The Supreme Court has held the Points Based System’s sponsor licensing scheme is lawful. As Nicola Carter observes, sponsors may be disappointed with the result in R (New London College Ltd) v Secretary of State for the Home Department [2013] UKSC 51 but it at least provides welcome clarity for businesses and universities awaiting the outcome. It is also a fatal blow to legal attempts to challenge the Home Office’s policy in recent years of outsourcing immigration control to private businesses, colleges and others (next: landlords) and the judgment includes an unpredictable constitutional sting in the tail for the future.

The case was brought by two colleges but the judgment will be of as much interest to employers as educators. The ruling concerns the legality of the monstrously complex edifice of the sponsor licensing scheme that the Home Office has built on top of the shifting sands of the constantly changing Immigration Rules behind the Points Based System. Lord Sumption delivers the leading judgment and as he observes:

The Sponsor Guidance is a large and detailed document issued on behalf of the Secretary of State, which may be amended at any time and has in fact been amended with bewildering frequency.

Nevertheless, he finds that the sponsor guidance and sponsorship scheme is not unlawful. In essence, he reasons that sponsors voluntarily sign up to the scheme in order to derive a benefit, namely the opportunity to accept private fees from overseas students (or employ overseas workers in the case of employers). It is not therefore open to sponsors to complain. The key passage comes at paragraph 29:

If the Secretary of State is entitled (as she plainly is) to prescribe and lay before Parliament rules for the grant of leave to enter or remain in the United Kingdom which depend upon the migrant having a suitable sponsor, then she must be also be entitled to take administrative measures for identifying sponsors who are and remain suitable, even if these measures do not themselves fall within section 3(2) of the Act. This right is not of course unlimited. The Secretary of State cannot adopt measures for identifying suitable sponsors which are inconsistent with the Act or the Immigration Rules. Without specific statutory authority, she cannot adopt measures which are coercive; or which infringe the legal rights of others (including their rights under the Human Rights Convention); or which are irrational or unfair or otherwise conflict with the general constraints on administrative action imposed by public law. However, she has not transgressed any of these limitations by operating a system of approved Tier 4 sponsors. It is not coercive. There are substantial advantages for sponsors in participating, but they are not obliged to do so. The rules contained in the Tier 4 Guidance for determining whether applicants are suitable to be sponsoring institutions, are in reality conditions of participation, and sponsors seeking the advantages of a licence cannot complain if they are required to adhere to them.

An interesting issue left for the future is the charging of fees within the scheme, for example for the initial application and for the controversial (and generally useless) ‘action plans’ where downgrading is threatened by the Home Office. Lord Sumption declines to decide either way whether the fees are lawful in the absence of statutory authority. No doubt the Home Office will argue that fees are effectively voluntary: one can decline to enter or withdraw from the scheme and its benefits at any time and no-one is being coerced as such. There does seem to be room to argue that the action plan fees are mandatory and coercive, though, given that all the benefits of the scheme and a sponsor’s huge financial and time investment in complying with its strictures are potentially lost if one refuses to pay a £1500+ fee for a half page document that tells one almost nothing. The widely reported judgment from yesterday in R (on the application of Attfield) v London Borough of Barnet [2013] EWHC 2089 (Admin) provides an example of the care with which the courts normally seek the precise statutory basis for a charge levied on private individuals. That scheme was also effectively voluntary (one could decline to own a car or receive visitors with cars) but that did not prevent the court finding it unlawful.

From a constitutional and legal perspective, Lord Sumption’s judgment is a puzzler and could have quite profound future consequences. At no point does Lord Sumption identify the statutory authority for the sponsor guidance scheme. Instead, he holds that there is no statutory authority as such, but apparently this does not matter:

It has long been recognised that the Crown possesses some general administrative powers to carry on the ordinary business of government which are not exercises of the royal prerogative and do not require statutory authority: see B.V. Harris, “The ‘Third Source’ of Authority for Government Action Revisited” (2007) 123 LQR 225. The extent of these powers and their exact juridical basis are controversial.

Given that he is about to undermine the whole concept of ultra vires and negative liberty, one might expect that after that final sentence the judgment would go on to deal comprehensively with this mysterious ‘third power’. Not so. Instead, Lord Sumption merely asserts that

the statutory power of the Secretary of State to administer the system of immigration control must necessarily extend to a range of ancillary and incidental administrative powers not expressly spelt out in the Act, including the vetting of sponsors.

Lord Carnwath’s dissenting judgment is thought-provoking. He agrees with the majority that the appeals fall to be dismissed, but he calls out Lord Sumption on the source of authority for the sponsorship guidance, rejecting Mr Swift’s submission for the Secretary of State’s submission

that there is some alternative, unidentified source of such powers, derived neither from the prerogative nor from any specific provision in the Act, but from the general responsibilities of the Secretary of State in this field. No authority was cited for that proposition and to my knowledge none exists. Mr Swift did not seek to rely on a possible “third source” of powers, by reference to the “controversial” line of authority mentioned by Lord Sumption (para 28). In my view he was wise not to do so…

Lord Carnwath then goes on to say that he finds Lord Sumption’s approach ‘more difficult to accept’. Incidental powers to regulate have previously been found in specific statutory provisions, and Lord Carnwath prefers to find the source of authority for the sponsorship system in the Immigration Act 1971 itself.

What has Lord Sumption done? Out of the blue he has suddenly settled a controversial constitutional legal issue in favour of the Executive branch of government’s ability to act without statutory authority. He has done so without hearing clear argument or authority on the issue and, in the view of Lord Carnwath, without having needed to go down this road.

What further schemes might the Executive devise that are seemingly ‘voluntary’ but which volunteers feel compelled to join because the consequences of not doing so are extremely inconvenient and put one at a serious commercial or other disadvantage? Over to the Executive on that one, I guess.