Public Accounts Committee - Minutes of EvidenceHC 101

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Oral Evidence

Taken before the Committee of Public Accounts

on Monday 14 May 2012

Members present:

Margaret Hodge (Chair)

Mr Richard Bacon

Stephen Barclay

Jackie Doyle-Price

Matthew Hancock

Chris Heaton-Harris

Meg Hillier

Mr Stewart Jackson

Fiona Mactaggart

Austin Mitchell

Ian Swales

________________

Amyas Morse, Comptroller and Auditor General, Gabrielle Cohen, Assistant Auditor General, Aileen Murphie, Director, NAO and Marius Gallaher, Alternate Treasury Officer of Accounts, were in attendance.

REPORT BY THE COMPTROLLER AND AUDITOR GENERAL

Immigration: The Points Based System – Student Route (HC 1827)

Examination of Witnesses

Witnesses: Timothy Blake, Chief Executive, London School of English, and Simeon Underwood, Academic Registrar, London School of Economics.

Q1 Chair: Welcome everybody. Welcome Mr Underwood and Mr Blake. May I explain to you the process, if you don’t know it? We have these initial, short sessions at the beginning when we are doing an inquiry. You are both customers of UKBA in relation to tier 4. We are not trying to catch you out in any way. We really want you to use this opportunity to raise with us not issues of policy-which are outside the Committee’s remit, and on which I have no doubt you have strong views, but please try to steer clear of those-but issues of implementation, as to how UKBA has performed in relation to the change under the introduction of tier 4. We would also like to hear any hints about what you think we should ask the officials who will appear before us afterwards, so it is really over to you. Mr Underwood, you are from LSE?

Simeon Underwood: I am from the London School of Economics, yes.

Q2 Chair: Would you like to start? Say whatever you would highlight in the implementation, so far, of tier 4 over the past three years.

Simeon Underwood: I will try to keep it succinct. For the London School of Economics, this is, of course, key business. The international students that we recruit are critical to our financial model and bring in about a third of our income. The introduction of the points based system for student visas has created for us a state of almost complete up-gearing of a major administrative system in a way that has been, I am afraid, fairly chaotic and difficult to handle, and that has incurred high cost for us as an institution.

Q3 Chair: Can you give us some idea? Have you done that costing?

Simeon Underwood: My own reckoning for the London School of Economics is that the cost each year to us is in the region of £250,000, possibly slightly more. I am including in that the actual operation time of staff in the student admissions and student support offices; the management time in understanding the policy changes-trying to interpret them and develop the systems around them; plus what we have to pay the UKBA in fees for the certificates of acceptance of sponsorship, which, in our case, is in the region of £50,000 to £70,000 a year.

Q4 Mr Bacon: Can we just be clear-that is an additional £250,000?

Simeon Underwood: That is additional to where we were, say, five years ago. We did not keep a tab five years ago, so I cannot put my hand on my heart and say, "It was that much then; it is that much now", but certainly the cost would have been altogether less five years ago-probably less than £50,000.

Q5 Chair: Just to give some context, £250,000 cost on an income from foreign students of?

Simeon Underwood: £70 million.

Q6 Chair: Mr Blake, you are involved in a very different sort of institution.

Timothy Blake: Yes.

Q7 Chair: Give us some idea from you.

Timothy Blake: I can’t give you a financial figure in the same way that Mr Underwood has.

Q8 Chair: Talk a little bit about your institution, so that Members have a feel for it.

Timothy Blake: We are a medium-sized English language school. We have a turnover of £5 million a year. We depend on people coming in on various visas to quite a significant extent. A lot of our business is EU-based, and that is, of course, outside this inquiry.

The amount of tier 4 business we get is relatively modest, and has become significantly more modest because the rules have become increasingly tightened to make it impossible for our students to qualify for a tier 4 visa. It is probably now down to about 5% of our turnover, but that is still a significant sum.

The amount of time taken in trying to understand and implement the system is quite considerable. We have about 16 members of staff-we are not a large organisation-who need to be familiar with the rules. The amount of work, effort and stress involved in their becoming familiar with the rules and implementing them is very considerable.

Q9 Chair: Tier 4 is 5% of your turnover.

Timothy Blake: About that, yes.

Q10 Chair: Yet your main purpose is to teach English.

Timothy Blake: That’s right.

Q11 Chair: So who are the rest of your students?

Timothy Blake: We get a lot of people from the European Union, who therefore have no visa implications, and we get a lot of people coming in on student visitor visas and extended student visitor visas. It is important to stress that although you are looking at the implications of the introduction of tier 4 and the points based system, an English language school has to juggle lots of different visa regimes simultaneously. We have tier 4 students. We have student visitor visa students. We have extended student visitor visa students. We have youth mobility students. We have people coming in on diplomatic passports and on dependent visas. We must be able to cope with an enormous range of visa types. There are also people on business visas and other areas that are particularly tricky. So one way or another, the visa regime represents a really, really major headache for us.

Q12 Chair: You haven’t got a feel for how much you spend just administering that, as a proportion of your income.

Timothy Blake: Time is a stretchable commodity. People just have to stay late to do it. We are not so large that we have to employ extra staff to do it. It just means that the people we have, have to work harder and have to work later. There have been days when I have been in my office and have done nothing at all, all day, except visa-related activities. So the opportunity cost, in terms of my inability to develop the business, may be quite considerable even though I cannot put a figure on it.

Simeon Underwood: Can I pick up a couple of points? This is not an area where any of the education institutions can afford to take risks. We have to gold-plate the administration of this in case we get something wrong, because the consequences of losing our sponsorship status are absolutely enormous. I would also say, with due respect to the National Audit Office, that figure 1 in the methodology section, where it has come up with the figure of about £40 million as the average total additional cost per year for the first four years, is, in my view, a significant underestimate. It has made a recommendation that further costing needs to be done, and I would support that wholly, because I think the true financial cost of this to the sector is not well appreciated and it is, as Timothy says, opportunity cost forgone at a time when Government want us to spend less on administration and more on the student experience.

Q13 Chair: Let me just ask you this question, which will be helpful. This is one of the most worrying reports that I have seen about the quality of administration and execution of a Government policy in our almost two years on this Committee. Perhaps, Mr Underwood, you could start on this. What are the key things that caused you the biggest headaches-a couple of key things-and what are the two key priorities for getting it better in the future? The policy is not going to change, so we want to make sure that the administration is right.

Simeon Underwood: For me, the really big problem we face is the timing of changes. Changes often happen midway through the cycle, so in a university such as ours, we will have made most of our offers for the coming academic year when the changes kick in.

For example, last year, there was a change of policy about English language proficiency, which was coupled with a quite tight specification on what we had to do. We then had to go back through all the offers that we had made in the school at that point to visa national students-6,649 of them-by hand to check whether they actually met the new criteria. That was after the offers had been made, and in some cases we had to adjust what was in effect a contract we had made with the students. The same thing applied last year with the rules on academic progression. The rule came in that, in effect, the student had to be going upwards on the academic ladder, and the same thing applied: we had to do manual checks of all files.

This year, after the sector bodies had complained at some length about this timing issue, the same thing has happened. The new development is the so-called five-year cap on how many years a student can study within tier 4. Again, we are going to have to revisit all our files. If I may move on to a different point, what makes that one exceptionally difficult is that we are getting a mixed message about what the rule really is. When the statement of intent was published in April 2011, it clearly limited the change to tier 4 leave only. That was what seemed to be the case in paragraphs 472 to 477-I am not making that bit up-of the sponsor guidance. But when paragraph 245ZV(ga) of part 6A of the immigration rules was published, that said something completely different. At the moment, we are going to have to check these 600-odd files, and we do not know what we are looking for.

Q14 Chair: So timing is the one thing you would change.

Simeon Underwood: Timing and the consistent rule changes. In the past three years, something like 14 or 15 sets of rule changes have happened. In answer to the question about what we want, I think what we all need-I am sure the UKBA need this too-is a period of stability, with no further rule changes except those that simplify the process. We need time to review, to reflect and to build up relationships between the UKBA and the institution in a way that is not possible now.

Timothy Blake: I certainly echo the point about changes. There have been constant changes. It is difficult, particularly because we are operating through-not exclusively, but to a significant extent-a network of agents abroad, so we are trying to communicate those rules to a range of people in many different countries. We had people from about 75 different countries last year. The majority of them were from outside the European Union, and therefore we have a huge communication task, certainly in relation to the points to do with levels of English. That has been constantly ratcheted up. When the system was introduced, we were rather taken by surprise with the rule that people had to have at least some elementary level of English.

Q15 Chair: To learn English.

Timothy Blake: To learn English. Then it was increased so that they had to have a reasonably good elementary English to learn English. Now they have to have a good intermediate level of English to learn English.

Q16 Mr Bacon: Can we be clear about that? I know what B2 is-the B2 standard that is required for university entry. What standard is now required to start studying English at your institution?

Timothy Blake: B1.

Q17 Chair: Which is what?

Timothy Blake: Halfway up the scale.

Q18 Mr Bacon: Can you explain that?

Timothy Blake: Well, B1 would apply to someone who was perfectly capable of functioning in English in simple ways in normal life: someone who could travel, communicate, talk to people, make friends and talk about relatively straightforward things. They would not be able to do highly sophisticated things in English. They would have difficulty holding down a job that had a significant language component, but could perfectly easily hold down a job that did not have a significant language component. In other words, they could understand instructions and things like that. You have to have quite good English in order to qualify.

Q19 Austin Mitchell: You are working in a very competitive world. When I go to Australia and New Zealand, I am impressed by the efforts that they make to get in foreign students, whereas we seem to put barriers in their way. Can you give us an indication of how much you were consulted when the big shift in responsibility back to you came in, and then in the other changes in the English language? Are you consulted in advance or are you complaining afterwards?

Timothy Blake: We were surprised and impressed with the amount of consultation that there was before the PBS was introduced. I have to say that to be fair to the Border Agency. There were lots of meetings and the language schools were engaged in them quite a lot. That is not the same as saying that the rules that came out were necessarily the ones that we would have written. To some extent, that is unavoidable. I have to say that since the PBS came in, all the successive tightenings of rules have been accompanied by significantly less consultation. There are communication channels between our schools association and the Border Agency, which I cannot talk about a great deal, because I am not part of them, but I know they exist.

The fact is that a lot of the rules that have come in have been accompanied by howls of protest from the English language schools. I am not here to defend the type of English language schools that you might have read about in the newspapers, which are just visa shops and things like that. Pretty well all of those have gone, and good riddance. None of us in the legitimate sector-

Q20 Chris Heaton-Harris: Why have they gone?

Timothy Blake: They have been driven out of business by the Border Agency. To be fair to the Border Agency, the rules that have been applied, which are what you need in order to be able to sponsor a student, now mean that you have to be a good-

Q21 Chris Heaton-Harris: So the rules have driven out a load of bogus colleges. I am just wondering if you can explain to my constituents, who are very concerned about this, why that is a bad thing.

Timothy Blake: Because the rules are now biting into the flesh rather than merely getting rid of the fat.

Q22 Chris Heaton-Harris: But we also have 40,000 to 50,000 people coming in who should not be coming in, by the looks of this Report. Should you not be doing slightly more to stop that?

Simeon Underwood: The 40,000 to 50,000, as I read the Report, refers to a specific implementation period, at the time that, particularly, the HTS-highly trusted sponsor-arrangement came in. I think we have bedded down, particularly in terms of what institutions are and are not recognised.

Q23 Chris Heaton-Harris: How much money do both your institutions make from foreign students coming to this country?

Simeon Underwood: I answered that question earlier for the LSE-

Chris Heaton-Harris: I am sorry, I was not here.

Simeon Underwood: We get £70 million in income, and the additional cost for us of doing this is in the region of £250,000.

Q24 Austin Mitchell: You were particularly scathing about the system. Was the LSE consulted? Did you warn of the costs that you will be incurring and of the difficulties that will arise? Did you get that opportunity?

Simeon Underwood: I do not think that at any stage we have had the chance to take a holistic view of the management and the costs associated with that management. Consultation tends to be incremental, so when, for example, the highly trusted sponsor scheme came in we spent a fair amount of time in discussion with the UKBA. One thing I would say very much in favour of the UKBA is that it does spend a lot of time talking to the sectors, which must be fairly thankless, but in that process I can remember giving very detailed advice on why its initial questionnaire on highly trusted sponsor status was not going to work. That advice was ignored, and it did not work. There is a steady pattern of trying to get the UKBA to think about the practical, almost case-by-case things we have to deal with in relation to the policies it’s coming up with, and I am afraid that our experience-certainly from the university sector-is that many of those problems survive once the policy is introduced.

Q25 Austin Mitchell: The LSE is a very prestigious institution, but I get complaints from the Grimsby institute, which has suffered a huge effect on the number of students it attracts, on the relationships it has developed with sponsors and other institutions overseas, and on its financial position. What has been the effect on the LSE, and on numbers of overseas students and your financial benefit from them?

Simeon Underwood: In terms of actual numbers, so far the impact has not yet been substantial. We do not reckon-it is very difficult to tell, because you don’t know why someone hasn’t come until they haven’t come-that at the moment we are losing any more each year than tens or twenties of students across our international intake, which is a small proportion. But we know-this drifts faintly into policy, so I am a bit loth to go down this road-that that is not going to stay the same. We have already had a 20% drop in applications from Indian applicants this year. We know that that applies across the whole of the higher education sector and is not just an LSE phenomenon. It is in the Indian subcontinent where the feeling that the UKBA regime is negative has bitten the most.

But to give another example, my head of recruitment was talking last week to a senior Chilean official who said that the impression that they had is that UK higher education is no longer open for business. At the same time, various other competitor higher education systems-notably Australia and France-have made the moves that actually correct the kinds of things that we are doing now and have recouped a great deal of ground. I am sorry if that is policy.

Chair: Okay. Now, I have Matt, Meg-Chris has already had his question-Stewart and Fiona.

Q26 Matthew Hancock: I would like to bring you back to the Chair’s end question, on what it is about the implementation that you are concerned about and what you would do differently. So far you have said that there is a fair amount of time in consultation, that there has been a lot of consultation-you said that the UKBA has taken a lot of time to talk to the sectors-that the LSE is not losing more than 10 to 20 people per year, and that all the complaints have been about changes to policy and this successive tightening of the rules. Now, I declare that I am a very strong supporter of this successive tightening of the rules, and I think it is reasonable that people should be able to speak a little bit of English before coming here-it is not enough to get a job that needs communication, you said, so it is not much English. Other than complaining that the policy is tightening, what is it about the implementation that would you like done differently?

