Case Comment: R (New London College Ltd) v Secretary of State for the Home Department; & anor case  UKSC 51
07 Wednesday Aug 2013
In a judgment handed down on 17 July 2013, the Supreme Court (leading opinion of Lord Sumption, with which Lords Hope, Clarke, and Reed agreed, and a separate opinion of Lord Carnwath concurring in the result but not some of the reasoning) rejected a challenge to the Secretary of State’s power to operate the scheme of licensing educational institutions to sponsor non-European Economic Area (EEA) migrants to come to the UK to study under Tier-4 of the points-based visa system. The decision is of obvious interest to sponsoring educational institutions and immigration practitioners. However, the majority’s reasoning – identifying a broad implied statutory power incidental to the Secretary of State’s general responsibilities for immigration control under the Immigration Act 1971 as underpinning the visa licensing system – is also of broader constitutional significance.
Background to the Tier-4 visa sponsor licensing system
Under the relevant provisions of the Immigration Rules, Tier-4 applicants accrue the necessary points from the issue of a formal Confirmation of Acceptance for Studies (‘CAS’) on a relevant course by an educational institution with a valid sponsor license. If a sponsoring institution’s license is revoked during the currency of a sponsored student’s visa, the student’s right to remain in the UK may be revoked, as was vividly illustrated by the widespread disruption to international students caused by the revocation of London Metropolitan University’s license in September 2012.
As a condition of obtaining and maintaining sponsorship status – and therefore as a precondition for access to the lucrative non-EEA student market – sponsoring institutions undertake to perform a range of duties, including ensuring that a CAS is only issued to those who qualify for a visa, and monitoring, record keeping and reporting on students’ compliance with visa conditions. A self-contained code regulating sponsors is enshrined in policy guidance published by the Secretary of State (‘the sponsor guidance’). This scheme is operated without express statutory foundation in the governing provisions of the Immigration Act 1971. The sponsor guidance is also not part of the Immigration Rules made under s 3(2) of the 1971 Act (which requires the Secretary of State to lay before Parliament, for approval pursuant to the negative resolution procedure, a statement of her practice for regulating the entry into and stay of persons required to have leave to enter, including rules as to the period of leave and conditions to be attached to different circumstances).
The challenge to the visa sponsor licensing scheme and the Supreme Court’s reasons for rejecting it
The Secretary of State had revoked New London College Ltd’s sponsor license, and had refused an application by West London Vocational Training College for a license, on the basis of failures to satisfy certain mandatory requirements of the sponsor guidance. The decisions were challenged by way of judicial review. By the time the respective appeals reached the Supreme Court, the Appellants (and the two interveners – Migrants’ Rights Network and the Joint Council for the Welfare of Immigrants), were relying solely on grounds challenging the vires of the Secretary of State to operate the visa licensing system pursuant to her policy guidance, on three alternative grounds. The Supreme Court rejected all three grounds.
(i) The unlawful delegation ground
Lord Sumption had little difficulty rejecting an initial ground that the licensing system was founded on an unlawful delegation to sponsoring institutions of the Secretary of State’s powers to control entry into or stay in the UK. This ground was rejected on the basis that the Secretary of State retained the last word in the case of each application by virtue of residual general grounds of refusal under the Immigration Rules, which operated notwithstanding accrual of sufficient points by virtue of the issue of a CAS. As such, the issue of a CAS was not tantamount to leave to enter: .
(ii) The narrow vires ground
Previously, in the case of Alvi v Secretary of State  1 WLR 2208, the Supreme Court had held that if a matter fell within the scope of s 3(2) of the 1971 Act, it must be regulated in the Immigration Rules and could not be validly regulated by other means, such as by the Secretary of State’s policy. The main argument of the Appellants was that the mandatory requirements of the sponsor guidance fell within the scope of s 3(2).
In his leading judgment in Alvi, Lord Dyson had defined an immigration rule as mandatory requirements, “which if not satisfied by the migrant, will lead to an application for leave to enter or remain being refused . . . ” (para. 94). Lord Sumption rejected the contention that the mandatory requirements in the sponsor guidance fell within this definition. He reasoned that (with one minor and non-material exception) the guidance regulated the position of the sponsor and not that of the migrant. This could be contrasted with the list of skilled occupations contained in policy guidance considered in Alvi, which the migrant had to satisfy in order for his application to succeed: -.
