UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 217-ii

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

HOME AFFAIRS COMMITTEE

MANAGING MIGRATION: POINTS-BASED SYSTEM

Tuesday 10 FEBRUARY 2009

MS LINDA ALLEN and MR STEPHEN SEYMOUR

MR DES HUDSON and MS SARAH LEE

Evidence heard in Public Questions 116 - 186

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Home Affairs Committee

on Tuesday 10 February 2009

Members present

Keith Vaz, in the Chair

Tom Brake

Ms Karen Buck

Mr James Clappison

David T C Davies

Mrs Janet Dean

Patrick Mercer

Margaret Moran

Gwyn Prosser

Bob Russell

Martin Salter

Mr Gary Streeter

Mr David Winnick

________________

Memorandum submitted by the Office of the Immigration Services Commissioner

Examination of Witnesses

Witnesses: Ms Linda Allen, Deputy Immigration Services Commissioner, and Mr Stephen Seymour, Director of Operations, Office of the Immigration Services Commissioner, gave evidence.

Chairman: We welcome Ms Allen and Mr Seymour. This is the first of a two-part session we are conducting this morning. I begin by declaring an interest. My wife is an immigration solicitor and part-time judge.

Mr Winnick: I was involved some years ago in what is now the Immigration Advisory Service.

Q116 Chairman: In respect of other Members of the Committee all their interests are declared in the register of Members' interests and for the purposes of these proceedings they are noted as part of the record. Ms Allen, perhaps I may begin by asking whether the introduction of the points-based system by the government will result in fewer people seeking advice from immigration practitioners.

Ms Allen: We believe it unlikely that the points-based system will result in less demand for immigration advice or services. The areas in which people are likely to seek advice will change but they are unlikely to diminish. Mr Seymour can go into that in more detail.

Mr Seymour: We believe that 60% of immigration advice will remain unaffected by the points-based system. What will not be affected are the asylum legacy cases, detention, removal and citizenship with all the transitional arrangements to PPS. A lot of that will remain the same. We have looked at applications in the past year by those people who wish to become immigration advisers. As of this morning, after 10 months or so we have received the number of applications that were made in 2007/08, so there is no sign of a reduction in the number of people who wish to become immigration advisers. If we count back from that we would assume there is a demand for that advice.

Q117 Chairman: You welcomed the introduction of the system, did you not?

Ms Allen: We did indeed.

Q118 Mr Brake: Has the UK Border Agency issued clear guidance on the operation of the points-based system?

Ms Allen: As a regulator rather than a representative body we can report back only that which those we regulate have said to us. We would not expect UKBA to issue guidance specifically to us. We tend to work alongside them rather than to administer or use the system. At our annual conference in November advisers expressed concern about the lack of information, the timing of the information coming to them and the fact that although there was a lot of information on UKBA's website it was difficult to find a specific item and get an overview of the situation. That reflected opinions that had been expressed to us when we met advisers in August 2008. At that time some said they were getting information and some felt a bit disenfranchised and were not getting the information they needed in order to gear their own businesses to the new system.

Q119 Mr Brake: As regulator do you take up the concerns raised by those regulated and, if so, what has UKBA said in response?

Ms Allen: We have encouraged UKBA to widen its stakeholder arrangements and our advisers to participate in them. Advisers now go to meetings organised by UKBA. They have better access to the centre and better information is going to them. In addition we have organised seminars and made PBS the subject-matter of our conferences. UKBA speakers attend them to give information to those we regulate.

Q120 Mr Brake: You have encouraged them to widen their engagement with stakeholders. Do you believe they have done it?

Ms Allen: Yes, they have. We have also changed the way we relate to them so we are getting more information from our policy side quicker and can pass that on.

Q121 Bob Russell: I am not sure the procedure allows you to make recommendations, but if it did what recommendations would you make to the UK Border Agency to improve the administrative operation of the points-based system?

Ms Allen: I am not sure that it is necessarily for us to tell them how to improve the administration of the system. We work beside them in improving enforcement to ensure that there are no loopholes in the system and that the integrity of the system is intact. Mr Seymour's staff does a lot of work with the agency's enforcement and intelligence staff. We would like to build on the relationship that has been developing over recent months. Maybe Mr Seymour can say something about the sorts of things we would like to emerge from that and build upon as recommendations.

Q122 Bob Russell: There is a dialogue out of which recommendations might flow?

