House of Commons Hansard Debates for 15 Jul 1992

Mr. A. J. Beith (Berwick-upon-Tweed) : This change will affect 1, 600 large businesses. It seems harsh that the firms which will be adversely affected by the requirement for monthly payments will often be domestic concerns trading at home, whereas the businesses which may benefit from the windfall advantages will in many cases be companies which import goods into this country. I appreciate that we cannot devise a procedure that will have the reverse effect, because that would be contrary to Community law, but that unfortunate feature strengthens the case for examining the grievances of those large companies on their merits.

Value added tax is not the property of the businesses which collect it from their customers ; it is handed over to Customs and Excise. Nevertheless, the realities of life are such that many businesses will not have collected on VAT invoices to their customers by the time they are required to remit their monthly VAT payments on account. They therefore make an interest-free loan to the Government.

That is a significant burden, particularly at a time of recession. Once a company is included in the monthly

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payment scheme, it incurs a significant cost. That is relevant to the timetable issue and to the selection criteria for inclusion in the monthly payment scheme. Whether or not a company is in the scheme could make a significant difference, and might adversely affect its competitive position.

The hon. Member for Wrexham (Dr. Marek) pointed out that the potential move to an origin-based system in 1997 or later could bring a complete change and result in additional Government revenue. The businesses concerned wonder whether there will be alleviation at that stage for firms which have been adversely affected.

The businesses which will be most affected by the order have gone to considerable lengths to make alternative proposals. They share the feeling that they are not being fairly treated, but that they are being unjustly used to make up a hole in the Government's finances, being singled out merely by size. That is the kind of thing that people often describe as rough justice, but in my experience it is really injustice incorrectly described.

Customs and Excise may take the view that the largest firms have the broadest backs, on which such an injustice can more easily be laid, but in these recessionary times few large firms can easily bear unreasonable and additional burdens, or make tax payments for which they may not be liable and which amount to interest-free loans to the Government.

7.48 pm

Mr. Bob Cryer (Bradford, South) : The front page of the statutory instrument states :

"This Order supersedes S.I. 1992/1510 published on 2nd July 1992 and is being issued free of charge to all known recipients of that Statutory Instrument."

That demonstrates a point that I made in respect of the previous order. The cost to the public of this legislation is absolutely outrageous. A couple of sheets of printing costs 55p, and a 50-page document can cost £10, £12 or £15. It is no excuse to advance the argument that a copy of legislation was too expensive to purchase. The Government do not allow any exemption because of cost. The order has had a chequered career. It was originally tabled for debate on 7 July. On that day, the Select Committee on Statutory Instruments was also due to consider it. Hon. Members probably do not know that the Committee has a duty to report to the House whether a Minister is making unusual use of his powers, whether the order that he is presenting is within his powers or is ultra vires, whether the order is ambiguous and whether certain other criteria have been observed. The House, not the Committee, lays down those criteria. If the Committee is to report an instrument, the Department concerned must have an opportunity to defend its position.

It was clear that, if the Select Committee on Statutory Instruments decided, for instance, to take evidence and not to report the incident to the House on 7 July, the statutory instrument would, in effect, slide through. However, the Committee determined that, because certain parts of the original order were ultra vires, it should be reported to the House. Fortunately, we had a memorandum, and we decided not to take evidence.

Because the Government are producing so many statutory instruments, they are turning the House into a sausage machine. They are not allowing the Select and Joint Committees on Statutory Instruments adequate time in which to do their job properly and report fully to the

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House. I am pleased to say, however, that, because of the Select Committee's report, the Government decided to withdraw the original order. My hon. Friend the Member for Wrexham (Dr. Marek) alluded to the reasons for the report.

Articles 4, 5, 6, 11 and 14 of the original order were all prefaced by the words

"save as the Commissioners [of Customs and Excise] may otherwise allow".