Timothy Blake: One thing that I think would be enormously helpful is if there was better training within the Border Agency staff, so that there was much higher consistency of decision making and much greater clarity of the rules, because they are very opaque. There is a comment in the National Audit Office Report that the Border Agency had declared that the cost to a sponsor of acquainting themselves with the rules was £25. Where they got that figure from-this is some of the paperwork we have to cope with.

Q27 Matthew Hancock: If I can stop you there-I appreciate that there is a lot of paperwork, but there is a huge cost to the UK from bogus immigration and immigration that is not within the rules that needs to be dealt with. I understand, of course, that you are at the forefront of the positive side of immigration, but there is a huge cost on the other side of the balance sheet. Rules that try to have a secure immigration system are, of course, regulations that have costs, so the fact that you are having to put those in place, frankly, pales into insignificance when compared with the benefits of having a good immigration system.

The question is: within that tight policy, what can be done to make it easier for you to implement and, as you said when you started to touch on this before, where can you get the benefits of immigration where it is beneficial, without too big a cost? If you are just complaining that there are costs to policing the system, we are not going to get anywhere, because-my goodness-the system needs to be policed.

Timothy Blake: One other point I would make at a very practical level concerns much better access to people who can actually make things happen. The helpline is frankly quite useless-you might as well ask the first person you meet at a bus stop quite a lot of the time. I have found myself having to explain to the people on the helpline the most elementary things about the system, at which point I, of course, give up asking them questions. If you have a problem, it is very difficult to access anyone who can fix it. We were promised an HTS-highly trusted sponsor-link person who would be available to us, but that seems to have disappeared, so all my staff can do is telephone the helpline and they do not get anywhere.

Recently, we had an issue with a Taiwanese student, whom I wrote some notes about-I sent notes in advance on an entirely genuine, very conscientious young Taiwanese student who had a major visa problem that was none of his concern. He told me that every day for seven months he was thinking about visas. He spent £1,500 on immigration lawyers trying to sort it out. We spent countless hours doing it. One of the problems was that we could not access anybody at the Border Agency who could do anything about it.

Q28 Mr Bacon: Can I follow up on this, because Mr Underwood referred to this and this was the question I wanted to ask?

Mr Underwood, you have said that the obvious thing to do was to have some stability so that you could build a relationship with the agency. There will be many who will think that you are sadly and ludicrously optimistic if you think that you can build a relationship. There are Members of Parliament who have been trying to build a relationship with the agency for many years. I declare an interest, because, like the Chair, I was at the London School of Economics, so I have no doubt whatsoever about your standing or bona fides-

Matthew Hancock: I have even been a summer student there with all your foreign students.

Mr Bacon: That is why Mr Hancock is now as good an economist as he is.

Simeon Underwood: There would have been different visas, if you had been international students.

Q29 Mr Bacon: If we can bring this commercial to a close-I know that I should not have started it, but it is obviously one of the world’s finest institutions.

I regret Mr Blake’s experiences. They must be deeply frustrating. He is saying that you need an interlocutor at a reasonably senior level who can make decisions and make things happen, rather than just reading the rules back to you, which you can see for yourselves anyway. Mr Underwood, you are in a slightly different position, with respect to Mr Blake, because you represent one of the country’s leading academic institutions. One would hope you would be able to have reasonably easy access to a senior interlocutor who could make decisions, just as you might expect Mr Blake’s representative body to do. In developing the relationship with the Border Agency in the way you have hoped to do, has that been your experience? Have you been able to go into the offices of the Border Agency, sit down, have meetings with senior people and see things change as a result, or not?

Simeon Underwood: Not necessarily from the LSE. I am in a privileged position because I was chair of the national Academic Registrars Council for two years. I led a string of meetings between 2008 and 2010 with senior UKBA officials including Jeremy Oppenheim, whom you will be seeing next. As a result of that, and as a result of involving my own staff in some of the consultations about the development of policy, we have personal, direct lines, which we would not, I think, have otherwise. So when last week we, along with a number of other institutions, got an e-mail headed "Recent rejection of the application for a sponsor’s licence made by London School of Economics"-it simply said that; it was a no-reply e-mail address, and it gave an application number without telling us what the application was about-we did not know that we had an application in, so we rang our chums. Later on that day, after a few hours of a certain amount of panic, we found that it was an IT error.

Q30 Mr Bacon: The implication being that you do not currently have highly trusted sponsor status. Is that right?

Simeon Underwood: No, we have highly trusted sponsor status.

Q31 Mr Bacon: Yes, but the implication of the e-mail was that you did not. Or am I getting this wrong?

Simeon Underwood: The implication of the e-mail was very unclear, but something had been rejected. If you think about what this all means to an LSE, whichever LSE you are talking about, to have something rejected is desperately serious. This just popped up in my e-mail in that way.

Q32 Mr Bacon: Was it automatically generated?

Simeon Underwood: I don’t know-it didn’t look it. When we asked, we got, eventually, a message saying that it was an IT apology, and then the other institutions that had received this got an apology at 7 o’clock that evening. This is the kind of thing we are doing; we are firefighting on the individual issues and the individual cases. The kind of forward-looking relationship that we would like to have has never emerged in the three years of the points based system.

Q33 Stephen Barclay: So what you are saying is that an institution of your size does not have a dedicated relationship manager.

Simeon Underwood: Under the highly trusted sponsorship system we should have. Some universities do, and they like it when they have got it, but we haven’t.

Q34 Stephen Barclay: Why not?

Simeon Underwood: I don’t know. We have asked.

Q35 Meg Hillier: I am interested, first, in the cost front. Working out the maths on the back of an envelope, about 3.5% of your income from overseas students is currently spent on the visa regime. Previously, it had been about £50,000.

Simeon Underwood: I think, maximum. Before this all came in, it was almost a cottage industry where one person in the admissions office and one person in the student registry would know roughly what you had to do when a visa case came up. I now have two dedicated members of staff, one of whom works full time and one of whom works part time in this area, in graduate admissions. I have two staff who work full time in this area in the student services centre. I have one member of staff who works something like three quarters of her time on the monitoring that accompanies this whole system. Those are the operational figures I gave you, and there is a massive amount of management time in just sorting this whole thing out.

Q36 Meg Hillier: I should declare that I was a Minister at the Home Office from 2007 to 2010, dealing with some of these issues as a junior Minister. On the cost front, there is always a cost to anyone going through the immigration system. Given that you make a profit from it-sorry, is that a £70 million profit or turnover?

Simeon Underwood: Turnover.

Q37 Meg Hillier: Well, there will be a profit margin in that. You are saying that is too much, basically, but arguably you could say that that is actually very little.

Simeon Underwood: I would argue it is too much, and I have two arguments. First, because the system is so chaotic, it is more expensive than it needs to be. Secondly, I think the situation is probably that the safest institutions are the ones that are carrying the highest bill. It is almost a paradox here. Some of the largest universities, which probably have the best-administered systems, are spending more on this than the institutions that are more at risk.

Q38 Meg Hillier: So it is not so much a risk-based system as a blanket approach.

Simeon Underwood: That’s right.

Q39 Chair: Why? Why should the safe institutions spend most?

Simeon Underwood: Because of size, because of the volume of the students they are taking-

Mr Bacon: And the size of the downside risk, as well.

Q40 Meg Hillier: The points based system was also supposed to make it easier for applicants, because it was transparent. You could look up and see whether you, as an applicant-without having to go through all the bureaucracy of applying in the first place for a visa-would make it in on any of the five scales. From what you both have said, you are doing a lot of that work for your students, and, Mr Blake, you were saying that you were doing a lot of this work. Is it that your students cannot do it, or do they assume that you will do it because they are paying you? Can you just unpack that a little?

Timothy Blake: There is hefty element of that.

Q41 Meg Hillier: Because they are paying you, they think that they should get your help.

Timothy Blake: Yes.

Q42 Meg Hillier: So, actually, your help in supporting them through the visa system is part of the package of offering support for overseas students to come. I have read with interest what is happening in Australia. They are marketing themselves as another place to go to study English, and they are loosening up-whatever phrase you want to use-and making it easier for applicants, but they are working in a competitive international market. In order for you to be competitive, are you saying that it is very important that you offer this extra support to students?

Timothy Blake: Certainly. It is very important to stress that Britain still is probably the single largest destination market for people learning English, but it has fallen to about 35%. It is a very, very competitive market. Australia, New Zealand, America-of course-Canada, Malta, and South Africa are examples of the very many places where people can go. They have a very wide choice, and visa policy is seen as a significant factor in where people go. That is not because they are bogus and they are trying to go somewhere where they can get in without anyone scrutinising them too much; it is because the deterrent level of the visa regime means that they think, "Oh God. I’ll go somewhere else."

Simeon Underwood: I do not want to veer into policy too much, but what this is in part about is the package that is sold to students. Introduced in 2010-11, the changes to post-study work and to the rules on dependants made the British higher education system distinctly unattractive. What the Australians and the French, in particular, have done is to spot what we have done and go in the opposite direction.

Q43 Meg Hillier: My point was really about the support that you give. That 3.5% of your turnover is partly because you are choosing to invest in something to give the students a better way through the system.

Simeon Underwood: Yes, and we face within that some very interesting dilemmas, because on the one hand we have to monitor and report to the UKBA when students go missing or do not attend properly, but on the other hand we have to give advice to students, who are very often in distress. I will bear out Tim’s point about some students who get on the wrong side of one of the more Kafkaesque visa stories actually coming to us in deep distress and having to defer their studies because of visa problems.

Q44 Meg Hillier: We all deal with the Kafkaesque systems. I have just hot-footed it from a busy surgery and I could probably swap you a few cases.

Can I move on to a couple of practical issues? You talked about the helpline and you seemed to think that you, as highly trusted sponsors, should have a specific route through, but there are many people going through other routes in the immigration system who should, in my view as a constituency MP, have equally good access to good advice on the helpline. I must say that it was fine on the one time that I had to use it as a potential employer, so I had no problems with it, but I am aware that one anecdote does not make a rule. Why do you feel that your area of business should have specific help, compared with the person who wants to bring their wife over to join them or their family to settle, or who just wants a visitor visa?

Timothy Blake: I am clearly not suggesting that other people should get poor advice.

Q45 Meg Hillier: But there is a cost to the whole thing.

Timothy Blake: Part of the reason is that when the highly trusted sponsor system was introduced, we were told that one of the benefits of being a highly trusted sponsor was that we would have a dedicated point of contact. That dedicated point of contact existed briefly, but in my experience all that person ever really did was take messages and say, "We’ll get back to you," which then might happen some weeks or months later, so it did not really work as well as it could. We are trying to do an honest job in making the system work, and it is very hard for us to do that without access to people within the UK Border Agency to help us to do that.

Q46 Meg Hillier: I can understand that. Can you just perhaps explain what ISI and BC inspections were, because that was lost on me and I do not know whether that is significant?

Timothy Blake: There has been a system of accreditation within the English language sector for some 30 years, which is run jointly by the British Council and English UK, which is our industry body. That has been honed down the years into a very, very good system. It is the gold standard around the world. It is the best accreditation system. For reasons that we have never been able to understand, last year the Border Agency decided that that scheme was not good enough and that it would ask the Independent Schools Inspectorate to run a scheme instead. That was imposed upon us.

Q47 Meg Hillier: Your previous comments then explain what they are. I just didn’t know that meant.

Timothy Blake: In our experience there is very little to choose between the schemes and we find it highly regrettable that the system that has done us very well for decades has been pushed aside in favour of something that is no better.

Chair: I ask people to be brief and then we can get on to the main session.

Q48 Mr Jackson: Mr Underwood, are you seriously saying to the Committee that your critique of the current system is based on the fact that, by my reckoning, the cost that you have at the outlay is 0.357% of the £70 million turnover that you are bringing in? It seems to me that for every £1 that you spend, you get £280 in. There are a number of points I will make, and one is that you do not mention what I think is pricing out inelasticity. The prestige and kudos of British universities mean that, to a certain extent, you can vary the price that you are charging international students. You have not mentioned that.

You also have not mentioned the impact over time of the pricing regime. To me, one thing that comes out-apart from the fact that these figures do not make any sense in terms of the critique that you are making-is that you do not seem to be in a position to prove, one way or the other, that this will have any demonstrable impact in the future on the number of students. You mentioned the figure of 10 students, but before that you mentioned the 6,500 that you were looking at. My general point is that, surely, any business or commercial entity that has an outlay of 0.36% to get 100% income is doing pretty well. Finally, I was in Chile last July and I met the Minister for Education, representatives of UKTI and the British Council and there was no significant problem about the impact of these rules on higher education in the United Kingdom, so perhaps we have been talking to different Chileans.

Simeon Underwood: Quite possibly, Mr Jackson. I have not talked about the effects in terms of, for example, the reputation of British higher education, or the soft diplomacy that British higher education does as a historical part of its mission, largely because the questions have not led in that direction. I have been trying to keep to matters of implementation, rather than policy. In terms of your point about trying to make sense of the figures, I would repeat that, if it seems puny to you, it is still unnecessarily high and a better ordered administrative system would drive those costs down significantly, and that it is an opportunity cost in relation to other aspects of what the LSE might be doing with the income that it derives from its international students. I would also say that, behind this discussion of these broad issues of finance, there is serious damage being done to the UK as a whole through the experience that many of our international students have and are reporting back, in these days of modern technology, pretty instantly to their peers at home.

Q49 Fiona Mactaggart: I was wondering whether either of you could tell me how many students that you have accepted have not subsequently enrolled in your institutions, how many have failed their academic progression and how many have been in breach of immigration control after they have completed their experience with you?

Timothy Blake: If I can go first, the answer to your first two questions is zero. Nobody has failed to turn up and nobody has failed to complete their course. The only people who have ever discontinued early in any way are those who had a genuine reason to do so. That could be, for example, someone who had to go home because their mother was ill. As for people who were in breach of their immigration control after they left us, I am afraid that I cannot comment on that since we do not actually escort them to the airport, but to the best of my knowledge the answer is nil as well.

Simeon Underwood: We don’t know how many students arrive in the UK but do not make it from Heathrow to the LSE. Part of the point of the sponsor management system is that we should be able to provide that information, because, potentially, it is one of the critical points where migration breaks down. I think that is one of the things that UKBA is trying to address through developing the sponsored migration system.

Our drop-out numbers are extremely low. We have a substantial reporting process-this takes me back to the point about unnecessary bureaucracy-which is isolating very few individual cases. As Timothy says, although we can advise those students who do interrupt or defer of their visa position, we are not really suitable people to take them back to the airport and put them on the plane.

Q50 Fiona Mactaggart: I understand that. I ask these questions because it seems to me that, potentially, one of the cases that you might be making is that you should have more autonomy in determining the immigration likelihood of students who you think are appropriate. I wonder, Mr Blake, whether you feel that the Government could take a risk-based approach to institutions like yours, which can happily report zero breaches, and allow the institution itself to make these decisions so you wouldn’t have horrible times on hotlines. Would you be prepared to take that risk? What do you think is the appropriate penalty if your students breach the system?