Ms Allen: Yes.

Mr Seymour: We certainly want to be involved at the early stages of policy development and the processes. We believe that we have a part to play. I think we offer a slightly different perspective on the sector from UKBA. We would like to be part of that so we can get information and provide better advice.

Q123 Mr Brake: To date how receptive have they been to your comments, proposals, suggestions or recommendations?

Mr Seymour: Fairly receptive. In the conversations we have with UKBA we have received assurances that we shall be kept very much involved at an early stage. There is also good practice taking place. We have a particularly good dialogue with UKBA in Sheffield, for example, and meetings with them seem to be acted upon.

Q124 Mr Brake: So, finally everything is joined up, is it?

Ms Allen: It has much changed. The introduction of PBS has meant that the OIS has had to work more closely with parts of UKBA with which in the past it did not have any relationship. We have got to know them and they have got to know us. They need to understand our remit and where we fit in to secure the integrity of the system. There is probably room for even further improvement, but it is much better than it was and it is ongoing. For example, the commissioner has meetings with all the regional area directors and their staff. We have regular relationships with the intelligence hubs and their staff and it is all beginning to pull together.

Q125 Mr Winnick: Ms Allen, I get the impression arising from what you have just said and your further letter to us that to a large extent the UK Border Agency and yourselves are working in harmony and there is not a great deal outstanding. Am I right?

Ms Allen: That would be a fair summation.

Q126 Patrick Mercer: You used the phrase "intelligence hubs". Would you define that more clearly?

Ms Allen: UKBA can probably explain it better than I can because it is within their organisation, but they have gone for regional directorships rather than having everything at the centre. Each regional area will have a focus for intelligence, so we now have to tie in both to the regional hubs and then back into the central hub. Therefore, if there is anything they are concerned about that they want to tell us we will go through the intelligence team and then back through to our office at either regional level or national level.

Q127 Patrick Mercer: To be clear, these are UK Border Agency intelligence hubs?

Ms Allen: Yes, they are.

Q128 Mr Streeter: I understand one of your concerns is that migrants who apply from outside the UK might to a greater extent turn to local unregulated immigration advisers under the new points-based system. Can you say a bit more about that? What kinds of problems might arise from that situation?

Ms Allen: PBS will put control back overseas much more than at the moment with the migrant applying overseas and there being no appeal and administrative review overseas. It is likely that applicants overseas would seek to find advice locally rather than in the UK. They do not have to do so; they could come to UK advisers, but experience suggests that they are more likely to seek advice locally where it is both accessible and cheaper. With regard to the problems, first they could just get wrong advice. The person giving advice could lack knowledge and skills. If the advice they get means that their application is refused that is likely to have potential problems for them in future because that refusal will be on their record. Therefore, when they reapply somebody will know that it has already been refused. There are also problems for the integrity of the system. Overseas advisers are not regulated and may not be that interested in protecting the system. They may knowingly or unknowingly assist people with false documents and applications and try to get into the country people who may not be entitled to come. We believe that that would put more pressure on entry claim officers who will have to make sure that every document is absolutely correct. They can place no reliability on the fact that the adviser is regulated and is already judged to be fit and competent, so it could lead to delays and inefficiencies.

Q129 Mr Streeter: It could lead to more people coming in with wrong documents?

Mr Seymour: That would arise only if entry claim officers allowed that to happen and the applications got as far as them.

Q130 Chairman: This will create a lot of problems, will it not? How can an applicant overseas get in contact with legal advisers and immigration advisers in this country other than through email?

Ms Allen: By going through email and the internet. Obviously, the points-based system is very much an online system and advice could be given from UK-based advisers. UK-based advisers are also opening up offices overseas and putting more emphasis on partnerships with overseas companies in order to have a presence there.

Q131 Chairman: But you are not able to regulate them?

Ms Allen: We cannot regulate their activities overseas, although we hope that the fact they are regulated here means they would remain cognizant of their duties when acting overseas. We cannot regulate anybody overseas because we have no authority.

Q132 Chairman: I know that you have a budget of £4.2 million, but is there an allocation within it to allow you to go to one or two of the posts abroad to look at this particular issue?

Ms Allen: There is no specific budget for that, although to be fair our budget is not allocated in that sense. We have not done that and do not view ourselves as having funding to do it.

Q133 Chairman: But would it be helpful if you had the opportunity to go to the busier posts in order to check the kind of advice being given by these advisers?

