Joint Committee on Statutory Instruments Fortieth Report



APPENDIX 1

Memorandum from the Foreign and Commonwealth Office

CONSULAR FEES ORDER 2002 (S.I. 2002/1627)

  1. The Committee requested a memorandum on the following point:
  2. Explain the reasons for the increase in fees for entry clearance for settlement and for marriage (from 240 to 260) and for any other purpose (from 50 to 75).

    Background to fee increases

  3. The entry clearance operation is not funded from general taxation. It is required by Treasury to operate on a full cost recovery basis. However, in the financial year 2000/01, the global visa operation did not recover its full costs. This was caused by (a) rising costs overseas, (b) changes to internal Foreign and Commonwealth Office costing methodology which led to the re-basing of entry clearance costs, and (c) the financial impact of changes in the Immigration Rules introduced in October 2000, which reduced income and led to additional resource costs. The deficit amounted to 3.3m in 2000/01 and at the time of the fee increase was expected to rise to a 4.6m cumulative deficit in 2001/02. This figure has now been revised in the light of latest estimated information (including a drop in applications following 11 September) to reflect a cumulative deficit in the region of 7m.
  4. A breakdown of income and costs since the last fee increase in 1995

     

     

     

    1995/6

    1996/7

    1997/8

    1998/9

    1999/00

    2000/01

    2001/02

    (estimated)

    Income (m)

    42.1

    57.0

    63.5

    67.5

    71.2

    77.0

    77.4

    Costs (m)

    46.1

    60.2

    64.4

    67.6

    71.1

    80.3*

    81.2*

    Applications

    (millions)

    1.35

    1.55

    1.5

    1.5

    1.55

    1.79

    1.88

    *Includes adjustments for gratis visas

    Source: 2001 FCO Departmental Report

  5. A number of alternative options were considered to recoup the deficit and return the operation to a self-financing state, including that of reducing costs. However, operational pressures, including a rise in demand of around 6.5% this year, meant that UKvisas, who manage the entry clearance operation, could not cut costs sufficiently without affecting their ability to deliver a good service to applicants and seriously undermining their ability to deliver their public commitments. UKvisas has embarked on a wide ranging modernisation programme, including streamlined processes and improved IT, which will help visa sections make better use of resources and reduce costs. But these measures alone will be insufficient to tackle the deficit.
  6. Therefore fees were increased in July 2002 to enable the operation to return to full cost recovery by 2002/03 and cumulative recovery by 2003/04. Permission to recover the past deficit was obtained through an affirmative order under Section 102 of the Finance (No.2) Act 1987.
  7. The table below summarises the fee increases: -

     

    Visa Category

    Fee before July 2002

    Fee from July 2002

    % increase

    Standard Visit Visa

    33

    36

    9%

    5 year Multiple Entry Visit Visa

    80

    88

    10%

    Long Term Non-Settlement Visa (visa for any other purpose)

    50

    75

    50%

    Settlement Visa (incl. Marriage)

    240

    260

    8%

    Reasons for specific increases

  8. Prior to the July increase, visa fees had not been increased since 1995. According to Treasury figures, at the time of the increase, cumulative inflation since 1995/96 stood at over 16%.
  9. A general fee increase of 8%-10% was therefore below inflation and within UKvisas' Service Delivery Agreement ("SDA") with the Treasury not to increase visa fees in real terms above the 1997 baseline.
  10. Moreover, applicants now get better value for money. Since October 2000 the standard visit visa has permitted multiple entries rather than a single entry during its period of validity. It is still cheaper at 36 than the former 6 month multiple entry visa, which provided the same level of service at a cost of 45.
  11. The cost differential of processing a settlement entry clearance application as opposed to a non-settlement application is due in large part to the time involved in the assessment process. Unlike other entry clearance applications it is a mandatory requirement to submit a wide range of documentation in support of an application for settlement and these need careful consideration. For example, these include evidence of the sponsor's financial, employment, housing and marital status. Additionally, evidence of the legality of previous divorce, claimed relationship to minor applicants and the personal/domestic circumstances of the applicants may be required. Evidence that a claimed relationship continues to subsist may also need investigation. It is essential that any evidence of reluctance/coercion on behalf of an applicant or sponsor to accept the other party be investigated to safeguard the welfare of all concerned. We are duty bound to ensure that not only are the requirements of the Immigration Rules met, but that our responsibilities to both applicants and sponsors have been discharged. There are few shortcuts to any of this, hence the higher cost of processing these applications. At 8%, the increase in fees for settlement visas (including marriage) is lower than the increase for standard visit and 5-year multiple entry visit visas, as well as being well below cumulative inflation.
  12. The increase in fees for long-term non-settlement visas (entry clearance for any other purpose) is substantial. This increase reflects the fact that these applications are expensive to administer. They create a relatively large workload for Entry Clearance Officers, requiring in-depth interviews, consideration of complicated and lengthy supporting documents and the assessment of people's skills and abilities. Some applications require mandatory referral to the Immigration and Nationality Directorate of the Home Office or other follow-up action such as local or UK enquiries. In addition the scope of the long-term non-settlement category is widening. The higher fee reflects these costs, and is within UKvisas' SDA commitment. However, the new fee of 75 will still not meet the full costs of processing all these cases.

28 October 2002

 


 
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