The cost of making an immigration or nationality application has risen extremely steeply in recent years. Annual increases of 20% or 25% per year are now standard, bringing the current cost of an application for Indefinite Leave to Remain in 2017 to £2,297.
The actual cost of processing such an application is £252, so the Home Office is generating considerable income from each application.
The cost of settlement is only one of the last steps in a long journey of applications, though. The total costs of applying to enter the UK as a spouse, for example, are much higher once all the different applications and fees are taken into account:
Fees were only introduced for in-country applications in 2003 and the increase only began in earnest in 2007, when for example a postal application for Indefinite Leave to Remain was increased from £335 to £775 and an application for naturalisation as a British citizen from £200 to to £575.
The principal driver for the increases appears to be pressure on the Home Office budget. The Autumn 2015 Spending Review indicated that the Home Office was aiming to achieve “a fully self-funded borders and immigration system.” Savings were needed but
[t]he remainder will be funded through targeted visa fee increases, which will remove the burden on the UK taxpayer while ensuring the UK remains a competitive place for work, travel and study internationally.
There seems little doubt, however, that as far as Ministers are concerned a welcome side effect of the steep fee increases is that this “prices out” migrants of modest means. There is certainly anecdotal evidence that families struggle to afford the necessary fees and the earnings threshold for spouses and some are driven to explore alternative migration routes as a consequence.
For children, the cost of registering as a British citizen is £973. This is literally prohibitive for unaccompanied children who otherwise qualify for citizenship. The high cost may well deter parents who are struggling financially from making applications that would be in the best interests of their children.
The new Immigration Skills Charge introduced on 1 April 2017 is more explicitly aimed at reducing immigration. It was introduced at a level of £1000 per year per worker and is due to be doubled (Conservative Manifesto 2017). Introducing the implementing regulations, the Minister, Lord Nash, said
Through the charge we want to incentivise employers to think differently about their recruitment and skills decisions and the balance between investing in UK skills and overseas recruitment … There are many examples of good practice, but it seems that some employers would prefer to recruit skilled workers from overseas rather than invest in training UK workers.
The Migration Advisory Committee, appointed by central Government to advise on immigration policy questions, recommended that £1,000 would be
large enough to have an impact on employer behaviour and that this would be the right level to incentivise employers to reduce their reliance on migrant workers.
But this is not the only cost. Employers also have to purchase and maintain a sponsorship licence and the cost of the immigration applications for the employee must also be borne, either by the employer or the employee. The direct costs soon mount up:
Certificate of sponsorship
Immigration Skills Charge
The indirect costs are also considerable and are probably more of a deterrent. These fees omit several other elements of friction:
• the fact that a skilled worker can only be recruited if the job has been advertised in a certain way and there were no suitable UK applicants
• the reference to the hundreds of pages of so called “SOC codes”, which impose a minimum salary for every conceivable job in the United Kingdom
• the quota on skilled migrants
• the fact the skilled worker will need to be sacked at the end of five years unless earning £35,000 (increasing to £36,200 by 2020)
• the cost of onerous sponsor administrative and compliance duties imposed by the Home Office, which can be extremely time consuming but neglect of which leads to loss of the sponsorship licence and therefore current and future foreign workers.
The Immigration Skills Charge is explicitly intended to make foreign workers uncompetitive in order to reduce immigration. It is a classic “tariff” in intention and effect. Like all tariffs, such misplaced protectionism is likely to have unintended consequences, including making us all poorer.
Imposing these tariffs on human beings in the form of onerous and — for some — unaffordable application fees as if they were widgets, whether for entry as family or as workers, is inhumane and is very poor policy indeed.