Fourth Standing Committee on Delegated Legislation

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Mr. Malins: I welcome you to the Chair, Mr. Forth. I thank the Minister for the thorough way in which he introduced this matter, and also for the letter sent out at the end of last week. I am sorry to see that the hon. Member for Winchester (Mr. Oaten), representing the Liberal Democrats, is not here. Indeed, no one from his party is here to debate this important matter. I do not want to speak at length, but there are some areas of concern that I wish to raise.

The order deals with proposed new fees for immigration applications from April 2005. Nineteen such applications are listed. The first point to note is that some of the fees have risen dramatically. The “Leave to Remain (postal)” fee has more than doubled; it is up from £155 to £335; the premium application has risen from £250 to £500; and the postal student leave to remain fee is up from £155 to £250, which is an increase of more than 60 per cent. We need to probe the Minister a little more about why there are such swingeing increases.

The order gives us a clue as to why the Government have taken these steps. It mentions the recovery of deficits incurred in 2003–04 and 2004–05 and before the date of the order. The Minister has dealt with that matter in very slight detail, and the Committee would like to hear more. What are the precise amounts of those deficits? What is the exact length of time during which they were incurred? Why were they incurred? Does he accept that the Home Office must have been negligent in allowing these deficits to be incurred? Somebody somewhere has made a massive misjudgement. Does he also accept that it appears to many people that the Government are, in a sense, punishing future applicants by making them pay for earlier Government errors? It is essentially unfair that, if there have been Government errors, future applicants should have to pay for them. Why is that the case? The answer to that appears to be: that is one of the Government’s approaches to the deficits.

The Home Office must have been negligent in some ways, as the memorandum to the order refers to

    “deficits incurred . . . as a result of a difference in actual revenue against forecast volumes and costs.”

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Somebody somewhere at some stage got this very badly wrong, and the Minister should tell us, if not who that was, then what areas of the Government were at fault and how wrong they got it. It is right to ask whether others should be expected to pay for the Government’s mistakes.

The Government also referred to

    “the costs of providing an appeals function for those who seek leave to remain or variation of the condition of their leave to enter or remain”.

Curiously, it seems that the Government now expect all applicants, regardless of whether they are going to appeal, to contribute to appeal costs. That is an odd approach. The Government appear to justify it on the basis that all applicants benefit from the knowledge that an appeal system exists. If the Government are really saying that, it is very odd. Let us draw a parallel with, for example, certain parts of the civil law. There, one tends to pay fees as one goes along—there is a fee for the issue of summons, another fee for this or for that, and a fee for an appeal. I have never yet known it to be the case that somebody who takes the first step in a process is expected to ante up in advance for every subsequent stage in that process notwithstanding that they might not use all those stages. Therefore, this is an unusual and unfortunate approach. If there are parallels in the judicial system, I would like the Minister to inform me about them.

We have had a little discussion about students, and my hon. Friend the Member for Cotswold (Mr. Clifton-Brown) was typically diligent in raising constituency matters. Other hon. Friends were equally diligent, including my hon. Friend the Member for Salisbury (Mr. Key); he has taken a serious interest in this matter on behalf of a language school in his constituency. Very properly, he has been in contact with me and expressed not only his own concerns, but those of the language school in question. He is right to have done so.

We need to consider the issue of foreign students. The Minister has, properly, focused on it, and has been as helpful as he could be. However, the Government must take the view that this country should be attractive to foreign students. There is no doubt that we all accept that; one has only to look at comments made by the Prime Minister over the years about the importance of foreign students to this country to know that. The Home Secretary, when introducing his five-year strategy to the House of Commons in February 2005—many of us hope that it will be no more than a five-week or five-month strategy—said:

    “Overseas students make a major contribution, economic and intellectual, to our education institutions”.—[Official Report, 7 February 2005; Vol. 430, c. 1181.]

The Conservative party has always felt that, and the Home Secretary was right to make the point. In a speech on his visit to China last month, the Chancellor of the Exchequer referred to his commitment to promote further expansion of the number of international students and higher education institutions in Britain.