Ms Allen: Information and knowledge is always useful; it would give us a perspective on what was happening overseas and the opportunity to see if anything could be done through the OIS, but we certainly do not have any authority to regulate overseas lawyers and advisers.

Q134 Mr Brake: Do you have any other ideas about how to regulate the cowboys overseas? What sort of action can be taken here or what kind of publicity can be provided over there?

Ms Allen: I do not think there is much we can do to regulate overseas, but we could intervene by encouraging overseas applicants to use advisers who are regulated here, to get access to them here and encourage advisers to go overseas and work with clients overseas. We are planning to make changes to our website so that overseas applicants will be able more quickly to access advisers here who have offices overseas. We have been working with UKBA International to have posters put up in entry clearance offices and in the offices of their commercial partners to explain to overseas applicants that in the United Kingdom persons who give immigration advice are regulated and how they can access them.

Q135 Ms Buck: What are your expectations of the impact of the move to administrative review? How will that affect the workload and the number of applications?

Mr Seymour: So far there has been little impact on that side of things. As far as work permits are concerned, there was always an administrative review-type system in existence. As far as students are concerned, only students had the opportunity to go to the Asylum and Immigration Tribunal, but given that as yet PBS has not come into operation for tier 4 there has been little impact so far. We estimate that going forward for level 3 advisers - those who do advocacy - there could be a slight reduction in their work and solicitors' work. Conversely, I would have thought there would be slightly more work for level 1, that is, the people who do the more basic work in putting together applications. From our side of things there will probably be little impact.

Q136 Ms Buck: You do not expect that to change?

Mr Seymour: I do not think so.

Q137 Ms Buck: It has bedded down as much as it is going to?

Mr Seymour: I think so. I know it is fairly controversial. Taking the matter to appeal right away will clearly have an impact on people. The fact is that from UKBA's perspective they would expect people to get the information right in the first place and to make good decisions. Good advisers will try to do that as far as they possibly can. There will always be arguments around certain cases and that will carry on.

Q138 Mrs Dean: Do you now have access to the full list of immigration advisers that authorised sponsors have indicated they will be using to assist them in obtaining certificates of sponsorship?

Ms Allen: Yes, we do.

Q139 Gwyn Prosser: You have access to the list, but what work do you do to ensure they are credible, genuine and above board? Can you and do you investigate them?

Mr Seymour: Yes. At the moment the checking to make sure that the reps are legal is the responsibility of UKBA. People should not be on the sponsors' register if the representatives do not meet the Immigration and Asylum Act 1999, so they should do the checks in the first place. What we are doing is really a back-up, as it were. We are working with UKBA at the moment to get that list into a format. Unfortunately, the information that goes into that list is input by the applicant's sponsor. At the moment there are mistakes in it and we need to clean up that list with UKBA. We then expect to use that list. It is the first time we have had a list of representatives when we will be using the PBS. From our perspective that will be a very useful list. If we find certain people on that list clearly we will alert UKBA. If they are inputting certificates of sponsorship or migrants' details onto the sponsor management system they will be committing a criminal offence, in which case that would fall to be prosecuted by the OIC. Clearly, we would want to pursue that.

Q140 Gwyn Prosser: So, it is work in progress?

Mr Seymour: We are to have a meeting with them next month to take it a little further, yes.

Ms Allen: As Mr Seymour said, the positive aspect to come out of this is that we now have a list of all the individuals who are giving assistance to persons who seek immigration advice. That will include private and state colleges, employers and the reps who are working with them. In the past we did not have that data.

Mr Seymour: Solicitors who provide advice are also on that list.

Q141 Bob Russell: Are physical checks made of the premises of authorised advisers and sponsors?

Mr Seymour: That is the responsibility of the UKBA; they would audit them. If there is anybody on the list who we believe may be committing an offence the first thing to do would be to conduct a physical visit.

Ms Allen: The representatives are on a list that comes off the form for those who apply for sponsorship, so UKBA judges whether or not to allow them to be sponsored, but at the same time we get a list of those who assist them.

Q142 Chairman: I want to press you on your answer to Karen Buck. You said that you did not feel that a right of appeal was appropriate given that there was not one previously. Did you say that?

Mr Seymour: I do not think I quite said that.

Q143 Chairman: Maybe you should tell us what you think. Do you think there ought to be a right of appeal?

