Draft Immigration (Health Charge) (Amendment) (Order) 2018

Transcription

1 HOUSE OF LORDS Secondary Legislation Scrutiny Committee (Sub-Committee A) 3rd Report of Session Proposed Negative Statutory Instruments under the European Union (Withdrawal) Act 2018 Draft Immigration (Health Charge) (Amendment) (Order) 2018 Includes 2 Information Paragraphs on 2 Instruments Ordered to be printed 29 October 2018 and published 31 October 2018 Published by the Authority of the House of Lords HL Paper 210

2 Secondary Legislation Scrutiny Committee (Sub-Committee A) The Committee s terms of reference, as amended on 11 July 2018, are set out on the website but are, broadly: To report on draft instruments and memoranda laid before Parliament under sections 8, 9 and 23(1) of the European Withdrawal Act And, to scrutinise (a) every instrument (whether or not a statutory instrument), or draft of an instrument, which is laid before each House of Parliament and upon which proceedings may be, or might have been, taken in either House of Parliament under an Act of Parliament; (b) every proposal which is in the form of a draft of such an instrument and is laid before each House of Parliament under an Act of Parliament, with a view to determining whether or not the special attention of the House should be drawn to it on any of the grounds specified in the terms of reference. The Committee may also consider such other general matters relating to the effective scrutiny of secondary legislation as the Committee considers appropriate, except matters within the orders of reference of the Joint Committee on Statutory Instruments. Members Baroness Bowles of Berkhamsted Lord Haskel Rt Hon. Lord Trefgarne (Chairman) Rt Hon. Lord Chartres Lord Hogan-Howe Rt Hon Lord Walker of Gestingthorpe Lord Faulkner of Worcester Rt Hon. Lord Lilley Lord Wood of Anfield Baroness Finn Lord Sharkey Registered interests Information about interests of Committee Members can be found in the last Appendix to this report. Publications The Sub-Committee s Reports are published on the internet at seclegapublications The National Archives publish statutory instruments with a plain English explanatory memorandum on the internet at Committee Staff The staff of the Committee are Christine Salmon Percival (Clerk), Paul Bristow (Adviser), Nadine McNally (Adviser), Philipp Mende (Adviser), Jane White (Adviser), Louise Andrews (Committee Assistant) and Ben Dunleavy (Committee Assistant). Information and Contacts Any query about the Committee or its work, or opinions on any new item of secondary legislation, should be directed to the Clerk to the Secondary Legislation Scrutiny Committee, Legislation Office, House of Lords, London SW1A 0PW. The telephone number is and the address is hlseclegscrutiny@parliament.uk.

3 Third Report PROPOSED NEGATIVE STATUTORY INSTRUMENTS UNDER THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 Proposed Negative Statutory Instruments about which no recommendation to upgrade is made Guarantees of Origin of Electricity Produced from High-efficiency Cogeneration (Amendment) (EU Exit) Regulations 2018