Timothy Blake: The system was set up with that in mind. When it was introduced, we were told, "You can import whom you like." We were very surprised, I have to say-it was a thunderbolt, really-because we had had a lot of problems in the past with entry clearance officers turning people down for student visas under the old regime. "You can import whom you like, but on your head be it if you import people who turn out not to be genuine-who do not complete their course, do not show up and things like that-because you will lose your place on the sponsorship register, which will be very serious for you." When we thought about it a bit, the Border Agency’s scheme seemed rather ingenious; the problem was that they never allowed time for it to be implemented. They should have held their nerve and accepted that some things might go wrong, because those institutions that imported students who were not genuine would have been off the sponsor register and the whole problem would have been weeded out. Instead, they introduced successive extra rules, particularly on the level of English required, which has strangled the number of tier 4 students that we can get down to a very modest number.

Last year, we issued only 40 CASes-confirmations of acceptance for studies-which was down from 90 the year before, at a time when we had been doing a lot of work to develop the type of business for which tier 4 student visas would be appropriate. So there has been a significant impact on us, but the system was not allowed to work in the way in which it was designed-I think it could have worked in that way, but they kept changing the rules to tighten it because they perceived problems.

Simeon Underwood: If I might pick up on that answer, the point of introducing the highly trusted sponsor system was, we were told at the time, to move to a more risk-based approach. To be fair to the UKBA, it is dealing with a very broad church across tier 4, which I suspect is seen as unnecessarily or inappropriately elitist. So the highly trusted sponsor scheme, which I think was meant to deliver the kind of risk-based approach that you are talking about, has not functioned in the way intended, either.

Q51 Fiona Mactaggart: Do you think it could?

Simeon Underwood: The NAO Report contains some very interesting recommendations that, if implemented, would go a long way towards delivering what I think we were promised in the first place, which would also be safer.

Q52 Jackie Doyle-Price: We have just got into the area on which I want to question you. I am struck by what you have said about the increasing burden of rules. Obviously, the more rules that are applied, the heavier the burden on those who wish to be compliant, and the ones who wish to avoid the rules will carry on breaching them. To what extent would you like to see UKBA focusing more on enforcement against those institutions? Do you think the balance needs to be pushed further in that direction to achieve the objective? Ultimately, we know what the spirit of the regulation is. It seems to me that there is too much regulation and not enough enforcement.

Timothy Blake: That is probably right. We have not had a recent inspection by the Border Agency, but I know schools that have. Schools that I know well have survived that perfectly well. There is a system in place, which can be implemented. The problem is that there is a range of rules that is unnecessarily restrictive. There is not an adequate level of relationship between risk and the type of rule that is in place, so that everyone is regarded as being high risk, even if they are not. We therefore have the fairly ridiculous situation that someone from, say, Japan or Korea, can enter the country relatively freely as a tourist simply by declaring undying love for Manchester City or something like that, and a desire to see a game in the proper place. I’m sure you know that football-the premier league-is very big in Asia. They can get into the country quite easily, but they must be subject to exactly the same level of scrutiny, and meet exactly the same requirements for English language competence and things like that as someone from a country that would be perceived as quite high risk.

I also think that one thing worth noting is that many of the countries that are quite high risk in terms of their past fraud-this is clearly in the NAO Report-are not English language markets at all. No one comes from Nigeria to learn English, and very few people come from Pakistan to learn English.

Simeon Underwood: I would agree with the thrust of your question that the targeting of effort on the actual points of risk is not exact, and on a number of occasions in our working relations with the UKBA we have come across a kind of disjunction between the high-level policy discussions we have had, and the operation on the ground.

Q53 Jackie Doyle-Price: Just one final point. I note that you, Mr Underwood, mentioned earlier that what you are looking for now is stability because there has been so much change. Is it really stability you want, or is it simplicity.

Simeon Underwood: It would be nice to have both.

Timothy Blake: Perhaps we could have one nice period of simplification, followed by stability.

Q54 Jackie Doyle-Price: Ultimately, it comes down to the outcome, doesn’t it, and if you row back from the outcome, you end up with a set of rules, whereas it seems to me that we are just having rule upon rule upon rule because of perceived weaknesses in the regime, when those rules are not addressing those weaknesses.

Timothy Blake: There is a fair degree of that, yes. The rules have been changed again and again because of the perceived failure of the previous set of rules, so they are changed and then they do not work, so they are changed again, and so on. I think they have gone too far. To come back to a point I made earlier, I think that legitimate students are being seriously affected by rules that were designed to eliminate bogus students.

Simeon Underwood: The sponsor guidance we have to work to runs to 74 pages and 635 paragraphs, but we also have to be aware of the student guidance, which is a different document, and runs to 74 pages, 300 paragraphs and four annexes. The latest edition had an addendum put on the front of it before it was even published.

Q55 Mr Bacon: And that is a separate document.

Simeon Underwood: Yes.

Q56 Mr Bacon: Does it have any points of similarity with the other document?

Simeon Underwood: There is significant overlap, but there are also, interestingly, occasional little points that are different.

Q57 Chair: Like?

Q58 Mr Bacon: Are there contradictions between the two?

Timothy Blake: I could point to some contradictions, but I am not sure that you would-

Mr Bacon: Yes, we would. Go on.

Timothy Blake: Well, there is a requirement, for example, that every course in English must lead to a qualification, and then there is a list of acceptable qualifications, none of which has anything to do with English.

Q59 Matthew Hancock: But does it say that it has to lead to one of the acceptable qualifications?

Timothy Blake: But the qualifications in question are then listed elsewhere in the document, and none of them relates to English.

Q60 Mr Bacon: Obviously someone who used work in the Rural Payments Agency got transferred.

Timothy Blake: Sometimes I feel that the DVLA should run the Border Agency. It always seems to get it right.

Q61 Chair: Thank you very much for your very full and informative evidence, both of you, and for sticking to the nature of the inquiry that we are doing.

Examination of Witnesses

Witnesses: Dame Helen Ghosh, Permanent Secretary, Home Office, Lin Homer, Chief Executive and Permanent Secretary, HMRC, Jeremy Oppenheim, Temporary Migration Lead, UK Border Agency, and Robert Whiteman, Chief Executive, UK Border Agency.

Q62 Chair: I am going to start quickly. Can each of you tell us how long you have been in your job-Jeremy, you could probably say how long you have been in the UKBA-so that we have some view of who we are talking to in terms of accountability?

Jeremy Oppenheim: I have been in the UKBA since 2003 and responsible for temporary migration since 2009.

Robert Whiteman: Six months, Chair.

Dame Helen Ghosh: Since January 2010.

Q63 Chair: 2010?

Dame Helen Ghosh: 2011. I am sorry. December 31 2010, strictly speaking.

Chair: 2010?

Dame Helen Ghosh: The end of 2010. I started work on 1 January 2011.

Mr Bacon: Do you have a problem with dates, Dame Helen?

Dame Helen Ghosh: I have no problem with dates.

Lin Homer: I was at the UK Border Agency from August 2005 to the beginning of January 2011.

Q64 Chair: I will start with Lin. If I am absolutely honest, when I read this Report, I thought that it was one of the most depressing reports I have read in terms of policy implementation in the two years that I have been on this Committee. If I take you to the NAO conclusions on paragraph 18 on page 8, what it says-I assume that this was signed off-is: "On the available evidence, the implementation and management of the Points Based System for students currently does not provide value for money." Comment?

Lin Homer: I was very disappointed to hear you say that it was, in your view, one of the most worrying implementations. I don’t think it felt like that to me as we were doing it. Obviously, I am very happy to be back in front of you, and I have thought back into the position I was in at that time, and I don’t think it does, with the benefit of hindsight.

I think we were introducing a very wide range of changes into the agency in that period. This was the third substantial part of the introduction of the points based system. I think that was, and remains, on the whole a good addition to the immigration system. It provides a chassis on which you can determine a range of policies. In a sense, you can regard it as a flow monitor-you can turn the flow on or off. I think it has proven to be very useful.

I am absolutely prepared to say that with much of the points based system, following introduction, we have found it necessary to adjust or change in a number of respects. One of those is as we see reactions to the system. One of the things that I do want to say, having listened to our colleagues before us, is that I don’t think we saw perceived failures in the student implementation, but real ones. I think that those were in relation to a very fast adaptation to our changes, which we had to adapt equally quickly to. So I am perfectly happy to accept that we have made these systems progressively better as we have gone along. I think Dame Helen and Rob Whiteman will have to continue doing that.

What I would want to say is, I don’t think I ever saw hard enforcement against individual students as a major part of the introduction of this system. I understand the NAO’s points about that in the report, but it wasn’t part of our plan at the time that we would go after individual students with hard enforcement. We were making a system change rather than that.

Chair: I think we will keep compliance a little bit separate.

Reading this report, Lin, your answer there sounds odd to me. You had a system in place where your officials were doing the checks on individuals as they were coming in, which in a policy context where people were trying to increase the number of students was seen as a good thing. Then people started worrying, but you had a policy in place. You then switched to just tier 4 and that was all you were doing. You went live on tier 4. You knocked out-it became illegal to do any of the other checks, which on the whole were working, and suddenly you see complete chaos: an increase of a third in applications; an increase in people using the system to work rather to go and study; an increase in people not going home at the end. All the stats are absolutely, scarily wrong. What I do not understand is why you killed off your previous system-you went live before you were ready, is how it reads to me-which was vaguely operating. I have no doubt there were flaws in that too. It was vaguely operating but you made it illegal to use that. You went for a new, untried, untested system and the thing went out of control. That is how it reads to me.

Lin Homer: I understand. I do not think I saw the old system in quite the positive way that you did. The old system allowed a student to bid to go to a college and then to change their mind, and there was nothing we could do about that. There was no obligation to study at the original college. It required no compliance on the part of the institutions. You had an interesting debate with the first two witnesses, but we were very clear that this was a system that was highly regarded, but its beneficiaries-the people providing the system-needed to carry a great deal more of the responsibility and some of the costs.

Q65 Chair: But did you know, for example, that they had the capability? One of the things that hits you is whether they had the capability and capacity to do it. Clearly, because you then had to go back and change the rules, they did not. So why did you go live on something before you had certainty within your organisation that they could hack it?

Lin Homer: Because it was better than the system it replaced.

Q66 Chair: Well, was it?

Lin Homer: Yes-

Chair: Was it?

Lin Homer: I will try to answer the question if you would like me to. It was better, in that it attached an identity to the student via both the biometric visa and a foreign national identity card, which we introduced in 2008. It was better, in that it required the student to study in the university or the college that they had said they were applying to. It was better, in that there were clearer rules about the right to work. There were no rules about the right to work in the previous system.

Q67 Chair: Hang on a minute, Lin. This is theoretical.

Lin Homer: No. It is not theoretical.

Q68 Chair: In practice, numbers went up by third. According to this report-and I do not trust the estimate-40,000 to 50,000 came in to work, not to study. Those figures are not better.

Lin Homer: I totally agree that we saw a huge surge in abuse very quickly.

Q69 Chair: Okay. Let me just stop you at that one. If you agree with that, my main point, reading it, is this. Why did you let go of your previous controls and shift to an untried, untested system that broke down so quickly that it then forced you into a lot of changes which created hassle for absolutely everybody: the institutions, the students and people in Britain who felt that there was abuse going on in this particular area of immigration policy?

Lin Homer: I do not think we let go.

Chair: You did. You outlawed it.

Q70 Stephen Barclay: Even the current Immigration Minister on the Radio 4 "Today" programme described the system when he took office as chaos. This just builds on the Chair’s point. How this report reads is that you failed to enforce the existing rules. You have changed the rules, which put a huge cost on the lawful-the good-colleges, because you have not been enforcing against the colleges that were not playing by the rules. Turning to figure 12, one of the changes around permission to work was to say that students at private further education colleges could not work during term time. But that was not a risk-based assessment. At certain private colleges which are highly trusted, students are not allowed to work, but you have got publicly funded colleges that have lost their highly trusted status, yet their students can work.

You have got an inconsistency there which is totally divorced from risk. At institutions that happen to be private but have good controls in place, you are deterring students, which has a value for money implication, and at publicly funded institutions which you have concerns about-material concerns over which you have changed their risk rating-you are not applying controls. What is the logic for putting controls in place which are at odds with your own risk profiling?

Lin Homer: I don’t think we did introduce profiles that were not risk-based, but we started from a position where we had to make judgments about which bits of the system were most risky. I took the view, in the development of the policy, that it would be better to lift the bar higher on study, because we always perceived that there was less risk of abuse from the high levels of study than from the lower levels. So that was a risk-based judgment.

Q71 Stephen Barclay: You applied a catch-all between private and public. We have certain highly trusted colleges, and we have other colleges that have lost their highly trusted status.

Lin Homer: Yes.

Q72 Stephen Barclay: The risk must be, must it not, greater with a college such as Glasgow Caledonian university or Teesside that lost its highly trusted status? It must be the case that the risk is higher with a college like that than with one which is highly trusted, but you are putting a control in place that actually does the opposite.

Lin Homer: We introduced the highly trusted sponsor as a reaction to the educational establishment saying that some of them wanted to carry more risk. We had a situation where we would not have been able to make instant judgments about highly trusted sponsor status across every establishment. We had probably more than 2,000 establishments at that time.

Q73 Stephen Barclay: Highly trusted ones. That is not an instant judgment; the judgment is already made.

Lin Homer: I will explain the rationale at the time, which I accept was imperfect, but it was very public. We said that we would take a view that public institutions would start as highly trusted, that we would register them and take them out if they were proven not to be worthy of that, and that private institutions would have to apply to become highly trusted. We started by focusing on those. We made a risk-based judgment about how to apply our risk-based system. I accept that-

Q74 Stephen Barclay: With respect, I don’t feel you’re answering me. The point is that if they have lost their highly trusted status, they do not lose the right for the students at those institutions to work in term time. If a private institution gains its highly trusted status, it does not gain that right for its students. You have got a massive market distortion. If you are trying to recruit students from abroad and you are a private highly trusted institution, you must say, "Come to my institution, but you’re not going to be able to work." Then you have got another institution which has lost its status and which you have concerns about, but it can go and market itself and say, "Come to us. Now we’re lower down the risk profile, but you can work if you come to us."

Lin Homer: I don’t think that’s right. My understanding-

Mr Bacon: Why is the lady behind you nodding if it’s not right?

Q75 Stephen Barclay: Well, that is what figure 12 says. I know that there are many pages of rules, which is one of the things that the previous witness highlighted, but can you clarify? Is it not the policy that the distinction is based on whether it is public or private?