Mr Seymour: As far as the administrative review is concerned I think the question was about the impact.

Q144 Chairman: What about a right of appeal? This is a restrictive proposal, is it not?

Mr Seymour: Yes.

Q145 Chairman: Do you think there ought to be a right of appeal?

Mr Seymour: I do not think that is something in which we would get involved. We look at advisers and ensure that the client gets the right advice in the first instance. Clearly, if UKBA does not approve a person's application that is a matter for them.

Q146 Chairman: Mr Seymour, you have given us evidence that you think the points-based system is a good idea. That is expressing an opinion beyond your remit. It is not in your remit to agree or disagree with government policy, is it?

Mr Seymour: I think we have said we welcome the PBS if it simplifies and makes the system better.

Q147 Chairman: You are on record as saying that. Did you not say in your written submission in July 2008 that you thought it was a good idea?

Mr Seymour: I think we said we welcomed a more simple and effective system.

Q148 Chairman: So, you must have an opinion on whether or not you think it is a good idea that people should have a right of appeal?

Mr Seymour: Clearly, there should be a checking system and the administrative review as far as concern UKBA seems to cover that.

Q149 Chairman: That is an administrative review.

Mr Seymour: That is right.

Q150 Chairman: I am asking you about a right of appeal. Do you think it is a good idea or not?

Mr Seymour: I think that is something on which we would not want to take a view.

Chairman: Ms Allen and Mr Seymour, thank you very much for giving evidence. If you have anything further that you wish to tell us in writing please do not hesitate to provide it to the Committee.

Memorandum submitted by The Law Society

Examination of Witnesses

Witnesses: Mr Des Hudson, Chief Executive, The Law Society, and Ms Sarah Lee, partner, Slaughter and May, gave evidence.

Q151 Chairman: I declare a formal interest. My wife was a member of the council of The Law Society for a period. Mr Hudson, what kind of migrants do law firms need to bring into the United Kingdom and under which tiers and for what purposes?

Mr Hudson: Migrants would cover a wide range of activities. I suspect that the tiers under which they would fall would be two and five. I shall deal first with law firms in terms of their commercial activities. They would be bringing in skilled individuals who might be either employees of that firm's office in Frankfurt or Singapore or employees of independent law firms in, say, Shanghai with which they operate. The transaction of international law means that law firms in England and Wales must have a wide range of connections if they are to operate in a highly competitive global market and deliver cross-border international transactions. They will do that either because they have employees in their office in another city and jurisdiction or - it is very important and so I stress it - because they have a relationship with, say, a firm of lawyers in Shanghai and want to bring people from that office to spend some time in London because the interchange and flow of ideas is critical to their ability to provide a seamless service across all of those markets. In doing that they are competing with law firms in, say, New York and other jurisdictions. We see particular significance in the contribution made to GDP, which is about £4 billion per annum, because of the prominence of our firms in these markets.

Q152 Chairman: Four billion is brought in by lawyers?

Mr Hudson: Precisely. At the moment, I identify, for example, Singapore as a significant competitor both in terms of jurisdiction of choice compared with London and in terms of the lawyers working there.

Q153 Chairman: How many British lawyers are working abroad at the moment?

Mr Hudson: We estimate that about 6,000 of our solicitor members are working in 88 other jurisdictions apart from England and Wales, and that figure is growing.

Q154 David Davies: As solicitors?

Mr Hudson: It depends on what you mean by "as solicitors", but certainly they are working as lawyers. "Solicitor" has a particular meaning in this jurisdiction which gives rights of audience and activity in England and Wales, but in terms that you and I would understand they would be working as solicitors.

Q155 Chairman: How does that compare with other countries?

Mr Hudson: We estimate - this is an internal estimate because the figures are not widely available - that that is probably a leading number. For example, we would see lawyers from Australia - obviously, the common law jurisdiction is an advantage - as well as from America as being very mobile. We are probably the leading proponents of that, not least because I perceive the England and Wales legal market as one of the most open on the planet.

Q156 Chairman: Have you resolved your difficulties with India? There was some resistance to British lawyers being able to practise there and a lot of lobbying of ministers and others.

Mr Hudson: We are making progress in that. We have not yet reached the point where an English law firm, Slaughter and May or whoever it might be, would be allowed to open a representative office in Mumbai. That is clearly a very important market to the legal profession and to UK Plc. We have made some progress but there is a heck of a long way to go in that respect.