4 2 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) INSTRUMENTS DRAWN TO THE SPECIAL ATTENTION OF THE HOUSE Draft Immigration (Health Charge) (Amendment) Order 2018 Date laid: 11 October 2018 Parliamentary procedure: affirmative When the Immigration Health Charge was first introduced in 2015 this Committee questioned why, at 200 per person per year, it was so far below the estimated cost of the service provided ( 800 per person per year). This Order revises the level of the charge to 400 per person per year ( 300 for students) based on a revised estimate of the actual cost of treatment as an average of 470 per charge payer per year (We note that these estimates of the cost exclude people such as trafficking victims or asylum seekers who might have more complex health needs, as these groups are exempt from the charge.) Three years later, it is still not clear to us why the Home Office takes the view that those coming to the UK for more than six months should only pay a contribution to NHS costs rather than a sum set to fully recover the average costs incurred. The House may wish to ask the Home Office Minister to justify this subsidy. This Order is drawn to the special attention of the House on the ground that it raises issues of public policy likely to be of interest to the House. 1. The Order has been laid by the Home Office under the Immigration Act 2014 and is accompanied by an Explanatory Memorandum (EM) and an Impact Assessment (IA). Additional information about the operation of the scheme is included in Annex 1 of this report. Background 2. The Immigration Health Charge is a levy placed on temporary migrants from non-eea countries (Australia and New Zealand excepted) as a contribution to the costs of the National Health Service (NHS) while the person is in the UK. The charge was first introduced three years ago and the Government are now seeking to double the amount of the annual charge to 300 a year for students and 400 for everyone else. The Order also establishes that where the charge is paid in a currency other than sterling the Home Office exchange rate will apply. 3. When the charge was originally introduced in 2015 we drew the matter to the attention of the House, 1 questioning why it was set at 200 per person per year, significantly below full cost recovery levels, then estimated at 800 per person per year. Revised charges 4. According to paragraph 7.4 of the EM, following a review by the Department of Health and Social Care (DHSC), the estimate of the average actual cost to the NHS in England per charge-paying migrant has been revised to 470 per year. Although the gap is smaller, at 400 per person, the charge proposed by this Order is still set below the level for the 1 27th Report, Session (HL Paper 120).

5 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) 3 full recovery of costs. The IA provided with the Order notes that this is also below the manifesto commitment to raise the charge to 600 per person. 5. The IA supporting the Order states that in the revenue for the UK from the charge was 164 million and 204 million in with similar revenue levels expected in subsequent years. The increased charge is expected to raise an additional 220 million per year for the NHS. The estimated costs 6. Page 4 of the IA quotes a slightly different average cost figure of 480 per person per year and gives more information on how the DHSC calculated that figure. It says the department looked at actual data on the cost to the NHS from treating charge payers who used the NHS from April 2015 to December 2017, their length of the stay, and their estimated average treatment costs. The average figure is a weighted average across all charge payers including both those who used and those who did not use the healthcare services: The estimated average cost for primary and secondary care and some other services [for example ambulance, public health, community and mental health services] across all charge payers (including those who did not access health services) was around 480 per person per year (an estimated 310 on secondary care and 170 for primary care per person). The average cost to the NHS of those who used secondary care was around 1300 [this is a subset of the total number of charge payers] While acknowledging that the revenue to the NHS will be increased, it is still not clear to the Committee why the charge remains below the full cost of supplying these services. Home Office policy 8. The Home Office policy is that temporary migrants should make a contribution to the costs of any NHS healthcare used while in the UK. We asked the Home Office to articulate the policy decision more clearly than in paragraph 7.4 of the EM. The Home Office replied: The Government intends to double the annual surcharge amount so that it reflects better the financial impact that surcharge-payers have on the range of NHS services available to them. But it has never been the intention of the surcharge policy that the level of the surcharge should operate as a full cost recovery measure for individuals. This would still be a lower level than equivalent charges on average operated in other comparable countries. The proposed change is consistent with the stated policy intent of ensuring non-eea migrants make a fair contribution towards the cost of the NHS services available to them, commensurate with their temporary immigration status. 9. We found this reply disappointing because it appears to us simply to restate the policy rather than explaining the rationale behind it. 2 Secondary care services are usually based in a hospital or clinic as opposed to being in the population and patients are usually referred to secondary care by a primary care contributor such as a GP.

6 4 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) Conclusion 10. When the Immigration Health Charge was first introduced we questioned why it was so far below the estimated cost of the service provided. Although this Order doubles the charge, and the estimate of cost of treatment is lower, it still does not fully recoup the revised estimate of the average cost of treatment to these charge-payers. We note that the estimate of the cost excludes people such as trafficking victims or asylum seekers who might have more complex health problems, as these groups are exempt from the charge, and therefore not taken into the calculation of costs. Three years later, it is still not clear to us why the Home Office takes the view that those coming to the UK for more than six months should only pay a contribution to NHS costs rather than a sum set to fully recover the average costs incurred. 11. In relation to the revised charges, in a Written Statement on 11 October 2018, the Minister, Baroness Williams of Trafford, said: The proposed amount is still below full average cost recovery level and remains a good deal for those seeking to live in the UK temporarily. 3 The House may wish to ask the Home Office Minister to justify this subsidy. 3 HL WS 962.

