PARLIAMENTARY DEBATE
Draft Immigration (Health Charge) (amendment) Order 2023 - 10 January 2024 (Commons/General Committees)

I beg to move,

That the Committee has considered the draft Immigration (Health Charge) (Amendment) Order 2023.

It is, of course, a pleasure to serve under your chairmanship, Mr Pritchard. The new rate of health charge replaces that agreed in 2020 by this House. Not only does it reflect the increases in healthcare expenditure, but it also utilises the latest revised assumptions of migrant use of healthcare services. Using more recent and representative data better reflects NHS service use by health charge payers. The proposed increase supports the sustainability of our NHS, ensuring vital NHS services are funded, and allowing wider NHS funding to be directed towards other priorities in the system.

The draft order amends schedule 1 to the Immigration (Health Charge) Order 2015. The full rate of the charge will increase to £1,035 per person per annum, with the discounted rate for students, their dependants, those on youth mobility schemes and under-18s increasing to £776 per person per annum. These levels are currently set at £624 and £470 respectively.

The draft order amends schedule 2 of the principal order to formalise existing exemptions from payment of the health charge for migrants applying to the statelessness immigration route, and those applying to the Ukraine schemes. I know this move will be welcomed across the House, as it places these exemptions on a legislative footing and provides clarity for applicants. It is worth remembering that the charge does not apply to those who apply to settle in the UK, recognising the strength of their long-term commitments to our country and the contributions they have made while living here.

It is important to highlight that safeguards exist in administering the health charge. The Government recognise that the cost of the charge may be unaffordable for some. On family and human rights routes, the fee waiver application can be made and a full fee waiver will be granted if it is determined that the applicant cannot afford the visa fee and the health charge. A partial fee waiver can be granted if it is determined that they can afford the visa fee but not the health charge as well.

The health charge is designed to benefit our NHS and support its long-term sustainability. Our manifesto committed to increasing this charge to NHS cost recovery levels. The draft order delivers on that commitment, and I commend it to the Committee.

It is a pleasure to serve under your chairship, Mr Pritchard. The immigration health surcharge, or IHS, was introduced in April 2015, at which point it was set at £200 per year. The stated purpose of the policy was to

“ensure that migrants make a proper financial contribution to the cost of their NHS care.”

Well, we have come quite a long way since then. The level of the charge first rose from the initial £200 to £400 per year in 2019, and then to £624 in 2020. Now, thanks to this statutory instrument, the main rate is set to rise further still to £1,035 per year. That represents an increase of 66% from the current charge, and more than 400% compared with five years ago.

While Government revenues from the IHS have increased massively since its introduction—far in excess of increases in health spending, by the way—the intent of the policy seems to have shifted significantly. While the IHS has, to date, primarily served as a means of topping up health spending—according to Ministers—the increase provided for in this SI is explicitly linked to the Government’s commitments on public sector pay.

To be clear, that amounts to a massive cross-subsidy from the Home Office to other Government Departments, with the IHS now raising money for pay increases across the public sector, including for police and prison officers, teachers and members of the armed forces, as well as doctors and nurses.

Labour supports the planned pay rises for hard-working and hard-pressed public servants. However, it would be remiss of me not to ask questions of the Minister about what could be wide-ranging consequences of raising the IHS to the level set out in this order.

The impact assessment acknowledges that the higher charges

“could deter some potential migrants from applying to enter or remain in the UK.”

However, there simply is not enough evidence for the Government to be able to produce reliable forecasts of how such effects will play out in practice. The Government have already been warned by some of our leading universities that they could face tuition fee losses in the hundreds of millions of pounds if, as they expect, the increasing costs of studying in the UK become prohibitive for many international students and academics, who may simply vote with their feet and choose to study elsewhere.

The Government themselves acknowledge that risk in their own impact assessment, but they offer very little in the way of plans to mitigate any such impacts, or to reassure universities and employers that the actual effects of this order will be closely monitored by Ministers, with appropriate steps taken to mitigate any unintended consequences of which they may become aware in the coming months. Any light that the Minister could shed on those questions—specifically the potential impact and unintended consequences of these changes—would be gratefully received.

