I beg to move amendment No. 76, in

clause 20, page 20, line 43, at end add—

'(6) No fee shall be prescribed under the provisions of this section in respect of any application or process in respect of a student, prospective student, student nurse, postgraduate doctor, postgraduate dentist, trainee general practitioner, academic visitor or a dependent of such a person.'.

With this it will be convenient to discuss the following:

Amendment No. 77, in

clause 20, page 20, line 43, at end add—

'(6) Instruments prescribing fees under the provisions of this section shall ensure that no student, prospective student, student nurse, postgraduate doctor, postgraduate dentist, trainee general practitioner, academic visitor or dependent of such a person shall have to pay more than once in any period of ten years a fee that exceeds the administrative cost of determining the application or undertaking the process.'.

Amendment No. 78, in

clause 20, page 20, line 43, at end add—

'(6) No fees shall be prescribed using the powers conferred in this section unless the Secretary of State has first given at least three months' notice of his intentions and consulted with bodies and individuals appearing to him to represent the interests of those affected.'.

New clause 2—Charges—

'At the end of section 5 of the Immigration and Asylum Act 1999 (c.33)(charges) add—

''(8) Regulations made under this section may confer discretion on the Secretary of State or another person to waive or to refund all or part of any fee in cases when, in the opinion of the Secretary of State or any person designated under the regulations, mistakes have been made, insufficient leave has been given, delays have occurred, passports have been lost or misdirected, or payments have been mishandled.''.'.

We find ourselves concerned with a clause that has raised some worries in the education world. I know that the Minister has received representations from a number of bodies. The university of Cambridge vice-chancellor's office wrote to the Home Secretary at the beginning of this week, but there have also been representations from Universities UK and the Council for International Education. Summing up the problems that my amendments seek to address, the university of Cambridge got it about right. The vice-chancellor's office wrote:

''We believe that this Bill signals an intent to introduce charges for visa applications which will harm student recruitment, damage access efforts, and further burden students who are already making great financial contributions.''

A summary of the concerns might be put as follows. It is argued, first, that the fees provided for in clause 20 should not apply to international students or dependants; secondly, that the international student market is worth an estimated £5 billion a year to the UK economy; thirdly, that international students contribute through income tax and national insurance contributions for part-time and vacation work; and fourthly, that there have been some negative experiences from the introduction in 2003 of immigration application charges, which have failed to lead to an improved service. In short, to introduce over-charging for students would be short-sighted and would risk alienating the international student market.

As briefly as I can, with the material in front of me, I shall speak to my amendments. Amendment No. 76 would ensure that fees in excess of the actual cost of determining the application would not be charged to students and others mentioned in the amendment, or their dependants. It is mainly a probing amendment to discover how the Government intend the provisions to affect students and their dependants.

The Minister does not need reminding that fees for extensions to and variations of leave under the 1999 Act were introduced only last summer. They were said to be cost-recovery fees only, but they still amount to a staggering £155 for a postal application and £250 for a personal application. Students are one of the groups worst affected by the charges, despite the fact that education is a vital export. Students now face the prospect of having to pay an entry tax to the Exchequer for the privilege of entering the UK.

Whatever the Minister may say about students being eligible for free treatment under the NHS and free access to education for their children, many international students work while they are here and pay taxes and national insurance. I know that the Minister believes, and the Prime Minister certainly believes, that international students are very important to the UK. I recall the Prime Minister's initiative to recruit more international students. In publicly funded higher education alone, there are about 240,000 international students, which I believe is about 12 per cent. of all students in higher education. Other arguments could be advanced, but the Minister will know what they are.

The point of amendment No. 77 is to remind Ministers that students are the group most likely to have to make multiple applications in order to complete a programme of studies here because of the way in which the system operates. According to the latest published Home Office figures, students are the single largest category of applicants for extensions. In 2001, there were more than 83,000 student applications for extensions, out of a total of 189,000 for all purposes. International students are therefore not a marginal group, but a major element in the equation. Students may have to make more than one application on behalf of themselves and their dependants, either because they progress from one course to another—for example, from A levels or a foundation course to a degree, or from an undergraduate degree to a masters or a doctorate—or because at the time of their original application, they were not given sufficient leave for the planned duration of their studies. The Minister will understand the thrust of my amendment. I know that she has carefully read the points raised by the various bodies that I mentioned and I need say no more about this amendment.

Amendment No. 78 relates to consultation. On Second Reading the Home Secretary guaranteed that the Government would consult before laying an order before the House. When what is now section 5 of the Immigration and Asylum Act 1999, which provides for cost recovery charges, was in Committee, the then Minister of State, now Minister for Trade and Investment, recognised that

''We are looking for ways to encourage more students to come in . . . We shall consider proposals for students in due course when regulations are introduced. It would be appropriate to discuss the detail of specific categories of fees and the figures in a debate on those regulations.''—[Official Report, Special Standing Committee, 15 April 1999; c. 555–563.]