Lin Homer: No, not at all. There was simply an initial distinction about which ones we would regard as highly trusted until we checked them, and we were always clear that we would take them out. My understanding-I am sure that Jeremy will correct me-is that if a public institution loses highly trusted status, it is treated just the same as a private institution, and vice versa. There is no discrimination.

The discrimination we began to make about the right to work was to attach that right to work only to higher levels of study. That was simply because we had such overwhelming evidence of abuse. A young woman from southern India who had last studied when she was 13 would apply to come to a college in the UK to study an NVQ in tourism, which would be relatively cheap. Surprise, surprise, she would bring a male dependant with her, who would then have the full right to work. We felt that both the right for a dependant to work and the right for a student to work, on a lower level of education, should be much more severely restricted.

Q76 Chair: And when did you take that view?

Lin Homer: We started introducing greater limitations on work in 2009, and they have been steadily ratcheted up since.

Q77 Chair: And when did you implement tier 4?

Lin Homer: In 2009.

Q78 Chair: Did you take that decision after you had started implementing?

Lin Homer: We implemented in March 2009. We undertook a review that culminated in December of 2009-

Chair: Quite.

Lin Homer: -when the first change happened.

Q79 Chair: I know Stephen wanted to come in at that stage, but I just want to ask a question that I think Jeremy can answer-and perhaps Dame Helen can, too. It just strikes me that you went ahead with this new scheme without having all the building blocks in place. Did you?

Dame Helen Ghosh: Going back to the comments that Lin made, the introduction of tier 4 was a progressive process, so as she said, we already had some of the building blocks in terms of the biometric tests.

Q80 Chair: Not progressive. Hang on a minute, because I want to get this clear. You introduce a new system. You ask colleges and institutions to undertake all this validity. You cannot have some of it in place. Did you or didn’t you have it in place? If you did not, why didn’t you just postpone until you got the thing sorted?

Dame Helen Ghosh: The institutions themselves like the progressive approach that we adopted.

Q81 Chair: That is not the evidence we had, Dame Helen.

Dame Helen Ghosh: They asked us to go ahead in 2009-Jeremy will be able to say more about this. I very much heard the comment that the previous witness made about the importance of fitting in our policy changes and our communications with the natural cycle of the academic year. They asked us to go ahead in March 2009. They were not concerned at that stage that we did not have an appropriate IT system. The number of checks that we did, on about 30% of the institutions, we believed were risk-based. They favoured that approach, as did the Home Affairs Committee, which had said in the previous December that the bit-by-bit approach was a good one, so we believed that we were ready. As Lin said, the events-the surges in applications from what we subsequently believed to be non-compliant students-were a surprise to us.

Q82 Chair: Why a surprise?

Dame Helen Ghosh: It was not connected with the fact that we decided to take a progressive approach and do it bit by bit.

Q83 Mr Jackson: Can I come in and ask you a very straightforward question? You will know that in 2009, the salience of immigration as a political issue was very significant. Ministers were under enormous pressure to do something about immigration. We had had failure to deport foreign prisoners in 2006, all the way through. This is a straightforward question to which I expect a straightforward answer: what involvement did Ministers have in this? How much pressure were you under from Ministers to get something done-to sort this? I cannot understand why you implemented the scheme 11 months before the sponsor management system was in place unless you were under very significant political pressure.

Dame Helen Ghosh: I will just come back to the point that we did it the way we did because that was the pressure that we were under from the institutions-to do it bit by bit rather than big bang. I ask the question: what difference would having the IT system in place have made? I think that is an interesting question.

Lin will comment on ministerial involvement. I think Ms Hillier made the point that Ministers were very keen to attract more overseas students to the UK, but they wanted them to be genuine-as Damian Green would now say-best and brightest students, and not the bogus students who were previously coming through. They had a positive policy towards overseas students. They believed that the highly trusted sponsor approach was the best way to ensure both the quality of the education, which, in the long run, would be good for the UK economy, and the genuine nature of the students. That is why they decided to go ahead. I go back to Mr Vaz and the Home Affairs Committee, which had also supported the approach. In terms of discussion with individual Ministers, obviously Lin was there.

Q84 Chair: I want to get Jeremy Oppenheim in. From how I read this report, it all sounds theoretically okay, but in practice, it led to chaos. Jeremy, did you go before you were ready?

Jeremy Oppenheim: No, I don’t think so, Chair. Can I place two things in context? First, the pre-PB system was profoundly unregulated. We had no knowledge and very little control of post-entry behaviour. As Lin said, we did not know where students were going once they had arrived, people could work with alacrity, almost with impunity. There was no identity fix for individuals nor any compliance regime for the 15,000 education institutions on the DIUS register. I think, Chair, you are absolutely right that we did implement in March 2009 a policy that did three very simple things. Firstly, as previous witnesses indicated, it made sponsors accountable for their actions for the first time and reduced the 15,000 to just 2,000 institutions that were able to bring students into the United Kingdom.

Q85 Mr Jackson: But is that the case, because the Report tells us that 70% did not have systems in place for suitable monitoring of their students? So you are looking at a third of the possible sponsors. It is simply not the case to say that, and as the Chair says, you are also admitting that entry clearance officers’ powers were reduced at the same time, in terms of exercising their discretion.

Jeremy Oppenheim: If I may, my second point is that the institutions were prepared. No student could enter the United Kingdom from March 2009 without a letter from the institution confirming the specific nature of the course-its duration and location. That had never been the case before. The reason that we withdrew the power of entry clearance officers to test the intention of a student to study is that, in all honesty, we were not very good at it. We lost 47% of such cases on appeal in 2005, reduced to only 28% in 2009. So we were not winning those cases and people were still getting into the United Kingdom under the old system.

The final thing that I would say is that the introduction of the electronic CAS system actually came in five months’ later, not a year later. It was taken up by few educational institutions until the end of the year, because we did not mandate it for just the reasons that Dame Helen said. We worked closely with universities and Universities UK-they were actually content and issued press releases about wanting us to do this in a phased way.

Q86 Chair: I will have one more go at this. The figures went up by a third, the rejections went down by goodness knows how much-it went down from whatever it was, 30-something per cent., to 20-something per cent. Institutions’ income clearly comes from foreign students. Their incentive is to maximise the number of foreign students. I cannot for the life of me think why you had not thought all of that through better-to put in controls, rather than having these incremental changes now, which we get time and time again and which are obviously driving people at the front completely potty. I do not see why you have got it so wrong-you keep thinking that you have got it so right, but why does the Report say that you have got it so wrong and that you did not provide value for money?

Lin Homer: Mr Jackson asked me the question about whether we were under pressure. I think that, truthfully, the answer is that officials and I think Ministers at the Home Office were keen to move ahead and to introduce new policies. I think that the element of the policy that you have seen very well illustrated today is that there is a very strong desire to continue selling the good side of the education system as an international export. The question about how much you regulate and how much you restrict versus how much you grow that sector continues to be a very finely balanced debate. Now, in my experience during that time-I will answer Mr Jackson’s question directly-yes, there was a great deal of ministerial conversation, not just within the Home Office but, more significantly, across Government. One of the issues was whether our probably more negative views about the level of risk would be borne out, or whether the views that you have heard very eloquently expressed by the witnesses who appeared before us today would be right and the system would right itself. I think that both our witnesses today said, in terms, that if you had held your nerve and waited then the whole thing would have kind of balanced itself. But I do not believe that that is true. I exercised operational autonomy-I thought that the risk we were seeing from southern China, Bangladesh, northern India and Nepal was such that I implemented operational measures and then asked Ministers. That is not something I did lightly, but the level of abuse was significant. It was an immediate response to the general restriction on immigration that was then occurring and to the increase in lower level qualifications that were available. Where we probably righted the policy during that first year is in the balance between lower and higher quality education. The Home Secretary has been very clear in recent times that she does not wish to do anything to move us out of the higher quality end of the market. That is the journey we have been on.

Q87 Mr Bacon: You spoke earlier about your judgment in relation to areas of risk. Was it your judgment that the judgment of entry clearance officers was an area of significant risk that needed to be reduced by removing the autonomy that they had? Because that is what you did.

Lin Homer: We did not believe that the entry clearance process made a significant difference to the level of abuse in the system.

Q88 Mr Bacon: Please answer my question.

Lin Homer: Sorry, I thought I was.

Q89 Mr Bacon: My question was: did you think that allowing entry clearance officers to exercise their judgment and some autonomy in the way that they had done hitherto was a significant area of risk that needed to be reduced?

Lin Homer: No.

Q90 Mr Bacon: You didn’t, but it says quite clearly in paragraph 1.14 of the Report: "Removing entry clearance officers’ powers to assess applicants’ intentions led to a fall in the student visa refusal rate from 32 per cent…to 24 per cent…If the rate had remained at 32 per cent, 46,000 additional applicants would have had their visa application refused." I am at a loss to understand why you removed from entry clearance officers the autonomy and the judgment that they had previously been able to exercise.

Lin Homer: For very much the reasons Jeremy gave earlier.

Q91 Mr Bacon: Make a difference?

Lin Homer: Because a very significant number were overturned on appeal and because I visited many of the overseas visa officers myself. I talked to front-line officers. They would be presented with an extraordinary array of documentation, which they had to make judgments on.

Q92 Mr Bacon: I appreciate that there was a lot of abuse going on. I am aware of that. And 47% being overturned on appeal is far too high, although, even then, 53% would presumably have found that they were not overturned on appeal, but were upheld.

Lin Homer: But then they would very often just apply again, so there was a carousel of applications. I believed that if we could tighten up the system so that an individual applicant had a biometric attached, they could not re-present themselves to us as another person for another course. I thought colleges could be made to be more responsible about the offers they made and about the care they took with the students when they arrived: did they study? were they working more than they were studying? Before we changed the system, I remember we found one case of a young man who was working 90 hours a week. I did not believe that that left much time to study, so our view was that the entry clearance officers were working incredibly diligently, but it was an open wide tap. Even if they stopped 50% of it, the rest was still riddled with abuse.

Q93 Matthew Hancock: I appreciate the descriptions of the pre-2009 position, but to argue that because that was dreadful, everything thereafter was perfect, because it was an improvement, is not a strong argument. Also, as we had the discussion with the previous witnesses, what is not under discussion is the policy of tightening controls, which is the policy that the Committee does not get into, which I strongly support. The question of the use of discretion seems to be one that the Report gets into. We hear from the front line-for instance, the union representing front-line border staff. Because a lot of appeals go through owing to the use of discretion on the front line, there are two responses that you could take.

One response is to reduce the amount of discretion used. The second is to change the criteria on which an appeal is based to justify-within a framework and within constraints-the discretion that is allowed, and therefore combine the use of biometrics, to ensure that people cannot go through a carousel, with discretion on the front line, which is supported by the system and therefore cannot be appealed against. If a lack of discretion is part of the problem, why did you not go down that route, as opposed to simply making the system one based on rules, so that those on the front line are just automatons, filling in a rulebook?

Lin Homer: We did make changes to the appeal rights-

Q94 Matthew Hancock: Did you think you made enough changes to the appeal right, compared with how much you made it a rule-based system on the front desks? Yes or no?

Lin Homer: I was in favour of tightening up appeals more. I spent a lot of time with tribunals suggesting not only that the rules were tightened but that judges were given support to consider the context in which appeals were presented.

Q95 Matthew Hancock: Do you think more of that would be effective in implementing this policy?

Lin Homer: I think more of it has been done since I left and I think that is absolutely a way to go. New evidence would be presented that was deliberately not presented to the visa officer, and it would be presented in-country in a way that was persuasive to the judge but without the background knowledge the visa officer had. As to whether-

Matthew Hancock: Could I move on? Given that you think that-

Lin Homer: Sorry, I was just going to answer the second part of your question. I did not feel that moving away from discretion for the ECOs was therefore the be-all and end-all. By the time we introduced this approach, we were already down to interviewing only about 12%, so this was not from 100% to nothing. I took a view subsequently. It is a learning process, and I do not think I said it was perfect.

Q96 Matthew Hancock: Rules versus discretion is always a balance.

Lin Homer: Yes, and I took a view subsequently-

Q97 Matthew Hancock: But a 12% exercise of discretion is on the quite low side.

Lin Homer: I took a view subsequently that there would be value in considering reintroducing a degree of discretion focused on more specific areas. Those would include the provision of maintenance on an ongoing basis, because our rules tended previously to test it just at one point. The second would be whether or not there was some value in allowing the border officers, who had not had discretion previously, to do what might be called a rudimentary test of English. Those are some things that, again, have gone on to be considered. This relates to my comment about accepting that this was not a perfect system but one that we have needed to land more fully. But it is easier to see that with hindsight than it was at the time.

Q98 Matthew Hancock: Do you think that enough has been done now to give discretion within a constrained framework?

Dame Helen Ghosh: I just want to reiterate the point that, as the previous witnesses said, the fundamental approach was that the institutions were in the best place to judge ability and intention to study and, as Lin says, in fact it was a very low proportion of potential students being interviewed. But what we have done recently-from last December to this March, I think-is some piloting of in-country interviews, which has shown some interesting results. We are currently wondering-obviously, you would have to have a value-for-money case on this-to what extent introducing or reintroducing risk-based interviews would be an appropriate thing to do.

Robert Whiteman: There are two points there, Chairman. One of them is this. Given the existing policy rules, if we operationally use interviews more, might we find that there is abuse of the system that otherwise would not be shown by the other tests? While the fundamentals of the system are now in place-we expect sponsors to regulate the quality of their students and we look at visa applicants in terms of their financial details and so on-in the pilot we did find that in spite of these controls being in place, visa officers would not have issued the visa in some cases under existing powers. We also found in the pilot that were a targeted use of an intentions test to be introduced as a policy change, visa officers would refuse a further number of visas which are currently given under the points based scheme. So I think what we want to move to is a targeted or risk-based use of interviewing.

Dame Helen Ghosh: Yes.

Robert Whiteman: I am talking about using the intelligence from what we see in-country, where we see students here and where we take enforcement action, and taking that back to the visa stage and trying to disrupt or prevent that by the targeted use of interviewing. I think that over the next few months, we are going to do more of that. We ran a pilot involving 2,500 to 3,000 applicants. We are going to run that over the next few months. But I think the expectation will be that interviewing will become a bit more of the bread and butter in some places, even without a rule change. A rule change with an intentions test is something that at the moment we think is valuable, but again that is being tested with entry clearance managers through an extended pilot.

Q99 Matthew Hancock: Okay. I am grateful for that answer. It sounds positive, although you did not give us the numbers. The other end of the risk-based system is that you keep focusing on giving more discretion to the institutions. As we saw, the institutions are very much in favour of "more students, please," because that is what their financial structure is based on. I don’t blame them for that at all; they have to make money.