7 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) 5 INSTRUMENTS OF INTEREST Draft Short Selling (Amendment) (EU Exit) Regulations In the Explanatory Memorandum (EM) to these Regulations, HM Treasury (HMT) says that the instrument addresses deficiencies in retained EU law in relation to short selling the selling of securities that are either borrowed or not owned by the seller arising from the withdrawal of the UK from the EU, ensuring that the legislation continues to operate effectively at the point at which the UK leaves the EU. The retained EU law is the Regulation on short selling and certain aspects of credit default swaps (Council Regulation (EU) 236/2012 ( the SSR ), and Commission Delegated Regulation 918/2012/ EU). The Regulations also amend Part 8A of the Financial Services and Markets Act 2000, in relation to provisions setting out the powers of the Financial Conduct Authority (FCA) for the purpose of exercising its functions under the SSR. In our view, the EM as originally laid gave insufficient detail of the changes being made, and did not present a full enough picture of their effect. We wrote to the Economic Secretary to the Treasury about this, and have received a reply in which the Minister undertakes that the EM will be revised and relaid in the light of our concerns. We are publishing the correspondence at Appendix 2. Return of Cultural Objects (Revocation) (EU Exit) Regulations 2018 (SI 2018/1086) 13. Current domestic law (which implements an EU Directive) provides for the return of cultural objects that have been unlawfully removed from the territory of an EU Member State, making exemptions for historic cases. These Regulations remove the UK s obligations to cooperate with Member States on the return of unlawfully removed cultural objects. The Department for Digital, Culture, Media and Sport (DCMS) has explained in the Explanatory Memorandum that this avoids a one-sided obligation upon the UK to return cultural objects, whilst unable to enjoy reciprocal rights because after exit day, Member States will no longer need to return objects unlawfully exported from the UK. DCMS has further explained that their preferred solution is to reach a new agreement with the EU to preserve the current restitution arrangements so these Regulations are a fall-back option in the event of a no deal.

8 6 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) INSTRUMENTS NOT DRAWN TO THE SPECIAL ATTENTION OF THE HOUSE Draft instruments subject to affirmative approval Infrastructure Planning (Water Resources) (England) Order 2018 Short Selling (Amendment) (EU Exit) Regulations 2018 Draft instruments subject to annulment Leeds (Electoral Changes) (Amendment) Order 2018 South Somerset (Electoral Changes) Order 2018 Windsor and Maidenhead (Electoral Changes) Order 2018 Instruments subject to annulment SI 2018/1081 Airport Charges (Amendment) (EU Exit) Regulations 2018 SI 2018/1082 SI 2018/1086 SI 2018/1088 SI 2018/1093 SI 2018/1099 The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 Return of Cultural Objects (Revocation) (EU Exit) Regulations 2018 Airports (Groundhandling) (Amendment) (EU Exit) Regulations 2018 Electricity (Guarantees of Origin of Electricity Produced from Renewable Energy Sources) (Amendment) (EU Exit) Regulations 2018 Armed Forces and Reserve Forces (Compensation Scheme) (Amendment No. 2) Order 2018