On a more practical level, the Minister will no doubt be aware of the concerns raised by many people about aspects of the IHS that they see as inefficient or unfair. The Government’s ongoing commitment to exempting health and care workers from the charge is welcome. However, the provisions for lower paid or otherwise vulnerable migrants to request a waiver, or a full or partial refund of charges already paid, appear to be little used in practice, with less than 2% of those subject to the IHS being granted a waiver by the Home Office, according to the Government’s impact assessment.

Visa application fees are set to increase sharply alongside these IHS increases, and there is still no mechanism to allow poorer migrants to spread those huge costs over, for example, monthly instalments. It is therefore incumbent on the Minister to provide assurances and reassurances to hon. Members, and indeed more broadly to our constituents, that the Government will take steps to ensure that the most vulnerable migrants are adequately protected from the threat of poverty or outright destitution. Therefore, my final question is whether he can provide more detail on the impact on poorer migrants and on how the impact on those who will struggle to pay the IHS in combination with increased visa fees will be mitigated.

It is a pleasure to serve under your chairmanship, Mr Pritchard. I want to ask the Minister some questions, focusing in particular on the impact assessment.

As my hon. Friend the Member for Aberavon has said, the figures are caveated—they are highly uncertain. If we look at the estimated application volumes, which are the central scenario for the five-year period between 2023-24 and 2028-19, we will see that the numbers are fairly static. If I have done my maths correctly, according to the estimates it is 1,016,000 in 2023-24, increasing to 1,032,000 in 2028-29. That is on page 7 of the Home Office’s impact assessment, as signed off by the Minister’s predecessor in October. Table 2 then gives the estimated visa application grants for the same period, and shows them increasing from 765,000 to 985,000. Therefore, although the number of applications is fairly static, the number of granted visas will increase, even though the Government say that it is their mission to reduce overall net migration to the tens of thousands. I think that is still a Government mission, so it would be helpful if the Minister could explain his strategy when the legal routes to come in are increasing the numbers to that extent.

The impact assessment also outlines the in-country figures and shows that in-country applications are likely to double. I assume that is because of the cumulative nature of such applications, with some people applying and reapplying. If the Minister clarified that as well, it would be helpful.

There is also a lot of uncertainty about the costs and indirect costs to the system. The assumption is that there might be a reduction in the number of people coming into the country—although the figures that I have just quoted suggest that a lot more people will still be coming—so I wonder how those figures counteract or work with the economic impact assessment outlined on page 2 of the impact assessment. We could see reductions in tax revenue and a reduction of £200 million in tuition fees. I will not quote all the figures as the Minister has them in front of him.

The £110 million increase in processing costs is another figure that I am keen for the Minister to talk about. Will he give us a breakdown of why he expects that increase for the health surcharge? It is an increase in cost, not volume. It does not apply to a different cohort of people; it is the same cohort, but the cost has increased. I am interested to know why that figure is there and what it is made up of. If he could explain that, it would be very helpful.

The impact assessment also notes additional net costs from an increase in visas granted with a fee waiver. Could the Minister provide a clarification? He might have addressed that in his opening remarks, so I apologise if I did not hear him because of the Division bell. The figure noted is £250 million—that is with caveats, as I have set out—but does he expect more fee waivers and, if so, why? Otherwise, is he able to give another explanation for that figure?

The more general point about the scheme is that it is challenging for a lot of migrants. A lot of people who come to the UK—such as students or people who are on work visas—naturally come with private health insurance. It would not be an impossible model to suggest that anybody applying for a visa in the UK needed to provide proof that they had adequate and appropriate health insurance.

I have the privilege of chairing the Public Accounts Committee and it has looked at how the NHS secures money from overseas visitors seeking health treatment. When we last looked at it, certainly it was an imperfect model, but there is a system. Some hospitals, particularly the good ones, recharge the private insurance provider for the treatment they give. If they are not doing that, that is another issue, and one that the Government might want to look at improving, because anyone coming to this country certainly should not get free healthcare just because they happen to be in the UK. I think most people would accept that any visitor or tourist on holiday who needs healthcare should have provision to pay for it. That principle should surely apply in this case.