I am very interested in something that somebody said very early in this hearing, which was that we do not target individual students. I was surprised by that, because one of the consequences of that will be that fine, upstanding institutions end up dotting every i and crossing every t. We heard from the LSE the pains that they need to go to to make sure that they get everything right, because the business model and their reputation depend on it, whereas those at the other end are much more likely to try to breeze through and get away with it. So the whole burden of the regulation will tend to fall disproportionately on where it is least needed, and those who most need most effort will end up with the least burden of regulation-not necessarily the rules, but the consequences for their organisation. So why not target individual students? It is, after all, individual students who are moving around, which is what we are trying to control.

Dame Helen Ghosh: I think you are picking up a comment that Lin made, which is simply trying to make the distinction that the whole point of tier 4 was to use the educational institutions as-I think she used the bath analogy-as the way you turn the taps off in the first instance. She did not mean that there is absolutely no place for pursuing individual students.

Q100 Matthew Hancock: Pursuing individual students not only gets the individual student, but it discourages other people. That is a crucial part of the system, surely.

Dame Helen Ghosh: Indeed it does. As the Report makes clear, obviously at any one time the agency will have different priorities around compliance, but we have had a compliance strategy from the end of last year, which will include some elements of compliance and enforcement of tier 4, because that is currently one of our priorities; Jeremy and Rob can talk about this. If you take a snapshot of compliance rates and how that is reflected in the kinds of checks and regulatory burden on a day-to-day basis, it is undoubtedly the case that the institutions-broadly speaking, the universities and the higher institutions-have a very high compliance rate of something like 98%. That is why they will get, from Jeremy’s people, less inspection and fewer people breathing down their necks. The lower compliance rates are in the other institutions in percentage terms, which is why they will get more people breathing down their necks.

Q101 Mr Jackson: That is not the case, because we learn from the figures on page 19-this is a very important point, because you have made great play of the importance of the sponsor institutions-that in the 20 months to October 2011, which is only about eight months ago, you did not collect data on the 62,000 occasions of students potentially in breach of visa conditions, of which 23,000 were about failure to enrol. You did not collect those data. No student is going to say, "I am an overstayer," or, "I am here illegally; please take me to the airport," so you are relying on the institutions. They are e-mailing you and telling you that, and you are ignoring it. You are not collecting the data, and the estimate is about 30,000 students even before the sponsor management system was up and running. I am afraid that these institutions are not a fail-safe, because you are not collecting the data properly. That was up to October 2011.

Dame Helen Ghosh: Can we talk about our compliance strategy and curtailment? I think that would help the Committee.

Q102 Chair: Well, it is a strategy at the moment.

Robert Whiteman: It is important that where we receive notifications from colleges we act on them. The Report does highlight that we were not doing that as quickly as we would wish to.

Q103 Chair: You are not doing it. Full stop.

Robert Whiteman: No, the position as of the end of this month is that we will be fully up to date and we will have considered every curtailment notification that we had from colleges. From the notifications that we have received for colleges over the life of PBS, we have considered those and we will identify about 26,000 cases where we think curtailment should take place because of those notifications.

Q104 Mr Jackson: Why weren’t you doing it in that period between February 2010 and October 2011? You had the figures for that spike, and you saw the imperative for acting on intelligence and data from individual sponsor institutions, so why haven’t you been doing it until now?

Lin Homer: I think that that is more fairly directed to me than Rob, because he was not there. I think that we were doing the things that we thought were most likely to deal with the surge, which included stopping applications from the most abusive places.

The other thing, which I think goes to Mr Hancock’s question as well, is that we were also taking action against employers who were employing students, because, as your Report makes out, if you are not coming to study, you are using your application to study in order to work, so one of the things that you do is bear down on the right to work. We called this the "hostile environment"-I know that you may not all like the phrase, but it was in our documents at the time. By attaching a biometric identity card to a student, we were able to say to an employer, "There was an easy and fail-safe way for you to check. Therefore, if you have employed this person when you weren’t meant to, we will put a civil penalty"-which we also introduced in 2008-"on you of up to £10,000 per student." Our view was that if we shrunk the opportunity to work illegally, it would do more good.

We did however, during those years, probably remove from the country 1,400 immigration offenders every month. That was the proportion of our detention estate that went on general immigration, rather than asylum or FNPs, and that will undoubtedly have picked up students who were breaking the rules by either working when they should not have been or doing crime. We did individual students, but as part of an overall toolkit.

Q105 Ian Swales: How many times has that sanction on employers actually been used?

Lin Homer: Gosh, I do not know the recent figures, but-

Ian Swales: Approximately.

Aileen Murphie: Paragraph 2.2 says 1,900 in 2010-11.

Ian Swales: Right.

Q106 Meg Hillier: Our job on the Committee is to look at where the public pound goes and how well it is spent. We heard quite interesting evidence from the witnesses concerned about the cost to them of doing it. I think that I got my maths wrong and it is actually a small percentage of 1% that LSE, for example, spent of its turnover. That is one college obviously. Did you analyse the balance of costs from the transfer of costs from the UK Border Agency or the Home Office to educational institutions?

Lin Homer: We did an impact study, and I think that the Report probably properly challenges us as to whether every estimate we made was right. All of you will have been engaged in impact assessments. They are a science and an art, so I would accept the comments that we may not have got all of those right. I think that the evidence would suggest that the costs for legitimate institutions are significant, but not business threatening-particularly what we heard today. To be honest, if the costs tipped the balance on illegitimate businesses, I guess I thought that was a good outcome. I think that it is probably fair to say that we were making some estimates, but we did do a full impact assessment and the figures were all in the published document at the time.

Q107 Meg Hillier: So are there savings to the UK Border Agency-perhaps Rob Whiteman can talk about more recently-of transferring that over or is it simply just a cost of the implementation of a tighter policy?

Robert Whiteman: It is a new system, which placed-

Q108 Meg Hillier: You are doing a pilot on the interviews, but, for instance, 12% of people were being interviewed, so that is the time of an entry clearance officer. That stopped just before this came in, but that stopped and this came in, so the administrative costs have fallen more on to colleges and, arguably, away from UKBA. Can you chart a saving?

Robert Whiteman: No, because some new duties were placed on the agency as well, with regard to sponsor management for example. It was a new system. As Lin said, there are estimates with regard to the administrative burden that that placed on the sector. I think that we would accept the recommendations of the NAO that we should work at improving our analysis to identify that type of burden for the future.

Lin Homer: I think it is the case that student visas do not generate as much income as the system costs. The net visa system more than washes its face, but the student system is, if you like, subsidised by other visas.

Q109 Meg Hillier: Because of the competitive nature of the market?

Dame Helen Ghosh: Yes, indeed.

Q110 Meg Hillier: I am aware that with the policy imperatives from Governments of all hues in this area, it is not always about costs, but we are the public pound Committee, so it is important to be clear about that.

We also had clear views from the witnesses that there is a lack of clarity about policy guidance, and that it is confusing, so it is adding an unnecessary burden. They were saying that there could be cost savings there to the sector. They also said that the helpline was next to useless-I am paraphrasing what the witnesses said, but not much-and that the policy was changing faster than operations could. At that point, of course, a lot of it was the operations in the education sector rather than the UK Borders Agency’s operations. Do you think that is fair comment, and what would you say about that?

Dame Helen Ghosh: First, I thought the two previous witnesses gave very cogent evidence on customer service and guidance, and so on. Clearly, for the good of both UKBA and customers, we need to make sure that we keep the system, the guidance and the help available to them as simple and as effective as we possibly can. That is something I am taking away, but Jeremy is obviously in control day to day.

Jeremy Oppenheim: Two things. First, of course, if people say that the helpline and the guidance are unhelpful and impenetrable, we would be crazy not to listen carefully. We republished the guidance for sponsors in tier 4 in the autumn in plain English-

Q111 Chair: How many pages?

Jeremy Oppenheim: Probably about 64, but that includes nearly every option that is around, so you pick and choose like you would if you were completing, say, an income tax form.

The second thing is that I know that previous witnesses suggested that perhaps we do not always listen as carefully as we might. We have an enormous range of environments in which we talk to education establishments, including joint education taskforces. There were bilaterals with most of the individual groups, and when we made the changes recently around English language testing, we listened very carefully to what the education sector said. The universities said, "Let us decide on the capability of students coming to universities", and we said that we would not ask them for a secure English language test. They said that there are occasionally highly gifted students who may not have any grasp of English, but hey they may be marvellous mathematicians or musicians. We made those changes as a result, and we would never have known about that had we not had those-

Q112 Chair: Can we just clear this one so that we can move on. According to the report, applicants must read 80 pages.

Jeremy Oppenheim: There is a wide range of guidance that you can read. In August, we will put most of the material online so that people can get the guidance on screen and move through an online application. We are trying to simplify that much further.

Q113 Mr Bacon: Are you going to have one lot of guidance instead of two? One of the witnesses said that there was not only a 74-page document for students, but another 74-page document for institutions, with a whole lot of addenda on top. Surely, having one bible that everyone can go to that contains the same information that is visible and available to everyone and remains pretty much stable would be more sensible, instead of having advice for institutions that contradicts advice given to students, which is what appears to be happening.

Jeremy Oppenheim: Two things. First, I think the dissonance that I heard from witnesses was around the immigration rules and the guidance, which we need to sort out. Secondly, I think there will always be a different set of guidance for sponsors as opposed to students, but both sets of guidance should be easy to navigate and in plain English. I think we have more to do, particularly with student guidance.

Q114 Mr Bacon: You say there will always be two. Why? You could have one document that says that if you are a student this applies, and if you are an institution that applies. If you have one person and one controlling mind and one hand doing it, the chances of producing two sets of guidance that contradict each other evaporate, don’t they? That is my point. Obviously you need bits in it that relate to institutions, and bits that relate to students, but what you have just said-Miss Homer was talking about risk earlier-perpetuates the risk that those contradictions will continue. You are nodding.

Robert Whiteman: It does. The immigration rules that are laid before Parliament, and the guidance that we issue to sponsors must obviously not have any inconsistencies between the two.

Q115 Mr Bacon: I am talking about inconsistencies between the two sets of guidance.

Robert Whiteman: The thing that I was disappointed to hear in the previous session is that although there are parts of the country where universities will have someone to speak to in order to understand where they are, clearly there are parts of the country where that is not the case. I think at the moment, our telephony and offer in terms of account management are patchy, and we are very conscious of that.

Q116 Mr Bacon: This is what I wanted to come on to specifically. I don’t know if this is a suitable analogy, but I remember hearing years ago that in the Child Support Agency, one of the issues was that the average age of staff was under 30 and that they change every two years, so you had a large number of quite inexperienced people. Can you tell us what the profile is of the work force of the agency? When you come through Heathrow, they don’t look young; they look relatively older and more experienced for the most part, but we are not necessarily talking about that. In characterising the profile of the work force, how many of them are young or inexperienced and how often do they turn over?

Dame Helen Ghosh: 3.5% is the turnover rate overall.

Robert Whiteman: It varies in parts of the country as well, Mr Bacon. On the whole, there are places where we have a more settled work force with a lower attrition rate of people moving on. There are parts of the country where we have a relatively younger work force, and therefore it is important that we have training and development.

Q117 Mr Bacon: 3.5% is the average, I take it?

Dame Helen Ghosh: What does it look like in Sheffield, Jeremy?

Jeremy Oppenheim: Significantly less. The turnover rate is less than the average for the agency by some distance.

Mr Bacon: Sheffield is a good spot.

Jeremy Oppenheim: It’s an excellent spot in which we run our services.

Mr Bacon: Let’s move on to the bad spot, shall we-[Interruption.] Dwell on Sheffield a bit longer if you want.

Jeremy Oppenheim: We run the process in Sheffield. That’s the reason why I was alluding to it. The work force is mainly graduate from two excellent universities that don’t have LSE about them, but we employ lots of people from the LSE as well.

Mr Bacon: We will forgive them for that.

Jeremy Oppenheim: I wouldn’t want to have a guess on the average age, but it is probably lower than the experience you have had at Heathrow, so a stable, able and incredibly committed work force.

If I may, Chair, that is not the place where we do all our call-centre work. We clearly need to do better in getting advice to people.

Q118 Mr Bacon: Mr Whiteman, may I take it that, noting as you do that the situation is patchy-good in some areas and poorer in others-you have a plan for correcting that?

Robert Whiteman: Yes, absolutely, which I will gladly speak about at a future appearance, or now, Chair.

Q119 Mr Bacon: You can very briefly summarise it, and then, if you want, send us a note with more detail to explain when it is going to be successfully implemented.

Robert Whiteman: I will say three things. First of all, I have formed a new strategy and intelligence directorate, whose job is to ensure that operational guidance makes sense, both to external users and to our staff, and to review our operational policy. Secondly, a skills audit of the agency, in terms of different locations and teams, what we want to do regionally and nationally, and where national roles would be carried out. Thirdly, much better management of information in order to have real-time information so that staff know about their performance. Part of helping staff in order to have a skills audit is to have a very open and transparent management information system. We are trying to make improvements to that at the moment.

Q120 Mr Bacon: If you want to write to us with more detail, please do, and we will include it in our appendix.

You bring me neatly on to other questions about management information. One of the flaws that has been widely discussed is the International Passenger Survey and whether it is fit for purpose. The Treasury Committee said that it wasn’t fit for purpose four years ago, if the purpose was to include playing a central role in estimating international migration. I declare an interest because Professor Edward Acton, who chaired the Universities UK working party on this, is a constituent of mine; in fact, he is contractually obliged to live in a very large house in my constituency.

Matthew Hancock: Tough life.

Mr Bacon: Yes, but as he would say, somebody has to do it. I must say that the UEA is going up the tables as a result of his stewardship. It is not yet with the LSE, but I am sure it won’t be long.

Given that it is plainly flawed-it isn’t really adequate-what steps are you taking to do something about it? He is suggesting that the information available from the Higher Education Statistics Agency, which is very precise-it includes passport numbers and all kinds of other things-would make a much better starting point, and that you should be using that as your benchmark for analysis, so you would end up with much more accurate information as a result. Are you going to do something about that?

Dame Helen Ghosh: Our main tool, which we are already able to use in fact, in terms of tracking the movements of some students-it is what has enabled us to note that a number have departed who we did not know had departed-is the e-Borders system. The objective of that by 2015 is that we will be able to count people in and count people out. We can already track 100% of flights out to non-EEA destinations and we can do about 55% of flights overall. So the objective is to achieve about 95% tracking by December 2014 and by 2015-obviously this depends on progress particularly in Europe around advanced passenger information-that we will actually be able to track our students coming in and going out. But we have already used that tool.

