House of Lords House of Commons Joint Committee on Statutory Instruments
Twenty-fifth Report of Session 2015–16
Drawing special attention to:
Collective Management of Copyright (EU Directive) Regulations 2016 (S.I. 2016/221) Immigration and Nationality (Fees) Regulations 2016 (S.I. 2016/226)
Ordered by The House of Lords to be printed 11th May 2016
Ordered by The House of Commons to be printed 11th May 2016
HL Paper 148 HC 352-xxv Published on 13 May 2016 by authority of the House of Lords and the House of Commons Joint Committee on Statutory Instruments
Current membership House of Lords Baroness Humphreys (Liberal Democrat) Lord Lexden (Conservative) Lord Mackay of Drumadoon (Crossbench) Baroness Mallalieu (Labour) Baroness Meacher (Crossbench) Lord Rowlands (Labour) Lord Sherbourne of Didsbury (Conservative)
House of Commons Derek Twigg (Labour, Halton) (Chair) Vicky Foxcroft (Labour, Lewisham, Deptford) Stephen Hammond (Conservative, Wimbledon) Mr Ian Liddell-Grainger (Conservative, Bridgwater and West Somerset) Victoria Prentis (Conservative, Banbury)
Powers The full constitution and powers of the Committee are set out in House of Commons Standing Order No. 151 and House of Lords Standing Order No. 74, available on the Internet via www.parliament.uk/jcsi.
Remit The Joint Committee on Statutory Instruments (JCSI) is appointed to consider statutory instruments made in exercise of powers granted by Act of Parliament. Instruments not laid before Parliament are included within the Committee’s remit; but local instruments and instruments made by devolved administrations are not considered by JCSI unless they are required to be laid before Parliament. The role of the JCSI, whose membership is drawn from both Houses of Parliament, is to assess the technical qualities of each instrument that falls within its remit and to decide whether to draw the special attention of each House to any instrument on one or more of the following grounds: i that it imposes, or sets the amount of, a charge on public revenue or that it requires payment for a licence, consent or service to be made to the Exchequer, a government department or a public or local authority, or sets the amount of the payment; ii that its parent legislation says that it cannot be challenged in the courts; iii that it appears to have retrospective effect without the express authority of the parent legislation; iv that there appears to have been unjustifiable delay in publishing it or laying it before Parliament; Twenty-fifth Report of Sesssion 2015–16 iii
v that there appears to have been unjustifiable delay in sending a notification under the proviso to section 4(1) of the Statutory Instruments Act 1946, where the instrument has come into force before it has been laid; vi that there appears to be doubt about whether there is power to make it or that it appears to make an unusual or unexpected use of the power to make; vii that its form or meaning needs to be explained; viii that its drafting appears to be defective; ix any other ground which does not go to its merits or the policy behind it. The Committee usually meets weekly when Parliament is sitting.
Publications The reports of the Committee are published by The Stationery Office by Order of both Houses. All publications of the Committee are on the Internet at www.parliament.uk/jcsi.
Committee staff The current staff of the Committee are Amelia Aspden (Commons Clerk), Jane White (Lords Clerk) and Liz Booth (Committee Assistant). Advisory Counsel: Peter Davis, Peter Brooksbank, Philip Davies and Daniel Greenberg (Commons); Nicholas Beach, Peter Milledge and John Crane (Lords).
Contacts All correspondence should be addressed to the Clerk of the Joint Committee on Statutory Instruments, House of Commons, London SW1A 0AA. The telephone number for general inquiries is: 020 7219 2026; the Committee’s email address is: [email protected].
Twenty-fifth Report of Sesssion 2015–16 1
Contents
Instruments reported 2 1 S.I. 2016/221: Reported for defective drafting and for failure to comply with proper drafting practice 2 Collective Management of Copyright (EU Directive) Regulations 2016 2 2 S.I. 2016/226: Reported for defective drafting and for doubt as to whether they are intra vires 4 Immigration and Nationality (Fees) Regulations 2016 4
Instruments not reported 6 Annex 6
Appendix 1 8 S.I. 2016/221 8 Collective Management of Copyright (EU Directive) Regulations 2016 8
Appendix 2 11 S.I. 2016/226 11 Immigration and Nationality (Fees) Regulations 2016 11 2 Twenty-fifth Report of Sesssion 2015–16
Instruments reported At its meeting on 11 May 2016 the Committee scrutinised a number of Instruments in accordance with Standing Orders. It was agreed that the special attention of both Houses should be drawn to two of those considered. The Instruments and the grounds for reporting them, are given below. The relevant Departmental memoranda are published as appendices to this report.