Nothing in the parent legislation allowed the commissioners that discretion. It was clearly a powerful discretion, for it allowed the commissioners to decide whether a person was subject to all the powers set out in those five articles ; and it was not contained in the primary legislation. The Committee's view was that the discretions were ultra vires --that is, that they were not within the powers of the Minister.

Following advice from counsel, the Committee decided that another section of the order was ultra vires. The order imposed a duty to make advance payments on divisions of a corporate body ; the primary legislation allowed such impositions to be made only on a corporate body--and divisions of a corporate body do not constitute corporate bodies. We considered that to be outside the Minister's powers, and accordingly reported it to be ultra vires.

I am pleased to tell the House that--as can be seen from the report that we have placed in the Vote Office--the order that we are debating has removed that discretion from the commissioners, thus conforming with the Value Added Tax Act 1983. Taxable persons are now regarded as corporate bodies, rather than as divisions of a corporate body : that, too, brings the order within the vires set out in the primary legislation.

On that occasion the Government behaved very sensibly, but that is not always the case. On other occasions, after the Committee has claimed that elements of similar orders were ultra vires, those orders have been tabled for discussion. In such instances, I have raised points of order, asking the Government to withdraw the orders and defer debate so that they could be examined with a view to tabling correct versions. The Government have simply pushed the instruments through the sausage machine, which is not good enough. The Minister must accept the commendations of the House-- although he may feel uncomfortable about doing so--for his sensible withdrawal of the order, and its retabling in a correct form. That should happen more often. If the Select and Joint Committees on Statutory Instruments are able to identify a vires point--a point relating to the powers of Ministers--there should be an automatic requirement for the House to see the Committee's report before any order is debated. In my view, nothing less than that will do. Sometimes, however, the Government simply press ahead when the Committee is about to report on a vires point, ignoring the work that it has done.

Let me add that the Select and Joint Committees are not the most televised parliamentary Committees. They are not a focus of great publicity ; their business is a fairly dull routine, which is carried out in the public interest. That may sound precious, but it is true. I think that the Committees' work at least merits recognition by the House.

Dr. Marek : I entirely agree with my hon. Friend. Difficulties are likely to be caused for traders, however, by

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the withdrawal of that phrase from the order. I am beginning to wonder whether we should not proceed with the statutory instrument, and whether the original wording should be reintroduced. That could be done as part of our proceedings on next year's Finance Bill. I should be interested to know what my hon. Friend and the Minister think of that proposal.

Mr. Cryer : Delegated powers are conferred by primary legislation. If the primary legislation does not contain powers for the Minister to award discretion to the commissioners, he cannot award that discretion. If discretion is needed--this is a particularly onerous system, requiring advance payments ; as has already been said, 1,600 companies will be affected--it is a requirement for primary legislation.

The Select and Joint Committees do not examine instruments on their merits- -which, incidentally, makes it even more iniquitous that the Government should, at times, ignore the views of the Select Committee, which has a Conservative majority. It is not as though its members were seeking to undermine a Government policy on merit ; they are simply carrying out the task allotted to them by Parliament, which specifically excludes debate on merit. My hon. Friend the Member for Wrexham has made a perfectly fair point, to which the Minister must reply. We must establish whether further primary legislation is required.

Customs and Excise has provided the explanation given to the Select Committee. It sets out the position fairly, explaining the original faults in the instrument, their recognition and their replacement by the new Value Added Tax (Payments on Account) (No. 2) Order, which takes those faults into account and--as far as the Committee is concerned--remedies them.

On the question of merit, if the order leads to companies having difficulty in making advance payments, the Government must take that into account. We are in the middle of a deep and, alas, deepening recession. I emphasise the dangers of making decisions about value added tax or other tax payments in the middle of a recession that would further exacerbate the recession.