Q121 Mr Bacon: Do you agree with Professor Acton when he said in Times Higher Education recently that e-Borders would be much more accurate in terms of the migration figures provided? He said: "It will gather comprehensive data, at last providing the individual entry and exit information that Parliament has long called for. And an ideal pilot to test the new e-Borders-based migration statistics - and to pin down the IPS’ failure to count student outflow - is offered by Hesa’s data"-the Higher Education Statistic Agency’s statistics-"on non-EU university students." You would agree with that?

Dame Helen Ghosh: I do not know whether that is the ideal issue to pilot. Lin is reminding me that we have had a joint programme with ONS on this.

Lin Homer: ONS also think that e-Borders would be a better base of information than their survey. There has been a joint programme running with them for two or three years.

Q122 Mr Bacon: I am specifically talking about the data provided by the Higher Education Statistics Agency, which appears to be much more accurate than what you have at the moment.

Dame Helen Ghosh: We will feed it into the work we are doing.

Robert Whiteman: I think there are two issues, if I could just add, Mr Bacon. One is in terms of estimates of net migration, what is the best proxy to use and certainly there are different debates, aren’t there, about what is the best methodology to use in relation to net migration.

Mr Bacon: Yes there are, but-

Robert Whiteman: Operationally, as Dame Helen and Lin said, at the moment we do not have full e-Borders coverage to count everybody out. But when we do have, in time, then that is likely to be a much better methodology than the others that we use at present.

Q123 Mr Bacon: That is why we should have a pilot using these migration statistics. Doesn’t that make sense?

Jeremy Oppenheim: We are in conversation with Professor Acton whom I have met a couple of times on a range of these issues to see whether there is material from elsewhere in the education system that can help us.

Q124 Mr Bacon: What we can surely agree on is that the present data from the international passenger survey is very flawed. He is suggesting something that is palpably better. Yes?

Chair: Are you going to agree on a pilot-

Mr Bacon: Sorry, but there was a silence there.

Dame Helen Ghosh: I am not going to say yes or no. I don’t know the quality of the data and I don’t know how it would relate to what ONS has already said.

Q125 Mr Bacon: So you are saying that if Professor Acton could persuade you on the basis of the most statistical analysis that the data were of a higher quality than what is currently being used under the IPS then you would wish to take that very seriously?

Dame Helen Ghosh: As you will know, the rules around national statistics and the role of ONS in relation to Departments are very strictly defined. So I don’t think I can speak for Jill Matheson. But we will note that and respond to the Committee.

Q126 Fiona Mactaggart: I, too, wanted to raise the survey. There is another article that has been published today by Matt Cavanagh, who was for some period in the Home Office. He suggests that one of the consequences of using international passenger survey data is that the peak in overseas student numbers will enable the Government to game apparent migration. As I understand it from his piece, Britain is the only country which counts overseas students in its immigration figures. Is that true?

Robert Whiteman: No.

Q127 Fiona Mactaggart: So which other countries do?

Jeremy Oppenheim: Nearly every country. It is an international agreement and there is only one country, as I understand it, that has opted out.

Q128 Mr Bacon: I have heard people praying in aid the United Nations before on this. But common sense suggests that if you want an effective and efficient system, students, for the most part, at least bona fide students, are not migrants. I studied in Germany. At no point did either I or the Germans think that I was an immigrant. I was there studying. Why would you call a student a migrant? That is what people do not understand. It defies all logic and common sense.

Jeremy Oppenheim: There is an international agreement about how one counts migration.

Mr Bacon: Yes, I know that.

Q129 Fiona Mactaggart: Most other countries have intelligent ways of getting around this, because they do not have ways that make people think that the figures are other than what they are. We all want a more efficient system that uses figures that are an accurate picture of something real. What percentage of students actually return to their country of origin or go to another country?

Dame Helen Ghosh: It is hard to say until you have the kind of measurement that we will get through e-Borders.

Q130 Fiona Mactaggart: What is your current estimate? You must have some evidence. You had some evidence on the numbers who do not and so on. Is it 90%? Is it 50%?

Lin Homer: I believe that, before we made the changes to the system that allowed you to move from study to work to settlement, a significant proportion of people, whose original sojourn had been to study, applied for settlement. So one reason why the break in study into settlement was introduced was to cut that thread and that may well allow you, at a point when that was successful, to make a case-even if you had to count them internationally-for disregarding them.

Q131 Chair: Can any of you answer Fiona’s perfectly legitimate question, excepting that e-Borders will give you an accurate number?

Robert Whiteman: Based on a research sample of 18,000, we believe that compliance with students is about 94% and that non-compliance is about 6%. Most people then comply within a year or two. On the whole, the higher up one goes in terms of the institution, the more compliant it is. Non-compliance of LSE would be 2% or less.

Chair: That is extremely helpful.

Q132 Fiona Mactaggart: That seems to me to get to the nub of the point. I think that Matt is right; we could be about to see gaming in this situation. I look at our report and one of the recommendations it makes is the point that I interrupted Mr Jackson about, which is what you actually do when you curtail someone who is in breach. I would like to know, Mr Whiteman, what you actually do.

Dame Helen Ghosh: Can I just get back briefly to the previous question? You have to distinguish here between international statistics and rules on international statistics and the policy of an individual Government, because, in terms of setting its net migration target, this Government’s policy has clearly been to include students. It has done so for the central reason that what it is interested in is the impact on communities, on society and on the economy of students as a group by definition staying more than a year and, in graduate terms, up to five years and so on. They think it is valid to do that and that is a policy issue-

Fiona Mactaggart: I really would challenge that, Dame Helen. In the Conservative manifesto upon which they were elected, their statement was that-Matt would no doubt say it accurately-the problem with the student route was the abuse of it and not that the student route represented migration. I do not think that any party-

Mr Bacon: The Prime Minister himself said that there are no limits on tier 4 numbers, so before you start representing policy I think you should make sure that you understand it. I do not think that this is the issue at all.

Q133 Matthew Hancock: If the rest of the world uses a UN definition that includes students, it is very hard for one Government to say, "We will exclude students," because you can imagine the presentational concerns. We have not had a decent answer as to why students are included other than because it is the internationally accepted standard.

Dame Helen Ghosh: And it is indeed the policy of the Government. Damian Green and the Home Secretary have stated on a number of occasions why they believe it is right to do so.

Chair: We are getting very het up.

Mr Bacon: I have heard them say it! They say it is because it is the United Nations.

Fiona Mactaggart: There will be a very handy figure in five years’ time when there has been a significant reduction in the number of students, but that would be a very cynical way of interpreting what we are doing.

Chair: Shush, you three!

Q134 Fiona Mactaggart: I wanted to ask Mr Whiteman what he does when a student’s leave has been curtailed. You spoke about the number of curtailments that have happened. I want to know what happens to the individual student at the point when their leave has been curtailed.

Robert Whiteman: We can curtail for several reasons. One may be about the institution. If we are revoking the licence of an institution, we would curtail the students that are going there. Obviously, it may be that we are informed by the institution that the student isn’t studying. When we curtail, we in effect give the student 60 days to find a CAS from another licensing college, which is then able to register them as a student. Where that doesn’t happen, we have a range of measures to deal with the removal of the overstayer. Once the CAS period has expired, the student is an overstayer.

One of the points that the Report deals with is the balance between focusing a lot of resources on high-harm, high-risk removals, such as foreign national offenders or failed asylum seekers, and dealing with high-volume returns that are perhaps not as high-risk. Our approach to that is that we have a national tasking and co-ordination board looking at the different types of overstaying that are taking place so that we can task arrest teams and local immigration teams to say what our priorities are. At the moment, Operation Mayapple, our summer enforcement campaign, is dealing with the priorities for arrest and enforcement over the summer period. We will then get intelligence packages on the subjects of those enforcements. Within that, we have tasked some student removals. By the end of the month, we are fully up to date with curtailments that have taken place under the PBS scheme. Thereafter we will process curtailments as they arise.

A number of curtailments have been tasked out to the arrest teams to make what are often called enforced removals. Enforced removals are just a part of the spectrum of removals and returns. Obviously, we want to encourage as many people as possible to leave voluntarily in response to our notices or through an assisted voluntary return scheme. To deal with some of that higher volume, we have also been running a pilot in recent months with a contractor that is contacting students and overstayers on our behalf to make returns in some of those less high-risk but higher-volume cases. We will do enforced removals, and we will go out and arrest people, including a selection of students, but we target a lot of our arrests at higher-harm individuals, too-foreign national offenders, illegal work operations, sham marriages, and so on. Within the national tasking framework, we expect some students to be removed. Below that we have a spectrum of activity in which we look to encourage people to leave in the knowledge that enforced removal is an option.

Q135 Chair: Can I just come back at you on this? The Report says that of the sample that was looked at, only just over half of cases where a sponsor had given notice of non-compliance were considered for curtailment and only 12% were curtailed. The whole thing took 213 days. What has changed in those stats since the Report?

Robert Whiteman: Obviously, the Report was accurate at the time.

Q136 Chair: I understand, but what has changed?

Robert Whiteman: What has changed is that we have processed those curtailments, so we are fully up to date with dealing with notifications from institutions.

Q137 Chair: Those that were identified in the Report? The 12%? You get 60,000 notices, 100,000 notices, or whatever it is, from colleges of potential abuse. When this Report was written, in a sample you had looked at only 55% of them. Now you are looking at how many? All of them?

Robert Whiteman: All of them.

Dame Helen Ghosh: We have looked at all of them, which is 123,000. That is all of the notifications, some of which will be about changes of circumstance. We have decided that 38,000 require some kind of action-in other words, they are not just changes of circumstance or the person deciding to go away-and 26,000 will result in a formal curtailment, which is the 60-day notice, assuming they have more than 60 days to stay.

Robert Whiteman: And some of those 26,000 then go into our enforcement campaign.

Q138 Fiona Mactaggart: Mr Whiteman, you were explaining how there are more serious kinds of cases to enforce, and you cited one of them as sham marriages. You will probably be aware that I have written many, many letters to the Home Office about its failure to act on my constituents who have been victims of partners who entered into a sham marriage with them and who, as soon as they got their leave, abandoned my constituents. It is a thing that I have been writing to the Home Office about since before I became a Minister in the Home Office, and I remain ineffective on this. If you are saying that you are being more effective on those ones, I think I must be right in saying there are very, very few of these 26,000 curtailments who are ever going to get a telephone call or a tap on the shoulder from the Home Office. Am I right? What percentage would you expect to get a contact?

Robert Whiteman: I think that, of the 26,000 curtailments, everybody will be contacted by the Home Office in one form-

Q139 Fiona Mactaggart: But of that 26,000?

Robert Whiteman: Some of them will go to, for example, the contractor that we are using on overstayers. Other people will be approached through contracts that we have in order to encourage people to take assisted voluntary return. Some of them will be tasked to our arrest teams because, as I said earlier, we will take a range of options on the spectrum of return and enforcement.

Q140 Fiona Mactaggart: And what proportion will nothing happen to?

Robert Whiteman: All 26,000 we will contact in one form or another.

Q141 Mr Jackson: Can I ask you specifically about the tier 4 applications from Pakistan? Recently, you have begun a pilot project, because you found that 40% of Pakistani applicants for tier 4 were not genuine students. I have two questions: first, on what basis have you alighted on Pakistan-incidentally, I wholeheartedly concur that that is an issue-and, secondly, when will that pilot be concluded and do you have any plans to roll that out further so that it is in more general use?

Robert Whiteman: Just to say, it may be that people are students. Obviously, there was a time-earlier in these reforms-when there were a number of bogus colleges and people were not really studying at colleges. We think that, as Jeremy mentioned, the number of licensed colleges has reduced from some 15,000 on the former DIUS register to 2,000 sponsors that can accept overseas students now. First, the interviewing will test that but, secondly, the interviewing may find that people do not meet the standard of English accredited to them under the testing.

There is a credibility test here, in that, while people have assembled their application-including an English language test-in order to study at that college, when we interview them do we find that that stacks up? What we found in 17% of cases, under existing powers, was actually that there were other issues with regard to their intentions to study and not to work, or that their English language standards were not up to the standards expected. We did not only choose Pakistan; we chose a number of countries.

Jeremy Oppenheim: Forty countries have been chosen.

Robert Whiteman: We are operating the pilot across a number of countries from which we receive a large number of student applications.

Q142 Mr Jackson: Are you allowing out-of-country appeal in this pilot?

Robert Whiteman: If we make the rule changes, one of the issues that will have to be considered is the effect that that could have on appeal.

Mr Jackson: The answer to my question is-?

Robert Whiteman: At the moment, the decision is not being changed. At the moment, the decision is standing. We are saying to the entry clearance manager, "Had you had a different set of powers-if you had an intentions test-would you have made a different decision?" That is why we are piloting or testing what, if colleagues in the Home Office made such a rule change, the effect of that would be.

Q143 Austin Mitchell: I want to come to the end and to how we deal with people who want to stay, but first I would like to ask a question which arose from a reception at the end of last year in the House of Commons, commemorating some anniversary of Rutherford’s. He came from New Zealand, and a rather bitter representative of the high commission said that, under the present rules, Rutherford would not have been allowed in and, if he had been allowed in, he would have been booted out after three years. Is that correct?

Robert Whiteman: No, I don’t think it is. I can’t look back on that visa application.

Austin Mitchell: You’re not as old as I am.

Robert Whiteman: Our visa requirements for New Zealand-of course, if he wanted to stay and settle, I think that would be possible because of the nature of the job that he had at university. I will gladly look at the case, Mr Mitchell, but-

Q144 Austin Mitchell: I just note it at the beginning. I want to move on to the question of people who stay on and disappear. It looks as though you have been able to pass part of your work, because we were told that the student entry system had been amplified by a lot of phoney colleges giving phoney qualifications. You have dealt with that and imposed a lot of checks on the colleges and the institutions at their expense, but the other end of the argument was that a lot of people were coming in as students and staying on, working. You have not dealt with that as effectively, have you?

Dame Helen Ghosh: Yes, we have dealt with that by setting a much tighter set of criteria around the circumstances in which you can stay on and work.

Q145 Austin Mitchell: But you do not know where a lot of them are?

Dame Helen Ghosh: Well, as Rob just said, in terms of the compliance record of universities-degree-giving institutions-it is actually very high. What we have allowed is that you can stay on to work in a graduate-level occupation-an unlimited tier 2-in order to do post-study work. At degree level, you can still stay on and do post-study work; it is just that you cannot stay on-I think the stat was that for some 60% of the people previously doing post-study work, it was definitely not degree level. It was dishwashing and care.