1 S.I. 2016/221: Reported for defective drafting and for failure to comply with proper drafting practice
Collective Management of Copyright (EU Directive) Regulations 2016
1.1 The Committee draws the special attention of both Houses to these Regulations on the grounds that they are defectively drafted in one respect and do not comply with proper drafting practice in numerous respects.
1.2 The Regulations transpose Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market.
1.3 Paragraph (1) of regulation 7 imposes a duty on a collective management organisation to ensure that there is a general assembly of members at least once a year; that the general assembly does certain specified things; and that members have certain rights in relation to it. Sub-paragraph (d)(vi) to (ix) require the general assembly to decide the risk management policy and to approve land transactions, mergers, alliances, setting-up of subsidiaries, acquisitions of other entities and loans; sub-paragraph (e)(i) requires it to appoint and remove the auditor; and paragraph (f) requires that all members may participate and vote in the general assembly. Paragraphs (2) to (4) of regulation 7 provide that the requirements in sub-paragraphs (d)(vi) to (ix), (e)(i) and (f) of paragraph (1) “may be satisfied” in various ways: those in sub-paragraph (d)(vi) to (ix) where the general assembly has delegated the functions to the body exercising the supervisory function; those in sub-paragraph (1)(e) (i) where an auditor is appointed under Chapter 2 of Part 16 to the Companies Act 2006; and those in sub-paragraph (1)(f) where members’ rights are restricted, by reference to duration of membership and/or amounts received from or due to a member, in a fair and proportionate manner and openly.
1.4 The Committee was uncertain of the intended meaning of “may be satisfied” in regulation 7(2) to (4) and so asked the Department for Business, Innovation and Skills to explain it and how effect is given to that intention, indicating in particular whether “is also” might have been more apt than “may be” to express the intended meaning. In a memorandum printed at Appendix 1, the Department states that the intention is that a collective management organisation is to be able to satisfy the requirements in paragraph (1) of regulation 7 which are referred to in paragraphs (2) to (4) of that regulation where the actions specified in those paragraphs are performed or, in other words, that paragraphs (2) to (4) provide an alternative way of complying with those requirements. The Department Twenty-fifth Report of Sesssion 2015–16 3
does not consider that the formulation suggested by the Committee in its question would necessarily be apt to convey that intention, at least in relation to regulation 7(3), because the alternative there is available only if the collective management organisation is a company.
1.5 The Committee is not persuaded that the Department is correct in its response to the Committee’s suggestion. Clearly, if the Committee’s suggested formulation had been used, nothing in regulation 7(3) would have suggested an alternative means of compliance for organisations other than companies, because Chapter 2 of Part 16 of the Companies Act 2006 does not apply to them. The effect would therefore have been exactly as intended. In contrast, the words “may be satisfied” seem to suggest that, while it is possible that paragraphs (2) to (4) of regulation 7 provide an alternative means of compliance with the requirements of paragraph (1) to which they refer, it is not inevitable that they do so. The Department’s memorandum indicates that, as the Committee suspected, it was not intended that it should be uncertain whether compliance with those requirements is achieved by satisfying the alternatives in paragraphs (2) to (4). The Committee accordingly reports regulation 7(2) to (4) for defective drafting.