9 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) 7 Appendix 1: DRAFT IMMIGRATION (HEALTH CHARGE) (AMENDMENT) ORDER 2018 Additional information provided by the Home Office Q1: How effective has the Home Office been in collecting the charge? A1: The Home Office collects the surcharge upfront as part of the visa application process, which makes it simple and straightforward to administer. Payment of the surcharge is a precondition before an immigration application can be considered; the Home Office does not take forward any applications where payment fails to be made up front. The visa application portal redirects an applicant to the Immigration Health Surcharge (IHS) Portal. The portal calculates the applicable surcharge fee according to the length/ type of stay as specified in their visa application. The portal then redirects the applicant to a WorldPay payment portal where they will make payment for the calculated surcharge fee. The WorldPay portal will generate a WorldPay payment reference before redirecting the applicant back to the IHS Portal where an IHS reference number is generated. The applicant is then directed back to the visa application portal where their IHS reference number is auto-populated and they proceed with their visa application, for which they make a separate payment. The surcharge has generated almost 620m from surcharge payments over the financial years , and , since the surcharge was introduced in These figures are published in the Home Office Annual Report and Accounts: uploads/attachment_data/file/727179/6_4360_ho_annual_report_web.pdf Q2: How effective has the Health Service been in checking that it has been paid before providing treatment? A2: Trusts in England are now legally required to charge upfront for NHS treatment that is deemed non-urgent. The trust must first establish whether or not an individual is chargeable under NHS legislation in England. One way a trust can do this is through checking the patient s record on the Summary Care Record application. Each week, the Home Office sends NHS Digital a weekly feed containing basic demographic data of all those who have paid the Immigration Health Surcharge or are otherwise exempt. For individuals who fall within these categories, NHS Digital creates a patient record and updates the record with a green flag, which indicates they are entitled to NHS treatment free of charge. The Home Office also provides immigration status checking services, including for the NHS in Scotland, Wales and Northern Ireland which are responsible for operating overseas visitor charging arrangements there. Q3: How much money has actually been collected in comparison with the estimates at the time of the 2015 Regulations? A3: Since the introduction of the 2015 Regulations, the surcharge has secured average surcharge income in the region of 230 million per annum, which accords closely with the Government s forecast when the impact of the enabling legislation in the Immigration Act 2014 was assessed. Please see attached published Impact Assessment in preparation to enabling legislation back in 2013, which forecast

10 8 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) average annual surcharge income in the region of 230 million per annum. Further statistics and breakdown are provided on page 126 of this in the published Home Office annual report and accounts : publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/ file/727179/6_4360_ho_annual_report_web.pdf The surcharge was not intended to raise a particular target sum of money. The policy principal was that the surcharge should provide an appropriate mechanism for ensuring that temporary migrants made a fair and proportionate financial contribution to the NHS, commensurate with their temporary immigration status. Ministers made this clear in the 2013 public consultation on the surcharge and in debates in Parliament during the passage of the enabling legislation in the Immigration Act Q4: What was the basis of the review that resulted in the revision in the estimate of actual cost being reduced to an average 480 per migrant (from 800)? A4: On introduction, the surcharge level was intentionally set to be low. The Government committed to keeping this under close review, as soon as actual data on cost of treatment of surcharge payers was available. We now know that NHS England spends on average approx. 470 per surcharge payer every year based on actual data on surcharge-payers who used the NHS in England, and their length of stay in the UK, between April 2015 (when the surcharge was introduced) and December 2017 inclusive. The estimated average primary and secondary care cost across all surcharge payers (including those who did not access health services) was 470 per person per annum (an estimated 300 on secondary care and other services costs and 170 for primary care per person). The average cost to the NHS of those who used secondary care was around 1,300. This is provided in the published impact assessment. The Immigration Health Surcharge provides comprehensive access to NHS services regardless of the amount of care needed during a person s time in the UK, which is far more comprehensive and at a much lower cost than many other countries. The Government believes doubling the surcharge is justified and continues to represent a fair contribution. Q5: The Committee would like a more explicit explanation for the Home Office s decision to set the fee at below cost recovery para 7.4 of the EM does not cover this adequately. A5: The Government intends to double the annual surcharge amount so that it reflects better the financial impact that surcharge-payers have on the range of NHS services available to them. But it has never been the intention of the surcharge policy that the level of the surcharge should operate as a full cost recovery measure for individuals. The Department of Health and Social Care reviewed the cost to the NHS in England of treating those who pay the surcharge, where new analysis had placed the average cost to the NHS per surcharge-paying migrant at around 470 per year on average. A proposal to double the current surcharge level to 400 ( 300 for students, their dependants and Youth Mobility Scheme applicants) was considered with other options. This would still be a lower level than equivalent charges on average operated in other comparable countries. The proposed change is consistent with the stated policy intent of ensuring non- EEA migrants make a fair contribution towards the cost of the NHS services available to them, commensurate with their temporary immigration status.