Q157 Chairman: Ms Lee, do you have any comments on what Mr Hudson has said?

Ms Lee: I think Mr Hudson has summarised it very accurately. In particular the need for short-term secondments from law firms around the jurisdiction is critical to the development of experience and career and business development of law firms.

Mr Hudson: If I may offer an example, we run something called International Lawyers for Africa. Every year about 30 or so lawyers from Africa come over here and spend about three months with firms in England and Wales, but predominantly London. I think that interchange has two benefits. First, it is a jolly good thing that we help lawyers in those countries to gain experience of international law in leading global firms, but, second, we are also socialising them to choose to use English law and firms in international activity. They might choose to do that in New York or Singapore, so there is a mix of moral good, if you like, with our own informed self-interest about wealth creation from this sector which has an important role to play, along with accountants and so on, in the international competitiveness of the City of London.

Q158 David Davies: Mr Hudson, you have talked about the importance of allowing legal firms to be able to select the best talent.

Mr Hudson: Yes.

Q159 David Davies: You have referred to entrepreneurial overseas lawyers. Can you tell me how many British lawyers are currently out of work?

Mr Hudson: I can give you some estimates. We estimated that in 2008 some 2,500 solicitors were made redundant and I expect at least that number during 2009, but, if I may say so, I do not believe that necessarily goes to the issue. There is no point my saying that today I am an unemployed conveyancing solicitor and so I will become an international expert in insolvency. You just cannot do that. Therefore, access to skills across the globe is very important for a very small sector of the profession. The point we make about the movement on short-term secondments of staff from overseas offices or overseas associates is critically important.

Q160 David Davies: I understand that, but can you not see that from where politicians of all parties sit the problem is that there are people in related fields who are losing their jobs and yet you are asking us to support rules that will make it easier for people to come from other countries to take those jobs?

Mr Hudson: I am asking you to maintain our ability to compete in fast-moving, highly competitive global markets, and it is not mutually exclusive. Let us put to one side examples such as International Lawyers for Africa and talk about someone who comes from my office in Shanghai to work in my London office. That may well be an individual who has a particular set of skills in Chinese law. It is not something I can do, even though I might want to use a displaced solicitor working in a completely unrelated domestic environment. I understand the pressures and the wish to see every possible solicitor who wants to practise to be able to do so fully and in the best way possible, but there is a different range of skills and jobs. I believe that we have a very open market which is an advantage to every solicitor in this country.

Q161 David Davies: To take your analogy, you want to use somebody who has knowledge of Chinese law in order presumably to do business with a Chinese company or public body. I am simplifying it. That person does not necessarily need to move from Shanghai to London in order to do that. You can pick up the telephone and engage that person to undertake work for you without having to employ the individual, surely?

Mr Hudson: I understand that point, but I do not want to give you the impression that these people are moving over here permanently. We are talking very much about a flow of people around various offices and associate firms. It is building that network of understanding of how the thing operates that is crucial to how any of our major firms are able to provide a level of service that is effective in this marketplace.

Q162 David Davies: It appears to be one-sided to me. The Chairman has already pointed to difficulties in India that face British lawyers who wish to set up there. I believe there are huge difficulties facing British lawyers who wish to set up outside countries that share our legal system, that is, former Commonwealth countries. I do not think that it would be very easy for a British law firm suddenly to set up shop in China. You seem to be asking for it to be all one way and to allow anyone from anywhere in the world to come and set up shop in Britain even though British lawyers do not have the same advantage elsewhere and are losing their jobs at the rate of 2,500 a year according to your own estimates.

Mr Hudson: I think the position is very different from the picture you paint. For example, some of our international negotiations in India are delicately poised. I believe that we have an advantage in those discussions because we act in a very open way. Moreover, I believe that acting in that way and having a very open market is good for UK Plc and UK solicitors. At the beginning of 2008 probably more than 2,000 solicitors in the City of London alone worked for American-owned firms. I would exhort you to preserve that openness as a sensible, informed move because to go back to a protectionist position would be to shoot ourselves in the foot.

Q163 David Davies: They work for American-owned firms but they do not work in America.

Mr Hudson: That strikes me as a very good thing.

Q164 David Davies: Your Chinese solicitor can work for you in China but he does not necessarily need to come to London.