1.6 The Committee also observed what appeared to be a large number of editorial and presentational errors in the Regulations. It therefore additionally asked the Department to explain, with the assistance of National Archives as appropriate, the errors which it had identified and to give an indication of plans for eliminating the possibility of such errors surviving in the validated version of the SI Template. The errors listed by the Committee were as follows—
a) in regulation 7 –
(i) in paragraph (1)(d), “regulation” rather than “regulations”,
(ii) in paragraphs (4) and (11)(e), random semi-colons after “and” between the (sub-) paragraphs, and
(iii) in paragraph (6)(b)(ii) “subparagraphs” instead “sub-paragraphs”,
(b) in regulations 8(2), 10, 15(4), 19(1), 27(3) and 30(3), more examples of random semi-colons after “and” between the (sub-) paragraphs,
(c) the misalignment of paragraph (1) in regulations 9, 12, 14, 15, 16, 22, 23, 24, 25, 26, 27, 32, 33, 36, 38, 40 and 43, of regulation 25(3) and of the full-out words in regulation 25(5),
(d) in regulation 39(3), the cross-reference to regulation 37 which should be to regulation 38 (not 37),
(e) in regulation 44(b), the superfluous comma after “or”,
(f) in regulation 46(1), the missing space after “(1)”,
(g) the numbering of the sub-paragraphs in regulation 46(5), (6) and (8) (which should be lettered), and
(h) the use of “repeal” rather than “revocation” in regulation 47. 4 Twenty-fifth Report of Sesssion 2015–16
1.7 In its memorandum the Department accepts that these errors have been made and points out that many may be capable of correction by a correction slip. That is not a matter for the Committee to adjudicate on but it considers it worth observing here that, even if the corrections can be made without formal amendment, that is no reason for the Department to be relaxed about the fact that the errors have been made. The Committee considers that subordinate legislation should be subjected to careful internal checking during and after drafting with a view to minimising (if not eliminating) mistakes of this sort which are a source of confusion to users, even if they are subsequently corrected.
1.8 The Committee’s memorandum is accompanied by a letter from the National Archives which points out that, in so far as the identified errors are typographical or grammatical, they are not matters which can be dealt with in the validation process. The Committee accepts that: it considers the remedy for errors of those sorts to lie in checking within Departments. But the Committee was surprised by the admission that the incorrect alignment of paragraphing, spacing and numbering which it identified (items (c), (f) and (g)) are examples of matters which cannot be picked up by validation. It seems odd to the Committee that a drafter should be able to choose incorrect formatting or numbering style without that being identified and corrected at the validation stage and, to the extent that software changes could be made to help identify and eradicate such mistakes during the validation process, the Committee urges the Government seriously to consider making them and to inform the Committee of any steps taken. The Committee accordingly reports the Regulations as not complying with proper drafting practice.
2 S.I. 2016/226: Reported for defective drafting and for doubt as to whether they are intra vires
Immigration and Nationality (Fees) Regulations 2016
2.1 The Committee draws the special attention of both Houses to these Regulations on the grounds that they are defectively drafted in one respect and that there is a doubt as to whether they are intra vires in one related respect.
2.2 The Regulations specify fees relating to immigration, nationality and associated functions.
2.3 Regulation 13 provides that “The rate of exchange for calculating the equivalents of fees set out in these Regulations but paid in a foreign currency must be based upon the rate of exchange which is generally prevailing on the date, and at the place, of payment but which may be adjusted by the Secretary of State (or a representative of the Secretary of State) in such a manner and to such an extent as that person considers expedient in the interests of administrative efficiency.”
2.4 The Committee asked the Home Office to explain which of the various commercially applicable rates of exchange is intended to be applied as a starting point in accordance with regulation 13. In a memorandum printed at Appendix 2, the Department explains that “in order to calculate the sum payable, for Consular service, the Foreign and Commonwealth Office (“FCO”) sets a rate (known as the ‘Consular rate’) in relation to each currency”. The Department goes on to describe in detail the process that it uses in setting and varying the Consular rate. In particular, the Department explains that the rate “that the government uses as the “generally prevailing” rate of exchange, and the starting point for the purposes Twenty-fifth Report of Sesssion 2015–16 5
of regulation 13, is the FCO Corporate Rate which is broadly based upon the Financial Times exchange rate”. Although the Committee finds this explanation helpful, it confirms the Committee’s suspicion that the phrase in regulation 13 “the rate of exchange which is generally prevailing” does not describe a single rate that is objectively ascertainable. The Committee believes that it might have been possible for the regulations to provide for the process described in the Department’s memorandum within the enabling powers; but the existing terminology of regulation 13 fails to do so. Accordingly, the Committee reports regulation 13 for defective drafting.
2.5 The Committee also asked the Department to identify the vires for the discretion conferred by regulation 13 in so far as it relates to an increase over the amount established by the rate of exchange in question.
