Draft Consular Fees Act 1980 (Fees) Order 2002

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Mr. Michael Moore (Tweeddale, Ettrick and Lauderdale): I want simply to add a few points and echo comments about the quality and nature of the work done by consular staff throughout the world. In particular, I pay tribute to immigration practitioners and the points that they have made in anticipation of today's debate.

I make one small plea to the Minister on a subject that comes up regularly whenever we debate statutory instruments or similar legislation that concerns Scottish issues. We now have a model from the Scottish Parliament of explanatory notes running to two or three pages of plain English, describing usefully

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what the instrument is about. I do not wish to cast aspersions on the Minister or his officials over the nature of the explanatory notes before us, as they are in the style of many in the House, but I urge them to examine what happens in the Scottish Parliament and perhaps to introduce it as a good bit of modernising practice.

Questions have been asked about the nature of the deficits and how far they go back. The Minister has answered them and will get a chance to clarify in due course, but I did not hear him comment on what he thinks future deficits would be without the increases. That is as relevant to the period until the order expires as it is to the past deficits that the fees will try to recover—there is clearly a continuous deficit problem to resolve.

The Minister also mentioned in passing that some of the income would be used to fund the purchase of new computers and equipment, which adds a new element to the process. To what extent will the fees increase fund additional improvements in the service as much as deal with current consular work? It has been common to talk about efficiency savings; will he mention that in explaining how future deficits might be dealt with?

Other orders concerning passport fees have been discussed. Although I appreciate that that is not why we are in Committee today, the accounting of cost recovery for passports and visas must be closely interrelated. Will the Minister clarify how the two are costed and separated so that one does not cross-subsidise the other? In so doing, will he specify to what extent other Foreign and Commonwealth Office costs are added to that calculation? To what extent does the cross subsidy involve, for example, part of the entertainment budget of other parts of embassies or high commissions? I use that example simply to get the Minister interested, but it might relate to some of the large increases. Finally, although this point is not directly relevant to the order, will the Minister say when he expects an announcement on passport application fees—or does he intend that they will stay fixed for some time?

4.49 pm

Michael Fabricant: I, too, add my message of admiration of the work done by consular sections on visas. I travel extensively on private visits and am conscious of the delicate work that they undertake, not only in having quickly to award visas but in trying to determine whether a visa application is bogus. I repeat the question of my hon. Friend the Member for Rutland and Melton (Mr. Duncan): given the large increase in fees, will those incurred for unsuccessful applications be refunded? If the total fee were refunded, that would be no disincentive to constant bogus applications from people wishing to enter the UK unlawfully. However, could a proportion of the fee be refunded to those who make genuine applications but who are subsequently turned down?

As my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) said, the increase in fees

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from £8 to £88 and £25 to £75 may not be significant to people in the first world—particularly Switzerland—but represents a large percentage of annual income to those in other parts of the world. The discrepancy between the income of the rich and poor has widened over the past few years, as has that between the value of currencies. My hon. Friend the Member for Rutland and Melton mentioned the rupee; the Indonesian rupea has fallen hugely in value. The value of the South African rand has also decreased.

The Minister and my hon. Friend mentioned the excellent work of the ILPA, which makes a powerful point on the issue. It says:

    ''It is arguable that a disproportionate increase could also be considered indirect racial discrimination, as it will be mainly people of Asian origin who are affected. By contrast, £50 or even the £75 proposed for a work permit holder is much less onerous proportionately, as is the £50 for a working holidaymaker or an au pair or student.''

My hon. Friend's point about the utility value of money is therefore important. Have the Government considered a scale of fees proportionate to the country to which they apply? The Minister rightly said that Britain is an attractive place to visit, but people have to be able to afford to apply to visit it. What might be an inexpensive application in some countries will be an expensive one in others.

