I beg to move, That the clause be read a Second time.

The purpose of the new clause is to tidy up some of the powers to raise money to help fund a robust and effective immigration system. I am afraid that I cannot offer the Committee any constitutional imagination, as we already have these powers. Section 51 of the Immigration, Asylum and Nationality Act 2006 gives the IND the power to cost recover. Section 42 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004 gives the IND the power to over-cost charge. The clause allows us to over-cost charge on the basis of the value of the service that we provide to the migrant who applies for leave to enter.

There are currently a number of limitations to the powers, however, and I should like to sketch out two or three of them for the benefit of the Committee. First, we do not have the power to charge for the introduction of sponsorship arrangements. That is significant, because we are shortly to introduce a points-based system, which means that sponsoring organisations, whether businesses or colleges, will have a much more important role. At the moment, there is no law that allows us to charge for such arrangements, and they are expensive. They allow us to put in place an enforcement and compliance network of people throughout the  country to ensure that sponsors behave appropriately. Given the conversations that we had about illegal working and bogus colleges, it is important that that network is robust and effective, so I would like the power to charge for introducing sponsorship arrangements.

The second limitation is a vires issue, which affects UKvisas. UKvisas is allowed to charge for its services under section 1 of the Consular Fees Act 1980. There are constraints on what it can charge for, however. In effect, it can charge only for administrative services that relate directly to consular activity, rather than for any aspect of enforcement of an effective immigration system that entails cost.

We want to do two or three things over the next couple of years to render our immigration system stronger. They include introducing sponsorship. The advent of the points-based system means that a lot of decision making will move abroad, so there will be no UK cost base against which we can charge. That means that there will be a volume shift of business overseas. It could be as high as 10 per cent., or it could be a little bit lower. The risk is that the UK cost base will be spread over a smaller number of applications. Given that many of the costs are fixed, one does not have to be a Nobel prize-winning economist to understand that there is therefore a risk of in-country fees going up.

The education and business communities and indeed the Select Committee on Home Affairs, of which the hon. Member for Hertsmere is a member, have consistently said that they want not divergence but convergence between out-of-country fees and in-country fees. A week or two ago, the CBI said:

“The current system clearly needs to be reformed. If rises in visa fees are necessary to fund these improvements, employers will see it as a price worth paying”.

The Home Affairs Committee said:

“The calculation of visa fees and in-country fees should be aligned” at least in terms of what costs are taken into account and the impact assessment that accompanies them. We want to ensure that there is a degree of flexibility, so that there is not a great deal of divergence between out-of-country and in-country fees.

The new clause allows us to do three things: it allows the IND to cross-subsidise between in-country fee streams, it allows us to cross-subsidise between out-of-country and in-country fees, and it allows us to over-cost charge where necessary for new sponsorship arrangements. The fees to be proposed for such over-cost charging will, of course, be subject to the affirmative procedure, as they are today, and we will have to consult on fees where we plan to recover over costs. Crucially, the new clause will allow us to set fees at the market value and retain the flexibility to protect key segments of the population, as we proposed to do recently with students and visitors.

It is not in our interest, of course, to hike up fees to such an extent that people do not want to come to this country anymore. That would be hugely damaging for the British economy given that each year foreign students pay about £5 billion in fees to our universities  and foreign visitors bring about £13 billion into the economy. I think that tourism is about the fourth or fifth biggest market sector in the economy.

The proposal will not, I am afraid, provide the IND with carte blanche to go crazy and put up fees as much as it would like. That would damage the economy and the country, and I think that the Treasury would have something to say about it. However, with new clause 16 we are seeking to acquire a degree of flexibility to help us render the charging scheme fit for the future.