2.6 In its memorandum, the Department asserts that sections 68 and 69 of the Immigration Act 2014 implicitly allow the government to collect fees in a foreign currency, “and to do so in a way that is administratively workable, provides certainty for customers paying our fees, and prevents abuse of the system”. The Committee does not dissent from that proposition, but it remains unclear why a power of the apparent breadth of regulation 13 is thought suitable. The concept of “of what is administratively workable” is broad and not sufficiently clear to define the range of discretion being conferred. If the regulation provided that the result of applying a commercial rate of exchange could be rounded up or down to the nearest figure that can conveniently be paid, for example, the Committee would have been satisfied both as to vires and as to drafting. As it is, however, regulation 13 appears to require a rate of exchange to be identified, and then varied by officials at their discretion to the extent that they consider “administratively workable”. That appears to be a level of sub-delegation that is neither expressly contemplated by the enabling power nor within the normal range of administrative discretion that might be allowed without express enabling power. As with the rate of exchange, the Committee suspects that the regulation might have been drafted unexceptionably in such a way as to describe the present practice; but as presently structured it raises a doubt as to the extent of the sub- delegation conferred. The Department notes in its memorandum that the same formula has been used in an earlier instrument, but that is not determinative of whether it is lawful. Accordingly, the Committee additionally reports regulation 13 on the grounds that there is a doubt as to whether it is intra vires. 6 Twenty-fifth Report of Sesssion 2015–16
Instruments not reported At its meeting on 11 May 2016 the Committee considered the Instruments set out in the Annex to this Report, none of which were required to be reported to both Houses.
Annex
Draft instruments requiring affirmative approval Draft S.I. West Midlands Combined Authority Order 2016
Draft S.I. Representation of the People (England and Wales) (Amendment) Regulations 2016
Draft S.I. Access to Justice Act 1999 (Destination of Appeals) Order 2016
Instruments subject to annulment S.I. 2016/279 Control of Noise (Appeals) (Amendment) (England) Regulations 2016
S.I. 2016/285 Building Regulations &c. (Amendment) Regulations 2016
S.I. 2016/299 European Union Trade Mark Regulations 2016
S.I. 2016/303 Water Quality and Supply (Fees) Order 2016
S.I. 2016/334 Unauthorised Deposit of Waste (Fixed Penalties) Regulations 2016
S.I. 2016/335 Party Wall etc. Act 1996 (Electronic Communications) Order 2016
S.I. 2016/356 Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Reports on Conduct of Directors) (Northern Ireland) Regulations 2016 S.I. 2016/360 Tax Credits and Child Benefit (Miscellaneous Amendments) Regulations 2016 S.I. 2016/375 European Public Limited-Liability Company (Register of People with Significant Control) Regulations 2016 S.I. 2016/389 Criminal Justice Act 2003 (Surcharge) (Amendment) Order 2016
S.I. 2016/498 Proceeds of Crime Act 2002 (Investigations in different parts of the United Kingdom) (Amendment) (No. 2) Order 2016 S.I. 2016/502 Jobseeker’s Allowance (Extended Period of Sickness) Amendment Regulations 2016 S.I. 2016/503 Export Control (Iran Sanctions) Order 2016
S.I. 2016/504 Belarus (Asset-Freezing) (Amendment) Regulations 2016
S.I. 2016/505 Approval of Code of Management Practice (Private Retirement Housing) (England) Order 2016 S.I. 2016/517 Patents (Amendment) Rules 2016 Twenty-fifth Report of Sesssion 2015–16 7
Draft instruments subject to negative procedure Draft S.I. Devon (Electoral Changes) Order 2016
Draft S.I. Kent (Electoral Changes) Order 2016
Draft S.I. Nottinghamshire (Electoral Changes) Order 2016
Instrument not subject to Parliamentary proceedings laid before Parliament S.I. 2016/378 Iran (United Nations Sanctions) (Amendment) Order 2016
Instruments not subject to Parliamentary proceedings not laid before Parliament S.I. 2016/309 Offshore Installations (Safety Zones) Order 2016
S.I. 2016/347 Tuberculosis (England) (Amendment) Order 2016
S.I. 2016/369 Aviation Security and Piracy (Overseas Territories) (Amendment) Order 2016 S.I. 2016/370 Copyright (Cayman Islands) (Amendment) Order 2016
S.I. 2016/394 Welfare Reform and Work Act 2016 (Commencement No. 1) Regulations 2016 S.I. 2016/401 Annual Tax on Enveloped Dwellings (Indexation of Annual Chargeable Amounts) Order 2016 S.I. 2016/418 Wireless Telegraphy (Licensing Procedures) (Amendment) Regulations 2016 S.I. 2016/497 Chief Regulator of Qualifications and Examinations Order 2016
S.I. 2016/500 Exempt Charities Order 2016
S.I. 2016/509 Imperial College Healthcare National Health Service Trust (Trust Funds: Appointment of Trustees) Revocation Order 2016 S.I. 2016/512 Financial Services (Banking Reform) Act 2013 (Commencement No. 10) Order 2016 8 Twenty-fifth Report of Sesssion 2015–16
Appendix 1
S.I. 2016/221
Collective Management of Copyright (EU Directive) Regulations 2016
1. In a letter dated 20th April 2016 the Committee requested the Department for Business, Innovation and Skills for a memorandum on the following points:
(1) Explain the intended meaning of “may be satisfied” in regulation 7(2) to (4) and how effect is given to that intention, indicating in particular whether “is also” might have been more apt than “may be” to express the intended meaning.