Q146 Austin Mitchell: From the Report, it looks as though you do not make any effort to deal with them. Take paragraph 2.10 on page 22, for example. The National Audit Office employed an inquiry agent to trace people. He was supplied with 812 names from Yorkshire and Humberside, a place I would have thought people would want to stay in and not leave. Those were names that could not be traced. A lot of them were not students, but a lot were and within a week, at a cost of £3,000, he traced 18% of them. This looks like indolence on your part. He traced 24% of the tier 4 overstayers. Why could somebody doing this for the National Audit Office trace people so easily when you could not?

Dame Helen Ghosh: We have obviously had some discussion with the National Audit Office about this. Indeed, as the Report says, when the Report was published and we agreed it, we said that it was not clear whether this would give us additional data. In fact, I believe it is the case that when we went to those addresses, we found none of those people. So, as a trace pilot, it did not succeed in giving us more up-to-date data on the students or people involved than we had had before, although we welcome any innovative ideas. That is distinct from what we are doing about the rules for post-study work, which are the ones now that I described and which come back to how attractive our offer is abroad. We have to communicate very clearly, particularly through our highly trusted sponsors, that people can come and still do post-study work. They just need to do high-quality post-study work. If, again, the previous witnesses argued that the myth that nobody was allowed to do any post-study work was getting out there in some of our key markets, it is very important that it does not, because it is part of our "best and brightest" offer, including for graduate entrepreneurs, for whom there are potentially 1,000 places. We need to send that message very strongly.

Q147 Austin Mitchell: I am glad to hear that you will communicate that to people thinking of coming in, because the Grimsby institute said that part of its problem and the falling recruitment were due to the fact that word was getting about that people could not stay on after they graduated, even to do another degree or qualification. The point made in this Report is that one region has its overstayers, and it does not inquire into whether they have gone into another region, so all people have to do is move around the country and you lose them.

Dame Helen Ghosh: That is a different point. I think something-Rob and Jeremy can talk about this-that we absolutely accept is that we have not been consistent enough in our approach. Again, as you say, Yorkshire and Humberside had a more proactive approach to chasing up than other regions.

Austin Mitchell: No, it was not Yorkshire and Humberside; it was the National Audit Office.

Dame Helen Ghosh: No, there are two. The Yorkshire and Humberside region of UKBA was more proactive. Coincidentally, the NAO, as an experiment, tried its tracing through a private company. It is confusing how many pilots there are. Meanwhile, we have also got Serco to do a pilot of checking and tracing. The answer is that we need to apply the best practice everywhere. That is what Robert and co. are trying to do.

Robert Whiteman: I don’t think we would want to be defensive about this. The sort of tracing work that has been taking place in Yorkshire and Humber-the regional manager is sitting next to me, and before he was the acting head of immigration.

Austin Mitchell: He is not smiling, though.

Robert Whiteman: Clearly, we expect that consistency. It is the same answer as before. We intend to build the consistency of everybody being contacted by us in some form or another if they are an overstayer into our enforcement strategy in the months ahead. We acknowledge what the report has said about the inconsistency in relation to that. The only thing that I would say-I am sure the NAO would say this-is that using a tracing agent does not mean that these people were traced. An address was found but when we have looked at that, sometimes it is an older or newer address but not one where we could trace people. That does not, however, step back from the fact that the sooner we put people into some form of tracing, the more likely we are to be able to remove them or encourage them to return.

Amyas Morse: Just a thought, since we are sharing suggestions-this was not in our Report, I hasten to say, so you can strike it down immediately-as I listened to the earlier witnesses, it struck me that some sort of service-level agreement between the agency and the education institutions might help. In other words, it would be something where you undertook to provide a level of service to them, in return for what you expect from them. It might have a more stabilised relationship. I am not making any implication about what that level of service is now, but given that they are your partners in doing this, it is just a thought that you might consider.

Dame Helen Ghosh: Yes.

Chair: Jackie, then Chris, then Richard, then I will wind it up.

Q148 Jackie Doyle-Price: For those people who are determined to enter our country illegally, they really don’t care how they get in; they will get in. On the one hand, you have applied a set of rules to where you think there is an area of risk, and good performing institutions have applied them, and you have also managed to identify some of the rogue colleges that have also been an outlet for that, which is great. On the other hand, we still return to those individuals who will, come hell or high water, get into this country illegally. As a consequence, I am really horrified to read paragraph 2.5 of the Report, which says that you do not have any measures or targets. It then goes on to give the example that, where you found a surge in applications from south China-an increase of 400% using this particular way in-yes, you clamped down on the number of people who were being approved that way, but there was no enforcement action taken and no attempt was made to trace those people. Why was that?

Lin Homer: This was the ground I was trying to cover earlier, which is to say that, in any enforcement arena, you have to have a prioritised approach to how you use your resources. We had about £440 million to spend on enforcement and we had a clear strategy agreed with Ministers that we would focus on the most harmful first. In terms of return, going back to the value-for-money angle, we took the view that we needed to concentrate on, for instance, employers who were providing employment, and therefore closing down employment, or individuals who were causing harm such as breaking the law or stealing. We had a community level as well, so antisocial behaviour could trigger it. You had to put your resources where they would be most useful.

In that context, when we launched tier 4, I will have had just under 3,000 detention spaces. You have to decide who will be in those detention spaces. Our basic working mantra is that you need a person, a document and somewhere to keep them until their plane goes. If you do not have all three things together, you will not have a successful removal. For that reason, you have got to decide where to use your resources.

Q149 Jackie Doyle-Price: That sounds great, but there is a public perception angle to this. One is to the people overseas who are thinking of using this route to come here. If they get a very strong signal that it will not be a way in, that activity will stop. Also, I would say that, when I am out knocking on doors, lack of confidence in the immigration system is probably the most regularly reported issue that I face. A very high-profile curb on these people would pay dividends in terms of confidence in your service.

Dame Helen Ghosh: Absolutely. That leads very much into what Rob is now doing on curtailment. The team envisages that there will be non-voluntary removals, and that is precisely to send a signal, as you and your constituents would want, to potential students or bogus students out there not to think about it, because if they try, they will not get a visa, because we will have a tight set of controls around that, and if they attempt to come, bunk off and stay on, we will pick them up. We are very focused on that deterrent effect.

Q150 Chair: Can I ask something in relation to that? Does that mean that you are not putting any more records in storage, as the Report says you did?

Dame Helen Ghosh: In relation to students?

Chair: Yes. What it says is that a lot of the people whom the education institutions told you had not complied-you put the stuff into storage.

Jeremy Oppenheim: That’s the 123,000. We have taken them out.

Q151 Chair: You have taken them all out of storage?

Jeremy Oppenheim: And looked at them all.

Q152 Chair: You know where they all are, do you?

Jeremy Oppenheim: They are electronic. They are not stored in a filing cabinet. They are in Sheffield’s electronic system. We have gone through every single one of them, and have completed-

Q153 Chair: Have you lost any?

Jeremy Oppenheim: No, we have lost none.

Q154 Chair: Can you absolutely, 100% assure us that none of these are lost?

Jeremy Oppenheim: I can absolutely assure you, Chair, that any we have received we have gone through with teams in Sheffield. Many were changes of address. Some of them we had already returned.

Q155 Chair: Have you lost any?

Jeremy Oppenheim: No. I have said and I will repeat that we have not lost any of these records.

Q156 Jackie Doyle-Price: Coming back, one of the ways you said you were clamping down on this was by enforcing civil penalties against employers. Doesn’t that work on the assumption that these people are working in the legitimate economy?

Lin Homer: No, because we take enforcement teams wherever there is trade. Our enforcement teams are 24/7. They will turn up at 11 o’clock, interrupt your meal and do a raid on a restaurant then, or they will go early in the morning to an agricultural establishment. They do not give a warning or signal that they are coming, so I think they pick up legitimate traders who might traditionally have said they didn’t know. Nowadays, we say, "Where’s proof that you knew this person had a right to work?" If the person claims to be a student, we can say, "Did you look at their foreign national identity card?"

If you think the employer is less concerned about the work force, you might at first give them some guidance about how they should recruit properly. You might revisit on another occasion, and then enforce the penalty if they have not learned. There are a range of responses there, but I think the enforcement teams are able to focus very well on illegal working. A significant number of the removals each year are people found illegally working.

Dame Helen Ghosh: We have not discussed it, but don’t forget that we revoke and suspend the licences of highly trusted sponsors. We have increased our number of visits, not least following the recommendation of this Committee after our previous hearing on the points based system. Our officers are doing more visits, and we are doing suspensions, some of them quite high profile, and revocations of licences. That is the other way we send signals to students and people abroad.

Lin Homer: For instance, the DVLA now expects to see more than six months’ right to stay before they will issue a licence. This is all part of the hostile environment. If you are coming to work rather than study, and you cannot achieve that, our belief is that that will reduce the number of people. The communication channels work very well.

Q157 Chris Heaton-Harris: On pages 26 and 27 of the Report, figures 10 and 11, there is a number of things you are hoping to deliver, whether under your compliance strategy for migrants and sponsors or your sponsorship sub-strategy. Some of the dates have just passed, and I wondered how you are doing. Have you achieved your targets? And just because I was slightly hard on the previous witnesses, I take it from their statements that you possibly have not yet quite achieved a number under the "Customer service enhancements" to the sponsorship sub-strategy. So could you run through those for us?

Jeremy Oppenheim: Of course. In figure 10, the "Unspecified"-the first one-just relates to the development of our main IT system, ICW, which is why we do not have a specific date, although we are nearly there; the "communications plan" is in place, though clearly not good enough for previous witnesses and therefore for myself, and we may need to revisit it; and, in terms of communicating with sponsors, we have agreed that we will make sure that every six months at least we are in direct contact with them. We have hit the improvement with reporting notifications. In terms of IT records, the "Unspecified" will be in place when the ICW process is completed, automatic curtailment the same; giving "employers an online method to check" is close, but we have some security concerns that we need to complete; we have already mentioned the DVLA situation; and the requirements for mandatory health insurance are currently being considered by Home Office policy, although we have already introduced one component-if you have a debt with a health trust, that can be picked up when you cross the border. Finally, on the continuing "roll-out of e-Borders" I am sure Dame Helen can say more, but that continues apace.

Q158 Chris Heaton-Harris: What about the other ones, the "Customer service enhancements" especially, which were mostly due in April?

Jeremy Oppenheim: Yes. If I just go through them: in terms of the improved productivity objectives, that has been completed-our compliance officers are doing even better than they had previously. On "All compliance officers to complete 16 visits a month", we committed to doing by the end of this calendar year-we are at 12 in most places at the moment, so I expect to be on target. Then on that tranche of "Customer service enhancements": the "customer service excellence" has been achieved in nearly all the regions that we run; "Accurate and more up-to-date information provided to customer service teams"-

Q159 Chair: From the evidence that we got earlier on, what do you think you have achieved?

Jeremy Oppenheim: Forgive me, Chair. It has been achieved recently. A lot of extra energy has gone into this national accreditation, so-

Chair: It is outcome that we are after, not the energy that goes in.

Jeremy Oppenheim: Indeed. All I am suggesting is that customer service excellence, which is a nationally accredited process, has been achieved by-

Chair: It does not feel like it if you are a customer.

Jeremy Oppenheim: That is the point that I made earlier: if the customer does not feel it, we need to do even more.

If I may cover the last two objectives: all staff are wearing uniforms for visits, although I recognise that that can produce concerns for some people visited; and on developing a "sponsorship charging strategy to recover all costs", a cost strategy has been put in place, although it may not recover all costs at present.

Q160 Mr Bacon: I would like to return to this question of the use of student numbers in the immigration statistics. Dame Helen mentioned this earlier, and I have heard Ministers talk about this on a number of occasions. They certainly make it sound as if they have no choice, because this is a matter of United Nations agreement, whereas in fact the United States does not treat students as immigrants and nor does Australia. It seems to me that it ought to be perfectly possible to have a set of parallel statistics. What I suspect that you are fearful of is being seen to be fiddling the statistics, whether you are or not-but that might be the perception. That is a legitimate fear, although I do not think that anyone in this-at least, anyone serious-is interested in fiddling the statistics. What one is surely after is accurate information that helps to inform the debate. The Government’s policy is to make sure that there are no bogus colleges and no bogus students, that no one is coming to this country as a student while actually, secretly, intending to work and that students, as a very important export market, are encouraged to come to this country. Indeed, the Prime Minister spends public money flying around the world encouraging students to come here. What we are interested in, as a value-for-money Committee, is making sure that the Government’s policies are effective, efficient and economic. Plainly, if they conflict with each other or there is poor information, there is an increased chance that they will not be those things.

Surely, if the Australians and the Americans can manage it, we should be able to manage it, too. Indeed, in his article, to which I referred earlier, Professor Acton said that there is a "stark contrast between the redoubled efforts of Australia, the US, Canada and a growing number of European countries to attract foreign students and the frosty image projected from Britain", which is damaging the UK economy and university receipts at a time when the Government are also telling universities that they need to depend more on external income rather than looking to the teat of the Government.

How statistics are treated is central to this. Would it not be more accurate as well as more effective and efficient to use statistics that do not suggest that students-genuine students-are something that they are not?

Dame Helen Ghosh: I am very happy to write to the Committee with the latest policy statement, but as I said, essentially, the coalition Government’s commitment, in their programme, to reduce net migration includes students, for policy reasons, as well as being supported by-

Q161 Mr Bacon: I should know this: are you saying that the coalition agreement mentions students?

Dame Helen Ghosh: No, it talks-

Mr Bacon: I didn’t think it did.

Dame Helen Ghosh: No, but implicitly, it does.

Q162 Mr Bacon: I am not sure that it is implicit at all. My whole point is that as it is not explicit-if you know your Robert Bolt, you will know that wonderful phrase in which Sir Thomas More says that, if anything, silence betokens consent. I cannot see that this is necessarily a problem at all in what you call policy terms.

I am interested in effective, efficient and accurate data. I am saying that the apparent adherence to what you call an international agreement is not something that troubles other countries. It does not trouble the United States or Australia. The apparent unwillingness to deal with the problem is damaging this country and making your policies and the use of public money less effective and efficient.

Dame Helen Ghosh: As I said earlier, I have nothing to add to the policy debate that is going on. I think The Times had an article today by one of your former colleagues on this Committee-

Q163 Chair: FT.

Dame Helen Ghosh: The FT, sorry-I saw it in our press cuttings. It was urging the case precisely for what you describe. I am sure that the Home Secretary, Damian Green and colleagues will consider that.

In terms of whether our current policy is providing the UK with good value for money, the fact that-

Mr Bacon: We know that it is not. The Report in front of us says that it is not.

Dame Helen Ghosh: Let’s look at it overall. As you know, the policy is to continue to attract, as you said, with no cap on tier 4 numbers-

Mr Bacon: It was the Prime Minister who said that-not me.