When the Minister generously gave way to me earlier, I asked him whether the fee increases will cover the £4.7 million deficit by 2004, when the order expires. He answered that the Treasury and other bodies had done considerable work on the issue, but he did not answer my question more rigorously. I therefore now ask what modelling the Treasury or the Foreign Office have undertaken to give assurance that the £4.7 million will be recovered. What assumptions have been made about the elasticity of demand? In the light of the increases—11-fold in one case—the Minister surely cannot assume that the amount of demand will remain constant. The gesture he has just made seems to indicate that he will not. What assumption therefore underlies his revenue projections, and what is the elasticity of demand? How are the projections divided between various parts of the world, particularly between the first and the developing world?

The Minister spoke about rising costs over the next two or three years, but what costs will be rising? He is right to identify the importance of new technology, but how much will costs increase in that respect—by 10 per cent., 20 per cent. or 50 per cent? The Committee needs an answer today if we are to believe his projections about fee increases in the next two years.

What will happen after 2004? What if the £4.7 million is not recovered? What projections has the Minister made about that? He may not be concerned—I know of his good strong connections with Switzerland—but people in South Africa, Indonesia and other countries in the developing world will be interested to hear what he has to say. Because of its education and other facilities, Britain is an attractive place for people in the developing world. The Minister should accept that we have a duty of care

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to that world, but it cannot be realised if people who could benefit so much from coming here are prevented from doing so because the fees projected today become far higher than any of us first anticipated.

4.56 pm

Mr. MacShane: I shall try to put all the answers together because of overlapping questions. For the sake of clarity, I want to make it clear—and apologise for my pronunciation—that the five-year, multiple-entry visa will increase from £80 to £88. In the old days, when communists trained their people to speak, they said that the last syllable should always be heard so that everyone would pay attention. Generally, the fee increases are in the order of 8, 9 or 10 per cent. The major change is the long-term, non-settlement visa, which goes up from £50 to £75. In my eight years as an MP in Rotherham, which has a substantial Pakistani community, I have never heard one complaint or protest that the level of fees deterred people from settling or visiting here.

The fee is a worldwide, standard fee; it does not vary from country to country. That makes the most sense administratively. The fee is payable because of the process of the application. It is not dependent on the success of the application. The same amount of work—a great deal—is involved, so the fee is not refundable and applies per applicant rather than per family.

Mr. John Randall (Uxbridge): Will the costs of processing be the same worldwide, or different owing to the different standards of pay that different local populations receive?

Mr. MacShane: That is an interesting point, but it needs to be debated with the Treasury. The United States has a single fee for processing all applications, but the cost of a visa to enter varies from country to country. We could examine that further in future, but a standard fee worldwide makes the most administrative sense.

Andrew Selous: Will the Minister give way?

Mr. MacShane: If I may continue, I was also asked whether the increase in fees would be held within each embassy or high commission. The answer is no: this is a global recovery process.

Another question was where we would be in 2004 if the full £4.7 million deficit had not been recovered. The answer depends on the increase in demand to visit the United Kingdom. Up to September last year, the year-on-year increase had been running at about 9 per cent. That shows how popular Britain has become under a Labour Government.

To answer the question about the calculations that justify the measure, the basis of the deficit reduction in the order is that, if there is a 3 per cent. increase in demand for visas, the entry-clearance operation will remain in deficit by about £1.5 million. However, if the figure goes as high as 7 per cent., there will be a surplus of £1.6 million in 2003–04. We are therefore taking the middle road of a 5 per cent. increase in demand, which will clear the deficit.

Andrew Selous rose—

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Mr. Duncan rose—

Mr. MacShane: Two hon. Gentlemen want to intervene.

Andrew Selous: I should like to press the Minister again on cross-subsidisation, especially in the light of the comments of my hon. Friend the Member for Uxbridge (Mr. Randall). Does the Minister think it fair and right that a visa application should cost an applicant from, say, New Delhi in India several months' wages, whereas someone applying to the embassy in Washington would probably be looking at a day's pay? He talked about cross-subsidisation, and the point made by my hon. Friend is extremely valid. It will not cost as much, particularly if local labour is used, to process a visa application in New Delhi as it will in Washington. I am most concerned to hear that there will be differences in the amount of money and about the effect on the earning power of applicants in different parts of the world. Will the Minister be kind enough to respond to that point?

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Prepared 11 June 2002