Conservative Harold Macmillan who broke the 300,000 homes ceiling in the 1950s. Actually it was done in the 1930s and, if I dare to say so, it was probably one of the reasons why that one-nation Conservative Stanley Baldwin formed the Government after 1935, despite the great crash in 1929.