I hope that other Government Departments will follow the example set by the Minister and his Department and make sure that the recommendations of the Select and Joint Committees on Statutory Instruments are taken into account before a debate is held. About 1, 600 companies will be affected by the order. I repeat that the legislation that affects the vast majority of the British people is not primary legislation. That goes through the House in dramatic circumstances, with a crowded House for the Report stage and with great interest shown in the Standing Committee proceedings. The debates are lengthy. Delegated legislation generally goes through the House in an hour and a half.

We are not considering the majority of instruments--negative procedure instruments--that are not even debated yet frequently contain criminal sanctions. On this occasion we are, fortunately, able to deal with a corrected instrument, but on many occasions faulty legislation that was delegated to Ministers and their Departments to draft goes through the House without examination. That is an imposition on the British people. They have to implement the legislation, but they are often inhibited from going to

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court for a clarifying decision because of the expense. It is our fault if defective legislation leaves this place. It is not the fault of the people outside who have to implement it. Mercifully, on this occasion we have corrected the legislation.

I hope that the Minister will not mind my few words of approbation. His political career will, no doubt, suffer as a result. Other Ministers had better look out, therefore, for if I crucify them with praise they will have to look towards a dreaded occasion--unless they wish to avoid it by taking similar corrective action.

8.6 pm

Sir John Cope : The hon. Member for Bradford, South (Mr. Cryer) commended me both at the beginning and at the end of his speech. He need have no hesitation in doing so. I am delighted to accept any commendations from him that are on offer, because I know that he would condemn me if he thought that I was not doing the right thing at any point. He need not worry about my political career. I know that Whips have very short memories. I do not believe that there will be any difficulty in that respect, whatever happens to my career. The debate provides me with the opportunity sincerely to commend the work of the Select Committee on Statutory Instruments. When I was in the Whips Office I came to know a little about its proceedings and how hard the hon. Gentleman in particular and his colleagues on the Committee work on behalf of the House. We had an exciting debate earlier this week about membership of some of the more glamorous Select Committees. I know, however, how difficult it sometimes is to get Members to serve on some of the less glamorous Committees, such as the Select Committee on Statutory Instruments, which does extremely important work on behalf of the House.

I agree with what the hon. Member for Wrexham (Dr. Marek) said--that in some respects it was unsatisfactory not to proceed with the first order. However, I considered it right not to do so, but to amend it in the light of the Select Committee's report. There is always legal doubt in these cases. I do not say that we were necessarily 100 per cent. convinced that the vires points raised by the Select Committee were exactly correct. Nevertheless, there was sufficient evidence to convince us that it would be right to redraft the statutory instruments and avoid a potential difficulty. That is what we have done by bringing the revised order before the House.

Therefore, the words that the hon. Member for Wrexham quoted-- "save as the Commissioners may allow"--

have disappeared from the instrument and have been replaced with more precise wording to cover the two points that we were anxious to amend as a result of consultations since the Budget.

The hon. Member for Wrexham also asked me whether there would be any delay over deciding about the 80 per cent. rule that has been mentioned so many times. We shall do our best to avoid any delay. About 1,600 traders are involved in the scheme. The number of traders who will make applications in connection with the 80 per cent. rule is much smaller. I do not anticipate, therefore, that there will be a huge burden of work. I hope that we shall be able to deal expeditiously with the applications.

As the hon. Member for Wrexham acknowledged, the review will take place after we have gained some experience of working the scheme. We expect to consider

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how the scheme is working next spring or summer. The hon. Gentleman also asked me whether this provision will be reviewed if and when we move to an origin system of value added tax. It will, of course, need to be reconsidered at that time, but I cannot anticipate either when that will be or what the results of the review will be.

The hon. Member for Wrexham mentioned that representations had been made to him about the leaflets. In the light of the order, assuming that it is agreed tonight, we shall issue revised guidance as soon as possible.

Finally, the hon. Gentleman referred to the sixth directive and asked whether we were satisfied that we had authority under that directive to pursue the order. The answer is yes, we are satisfied that we have that authority. Any Minister will be concerned about technical and legal matters. I am not a lawyer. There is bound to be slight concern, therefore, as to whether all its provisions can be upheld. We have received clear legal advice on the point, however, and I am in no doubt about it.