11 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) 9 Q6: Where the charge payer is authorised to stay for 2 years will they be charged 800 before receiving their immigration status or will they pay 400 up front and the additional charge fall to be paid after 12 months? A6: Migrants are expected to pay the total amount upfront for the whole period of leave they are granted. Those granted leave to remain for two years will need to pay 800 as part of the process of making their immigration application. Upfront payment of the full amount of the charge, covering the length of the visa period, is administratively simpler, and collection is surer than requiring migrants to make multiple payments. Payment in instalments would place unnecessary, administrative burdens on the NHS, which would need to check that the patient was up to date with their payments. The whole system is designed to be straightforward and cost effective to administer. Q7: The Committee felt the terminology used in the EM was inconsistent (long-term migrant, temporary migrants, those with limited leave to remain) and would like to be clearer about who exactly is liable to the charge (Is it anyone staying for longer than 6 months that is not otherwise exempt?) A7: The surcharge applies to non-european Economic Area (EEA) nationals subject to immigration control seeking to reside in the UK to work, study, or join family members for more than six months, unless an exemption from NHS charges applies to them. The charge does not apply to migrants granted indefinite leave to remain; this group qualify for free NHS care if they are properly settled in the UK. Those on visitor visas, those granted entry clearance of 6 months or less and illegal migrants do not pay the surcharge. They are subject to NHS treatment charges. Q8: Could the Committee also have a complete list of who is exempt from the charge? A8: A full list of groups who are exempt from paying the surcharge can be found in the 2015 Order s.7 schedule 2: ukdsi/2015/ There are a number of exemptions from the requirement to pay the charge including for asylum seekers, those who make an application for humanitarian protection, children in local authority care and victims of modern slavery. These particular groups qualify for free healthcare in the UK but visitors are subject to NHS treatment charges. Ministers have wider powers to waive or reduce the surcharge in particular cases. Immigration application fee waivers are available on specified human rights routes where a migrant is exercising the right to remain in the UK based on family or private life, but is destitute, or would be rendered destitute by payment of the immigration application fee. Where this fee is waived, the requirement to pay the surcharge is then also waived automatically. 29 October 2018

12 10 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) Appendix 2: CORRESPONDENCE ON THE DRAFT SHORT SELLING (AMENDMENT) (EU EXIT) REGULATIONS 2018 Letter from Lord Trefgarne, Chairman of the Secondary Legislation Scrutiny Committee, to Mr John Glen MP, Economic Secretary to the Treasury The Committee gave a first consideration to these draft Regulations at its meeting on 22 October. A number of questions arose. In particular, the Committee was concerned that the Explanatory Memorandum (EM) did not fully explain several important points, and thus made it difficult to assess the overall impact of the approach being followed by the Government. In paragraph 2.9, for example, the EM states that amendments made by the Regulations will allow market participants to use UK sovereign CDS to hedge correlated assets or liabilities located anywhere in the world, rather than just in the EU. In paragraph 2.11, that statement is repeated, but the EM goes on to say that this will ensure that UK firms can continue to use sovereign CDS to hedge correlated assets or liabilities issued by issuers outside the UK. The effect of these changes is that a wider range of global assets will now be able to be used to correlate to UK sovereign debt. While this is indeed a continuation with regard to EEA assets, it is an addition with regard to the rest of the world. The Committee considered that this change, and its possible effects, should have been set out more fully. The Regulations propose to delete conditions for what counts as being correlated to sovereign debt from the relevant EU delegated legislation (e.g., article 8.5 and the correlation coefficient of 80% and also the other criteria in 8.4 and 8.6); and to give the power to set these to HM Treasury. In the Committee s view, these provisions should also have been identified and explained in the EM, in order to give a better picture of the approach being followed. More generally, the EM does not indicate, by article reference or whether in the SSR Regulation or the delegated Act, where the significant changes in scope are proposed to be made. The Committee was unclear why there appeared to be no amendment to Article 15 of the SSR, the buy-in procedures. It also noted that, since in Article 17 of the SSR on exemptions for market making there is no reciprocity arrangement, it seems that notifications given under the transition will always continue unless the FCA considers that a change has happened. The Committee considered that these were also points that should have been dealt with more fully in the EM. We would welcome your response to these issues which, in the Committee s view, point to the need for the EM to the Regulations to be revised and re-laid. I would be grateful if you could reply to this letter by 10am on Monday 29 October. 23 October 2018