(2) With the assistance of National Archives as appropriate, explain the following editorial and presentational errors and give an indication of plans for eliminating the possibility of such errors surviving in the validated version of the SI Template—
(a) in regulation 7 –
(i) in paragraph (1)(d), “regulation” rather than “regulations”,
(ii) in paragraphs (4) and (11)(e), the random semi-colon after “and” between the (sub-) paragraphs, and
(iii) in paragraph (6)(b)(ii) “subparagraphs” instead of “sub-paragraphs”,
(b) in regulations 8(2), 10, 15(4), 19(1), 27(3) and 30(3), more examples of random semi-colons after “and” between the (sub-) paragraphs,
(c) the misalignment of paragraph (1) in regulations 9, 12, 14, 15, 16, 22, 23, 24, 25, 26, 27, 32, 33, 36, 38, 40 and 43, of regulation 25(3) and of the full-out words in regulation 25(5),
(d) in regulation 39(3), the cross-reference to regulation 37 which should be to regulation 38 (not 37),
(e) in regulation 44(b), the superfluous comma after “or”,
(f) in regulation 46(1), the missing space after “(1)”,
(g) the numbering of the sub-paragraphs in regulation 46(5), (6) and (8) (which should be lettered), and
(h) the use of “repeal” rather than “revocation” in regulation 47.
2. The intended meaning and effect of the phrase “may be satisfied” in regulation 7(2) to (4) is that the collective management organisation is able to satisfy the requirements in regulation 7(1) which are referred to in paragraphs (2) to (4) where the actions specified Twenty-fifth Report of Sesssion 2015–16 9
in one of those paragraphs are performed. Paragraphs (2) to (4) accordingly provide collective management organisations with an alternative option as to how they comply with certain of the requirements placed on them in regulation 7(1).
3. Use of the phrase “may be” is intended to convey the sense that these are options available to collective management organisations, if they choose to do certain things, in how they comply with some of the obligations set out in relation 7(1). In regulation 7(3) a collective management organisation would have to take the form of a company in order to be able to use the option which is provided. Use of the term “is also” may not be apt in the circumstance of a collective management organisation which is not a company.
4. The Department agrees that the provisions referred to in paragraph 2 of the Committee’s letter contain the presentational or editorial errors which are mentioned. Many of these errors are ones that appear to the Department to be suitable to be corrected by way of correction slip.
5. The Department has asked National Archives whether, as part of the validation process for the SI template, there are means to avoid the particular presentational and editorial errors referred to in paragraph 2 of the Committee’s letter. A letter from National Archives dated 21st April 2016 on this issue is attached to this Memorandum.
Department of Business, Innovation and Skills
25 April 2016
Letter from The National Archives
Collective Management of Copyright (EU Directive) Regulations 2016
The SI template makes use of the Styles feature in Microsoft Word to ensure that instruments are drafted in the correct format. This ensures that font size, typeface and spacing, amongst other formatting elements, are correct in the print and online version of Statutory Instruments. If the SI Template is not utilised in the correct manner this will result in the document failing validation and the errors must be rectified before the instrument can be sent to the SI Registrar for registration.