My hon. Friend the Member for Bristol, North-West (Mr. Stern) referred to the Danish solution, as he described it, to a similar problem. Denmark is one of the few countries in the European Community that has three-monthly returns. The time allowed for payment at the end of that period is one month and 20 days. That is 20 days longer than is allowed in the United Kingdom. The effect of the Danish system in shaving a few days off the time allowed for payment here creates no difficulty as it would in this country, where it would shorten, I think unacceptably, the time allowed for payment. That course is not therefore open to us.

My hon. Friend referred also to a legal opinion which we were told the day before yesterday is now on the way and which casts doubt on the order in relation to article 101. We have considered that point. Without the benefit of the new legal opinion that was promised to us recently, our clear advice is that the order is in order in that respect. Although there has been a fairly long consultation period over the order, I cannot help but remark upon the fact that that legal opinion has been promised to us a day or two after the House rises for the summer recess.

The timing is obviously extremely difficult from our point of view. It is essential that the order is passed so that businesses know where they stand and we have time to make proper arrangements. Were we to hang on for a few days until we saw the promised new legal opinion, there would be a much greater effect on our ability to have the order approved by the House, with consequent disorganisation for Customs and Excise and for the traders involved.

Mr. Stern : Speaking as one chartered accountant to another, does my right hon. Friend agree that the delay in providing the legal opinion is only what one can expect from a lawyer?

Sir John Cope : My hon. Friend has made his point and I do not need to add to it.

The right hon. Member for Berwick-upon-Tweed (Mr. Beith) said that VAT money collected by firms is not the property of those firms. I agree with that and it is part of the rationale for the process. The hon. Member for Bradford, South drew my attention to the cost of the order, or at least to the fact that

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it is free because it is a replacement. It is a complete replacement and the previous order is now of no value and can be thrown away.

There was a suggestion during the debate about monthly payments. The House will know that in some circumstances businesses can pay their VAT or send in their VAT returns monthly. Some seasonal traders have said that the one twelfth rule would be difficult for them because of the arithmetic workings and the seasonal nature of their trade. Customs and Excise will allow such businessses, upon application, to make their VAT returns and payments monthly as an alternative to quarterly returns with payments on account if it is judged to be right. It is for the businesses involved to consider that and to make an application if they think that it would be helpful.

Mr. Beith : The Minister quoted my observation that the money collected in VAT is not the property of the business but should be remitted. He omitted to refer to the other side of the coin, which is that money not collected in VAT and not yet returned through the normal business invoicing and terms of trade is not money that the business has to hand over. Therefore, the business is making an interest-free loan in circumstances that do not apply to the majority of traders. I hope that the Minister will continue to keep that in mind, because that is what this is all about.

Sir John Cope : As the right hon. Gentleman said, the order is all about cash flow. If we did not have the order, the Government's cash flow-- the public sector borrowing requirement--would suffer considerably. There is no way in which we can reverse that painlessly for the businesses and place the Government in a position where their PSBR does not suffer. That is the underlying reason for introducing the order, and why I commend it to the House.

Question put and agreed to.

Resolved,

That the Value Added Tax (Payments on Account) (No. 2) Order 1992 (S.I., 1992, No. 1668), dated 13th July 1992, a copy of which was laid before this House on 13th July, be approved.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).

Data protection

That the draft Data Protection (Regulation of Financial Services etc.) (Subject Access Exemption) (Amendment) Order 1992, which was laid before this House on 22nd June, be approved.--[ Mr. Robert G. Hughes.]

Question agreed to.

Motion made, and Question put forthwith pursuant to Standing Order No. 101(5) (Standing Committees on Statutory Instruments, &c.).

Rights of the Subject

That the draft Access to Personal Files (Housing) (Scotland) Regulations 1992, which was laid before this House on 30th June, be approved.--[ Mr. Robert G. Hughes.]