Dame Helen Ghosh: -the best and brightest students to this country. Now it is indeed the case that tier 4 visas issued last year are down on their peak, but they are still at 237,000. The interesting fact is that the number of those that are going to universities has gone up to 66% compared with just over 50% the year before, and the refusal rate is down-in other words, we have fewer grounds for rejecting applications at source.

It is still the case that when you look at the estimates of the economic value of students to this country, both in direct fees and in their spending power outside, living their normal lives, it is significant. It is something like £7.8 billion now, and it is projected to grow, whether by us in our impact assessment or whether in a recent BIS estimate, which said that the impact of our tier 4 tightening, in policy terms, was not likely to be overwhelming. In that study, I think they projected 4% growth over the next eight years to 2020. In the BIS study, the impact of our policy changes was to reduce that by 0.1%-in other words, it was only about £230 million less than it would otherwise have been. So the Government is not projecting a significant impact on the economic benefit of students from these changes.

Q164 Chair: Can I ask why a high refusal rate is a criterion? These are very short questions, to clear up.

Dame Helen Ghosh: Because it means that we are getting fewer-

Q165 Chair: Why is it a criterion for getting highly trusted sponsorship status?

Dame Helen Ghosh: They are doing their job in assessing the-

Q166 Chair: A high refusal rate is a criterion for getting highly trusted sponsorship status. I do not understand it. Why?

Dame Helen Ghosh: It is the opposite.

Jeremy Oppenheim: It is the other way round.

Chair: That is not what the Report says. The Report says-

Dame Helen Ghosh: A high refusal rate suggests that you are not doing your job as a highly trusted sponsor. As a criterion, if you have one it is a mark against you.

Q167 Chair: Aileen, where is it in the Report?

Aileen Murphie: It is in the figure for highly trusted criteria-figure 14 on page 32.

Dame Helen Ghosh: If you have a low refusal rate, you do not get any points deducted.

Jeremy Oppenheim: The point here, Chair, is very simple. It is that the intention to study was passed to the sponsor.

Q168 Chair: I understand now. I think I misread that table. Why is it a policy objective to reduce the tier 4 sponsors by 20%? Why is that a policy objective? What is the rationale there-page 27, figure 11?

Dame Helen Ghosh: I am assuming because we believe that there are still some sponsors in the system that do not meet the criteria.

Q169 Chair: Why? You have not got the data. You have told us all afternoon that you have got rid of all the bogus ones.

Jeremy Oppenheim: If I may, I hope we have not said that we have got rid of all the bogus ones, Chair. This is still a market that has really strong, able sponsors alongside a few people who will continue to exploit any processes we are operating, so we will want to keep the register fairly low.

Q170 Chair: But why have you made it a policy objective to reduce colleges by 20%? Why is that a policy objective?

Jeremy Oppenheim: Again, I think it is because the evidence that we have had is that there continues to be a proportion of colleges bringing in students-

Q171 Chair: Have you got any evidence that it is 20%?

Jeremy Oppenheim: When we did the study relating to the 18,000 students in 2010, we saw that the-

Chair: That was two years ago, and you have got rid of a lot of them.

Jeremy Oppenheim: Yes, but not all of them.

Chair: Yes, but 20%?

Q172 Meg Hillier: Is that 20% on current figures or 20% on figures back in 2009?

Jeremy Oppenheim: I would have to write to the Committee.

Dame Helen Ghosh: I suspect it would be a whole set of criteria that have gone into that, so we will write a note on that.

Q173 Chair: Well, you might write to us, because it looks to me slightly finger-in-the-air stuff. You are spending £236 million on tier 4-is it £236 million or £263 million? I cannot remember. You are putting all the onus on the colleges and the institutions to do it themselves. It works out, to me, at about £1,000 per application. How do you justify that cost?

Robert Whiteman: Where is that figure, Chair?

Chair: Again, I’ll find it for you. Maybe Aileen can help.

Aileen Murphie: Right at the start.

Chair: It is about a thousand quid for each application, and yet you are saying that it is the sponsors doing all the work.

Dame Helen Ghosh: We are not saying that it is the sponsors doing all the work. As Lin said earlier, we know that we do not make a profit.

Q174 Chair: Compliance does not come into this. The compliance is funded elsewhere, as I understand it. Aileen?

Aileen Murphie: The costs of compliance are not included in this.

Q175 Chair: So you are spending a lot of money and I cannot understand what you are spending it on.

Dame Helen Ghosh: Again, we will let the Committee have a breakdown of the figures.

Q176 Chair: I would have hoped that it might be something you had in your heads. Have you not got it in your heads, any of you?

Robert Whiteman: I am sorry; I do not know the NAO figures. I do not know if this is assuming some net of visa income and the cost to the student.

Aileen Murphie: The cost overall is in figure 1, and the two cost columns add up to £263 million, and the 19 is the surplus over two years.

Dame Helen Ghosh: So what you would like is a breakdown of what it costs us to process a visa application, because this is essentially the cost to us-

Q177 Chair: You are not processing them any more, are you?

Dame Helen Ghosh: Yes, we are. This is a misunderstanding. We are going through a process-

Q178 Chair: It is a paper process. You are checking that the paperwork is correct.

Dame Helen Ghosh: No, sometimes more than that.

Q179 Chair: Well, you are doing a pilot to see whether you should do more, but on the whole it is paperwork.

Dame Helen Ghosh: No. We are employing people. We are employing people overseas.

Q180 Chair: Yes, you are, but I am not sure it is value, Dame Helen.

Robert Whiteman: Under PBS, Chair, people still make a full visa application and we consider the merits of the visa.

Q181 Chair: But it is all paper based, apart from your pilot, where you are doing a little bit of seeing whether or not it would be a good idea to interview some of these people. It just seems, having passed the onus on-having heard from LSE that it is spending £250,000 on its 6,000-what on earth are we, the taxpayer, doing spending £1,000 per application?

Dame Helen Ghosh: We can describe that to you.

Q182 Chair: If you are worried that there are still bogus colleges around, why are you only inspecting them, particularly the English language colleges, every four years when you know that a lot of them change ownership with a whole load of permissions attached?

Jeremy Oppenheim: In a way, Mr Blake’s earlier evidence-he hadn’t been visited-shows quite clearly that we visit on a risk basis. So if there is a change in ownership, if there is a change in the organisation, we will visit more regularly than those that we think are more compliant. We use a very clear risk-based model to allow that to occur. We want to visit those that give us the greatest cause for concern, Chair, and visit less often those that don’t.

Q183 Chair: Fine. So you are doing that?

Jeremy Oppenheim: Yes.

Q184 Chair: The evidence that we heard earlier talked about the frequency of changes to rules. Do you take that point on? Are you going to try and work in the future so that you do not change rules every-[Interruption.] The answer to that is yes, is it?

Dame Helen Ghosh: Sorry, I was-

Chair: The witnesses who gave evidence in the beginning talked about the frequency of changes to the rules without notice.

Dame Helen Ghosh: I was nodding to say I think, although it is a policy issue, Ministers are well aware of the impact, both on customers and on the agency, of changing rules. They consider very carefully whether there is an absolute imperative to do so, not least for guidance, for the work of Rob and Jeremy and their team, and for the IT systems-so they are well aware of that.

Q185 Chair: That does not really answer the question. Are you, as a matter of policy to support giving a better customer service, ensuring that you do not change rules with such regularity? We got very good written evidence from Imperial college-a different college-in which, recently, with very little notice and no consultation, there was an increase in the maintenance requirements from £800 to £1,000. That seems to me an unnecessary change that could have been timed in with consideration of applications from students. What I am really after is: are you going to stop this practice that is prevalent?

Dame Helen Ghosh: I couldn’t possibly give a commitment that, if there were some kind of abuse that we identified, Ministers would not change the policy. I think I can give a commitment-

Chair: That is a different question.

Dame Helen Ghosh: No. But the point, again, that the previous witnesses eloquently made is that the process of consultation with them, which Jeremy describes-making sure that you have a good lead time; making sure that student applicants and the institutions understand it-is something we give a commitment to.

Q186 Chair: Listen, everybody wants to knock out abuse, but don’t hide behind that. Changing the maintenance requirements from £800 to £1,000 per applicant isn’t an abuse issue. It is obviously somebody somewhere decided it was a good idea to shove up that maintenance. That is perfectly okay, but it is the time-

Dame Helen Ghosh: It is the implementation that I think in that case was the issue, and that is where I think we can give that commitment.

Jeremy Oppenheim: There is a balance. If we give too much notice then we get an enormous closing down sale, with people getting in before the amount goes up. We have seen that over and over again, both with the points based system and previously. It is a balance that we try and strike, and we have good relationships with Universities UK and other representative organisations.

Q187 Chair: At the moment, they change the rules too often. What we are saying to you is, are you prepared to show a bit of rationality and clearly respond to abuse, but rationally change the other rules so that the poor institutions do not have to go through the same student body time and time and time again checking against your most recent change of rule? It is a very simple question.

Robert Whiteman: My understanding from Home Office policy officials is that they do indeed intend to quieten down the amount of policy change being made. It is absolutely right from an agency perspective that we want to stabilise performance. We want to improve; we want to ensure compliance. Of course, there are pressures on the Home Office to change policy at times, particularly if people think-

Q188 Chair: Does the Home Office agree with that? The Home Office is the policy-I do think this example from Imperial is a very good one. Don’t tell me £800 to £1,000 quid on maintenance was an abuse issue-was something where you were worried people would fiddle the system. It was a clear change-

Dame Helen Ghosh: I don’t think, Chairman, you can expect me to give a commitment that we will not change policy, because that’s a policy matter.

Mr Bacon: No, because of course the Minister may read something in the newspaper that morning and decide over his cornflakes that he needs to have a knee-jerk reaction, and we all understand that.

Dame Helen Ghosh: Ministers are very well aware of that.

Chair: I’m not asking that.

Dame Helen Ghosh: You want a rational implementation of a policy decision.

Q189 Mr Bacon: And the rational implementation requires rational timing; you would accept that.

Dame Helen Ghosh: Indeed.

Q190 Mr Bacon: I was interested in Mr Oppenheim’s answer a minute ago, when he said we need balance in this, and if you give too much notice you get a closing down sale, which I can understand. Mr Oppenheim, you almost made it sound as if the act of changing the rules-moving the goal posts unexpectedly, at an unexpected moment-is a tool for the implementation. Somebody is nodding vehemently, behind-always a good sign that I am on the right track; of course, it depends who’s nodding. It makes it sound very much as if that is itself a tool-a moving of the goal posts. We have seen this with the UK banks, in relation to commercial customers.

Jeremy Oppenheim: It certainly is not.

Q191 Mr Bacon: It makes it sound as if it is, which might be rational in some ways. Were you saying when you identify a particular abuse, therefore, not giving too much notice is necessary?

Jeremy Oppenheim: No.

Q192 Mr Bacon: What were you referring to in not giving too much notice?

Dame Helen Ghosh: Shall we give a particular example?

Mr Bacon: I am hoping Mr Oppenheim will answer my question.

Dame Helen Ghosh: I am encouraging him to do so-

Mr Bacon: If you would then let him speak, that would be good.

Dame Helen Ghosh: With the example of a real closing down sale. Tell the story of what happened.

Jeremy Oppenheim: Tier 1 post-study work: the Government has given ample notice-many months. As a result of that notice, colleagues in Sheffield, who have to process the cases, have something in the region of four times the number of cases that we had even planned to get as a result of announcing the closure of post-study work. It makes keeping to the service standards very difficult; it’s not good for the customer; and it’s certainly not good for the staff, who do not like to have large amounts of work that they cannot clear quickly. I want to be really clear about this. Any speedy process is not attractive to me as the director of operations responsible, because we have to gear everything up much more quickly-we are much more likely to make errors, which we don’t wish to make-and train staff, as well as bring on and explain things to our customers, the LSEs and the others, in this case. So no, it’s not a tool we enjoy using.

Q193 Mr Bacon: So you are saying it is much better from your point of view as well, to have, if you can, stable rules that, when they change, are implemented at a time that doesn’t require the LSE, or whichever institution it is, to trawl through 6,000 applications again. You would prefer that as well.

Jeremy Oppenheim: Indeed, but we always do what Ministers want us to do in terms of implementing these things, and the timing can be very complicated indeed. We try and only issue rules twice a year, and these things are very difficult to achieve with the stability that I think people are looking for.

Q194 Mr Bacon: Do you think it is in the nature of rules, Mr Oppenheim, that, whatever you do, you will create new opportunities for people to game the system, and that therefore, somehow, there is a degree of constant flux that you must expect if you are to try and keep closing down on abuse?

Jeremy Oppenheim: If I may, I am absolutely clear, having been involved in this work for some years, that as we bear down in one area of immigration another area of abuse pops up.

Mr Bacon: Like a balloon.

Jeremy Oppenheim: Yes, indeed.

Dame Helen Ghosh: Absolutely like that.

Q195 Chair: Can I ask a final one? The institutions said to us, if they get this wrong the whole financial model becomes chaotic. That’s what LSE said to us. They are 100% dependent on compliance and accuracy. What happens if the agency gets things wrong?

Robert Whiteman: People can take a judicial review against an administrative decision we make, if it’s thought that that’s a poor decision.

Q196 Mr Bacon: Most students have got enough money to hire a silk to do that, have they?

Robert Whiteman: I am sorry; I thought you were talking about the institutions.

Dame Helen Ghosh: The institutions are able to challenge us in just the same way as any individual would be-and they do.

Mr Bacon: How many people in total are there in the UK Border Agency?

Robert Whiteman: At the moment, now that Border Force has become a separate organisation, about 14,000.

Q197 Mr Bacon: How many are there in Border Force?

Robert Whiteman: About 7,000.

Q198 Mr Bacon: What is the level of overlap between the old immigration and nationality directorate and your agency?

Robert Whiteman: Considerable: the old immigration and nationality directorate plus the visa service-UKvisas-which was a joint Home Office and Foreign Office service, so there is a considerable overlap, with policy being a part of the Home Office rather than within the executive agency, although we are all Home Office, as Dame Helen has said.

Q199 Mr Bacon: Of those 14,000 people, how many work in HR?

Robert Whiteman: For UKBA, we have about 200 HR staff. If I am wildly wrong on that figure, I will write to you, Chair.

Q200 Mr Bacon: I am interested because, when the immigration and nationality directorate existed, there were 14,500 staff and 540 of them worked in HR. It sounds like you are improving, but does Border Force have a whole load of HR people separately?

Dame Helen Ghosh: No, it does not, because it previously relied on a UKBA service. One of the things we are working through at the moment is making sure-ideally, we will make all things within the Home Office a shared service-of a single HR function meeting the new ratio figures that we are aiming at and serving all parts of the Department. That is what we are aiming at.

Chair: Thanks very much indeed.

Prepared 3rd September 2012