A document will not, however, fail validation because of typographical errors. This gives departmental lawyers a full degree of linguistic freedom when drafting an instrument. If such mistakes do occur in the final, published version of an instrument it is possible for these to be rectified at a later point through the issuing of a correction slip.
With respect to the concerns of the Joint Committee on Statutory Instruments regarding S.I. 2016/221, The Collective Management of Copyright (EU Directive) Regulations 2016, the following comments can be made:
(2)(a) in regulation 7 –
(i) in paragraph (1)(d), “regulation” rather than “regulations”,
(ii) in paragraphs (4) and (11)(e), the random semi-colon after “and” between the (sub-) paragraphs, and
(iii) in paragraph (6)(b)(ii) “subparagraphs” instead of “sub-paragraphs”, 10 Twenty-fifth Report of Sesssion 2015–16
These errors are typographical in nature and do not concern the formatting of the document. They will therefore not be picked up on at the validation stage. It is for the drafter to ensure that they use the appropriate spelling and grammatical conventions for the instrument that they are drafting.
(b) in regulations 8(2), 10, 15(4), 19(1), 27(3) and 30(3), more examples of random semi-colons after “and” between the (sub-) paragraphs,
Semi-colons are grammatical elements that vary between provisions and instruments. It is ultimately for the departmental lawyer to refer to the relevant GLS guidance and make use of them accordingly. In the examples given by the Committee so long as the correct style is applied to the entire line “and;” then the document will successfully pass validation irrespective of any grammatical errors.
(c) the misalignment of paragraph (1) in regulations 9, 12, 14, 15, 16, 22, 23, 24, 25, 26, 27, 32, 33, 36, 38, 40 and 43, of regulation 25(3) and of the full-out words in regulation 25(5),
It appears in this instance that the incorrect formatting has been applied to the subsequent paragraphs rather than to paragraph (1). The document has nevertheless passed validation because a valid style has been applied albeit the wrong one for this level of text. The same principle applies in regulations 25(3) and (5). Drafters are referred to the SI Template User Manual available from https://publishing.legislation.gse.gov.uk/tools to ensure that they apply the correct style for each level of text within an instrument.
(d) in regulation 39(3), the cross-reference to regulation 37 which should be to regulation 38 (not 37),
This is a textual error which can be corrected by way of correction slip.
(e) in regulation 44(b), the superfluous comma after “or”,
This is a typographical error which can be corrected by way of correction slip.
(f) in regulation 46(1), the missing space after “(1)”,
This is a typographical error which can be corrected by way of correction slip.
(g) the numbering of the sub-paragraphs in regulation 46(5), (6) and (8) (which should be lettered), and
As with point (c) above, a valid (albeit incorrect) style has been applied by the drafting lawyer in this instance and therefore will not cause the document to fail validation. It is up to the drafter, with assistance from the SI Template User Manual, to select the appropriate style for any given line(s) of text within an instrument.
(h) the use of “repeal” rather than “revocation” in regulation 47.
This is a textual error which can be corrected by way of correction slip.
In summary there are limitations that apply to the SI Template and therefore the validation process. These exist for a number of reasons: Twenty-fifth Report of Sesssion 2015–16 11
Microsoft Word does not currently have the required functionality to support all the diverse requirements of an SI;
Rules built into the Template concerning textual input are not appropriate as they would potentially hinder the freedom of a lawyer when drafting an instrument; and
A full range of stylistic options must be accessible via the template. Ultimately it is up to the drafter to select the appropriate style in any given instance with the aid of the SI Template User Manual.
I hope this response addresses the concerns expressed by the Committee.
21 April 2016
Appendix 2
S.I. 2016/226
Immigration and Nationality (Fees) Regulations 2016
1. This memorandum is submitted in response to questions from the Joint Committee on Statutory Instruments to the Home Office on 20 April 2016. The Committee asked:
(1) Explain which of the various commercially applicable rates of exchange is intended to be applied as a starting point in accordance with regulation 13, and how that intention is achieved.
(2) Identify the vires for the discretion conferred by that regulation in so far as it relates to an increase over the amount established by the rate of exchange in question.