Question agreed to.

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PETITIONS

Heywood Magistrates Court

8.14 pm

Mr. Jim Callaghan (Heywood and Middleton) : I have no wish to detain the House, but I wish to present a petition that has been signed by 4,000 of my constituents in Heywood protesting at the proposed closure of Heywood magistrates court. It was given to me by Miss Susan Emmett and states :

To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled ;

The humble Petition of Residents of Heywood and others ; Sheweth that Heywood Magistrates' Court is part of Heywood's heritage and a familiar landmark in the town ; that if it is closed, all proceedings which currently take place in Heywood Magistrates' Court will be transferred to Rochdale or Middleton, to the inconvenience of the local community.

Wherefore your Petitioners pray that your Honourable House will ensure that a magistrates' court is retained in Heywood.

And your Petitioners, as in duty bound, will ever pray, &c. To lie upon the Table.

RN Stores Depot, Eaglescliffe

8.16 pm

Mr. Michael Bates (Langbaurgh) : I am grateful for this opportunity to present a petition in the name of six of my constituents. It concerns the proposed relocation of 180 jobs from the Royal Naval stores depot, Eaglescliffe to the Bath area. The petition was handed to me by Mrs. Eileen Sharp of Park End, Middlesbrough and is signed by Miss Bruce of Ormesby, Mr. Weighell of Marske, Mr. Wheatley of Marton and Miss Sykes of Eston.

While understanding that the idea of losing jobs to another part of the country is never particularly welcome and recognising the ever-increasing need to improve efficiency in Government Departments, which can be achieved by economies of scale and centralising Departments, my petitioners would have me suggest that the relocation should not move the jobs to Bath, but that the Bath jobs should be relocated to the Eaglescliffe area. That would provide significant cost savings. The petition states :

To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.

The Humble Petition of the members of the workforce of the Royal Naval Stores Depot at Eaglescliffe.

Sheweth that a proposal has been endorsed to create a centralised Naval Support Command in the Bath area which necessitates the loss of 180 jobs from the Royal Naval Stores Depot at Eaglescliffe near Stockton-on-Tees.

Wherefore your Petitioners pray that your honourable House urge the Secretary of State for Defence to abandon the proposal to transfer the 180 jobs from Eaglescliffe.

And your Petitioners as in duty bound will ever pray &c.

To lie upon the Table.

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AWD (Bedford) Trucks

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Robert G. Hughes.]

8.17 pm

Mr. David Madel (Bedfordshire, South-West) : This short Adjournment debate is an appeal for help to try to save AWD (Bedford) Trucks in Dunstable in my constituency from total collapse. I am delighted to see that my hon. Friend the Member for Luton, North (Mr. Carlisle) is listening to the debate, because he shares with me intense concern about the current position.

AWD (Bedford) Trucks is now in the hands of the receiver. It went into the hands of the receiver on 4 June this year. In my view, the company can be saved if a large order for civilian--I stress the word "civilian"--lorries for Libya can be given the go-ahead.

I shall give a brief history of the company. Bedford trucks have been made in Dunstable for 40 years, and for longer than that in Luton next door, part of which is represented by my hon. Friend the Member for Luton, North. It used to be part of the giant American firm, General Motors, which has owned Vauxhall Cars, manufactured in Luton, since 1925. Over the years, Bedford Trucks has provided employment for thousands of men and women in the Dunstable area. In addition, the prosperity of many suppliers to Bedford Trucks has been sustained by a viable truck plant in Dunstable.

In the 1960s and 1970s, as Vauxhall cars in Luton struggled desperately with huge financial losses and product problems, Bedford Trucks made a substantial contribution to keeping the car plant going.