There is a strong argument, agreed by all parties, that foreign students can bring immense value to this country. We have noted, and the Minister touched on
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this issue, that there has probably been a decline in applications from foreign students to the USA since 9/11, and one hopes that the USA has not made them less welcome. I cannot know about that, but there is that issue.

A little earlier, I referred to my meeting with representatives of CMU, which has noted that the number of international students applying through the UCAS system has fallen by 5.3 per cent. CMU is the largest of the university groups, attracts 500,000 students and meets all Government targets on widening participation and quality. CMU graduates equal those of Oxford and Cambridge in employability.

Universities UK has reacted to the Government’s proposals, and in particular to the decision to increase visa extension charges to international students from £155 to £250 for postal applications, and from £250 to £500 for premium in-person applications. Its president, Professor Ivor Crewe, expressed his great disappointment

    “that the Home Office has decided to increase visa extension charges for international students despite . . . strong advice”

from Universities UK

    “that introducing charges at this level could have a detrimental impact on international student recruitment.”

Mr. Clifton-Brown: The point put to me on Saturday by those Chinese students was that because of the time scales involved and their difficulty in having their visas processed, they are pushed into making personal rather than postal applications. So their costs will be increased even more.

An example was given of a course, part of which is given in Holland. They said that they would not be allowed entry into this country until they had obtained a Dutch proof of identity. Proof of identity takes so long in Holland that they would virtually not have the time to get to the beginning of their course in this country. Some of our entry requirements for such students are very difficult.

Mr. Malins: My hon. Friend makes a good point. I am glad that he does not urge me to discuss Holland more, as I was in Amsterdam for a particular event only a fortnight ago—but I shall say more about that on another occasion.

The president of Universities UK was right to express his disappointment. He has said that the matter should be kept under review. That is very important, and I urge the Minister to take it on board. Professor Crewe also said:

    “We have therefore called for a full review of the impact on international student recruitment before the end of this calendar year. It is particularly important that, if the adverse effect of higher charges is what we predict, the Government should undertake to look again at the level of charges.”

The Minister must be able to give us that sort of assurance this afternoon, because he and I, as representatives of the Government and the Opposition, both recognise that international students are important to this country in many ways apart from the financial benefits that they bring. I refer to the long-term friendships and the long-term spread of the English language, what we give to them and what they
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give to us. Our high standing in the world is in no small part due to the widespread use of English, which partly results from the welcome that we give to foreign students, who make lifelong friendships with this country and, more importantly, with the individuals in it. Such relationships go beyond friendship because, over the years, they turn into trading and business relationships, which are economically good for us all. We would all regret it bitterly if the Government were to do anything to set back that process.

Members of the university student world in this country are right to raise their concerns, which I share, with the Minister. I look to him to give us positive assurances, if he is able to do so, particularly on the issue of review. I know that my hon. Friends the Members for Cotswold and for Salisbury, and others on our Benches who have expressed concerns to me on behalf of language schools on the south coast and elsewhere, will be interested in some positive assurances from the Minister, particularly on the question of keeping the matter under review. Will he undertake to reconsider this matter if international student numbers start to drop and to establish whether that drop is due, even in small part, to his policies? If that is the case, he may well need to review them.

5.12 pm

Mr. John Grogan (Selby) (Lab): I thank the Lord Commissioner of Her Majesty’s Treasury, my hon. Friend the Member for Nottingham, East (Mr. Heppell), for suggesting that I should be on this Committee. I know that he is a strong believer in parliamentary scrutiny. Presumably, he asked me to be on the Committee because it came to his attention that I signed early-day motion 281 against international student visa charges and he wanted to increase that parliamentary scrutiny. I intend to do that by raising a few questions about student visa and other charges, which reflect my scepticism about the order.

It was helpful of the Minister to send out the document on the draft order and the analysis of its potential impact. Obviously, it is impossible to examine all the methodology behind that in the short time available, and one would need the full report to do so, but I have some points to bring to the Committee’s attention. If one accepts the figures, there will be an £11 million reduction in fees from international students, but that is concentrated in sectors such as the English language and further education sectors, for which there will be a 4.8 per cent. reduction and a 3.5 per cent. reduction in leave to remain applications respectively.

