Immigration and Nationality (Fees) Regulations 2014

Baroness Smith of Basildon Excerpts

Monday 24th March 2014 Grand 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.

--- Later in debate ---

[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.

[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 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.