Bedford Trucks stopped being part of the General Motors group as a result of the collapse of the General Motors-Leyland deal in the mid-1980s. That severe commercial setback had bad economic consequences for Dunstable and the vehicle industry in this country. I am looking forward to reading about what the people at the top thought about it and Lady Thatcher's memoirs on it. I hope that I shall be around 30 years on from 1986 to see the Cabinet papers. I know how keen the Government are to publish more detail of what goes on. Who knows--the 30-year rule may be changed to a 20-year rule. As a result of that great commercial crisis, General Motors pulled out of Bedford Trucks, which left Dunstable dangerously exposed. Although the David Brown family, who took over the plant, and the work force have made tremendous efforts to keep the plant going, everybody in the Dunstable area knows that the number of people employed in the plant has gone down since the crisis of the mid-1980s.

The present position is summed up in the receiver's letter of 1 July to my right hon. Friend the President of the Board of Trade. It says :

"Our role, as you will be aware, is to maximise realisations and our view is that a going concern sale of most or all of the business would not only enhance realisations but would also preserve employment and contribute to exports

We have been attempting to encourage interest in the business and it has become clear that prospective purchasers of the business as a going concern have generally required of us, not unreasonably, confirmation of the precise status of the contract to supply trucks to Libya. I understand you are aware of the background to this contract and the current impasse We now understand that the matter lies with you for a decision. From our analysis of the situation, I should say that we do not accept that the trucks are military goods' and

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that there is, therefore, any basis on which the contract should not be allowed to proceed We have been led to believe that governmental approval is required, has not been forthcoming to date, but remains under consideration'."

The penultimate paragraph of page 2 reads :

"If we are unable to resolve this issue within the next few weeks"--

this letter was written on 1 July, two weeks ago--

"the chances of a going concern sale will be, in our judgment, much diminished with the regrettable consequences this may entail and I therefore would be grateful if you could give this matter your early attention."

That is the current position, and that is why I have raised the matter the day before we adjourn for the summer recess.

The contribution of the Dunstable truck plant to the economic well-being of Dunstable and Bedfordshire over the years has been enormous. The plant's industrial relations have been superb. Indeed, Dunstable avoided the spectacular industrial relations smash-ups of the 1960s and 1970s because of the imaginative and co-operative spirit between management and trade unions.

I am most grateful to my hon. Friend the Minister for Trade and his civil servants for the helpful and courteous way in which, for a long time, they have listened to me pleading the case for the order for civilian trucks to go ahead. I end as I started, with an appeal for AWD (Bedford) Trucks to be allowed to sell civilian trucks to Libya. Time is running out at a terrifying speed. We must save the Dunstable plant from total collapse. I appeal to the Government for help. 8.25 pm

The Minister for Trade (Mr. Richard Needham) : The workers of AWD in Dunstable have no more doughty champion than my hon. Friend the Member for Bedfordshire, South-West (Mr. Madel). He has done everything possible to assist in trying to resolve the difficult position that the company is now in, not only because of the unfortunate fact that it has gone into receivership but because of the complexities of the order. My hon. Friend and I discussed the order in detail on 9 July.

I have the utmost sympathy with the predicament in which the company and its employees find themselves. My hon. Friend forcefully spelled out the history of that. I understand and share the distress and uncertainty that the employees must feel about the company's future. As my hon. Friend said, that is doubly distressing given the past of the business, which has acted professionally and innovatively and has upheld the high regard in which the vehicle industry has been held. We are all aware of the quality standards that AWD (Bedford) Trucks has set over the years.

It might help the House and my hon. Friend the Member for Bedfordshire, South-West--I am glad to see my hon. Friend the Member for Luton, North (Mr. Carlisle) present--if I give the background to the difficulties that we must jointly try to overcome. The receivers believe that the sale of AWD as a going concern is largely dependent on the export order which has been the subject of protracted negotiations in the past year. AWD has been at pains to draw those negotiations to the attention of the Government so that we know what is going on.

Exports are actively encouraged by the Government. Indeed, most of my work involves the promotion of exports. Having said that, everyone in government and in

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