Mr Hudson: With respect, what we are not talking about here is dragging these people over to appear in Islington Magistrates Court. They will not be dealing in the domestic markets but the international markets of which we are speaking, so I believe that the impact of bringing a lawyer over from Shanghai, to use my example, on a short-term basis will not have any impact on what I call indigenous or national-based law.

Q165 Mr Winnick: Ms Lee, leading on from the questions put by David Davies, in their brief The Law Society say that the position on lawyers up to now has not posed "a significant risk of abuse of the immigration system" and gives the impression, rightly or otherwise, that lawyers should be exempt from the points-based system. Why is it so important that lawyers should be recruited in the manner described by Mr Hudson? For example, can you describe the particular type of legal and financial firms which require lawyers to come into the UK and which otherwise would pose problems for firms such as yours?

Ms Lee: If I may talk again about secondment where lawyers are recruited externally to come and work in firms like mine for short periods, the advantage is that they get an educational experience so that when they go back to their jurisdictions they understand how international legal work operates. Most importantly, those opportunities for lawyers to come to English law firms are often done on a reciprocal basis so that English lawyers also have the opportunity to work in other jurisdictions in law firms with which we have close relationships. It is a two-way process in terms of short-term secondments. There is career development and educational opportunity for English lawyers as well as lawyers in other jurisdictions.

Q166 Mr Winnick: Do you operate on an international scale?

Ms Lee: The Slaughter and May model is different from some of the ways in which other law firms operate. We operate the "best friends" model whereby we have close relationships with law firms in different jurisdictions where we need to develop very close relationships with them because the kind of advice we give is often concerned with cross-border deals where legal advice is required from many different jurisdictions. We are English lawyers and we cannot provide that advice on our own and therefore we need relationships with other law firms so we have access to their legal services. One of the ways in which we develop those relationships so there is cross-referral of business and advice is by the secondment programme whereby we exchange lawyers so we and they can understand the kinds of deals that our clients require us to work upon.

Q167 Mr Winnick: If the points-based system is in operation - undoubtedly it will apply to lawyers - do you believe that great harm will be done to your profession as a result of the way you operate?

Ms Lee: If there is an inability to have secondments and the development of opportunities between international law firms I think that could be harmful to the kind of work we do.

Q168 Mr Streeter: As someone who was in training as a lawyer with Clifford Chance about a thousand years ago I am very sympathetic to the arguments you make. It may help the Committee, Mr Hudson, if you indicate the major cities in which some of these law firms are located these days.

Mr Hudson: I suspect that you would be looking all of the major capital centres: Frankfurt, Paris, New York, maybe Los Angeles, Hong Kong and Shanghai. Our law firms would be very prominent in the Gulf. We would like to see our firms operating in Mumbai. Recently, Singapore granted a number of licences to begin the opening up of its market. A handful of licences were granted to international firms to open offices in Singapore and one might say that English firms got more than their fair share.

Q169 Mr Streeter: These lawyers are not coming over here to do probate in Leicestershire, are they?

Mr Hudson: That is absolutely right. If you want to come here to practise as a solicitor in Basingstoke and do my will or convey my house you have to qualify under the rules of The Law Society and Solicitors Regulation Authority. You have to pass the sort of exams that you and I passed many years ago. This is a very different state of affairs. We are talking about people coming over into predominantly big corporate city firms in highly regulated circumstances within either explicitly owned offices or a network of co‑operating firms. They are in a different market from the consumer market, if I may put it that way, to which you refer.

Q170 Mr Streeter: How responsive has the UK Border Agency been to the concerns you have expressed over the past few months, and how good has it been in issuing clear guidance so you know exactly where you stand and how to interact with it?

Mr Hudson: I have great sympathy with UKBA because I would not start from where they have to start. We find them very receptive, but there are significant problems in creating the sort of flexibility and changes that we believe are needed. The previous witnesses referred to the fact that this was an online system. We all know what it is like trying to do what we want to do online. If the drop-down box does not give us the option we seek it is hellishly difficult. Very often when we talk to UKBA about the need for changes they find there are logistical problems in changing the system. The Law Society made an application in August of last year to become an overarching body and constantly it finds itself with colleagues in UKBA coming across problems that were not anticipated and not dealt with within the system. There is an effort to try to help but there are real problems with the guidance. To give some obvious examples, for them to be able to issue practical and effective guidance they have to understand a myriad of issues and industries. For example, we have experienced problems in the guidance they have issued which confuses the position in Scotland and England. It is entirely understandable, but it does make a difference. It is very problematic and I believe there is a long way to go, not because of any objection on its part, before clear guidance is available from the UKBA.