We have heard a lot about the value of English language schools in attracting students who become prominent in business and politics in their countries, yet, on the Government’s own analysis, that sector will be hit particularly badly. The analysis relates to international students who are undertaking a year of study in higher education, but some students will be completing a year of study not in higher education, but in further education or in English language schools. It is likely that the cost of tuition fees for such courses
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will be much lower than those for higher education, so the increased charges will be a much higher proportion of their total budgets.

I hosted a reception for the Rose of York English language school only two weeks ago. There were a number of students there, including one from Turkmenistan who had saved up to come on a course. His budget was certainly nothing like £13,000—it was just a few thousand. The charges will affect the different sectors of education in a different way, and English language schools, all of which do such a great deal for our nation, will be particularly badly hit.

It is also worth noting that, compared with other major English language countries such as Australia, Canada and New Zealand, our costs tend to be at the higher end of the range. I, too, support the calls from the vice-chancellors on that point, and it is interesting that the vice-chancellors and the National Union of Students agree on that, because they have not always agreed in the past few years. If the order goes through, an early review of its impact would be most welcome.

I intend to touch on various other aspects of the fee rises, and I have three points for the Minister. First, it is interesting that the proposals make no distinction between the length of time that people are permitted to remain. Is that entirely fair? For example, a person with an immigration employment docket would normally be allowed to remain for four years, while a domestic worker would be allowed to remain for only one year and would have to renew the permission each year, at a cost now of £335 each time. A doctor or dentist in training may be given only six months at a time, but all will pay the same fee whether they are here for four years or six months.

Secondly, there is the question of the fee for transferring an endorsement of indefinite leave to remain to a new passport. That is a simple administrative task that can be done in about one minute. The fee of £155 is high, and there is also a premium fee of £500. The reason people transfer their endorsement of indefinite leave to remain to a new passport is because they have to satisfy airlines about their right to return to the UK. If there is an emergency—perhaps a death overseas—and someone has not renewed their passport, they will face paying £500, which is a high fee.

Thirdly, the Home Office has raised the fee for travel documents for those who are granted exceptional or discretional leave to remain from £67 to £195, which is nearly three times as much.

Mr. Malins: I am listening carefully to the hon. Gentleman’s argument, which he makes well. Does he agree that one possible side effect of the proposal for a fee to encompass the appeals process is that there may be a series of frivolous appeals? Someone may think that, as they have paid the fee, they might as well make an appeal, even if it is not justified.

Mr. Grogan: That is an interesting additional point, which the Minister may touch on in his reply.

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In conclusion, will the Minister comment further on the order’s impact on students, in particular in the English language sector, and on the effect of the large rise in fees?

5.18 pm

Mr. Browne: I am grateful to my hon. Friend the Member for Selby (Mr. Grogan) and the hon. Members for Woking and for Cotswold for their contributions, which have identified some of the important points relating to the fee proposals. To the extent that I did not address those important points earlier, I shall endeavour to answer them now.

I want first to point out that I may have inadvertently misread a part of my notes for my introductory remarks. I might have said that we had received 482 leave-to-remain applications; I meant to say that we had received 482,000 such applications between August 2003 and July 2004. I am sure that hon. Members were aware of that slip and probably filled in the gap for themselves.

Mr. Malins: That gaffe is nothing like the one that I once made on the Front Bench. In a major debate in the Chamber more than three years ago, I castigated the Government for the fact that there were 45 asylum applications still outstanding, forgetting to mention the word “thousand” afterwards. I got away with it, and I think that the Minister is in less trouble than I was then.

Mr. Browne: I am grateful to the hon. Gentleman. I shall find the relevant Hansard reference and keep it in my back pocket in case I need it on another occasion, but I shall stop this sharing of admissions of error at this point.