He continued in the same vein.

Contrary to what was said in 1999, and ignoring their own consultation protocol—there was no prior consultation or publicity—the Government introduced regulations just before the summer recess, which is the worst possible time for students. It is important to try to avoid repeating that mix-up by ensuring that proper notice is given of the timing of the introduction of new charges, and that no regulations or orders are made without advanced consultation in accordance with the guarantee given by the Secretary of State and with the Government's own consultation protocol. If that guarantee is worth anything, the Minister will not mind including it in the Bill.

New clause 2 relates to errors. When the 1999 Act was first considered in another place, an amendment to section 5 was considered that no fee should be charged if an application was made necessary by a mistake of the Secretary of State or his agents. Speaking in that debate, the noble Lord Falconer promised:

''We shall ensure that when fee regulations are made, appropriate provision is made to deal with errors which may occur.''—[Official Report, House of Lords, 12 July 1999; Vol. 604, c. 49.]

It later became clear that the Act had been drafted to preclude the making of such provision under the regulations. We would hope to put that right. We want the Home Office to consider being able to waive fees where applications are necessary only to correct mistakes. That is the purpose of new clause 2. I shall not go further into the matter, but the Minister of State will be aware that errors are made.

The main purpose of new clause 2 is to ensure that Ministers do not respond to the many criticisms of how charging has been introduced and managed, by hiding behind the argument that the legislation gives them no discretion in responding to blunders of the sort that we know are made.

I rise briefly to support the amendment. The hon. Gentleman is right to raise concerns about the clause, particularly in relation to students, nurses, doctors and other individuals who will be affected. I do not wish to add to the hon. Gentleman's points, because he has made them strongly, particularly in relation to the briefings from universities. I hope that the Minister will say something about that. I am sure that many hon. Members recognise the shortage in the nursing and caring professions. My local hospital is trying to encourage individuals to help with that skills shortage, as are other hospitals. Any barrier to that will make things harder for those hospitals. The hon. Gentleman's points were well made.

The issue extends beyond fairness for students and nurses to the general principle of fairness behind setting an appropriate fee in the first place. Could the Minister say—she will not be bound by what she says—whether she envisages the figure settling closer to £155 or £500 in the next year or so? It would be hard to envisage the figure doubling, given that inflation is currently at around 2 or 3 per cent. The Government will have a hard time justifying an increase to above £200 or £250. A guarantee on that from the Minister would be helpful.

Can the Minister say what proportion of the increase is due to new costs and what proportion is,

for want of a better word, profit? That is, what proportion is money-making on the back of the fees? It would be helpful to know how much change will take place and exactly what the additional costs will be. I would be sympathetic to a system that imposed a fee that was based on the cost of the processes involved. I would be less sympathetic if a stealth charge was imposed and I would certainly want to know where the money from that was going if there was a profit-related element the charge.

Finally, when a fee goes up or a change is made, one often expects a linked improvement in the service. There are concerns about the delays and inefficiencies in the service, so I would hope that an increased fee would lead to an improved quality of service. If, however, the fee increases beyond the administrative costs and there is no improvement, everybody gets an unfair deal, not just students. That would be particularly unfair because some of the individuals applying and having to pay fees will be those who can least afford to pay them. I hope that the Minister can give some assurance on those issues.

First, let me put the charging of fees into context. Some rebalancing is required, because, unlike many countries—Australia, New Zealand, Canada, the United States, France, Germany, the Netherlands and others—that offer education and other services for people who enter the country for various purposes and have charged for a considerable time, the UK has not previously charged. Countries' charging structures vary and there is a range of charges. Some are levied on entry clearance, some in country as we propose.

In many respects, people who enter this country, particularly students, are being charged in a competitive global market. We want to encourage people to come to the United Kingdom to study and work, where that supports our labour market. We have to compete with other countries that want those particular incomers. However, given that the United Kingdom has previously not charged anything to cover the cost of administering its system, whereas other countries charge substantial amounts and have done so for a considerable time, it is in the wider interests of the British public to introduce into the equation a factor that relates to our potential to recoup some of the cost of administering the system.

We need to strike a balance between not jeopardising our position in international markets, being fair to students and other groups, and not charging at a level that would constitute a disincentive, because that would not be in our interests. We must be fair to the British taxpayer and must use the additional income to improve service standards—that was one of the starting points mentioned by the hon. Members for Woking and for Winchester.

The investment that has been made on the back of the increased charges has enabled us to improve the service standards. We now complete same day service applications in 99 per cent. of cases, compared with 87 per cent. last year. In the case of postal applications, 49 per cent. were completed within three weeks last year and 80 per cent. are now dealt with in that time. In terms of our overall service

standard, almost all cases—99 per cent. compared with 81 per cent. last year—that arrive by post are processed within 13 weeks. Those that are not completed are complicated or are missing some details.