Q171 Ms Buck: What is your firm's experience of applying for sponsorship particularly under tier 2? How many law firms have applied for sponsorship and what has been their experience?

Mr Hudson: I think it has been very mixed and rather problematic not least because the system has a number of difficulties but also because of some particularities that you might say apply to lawyers. It is very important to a law firm that its reputation is of the highest possible standard. You will know that ratings are given to a T2 sponsoring company. It might be A or B. In our own experience when making an application we may say that we have a problem and we are told not worry and we should just stick in the nearest thing. It is said in the right spirit but for a law firm that is problematic given the civil and criminal sanctions that the firm might face. But it is also of particular significance if you are downgraded from an A to a B category sponsor. If I am Bloggs & Bloggs, a firm of international lawyers, and am pitching to do some work for AIG, which is effectively owned by the US Government, and it does a due diligence check and finds that I have been graded as B rather than A as a tier 2 sponsor that has significant potential implications for me as an international law firm.

Q172 Ms Buck: What is the answer? What would be the preferred system?

Mr Hudson: No one suggests that lawyers should be exempt or given special treatment. What we need to do is continue the work that UKBA is doing as rapidly as possible to try to make it much clearer and give us the flexibility that I think is of value to UK Plc and the English legal profession operating in international markets.

Q173 Chairman: How many law firms have had their applications to become sponsors turned down?

Mr Hudson: I do not know that number. My understanding is that no applications have yet been refused. I am not sure that many have been successfully processed.

Q174 Mrs Dean: What new powers will the UK Border Agency assume under the sponsorship arrangements?

Mr Hudson: The things that concern me are the very ill-defined and rather vague rights of entry and inspection of documents. We must all be concerned about authorities having power to come in and go through the files of a law firm. The files and papers that they can look at are not explicitly limited to those matters relating to, say, sponsorship. Let us say I am acting as a solicitor for a prominent Member of this House who is the subject of police investigations and I have a file on it and I also have some people from the Abu Dhabi office working in my office. I think we would all be very concerned about the powers of UKBA to go through my files. I do not suggest impropriety; I suggest that there is vagueness and lack of definition that needs to be urgently resolved.

Q175 Mrs Dean: What do you believe is the answer?

Mr Hudson: I suggest that their powers need to be exercisable by reference to looking only at papers relating to an issue concerning an individual who is being sponsored. I would like to see a rebalancing of the wholesale transfer of liabilities to sponsoring employers and some arrangements as to what conditions must be satisfied by UKBA before it can exercise those powers of entry.

Q176 Gwyn Prosser: Ms Lee, Mr Hudson has referred to the danger of technical breaches by the sponsor resulting at worst in criminal prosecution which would be an obvious concern. Do you want to tell us a little more about that? Have there been discussions on the specific issue that for a technical breach, perhaps the filling in of a form incorrectly, a law firm in particular could be subject to criminal proceedings?

Ms Lee: My understanding is that the penalties are very stringent even for technical breaches and there are severe consequences, both civil and criminal. My understanding is that the UKBA has said in discussion that the way they will approach these breaches is to look for adherence in spirit rather than the letter. As lawyers we all want to comply with the letter of the regulations and there is a concern that there is an ability to impose stringent penalties for technical breaches.

Q177 Gwyn Prosser: To take that a step further, what are the dangers of the applicant for the visa, having been turned down as a result of technical breaches, engaging in litigation and suing the company?

Ms Lee: I have heard that this is a concern on the part of firms.

Mr Hudson: We are a little troubled by that. Clearly, there is more than a theoretical possibility that that may happen. I just think it adds to the burden and cost of going about business. We believe it is vitally important that the firms of which we have spoken have this interchange of people. This is a further layer of risk and bureaucracy that they have to go through. If you get it wrong you could be on the wrong end of prosecution from UKBA and a civil suit from the individual concerned. Therefore, it does not make doing business here any easier. I draw attention to the fact that of the planet's six largest law firms four are London-based. That is good for all of us in this room. I think we need to do all that we sensibly and reasonably can to ensure we give them the competitive advantage to maintain that pre‑eminence.