Given the figures outlined in the impact assessment, even with all the caveats about the highly uncertain nature of the actual numbers, surely the scheme could be a lot cheaper. The figures suggest that it is costly to run. Given that we already have a visa scheme—we have always had a visa scheme, even before we had a health surcharge—surely when people have to tick a box to say that they have insurance, they could provide some proof of that. It would be a small additional administrative burden on the applicant and the system to check that that had actually been purchased and was available for use, rather than us setting up the entirely new bureaucratic system of the health surcharge. That adds a burden, and potentially a deterrent, to people who want to come here for work reasons, especially those who may need to bring a number of dependants, even though there is a reduction for under-18s.

I will be grateful to the Minister if he could explain why we are persisting with the health surcharge. Has he looked at its value for money when compared with other scenarios? Has he looked at re-engineering the visa system so that we could have a private insurance model, rather than an expensive, bureaucratic, British Government-run model?

Let me start by expressing my gratitude for the scrutiny of this statutory instrument and for what I think is an indication from the Opposition that they will support this change to the level of the surcharge.

Before I address some of the issues and questions that have been raised, I want to make the general point that those who move to a new country expect to pay towards healthcare and that countries around the world have a range of systems in place for them to do that, in line with individual healthcare models. It is worth saying as well that since its inception the health charge has generated more than £5.1 billion for the NHS. The funds generated are shared between the health administrations in England, Scotland, Wales and Northern Ireland, using the now familiar formula devised by Lord Barnett. We think that it is right that individuals pay a contribution towards being able to access the NHS and the care that is provided. As I said, that is comparable to the level of financial contribution that others make elsewhere—perhaps through different approaches, but in terms of making contributions towards healthcare, that is what happens. We think that this is comparable and an appropriate way of going about obtaining these funds in order to support the NHS and to ensure that it is sustainable.

There were a few points that I wanted to pick up on—first, about the calculation. The shadow Minister, the hon. Member for Aberavon, asked about that specifically. As the Chief Secretary to the Treasury set out on 13 July, the health charge rates have remained unchanged for the last three years, despite high inflation and the wider pressures facing the healthcare system. The increases to the charge reflect the higher costs of healthcare provision and increases to healthcare budgets since 2020. Additionally, the assumptions on how intensively charge payers use healthcare services in different settings have been revised to use more recent and representative data, with the intention of better reflecting migrants’ use of these NHS services. Although the health charge is increasing, it is still considerably lower than the comparable average cost per capita of providing healthcare for the average UK resident, which stands at about £2,700 per person.

The Minister talks about the average per UK resident. That was unclear from the impact assessment; I thought it referred to the average for the applicants paying the surcharge. However, the evidence is very clear, particularly for people such as students, the younger population, that they have very little purchase on the NHS when they are here, because generally they are a healthier population. Migrants tend to be younger. Therefore, has the Minister done an analysis of what the cost has been of providing healthcare to the cohort in question—that is, those who have been paying the health surcharge?

What I will say to the Chairman of the Public Accounts Committee is that I am very happy to take away the various very involved, technical points that she is making and provide an update to the Committee. She will recognise that I have been in this role since the start of December. She has asked whether I have reviewed certain alternative approaches. These are all things that I am very willing and keen to have a look at. In fact, I thought that the shadow Minister made a valid point about regular review of the appropriateness of the level of charging. That is something that I would quite like to have a careful look at to consider whether there are further steps that we can take on that. I am very happy to provide a thorough update to the Public Accounts Committee about these very involved points that have been raised in the course of this debate.

On a point of order, Mr Pritchard. We are in the middle of scrutinising a statutory instrument that will be passed or—looking at the numbers—might well be passed this afternoon, yet the Minister is unable to provide me with information and answers from what is a detailed and thoroughly worked up impact assessment. Officials are in the room. I am a patient woman: I do not need the answers this minute, but perhaps in the next 10 minutes—they were not difficult questions that I asked. They are questions that I think the Minister needs to answer before we agree an SI. I would appreciate your guidance, Mr Pritchard, on whether we can leave questions to be answered after a statutory instrument is passed. This is all from the impact assessment document.