13 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) 11 Letter from Mr John Glen MP to the Chairman Thank you for your letter of 23 October on the draft Short Selling (Amendment) (EU Exit) Regulations While I have considered the Committee s comments on the Explanatory Memorandum (EM) and set out responses to them below, the EM will be revised and re-laid ahead of the parliamentary debates on the Regulation to account for the Committee s concerns. Correlation provisions and UK sovereign CDS You requested clarification of amendments relating to UK sovereign debt and global asset correlation. The amendments to Article 8 of Commission Delegated Regulation 918/2012 reflect that there is only one sovereign issuer under UK Short Selling Regulation (SSR), the United Kingdom (including any government department, agency or special purpose vehicle of the United Kingdom). Under the EU SSR, sovereign Credit Default Swap (CDS) positions can only be entered into for legitimate hedging purposes. To qualify, the assets must be correlated to the value of the sovereign debt and be obligations to public or private sector entities in the same Member State, or another Member State where high correlation could be demonstrated. HMT s approach to onshoring has generally been to replace references to Member States with the appropriate UK reference. In this context, this would result in the provisions around cross-border hedging being deleted. As a result, UK firms would be unable to use UK sovereign CDS to hedge assets or liabilities issued by issuers located in the EU even if they were able to demonstrate correlation with UK sovereign debt. Instead, this SI will allow market participants to use UK sovereign CDS to hedge correlated assets or liabilities located anywhere in the world, rather than just in the EU. This will ensure UK firms can continue to use UK sovereign CDS to hedge correlated assets or liabilities issued by issuers located outside the UK, provided the correlation test in Article 18 of Commission Delegated Regulation 918/2012 is met. Article 15 You raised a question as to why amendments had not been made to the buy-in procedure in Article 15. It is proposed to make the necessary amendments to Article 15 of the SSR in a later SI. Additionally, Article 15 is repealed by Article 72 of Regulation 909/2014. However, that repeal will not be in force before exit day, and as such we cannot use EU Withdrawal Powers to enable it. Article 17 You raised a question around exemptions for market making in Article 17 and FCA notifications. The notification given to the FCA continues to be effective unless the FCA prohibits the use of the exemption under paragraph 7 of Article 17, which it may do if it considers that the person seeking to rely on the exemption no longer satisfies its conditions. Anyone relying on the exemption is required to notify the FCA of any changes which may affect their eligibility to use the exemption under paragraph 9 of Article 17. I hope this is helpful. If you have any subsequent queries, please do not hesitate to contact me. 29 October 2018

14 12 SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE A) Appendix 3: INTERESTS AND ATTENDANCE Committee Members registered interests may be examined in the online Register of Lords Interests at The Register may also be inspected in the Parliamentary Archives. For the business taken at the meeting on 29 October 2018, Members declared the following interests: Draft Short Selling (Amendment) (EU Exit) Regulations 2018 Baroness Bowles of Berkhamsted Non-executive Director, London Stock Exchange plc (as part of this role, the member is also Chair, Regulatory Advisory Group, London Stock Exchange Group plc) Attendance: The meeting was attended by Baroness Bowles of Berkhamsted, Lord Faulkner of Worcester, Lord Haskel, Lord Hogan-Howe, Lord Lilley, Lord Sharkey, Lord Trefgarne and Lord Walker of Gestingthorpe.