Q178 Bob Russell: Mr Hudson, to my mind you have made a powerful and convincing case as to why overseas lawyers with their particular specialisms should be allowed to come here, but I should like to ask you a question relating to tier 5 temporary workers who are I suggest at the other end of the spectrum. In its written evidence to us The Law Society says that, "The ability to host paid interns and secondees is important to the competitiveness of the legal sector, both in terms of attracting recruits from the best international universities following an internship and also in building international networks by secondments . . ." We are not talking here about specialists with years of experience. What concerns does The Law Society have about the operation of tier 5 for intra-company transfers and other temporary workers?

Mr Hudson: If I were to take one of the magic circle firms, the Slaughter and Mays, the Clifford Chances, the Linklaters, the Allen & Overys and so on, it is operating in international markets. That firm's only competitive advantage beyond reputation and its processes is the quality of its people. Even at junior level they are competing internationally with the best lawyers. UK Plc needs to get to a situation where the best aspiring solicitors or lawyers want to be part of those firms or to be part of the relationship with our jurisdiction, not New York, Singapore or Bahrain.

Q179 Bob Russell: What does the unemployed probate solicitor from Leicestershire think of that?

Mr Hudson: I can understand that such a solicitor might be a little sceptical about that and would want to think about it, but I would hope that if the three of us sat down and talked about it we would be able to recognise that there are different markets operating in parallel here. We do not believe that the issues here are about people coming over to become trainee solicitors in Leicestershire. I come back to the point that if I want to practise as a probate lawyer or conveyancer in Leicestershire I have to qualify as an English solicitor or licensed conveyancer. That issue does not have a bearing on the points-based system.

Q180 Bob Russell: To clarify it, does the points-based system create concerns for The Law Society?

Mr Hudson: Yes, it does. We are very keen to have a situation where our firms choose to be English law firms and to operate from here in these international markets. The situation is already highly problematic given the way that we in this country have applied the relevant EU directive about money-laundering. It is now easier to undertake certain law transactions in Frankfurt than in London, so why when times are as tough as they are do we want to hobble our competitive ability?

Q181 Mr Brake: Mr Hudson, I understand that The Law Society is considering whether to become an overarching sponsor for government-authorised exchange schemes under tier 5. How is that going?

Mr Hudson: It is going very slowly. We have been at it since August and we find it very problematic, albeit the staff of UKBA are trying to help. We face a whole series of problems: vagueness in the way the rules and organisation have been defined and the fact that to define those rules in a way that is responsive means you need a vast knowledge of various industries, sectors and professions. I think we have given some examples of that. The way that the computer system has been organised again acts as a further inhibition to it. We find we cannot fit ourselves into some of the various options that exist in the online application process. For example, understandably most of the structure has been designed around the concept of the PLC, the corporate body. The Law Society, or the Institute of Chartered Accountants of England and Wales which might be affected by this, is a body established under royal charter; it does not fit into any particular box. That might be dreadful lawyer's pedantry or it might be the fact that these rules and the liability under them are rather important and you have to get it right. We started that application in August and it is still not complete.

Q182 Mr Brake: When do you expect it to be complete and what is the impact of the fact it is not complete?

Mr Hudson: We hope to get the thing resolved in a couple of months or so. As to its impact, it is very expensive both in internal time and external costs with advisers and all the rest of it. I know of only one other organisation that has been able to achieve OB status, the British Council. I imagine that some of the issues that I perceive to be problematic for the legal profession may well apply in the fields of accountancy, perhaps engineering and even the media. Sometimes I have doubts about whether professional bodies in those areas would want to go through the hassle we have experienced.

Q183 Chairman: We have had evidence from a number of witnesses who have said they feel very strongly that the points-based system ought to carry a right of appeal. What is your view on that, Ms Lee?

Ms Lee: I am sorry but it is not my area; I am not an immigration lawyer.

Mr Hudson: I would argue that the principles of natural justice and rule of law, and therefore the process of law, make a right of appeal an absolute necessity.

Q184 Chairman: Is that the view of your members?

Mr Hudson: I think it is.

Q185 Chairman: Have you canvassed their views?

Mr Hudson: I am not conscious that we have. In that case it is my view.

Q186 Chairman: The constituent group of The Law Society in this area would be the immigration lawyers.

Mr Hudson: It is the immigration lawyers. If it would help the Committee I would urgently seek their assistance, canvass their views and report back by written submission.

Chairman: That would be extremely helpful. Mr Hudson and Ms Lee, thank you very much for your evidence today.