Hon. Members might care to visit the new public inquiry offices, particularly the one in Croydon which has changed beyond recognition since I first saw it on becoming Minister and vowed to change it. It is a customer-focused, customer-oriented, pleasant environment with the modern system of numbering—visitors are seen speedily and, if they have all their documents and their money, can make their applications over the counter and get them sorted out straight away. The measures have resulted in real benefits to students and others.

The provision in clause 20 is an enabling measure, to allow for the revision of the way in which charges are made. We have made no firm decisions on how the powers in the clause should be exercised in the immediate or long term. The powers should be as flexible as possible. Many points raised by hon. Members about particular groups will be considered when implementing the additional provisions in clause 20. The clause does not set out how the provisions should be exercised, nor does it stipulate time limits.

I accept the point made by the hon. Member for Woking about amendment No. 78, which refers to the consultation process. I understand his concern and was apologetic in the debate. Notwithstanding previous commitments about specific forms of consultation, charging provisions were included in the 1999 Act. We announced our intention to implement them in the White Paper published in February 2002. The White Paper constitutes a consultation process. We are bound by the provisions of existing legislation to recover only costs. Treasury rules allowed us no flexibility over the level of fees. The potential to consult was limited, as was what we could consult on.

I accept that I am on the back foot and I assure hon. Members that we will consult widely when considering how to use the additional powers. Those additional powers could allow recovery over and above costs. We would not be bound by Treasury regulations and would have to consult widely and on a time scale that conforms with normal Cabinet Office standards. I hope that the hon. Gentleman will accept my assurance that, because the powers are wide-ranging, we will try and get the consultation right.

Amendment No. 76 would limit the potential scope of the enabling power. The clause does not prevent the Secretary of State from excluding certain categories of applicant from a cost charge or from setting differential rates for certain categories. Indeed, the existing fee setting powers referred to in the clause already allow him to do the latter. Those provisions allow the setting in secondary legislation of different provisions for different circumstances. I hope that the hon. Gentleman will accept that primary legislation is not appropriate for such exemptions. The secondary

legislative process is the correct process through which to prescribe the detail.

I take on board the hon. Gentleman's points about students and the occupations highlighted in the amendment. Many of those jobs are in the public sector, and we would not want to overburden the public sector by transferring the cost of the fees on to it. We want to take all of those issues into account.

Amendment No. 77 would have a similar impact in reducing potential income, because it would limit the number of times that a person might have to pay a charge. Students do not have to make successive applications for extension. I have taken great care to ensure that students know that they can apply for entry clearance outside the UK—a student visa costs £36. They can apply for the full period of their first course of study, whether it be one, two or three years, so would face no in-country charges. Some people arrive as students and are able, if they obtain their qualification, to switch to other categories, such as an employment-related category. They would be on a higher salary income and we do not think it right to exclude the potential of a further charge in such circumstances.

New clause 2 would amend the original charging legislation in the 1999 Act. Fees have been prescribed for applications for leave to remain, variation of leave, transfer of an indefinite leave stamp and so on. There is no facility to waive fees in the charging legislation. Other than the very few people who are legally exempt from the charge, everyone must pay for their applications to be processed.

However, that does not mean that we cannot deal with cases of maladministration. Certainly in the charging regime, they do not occur with any significance, but I can understand the wish for some remedy if an error does occur. The power to make an ex gratia payment in cases of maladministration exists independently of the charging regime. It is used and would be used in relation to this power if necessary.

I hope that the hon. Member for Woking feels that I have covered his points. I know that Opposition Members have reservations about this issue. I say to the hon. Gentleman that we are trying to strike a different balance that reflects the interests of the UK generally in attracting the people whom we want to attract; that does not disadvantage those people unduly; and that recognises the interests of the British taxpayer and does not require the taxpayer to foot the total bill for the administration of the fees and charges. With those comments, I ask the hon. Gentleman to withdraw the amendment.

At one stage, the Minister said that she found herself on the back foot, but one of her many qualities is that she can make a comment such as that without appearing any the weaker—indeed, quite the reverse. I, for one, value that sort of observation and regard her even more highly for it. I think that she understands the points that hon. Members are making, and she had something quite helpful to say about consultation before matters are set in stone. I also think that she understands that various education bodies take these issues very seriously.

We have had a useful debate. These are probing amendments, and I am sure that we shall return to the issue in due course, not only on Report and in another place, but in further debates down the line as the months roll by. I thank the Minister for her response. It was not 100 per cent. satisfactory—I would never say that—but it went a good way towards persuading us that she understands the nature of the problems and will consider them carefully. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 ordered to stand part of the Bill.