I want to say at the outset that I am grateful to the hon. Member for Woking for his comprehensive explanation of the advantages of the sort of policy on international students that we have developed in the past 10 years or so. It is, for the sake of this country’s economic and cultural potential, a development that is to be celebrated. I trust that any Government who may develop immigration and asylum policy will not put an arbitrary ceiling on the relevant figure, but that numbers will be subject to just the sort of review that the hon. Gentleman encouraged me to conduct on fees.

We need to be quick on our feet in this country, both in the education establishment and in matters of Government policy, so that we can take advantage of the opportunity that has been created by the growth of the middle classes in some countries—particularly developing countries—who want their children to be educated, and educated in English in particular. That is a big opportunity for the United Kingdom, and it would be a significant failure if the Government were not to take advantage of it.

Perhaps now, on the matter of the review and the taskforce, I can put more flesh on the bones of the remarks that I made earlier. At the time of the announcement of the five-year strategy, the Government also announced a new joint taskforce for the review of charging—exactly the thing that the hon.
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Gentleman is encouraging the Government to undertake. Its intention is to support the implementation of the five-year strategy and it will have representatives from the education sector and other stakeholders. Indeed, it will be chaired by Alan Bucknall, who is a customer services director of managed migration in the Home Office. Other taskforce members have not yet been identified, but we are keen to work with representatives of the education sector, and other key stakeholders, in that taskforce. Invitations to join it will be issued shortly.

The purpose of the taskforce is better to understand the needs of international students and to identify ways in which the Government and the education sector can help each other to work to achieve further improvements in the service, which is in everyone’s interest. The review will support the implementation of the five-year plan, by considering the fee structure for leave-to-remain applicants and appellants, with particular focus on international students. The group is distinct from the student taskforce that was set up last year internally in the Home Office to tackle abuse of the student migration route. I hope that that further information reassures the hon. Member for Woking and other hon. Members that we shall indeed do just what they encourage us to do.

The hon. Gentleman asked me to put a figure on deficits, and I am pleased to be able to say that I can do so. In the years 2003–04 and 2004–05, £21 million of deficits were incurred. It is intended that £15 million of those deficits should be recovered in the new fees. The element of that amount that relates to students—as I explained, we are not cross-subsidising—is not being recovered. The £6 million is not being recovered from students so that we can depress the fee for students, for the very reasons that we have been debating at some length.

The hon. Gentleman also asked how the £15 million was arrived at. It came about because the fees were fixed in anticipation of volumes of applications that turned out to be lower than forecast. As hon. Members will know, the charging of fees in this fashion began in 2003 and there was no significant history to refer to. There were significant changes in the value of the dollar in the period in question, and the American experience generated the depressive effect of the movement of students from certain countries.

It is obvious that we need the fees to cover all costs that directly support the service provided, if it is to be self-financing. There has been under-forecasting in leave-to-remain applications for dependants, and deficits have consequently occurred, but these assumptions were based on costing assumptions that were relevant at the time, and the best possible business data and forecasting information were used. We have deployed the best that is available in order to set the fees, but we have set up the review to see whether we have got them right and to make recommendations. We will touch the tiller and make changes if the effect of the increase is significantly more adverse than we anticipated.

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Mr. Clifton-Brown: Surely the Minister has just proved what the Opposition have been saying all along in this Committee: namely, that if we increase fees, we reduce the number of students who come here. When the fees were introduced in 2003, the number of students dropped and this caused a deficit. The Minister is increasing the fees again, so I would expect the number of students to drop again. Does that mean that he will still incur a deficit, even with these increased fees?

Mr. Browne: These increased fees have been based on the calculations that I have shared with the Committee, and on the methodology to which my hon. Friend the Member for Selby referred. That methodology is summarised in the letter that I circulated, and is available in its greater form to all hon. Members if they seek to follow up their references in the light of what I have provided.

It is part of the calculation, and part of my argument, that a reduction in the number of leave-to-remain applications is expected as a result of this increase in fees. The question is whether that reduction will be proportionate to the good that recovering the fees will allow us to do for the students who do come here. Other factors, however, have also affected the reduction in numbers in the period to which I referred. They do not all relate to fees increases, but we must try to isolate the factor over which we have control from the other imponderables. Some factors may be imponderable. For example, what will happen to the value of the dollar in the next couple of years? What opportunities will there be, as the hon. Member for Cotswold asked, for students to go elsewhere? Interestingly, the number of undergraduate students applying to come here has increased consistently year on year. That is not, however, what we are talking about today.