Question 1
2. There are numerous contexts in which monies are paid to the government by persons overseas, and in many cases it will be expedient (both to payer and payee) for such monies to be paid in currencies other than sterling. In addition, in some cases payment in sterling will not be operationally possible. In order to calculate the sum payable, for Consular service, the Foreign and Commonwealth Office (“FCO”) sets a rate (known as the ‘Consular rate’) in relation to each currency. The Consular rate is the rate that a customer will pay when paying in foreign currency. The rate that the government uses as the “generally prevailing” rate of exchange, and the starting point for the purposes of regulation 13, is the FCO Corporate Rate which is broadly based upon the Financial Times exchange rate.
3. The FCO conducts regular reviews in order to ensure that the Corporate rates track the Financial Times rates of exchange. In particular, on the last calendar date of the month, as a matter of course, the FCO check the Financial Times rates of exchange for the majority of currencies, review the Corporate rate for each currency and reset it (where necessary). For a small number of pre-determined currencies (approximately 10%) the 12 Twenty-fifth Report of Sesssion 2015–16
FCO review a wider range of currency websites to determine the corporate rate to be used. This is where the Financial Times rates of exchange are not representative of changes in specific countries and there is therefore variance from rates used in these countries.
4. If a divergence of more than 3% occurs during the month (between the Corporate rate and the Financial Times rates) the rate is re-adjusted before the ‘normal’ monthly review occurs. Further, where there has been a rapid change in the valuation of a currency which is not yet reflected in the Financial Times rates of exchange, overseas posts use the spot rate (this being the highest legally available rate in local banks) in that country and use this rate of exchange in all their business until the Financial Times rates of exchange have caught up such that the Corporate rate can be reset in the normal way.
5. The Consular rate of exchange is set by FCO Consular sections in order to ensure that when paying in local currency the full sterling fee is always charged. It is the government’s intention to ensure that the Consular rates reflect generally prevailing exchange rates, to ensure that fees paid in foreign currency are as close to the equivalent sterling charge as possible. To that end, policy guidelines state that the rate should never fall below the Corporate rate of exchange and never exceed it by more than 10%.Consular sections aim to keep the Consular Rate between 3-5% above the Corporate rate. The rates are then rounded to make sure they are administratively workable (such that fees can be calculated in a useable manner.) In addition, the Head of the FCO’s Consular section ensures that the Corporate rates of exchange are monitored (at least) weekly with the Consular rate being updated as necessary to remain compliant with guidance. The Consular rate is the rate used by government when collecting charges overseas.
Question 2
6. Section 68(1) of the Immigration Act 2014 permits charging for the exercise of functions in connection with immigration or nationality. To be able to charge for any particular immigration or nationality function, the function must be specified in a fees order along with the method by which the fee will be calculated and the maximum amount of that fee. Section 68(7) of the Immigration Act 2014 provides that for any specific product, the fee amount and method of calculation must be set out in fees regulations. The fees set out in the Schedules to the Immigration and Nationality (Fees) Regulations 2016, are all subject to regulation 13 when they are paid in a foreign currency.
7. Section 69(2) of the Immigration Act 2014 allows the government to charge for the exercise of its immigration or nationality functions outside the United Kingdom. We considers that the Secretary of State’s powers to charge in sections 68 and 69 of the Immigration Act 2014, give rise, by necessary implication to a power to collect those fees in a foreign currency, and to do so in a way that is administratively workable, provides certainty for customers paying our fees, and prevents abuse of the system. We consider that there is no requirement for a more specific power, set out in primary legislation or elsewhere, in order to permit the discretion set out in regulation 13. We understand that this replicates the analysis in relation to consular rates more generally. In particular, the wording in regulation 13 is identical to that contained in the Consular Fees Regulations 1981: again, the primary legislation on which this is based does not set out a specific power – rather, the power arises through necessary implication. The current method has been used since 2006 to calculate the rate of exchange used when levying immigration or nationality fees overseas. A possible theoretical alternative would be a system whereby the Twenty-fifth Report of Sesssion 2015–16 13
rate continually tracked the Financial Times rates of exchange. However, this would be both inconvenient for customers, who require more certainty as to the fees they will be required to pay, and would be unworkable in practice for the Secretary of State.
Home Office
26 April 2016