I would not want to challenge your ruling, Mr Pritchard, but I do think there is a serious point here. We are being asked to agree secondary legislation on an important issue, and I have questions about some of the numbers in the impact assessment, which are heavily caveated—but nevertheless there are questions. I have sympathy for the Minister, who is new in post. It is a lot to read, but nevertheless I think there is an important issue for the Committee about whether we should be passing secondary legislation without full access to the facts and figures. These facts and figures have been coming for some time, and were actually signed off in October by the Minister’s predecessor, so I thought it would have been possible to get the answers. I still stand to be advised by you about how best we might do that, Mr Pritchard, but the general principle is that we should not be passing secondary legislation without this. We are here to scrutinise, and in order to do that we need the answers to our questions.

On this occasion, Mr Pritchard, I will take your guidance. You are the Chair of this Committee and I respect your position. I will take other routes to raise this. I make it very clear that this is not at all an attack on the Minister. He is new in post. It is important, however, that we have stronger answers in Committee. This is not the first SI Committee I have been in where we have not been able to get answers, partly because of the churn of Ministers. I am not naming any individual Ministers, but the system should be better. On this occasion, I accept your helpful suggestion, but I will pursue answers to my questions.

Of course, I have not finished answering many of these points, so it is important to note that too. I have set out the position on how the charge has been calculated, and I think it is most definitely worth the Committee having an understanding of that and being able to clarify it. It is also worth saying that when it comes to the use of healthcare—I note the point that the Chair of the Public Accounts Committee made about this—evidence suggests that migrants’ use of healthcare is lower than the UK population. Differences in NHS usage are largely due to migrants tending to be younger and healthier. The modelling adjusts for the age and gender profile of migrants compared to the general population. It is also worth saying that the IHS is charged at a flat rate. We think that is fairer to all and that it takes account of the use of services. That is the basis on which historically the charge has been calculated.

Colleagues across the Committee have quite rightly raised questions about fee waivers and the ability of people to access them when they are needed. It is recognised that, in some instances, people who are required to pay the health charge may not be able to afford it. In those instances, particularly on family and human rights immigration routes, and where backed by clear and compelling evidence provided by the individual, the health charge may be waived. Where a fee waiver application is successful, the application fee and the health charge will be waived. Migrants who are granted a partial fee waiver are required to pay the application fee only; the health charge is waived in full. Evidence suggests that migrants are aware of the fee waiver process, due to the volumes of migrants on eligible routes utilising fee waiver applications. In the year ending September 2023, there were over 46,000 fee waiver applications.

The Chair of the PAC also raised a question about the modelling. She will recognise that the Home Secretary set out on 4 December the initial announcement on the net migration changes we are seeking to advance as a Government. We believe that those will, in their totality, reduce net migration to this country by 300,000 when taken together. That is the basis on which we are taking forward those proposals. However, I will very happily take away the Hansard report of this debate, and if there are outstanding points, I would be very glad to write to her to provide some additional detail.

I thank the Minister for that helpful comment. It is helpful to get the timetable clear. This impact assessment was signed off in October, so presumably the figures—I will say this for Hansard, so that it can be picked up—reflect the situation in October, and not the policy announcement as of 4 December. That makes me ask: what will the impact assessment be now, after that policy announcement in December? It would be very helpful if the Minister provided me with updated figures.

I am very happy to take that request and roll it into the update that I would like to provide. Colleagues across the House know that I am always keen to be as helpful as possible to colleagues during the course of our proceedings and in the work that we do, particularly to facilitate scrutiny by Select Committees.

In conclusion, our NHS was founded to care for every citizen in their time of need. We as a Government, and, I think, all Members of this House, feel that that principle must be cherished and preserved. Equally, it is right that migrants granted temporary permission to be in the UK make a financial contribution to the running of NHS services available to them during their stay—that is a matter of fairness. On that basis, I commend the order to the Committee.

Question put and agreed to.