(iii) The radical vires ground
A more radical argument was advanced by the interveners to the effect that there existed no power for the Secretary of State to operate a visa licensing system at all if this fell outside the scope of s 3(2) of the 1971 Act. They argued that this was the necessary implication of the finding of the Supreme Court in the case of Munir v Secretary of State  1 WLR 2192 and Alvi (which were heard together) that the power of the Secretary of State to make or vary the Immigration Rules was wholly statutory and not an exercise of prerogative power: .
Lord Sumption rejected this as an incorrect reading of Munir and Alvi (which had not considered rules not falling within the scope of s 3 (2)), but went on to consider whether the argument was correct in principle. He found it was not. He identified a broad implied statutory power under the 1971 Act extending “to a range of ancillary and incidental administrative powers not expressly spelt out in the Act, including the vetting of sponsors”, reasoning that “…if the Secretary of State is entitled (as she plainly is) to prescribe and lay before Parliament rules for the grant of leaver to enter or remain, which depend upon the migrant having a suitable sponsor, then she must be also entitled to take administrative measures for identifying sponsors who are and remain suitable, even if these measures do not themselves fall within s 3(2)”. It was therefore unnecessary to consider the availability and scope of any non-statutory, general administrative powers beyond the recognised royal prerogative powers – a so-called “third source” of authority: - .
Lord Sumption identified certain limits to the scope of this incidental power. Measures must not be inconsistent with the Act and Immigration Rules, must not be “coercive”, must not “infringe the legal rights of others”, and must not otherwise be contrary to usual constraints of administrative law. The scheme however satisfied these limits. In particular, it was not coercive since sponsors were not obliged to participate, and “sponsors seeking the advantages of a licence cannot complain if they are required to adhere to them”: .
Lord Carnwath, in his separate opinion, found the breadth of the incidental power identified by the majority to be difficult to accept: . He was however able to identify a narrower implied statutory authority for the sponsor licensing scheme incidental to the Secretary of State’s explicitly identified function of regulating entry to study under s 1(4) of the 1971 Act:  and .
The clean bill of health given to the legality of the sponsor licensing scheme may well come as a disappointment to sponsoring institutions and sponsored applicants alike, both of which will now remain subject to a regulatory system built entirely on the Secretary of State’s published sponsor guidance. This guidance is subject to alteration without Parliamentary approval and, as Lord Sumption observed, has been amended in the past with “bewildering frequency”: .
The informality of the legal underpinning of regulation of this sector is distinctly at odds with both the substantial economic interests at stake for educational institutions (who in reality may in many cases depend on non-EEA students for a viable business model, thereby arguably calling into question the Court’s ‘free-choice’ analysis at ) and the substantial impact of this regime on sponsored students (particularly, following revocation of a sponsor’s licence). While both these interests are briefly recognised in the majority judgment, it is interesting that they do not appear to influence the application of Lord Dyson’s test from Alvi despite the apparent scope for them to do so. It may be that (as Lord Carnwath appeared to have in mind in declining to enter a dissenting note on the application of this test, despite having reservations as to its correctness: ) a high premium has been placed on certainty in the construction of s 3(2).
What is especially interesting about the decision, both for immigration practitioners and constitutional scholars, is the Court’s analysis of the legal foundation of the licensing scheme. There is perhaps a note of relief in Lord Sumption’s judgment that the identification of an implied statutory basis for the licensing system meant he did not need to resolve the controversial questions surrounding the scope and juridical foundation of a non-statutory “third source” of powers. However, in passing, he nevertheless questioned the aptness of a longstanding analogy drawn between the Crown, as a common law corporation, and natural persons. This observation will undoubtedly be highly persuasive in influencing future decisions by lower Courts on the scope of any “third source” of power.
The scope of the identified broad implied administrative power incidental to the general responsibilities of the Secretary of State for immigration control under the 1971 Act is itself potentially controversial. As Lord Carnwath’s analysis shows, it was not necessary to derive such a broad implied power to uphold the licensing scheme, and indeed this was arguably contrary to the past approach of the courts to incidental powers which has emphasised a need to consider and construe specific provisions (e.g. Hazell v Hammersmith LBC  2 AC 1). One cannot help suspecting that the majority’s reasoning may have been driven in part by the perceived failure of the 1971 Act to “age well” so as to be “ill-adapted to the mounting scale and complexity of the problems associated with immigration control“(). These shortcomings of the 1971 Act were liable to throw up future challenges to the Secretary of State’s administrative infrastructure, which may now have been to a degree forestalled. The price of this solution however is that this complex and often controversial administrative infrastructure is neither expressly authorised by Parliament nor approved as part of the Immigration Rules.