Several factors are at play that all affect the different decisions that students take, and we should not try to simplify cause and effect in relation to leave-to-remain fees. I do not believe that the increase in fees alone has resulted in a reduction in student numbers. The figures that I have already shared with the Committee show that those in further education—and these are people in further education—pay in any event for their tuition and for the cost of living in this country, and we should bear in mind the fact that a significant number of them come from the developing world.

Importantly, we worked with universities, colleges and those who advise students abroad to ensure that more applications reflected the total length of time for which students would be in the UK, and we have seen an increase in the number of applications that accurately predict the length of time for which a student needs leave to be in the UK in order to complete their course of study. That had an effect on the number of those who needed to apply for leave to remain in the country.

The most significant thing that we can do for students, when it is comparatively cheap for us to process the application, is to get them to make an application for entry clearance for the length of time that they really need for the whole of the course that
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they are going to undertake. They are getting much better at doing so, which, as I said, has had an effect on the number of applications for leave to remain, which we could then anticipate.

Mr. Clifton-Brown: I am sorry to be tiresome, but this is important. When students come to the UK to do an undergraduate course, many of them have no idea whether they will like the course, whether it will be suitable for them or whether they will want to stay on for a postgraduate course. The greatest benefit to this country is to ensure that the brightest of those students stay on to do postgraduate courses. It is a great pity if the fees deter them.

Mr. Browne: I accept the hon. Gentleman’s point. However, I am sure that he listened with care to the contributions of my hon. Friend the Member for Selby and the hon. Member for Woking. By no stretch of the imagination are all those who apply for leave to remain in the country postgraduate students. The figures can be significantly affected by people who come here and sign up for comparatively short language courses when they should, in fact, seek leave to remain in the country, or entry clearance to come to the country, for longer. They should work out the cost of their undergraduate or further education much better than they did in the past, when it was simple for them to apply for leave to remain once they were here, but expensive for us.

We are encouraging students to apply for leave to remain in this country for the full duration of the courses of study on which they embark. By definition, nobody can contemplate entering a postgraduate course until he becomes a graduate, or at least until there is some indication in the later stages of his education that he is likely to become one. One of our reasons for setting up the joint taskforce was to enable us to become much more adept in charging fees and giving advice to reflects people’s needs. We do not have the basic information on which to be able to make such decisions, but the hon. Member for Cotswold can rest assured that some of the fee income will be invested in doing work in that area.

I deal now with appeals. The hon. Member for Woking said, and sought to reinforce his point in an intervention on my hon. Friend the Member for Selby, that it seems strange to charge everybody for the cost of the appeals system. He suggested that we might encourage frivolous appeals. At the moment, we do not charge a fee for appeals so there is no reason to think that in a future environment in which we do not charge fees for appeals, any more people will appeal than do at present.

I have made it clear that I have some sympathy for the argument that those who appeal should pay for the appeal process. The problem is that the process is currently so expensive that we would have to charge £1,700 for each appeal. That would be prohibitive in view of the circumstances of the students, which hon. Members have so helpfully described to the
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Committee. It would, in effect, be to tell those people that they will not be able to afford it, so there should not be an appeals system.

Our consultees were not quite evenly split, but there were approximately as many opposed to charging fees for appeals as there were to what we decided to do. I have decided to go with the proposal to reconsider the subject of appeals. Recognising that from April we will have the advantage—for which we legislated in 2004—of a single appeal system, I hope that we will be able to work through the issue. The intention is that a single appeal process will be much less expensive. What I have not done has been to factor into the calculations on the deterrent effect of fees, appeals and all the rest of it what agents, including lawyers, charge for advice in this area. I venture to suggest that if we add that to what students and others pay in order to come into this country or to appeal, the fees will become an increasingly diminishing percentage of what people are prepared to spend.

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