Lord German (LD)

My Lords, I declare my interest: I am supported by RAMP. Inflationary increases are recognised as an appropriate way to deal with charges of this sort. I will return to the amount and what has been happening since 2017 in a moment, but the core policy intent of the charge remains the same: to encourage employers to look at training resident workers rather than recruiting internationally. The impact assessment accompanying the regulations suggests that the increase will have only a small disincentive effect, putting off “less than 1%” of sponsorships that would have occurred without the higher charge. The overall package of immigration measures, including the ISC increase, is estimated to reduce net immigration by between 1,000 and 2,000 people per year. I am sure that noble Lords will recognise that this net effect is very small in relative terms as compared to the number of people in this country: it represents about 0.3% of long-term immigration figures. Although the Government aim to reduce reliance on international recruitment, the job needs are exceeding training provision. In any case, there are the implications of the increasing need for jobs as we face the growing older demographic—a subject to which I will come in a moment. For employers, the ISC is simply a mandatory fee that must be factored into hiring budgets, and there is no direct benefit or service provided in exchange for the outlay; the fee cannot be passed on to the sponsored worker. For us, a significant point of contention is the application of the increase to the health and social care sector. Increasing the charge for the health and social care sector is a mistake in our view, because this penalises hospitals and care homes attempting to hire desperately needed staff. The increase transfers money from the National Health Service to the Home Office, when GPs, hospitals and hospices desperately need funds. The Government are trying to ensure that the public sector, like the private sector, recruits from the British workforce, but transitioning takes time, and estimates of posts required are far outstripping the provision and recruitment to training opportunities in order to fill those posts. The ISC rates have not changed since the charge was introduced in 2017. The Secondary Legislation Scrutiny Committee noted that, when asked why the charge had not increased previously, the Home Office responded only that “there have not been any substantive reviews of the ISC” and, importantly, “Ministers had not sought to make changes”. I am not suggesting that it was the current Minister, but somebody somewhere was asleep on the job. Perhaps the Minister can inform us why that has not happened in the intervening years and why businesses will therefore now be subjected to a large increase because we did not continue with the proper process of increasing with inflation each year. The Secondary Legislation Scrutiny Committee also considered the Home Office’s replies on plans for future timely reviews of the charge to be “unhelpfully vague”, so it remains for the Minister today, I am afraid, to be encouraged to ensure that the ISC will be kept under regular review to ensure that it retains its real-terms value and to avoid large step changes in the amounts payable in the future. The SLSC says that the Home Office “did not respond” to it regarding consultation on these increased charges. The SLSC says that, if no consultation was undertaken, it regretted that and suggested that that would continue a trend of “inadequate consultation” on many immigration policies. Can the Minister correct the committee? Alternatively, will he take into account its criticism of what is happening inside the department? The Home Office deemed a formal public consultation unnecessary, arguing that it would be “disproportionate given the nature of the changes”. A 32% increase is not a disproportionate amount, so some form of public consultation should have been undertaken. I have five questions. First, I want to concentrate on the impact upon the health and social care sector and the transfer of money from the NHS. I do not know whether the Government plan to undertake a study of what impact this has on the NHS and our care services, but if they wanted to find out how much cost falls upon the National Health Service, it would be difficult to track down. The Budget produced last week—these are documents from the Budget—says that, between now and March, £48 million will be raised from these charges. In the year from next April, it will be £180 million. Altogether, that is a substantial amount of money in the next 15 or 16 months. It is necessary to understand how much of that charge falls upon the National Health Service, because taking with one hand and giving with another is not a way of ensuring that we get appropriate transparency of public funding. The documents produced for the Budget say that the £180 million next year will be offset by increased DEL expenditure, but we have just heard from the Minister that the DEL expenditure is going on training. My main question is: if they are putting this money towards training, to achieve the objective set out by the Minister at the outset, getting domestic employment rather than none, it is important to understand how much of that charge is being taken from the NHS budget. According to the statement just made by the Minister, it is certainly not transferred back into the National Health Service, as far as we can understand it. This is really a question about how we can measure that impact and whether, if there is a negative impact, the Government will try to reduce the rate for the National Health Service to the charitable small organisation rate, so that we can at least minimise the hit upon that service. The impact assessment estimates that the increase in the immigration skills charge will deter less than 1% of sponsorships. Does the Minister believe that this modest impact is sufficient to address the stated objective that levels of net migration—I am talking here about illegal migration for work—have been too high and must continue to come down? That impact is quite small compared with what I suspect the need is.