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Mr. Deputy Speaker: With this, it will be convenient to discuss Government amendments Nos. 8 to 10.
Mr. O'Brien: The new clause speaks for itself. The important words are:
- "under the supervision of a court."
Through the new clause, the Labour party would require a court to supervise any action taken by the Inland Revenue or Customs and Excise to seize people's property in settlement of a tax debt. Labour's proposals will give taxpayers in England and Wales a similar protection of judicial supervision of distraint of property by the tax authorities to that enjoyed by taxpayers in Scotland.
The Government originally proposed to give the tax authorities wide powers to distrain taxpayers' property which could be exercised without any independent supervision and by any person authorised by the Board of Inland Revenue or the commissioners for Customs and Excise. The Government appeared willing to accept that very junior officers in either tax authority could take people's property to settle a tax debt.
In Committee, we said that we supported the Government's attempts to rationalise the law on distraint for the settlement of a tax debt, but argued that taxpayers in England and Wales should enjoy the same right to judicial supervision as those in Scotland. The Government conceded then that there should be some judicial supervision, and the new clause is designed to give statutory effect to that concession. In England and Wales there is effectively no court supervision such as is provided by the sheriff in Scotland. We hope that Customs and Excise will never act lightly, but we need to be sure that there are sufficient safeguards in place to protect the liberty of the citizen.
Customs and Excise deals with an extremely large number of cases, many of which directly affect the ways in which businesses can be run and individuals can earn their living. The 1992-93 figures from the House of Commons Library show that 11 per cent. of bankruptcy petitions and 36 per cent. of company wind-ups were by Customs and Excise. It would take a courageous Minister to say that never in the course of 43,000 cases has a mistake been made. The mere fact that we are dealing with human beings who process the information means that errors might innocently have occurred. That is why it is always right to have a safeguard in place to ensure that rights are not infringed, and the courts are the mechanism by which we have traditionally sought to do that.
The Exchequer Secretary will no doubt say that in Scotland, when the sheriff signs the order for poinding or arrestment of earnings or funds, he does so merely to ensure that the formalities are complied with. Why should that supervision be necessary in Scotland but not in England and Wales? Why did the clause relating to the new attachment power in England and Wales, which was based on the Scottish example, lack the safeguards that apply to arrestment in Scotland?
I accept that the sheriff's involvement is ex parte, in that the person against whom the order is made does not appear before the sheriff and put a case, but the sheriff is there to supervise and to ensure that there is no abuse in terms of the paperwork. It is possible to raise questions about the appropriateness of the paperwork and the way in which the case has been conducted--not to make a detailed inquiry, but to ensure that there is adequate
protection. In Scotland, the British citizen is protected and orders are supervised. If that protection is necessary in Scotland, as the Government clearly accept, it is equally necessary in England and Wales.
I accept that 99.9 per cent. of the orders may result in no inquiry by a supervising court, but on each and every occasion Customs and Excise and the Inland Revenue would be put on their guard to ensure that they had done everything right before going before the court. In a tiny percentage of cases the court might question whether the paperwork is right and the procedures have been correctly complied with. The point of a supervisor is to make officials think long and hard before exercising their considerable powers.
To do the Exchequer Secretary credit--I would always do so where possible--he said in Committee:
The problem is that court supervision should be dealt with by statute, because regulations tend to be too easily changed. Historically, statute has been used to protect our citizens and ensure that their rights are not infringed. Statutes are always rigorously scrutinised in the House, whereas regulations, as any hon. Member who has served on one of the relevant Standing Committees will know, tend to go through on the nod or with limited scrutiny, although I accept that on occasion the process is more thorough.
Why is it right to protect the Scots in a statute but not those resident in England and Wales? Why do the Scots have a statute that allows supervision of an order by the sheriff, but citizens of England and Wales do not?
It is also curious that the Government's new order gives Customs and Excise an extra string to its bow to go beyond the traditional civil procedure of a garnishee order. The new power may be justified; I do not object to it. However, as someone who has had to deal with such orders in court proceedings, I know that they are closely scrutinised by those who issue them and that there is considerable procedure and discussion before they are issued, because they can be onerous.
Customs and Excise is being given an attachment power, which it no doubt requires. Will the Exchequer Secretary ensure that where powers are given to Customs and Excise and to the Inland Revenue there is supervision? Supervision should be properly set out in statute. It is not satisfactory to deal with it by mere regulation. I ask the Government to think again and accept new clause 4, which is based on the law in Scotland. It is a sensible, reasonable protection for citizens that most
hon. Members would accept. In principle, at least, the Exchequer Secretary seems to accept it. He seeks to introduce much the same provision by regulation, but he does not have to wait for a regulation: if it is necessary, as he accepted in Committee that it is, let us do it now.
Mr. Tim Smith:
New clause 4 is far too widely drawn in two respects. In Committee, concern was expressed about clause 54, which deals only with attachment of debts by Customs and Excise. New clause 4 deals not only with attachment of debts, but with matters that are covered by clauses 51 and 52--that is, enforcement by distress and enforcement by diligence. Moreover, it deals not only with Customs and Excise but with the Inland Revenue. The Inland Revenue is not given new powers by clause 54, which refers only to the commissioners, which I understand to mean the commissioners of Customs and Excise.
I greatly welcome the way in which my hon. Friend the Exchequer Secretary has dealt with the matter. It was difficult to get the right balance. We must give Customs and Excise the powers that it needs to enforce the law but, equally, we must ensure that the taxpayer is properly protected. My hon. Friend listened carefully to the arguments advanced and I believe that he has not been able to satisfy himself since that all the concerns that were expressed have been properly dealt with. For that reason, he has tabled amendment No. 10 which deletes clause 54. For the time being, I believe that that is the right solution.
The Exchequer Secretary to the Treasury (Mr. Phillip Oppenheim):
I thank my hon. Friend the Member for Beaconsfield (Mr. Smith) for his comments, which adequately sum up the situation. We have decided to drop the attachment provisions. He also summed up what is wrong with new clause 4.
New clause 4 relates to clause 54 as well as to clause 51. That may be where Opposition confusion stems from. Clause 54 made provision for attachment of debts. As my right hon. Friend the Member for Beaconsfield said--I am sorry, I mean my hon. Friend. I am getting ahead of myself. Government amendment No. 10 withdraws clause 54. As I mentioned in Committee, we had a long public consultation exercise last summer, during which no objections were raised to the proposed attachment provisions. We also had a VAT Budget open day at the end of January. Again, the interested parties raised no objections. Objections were raised only fairly late in the day in February. I listened carefully to those objections and decided that they had some validity.
"The issue remains--should there be any judicial intervention in the English and Welsh system? I have agreed that there should be and that it should be introduced by regulation."
He also said:
"I accept that this is a legitimate cause for concern, which we shall look to address when we introduce the regulations. I emphasise that, if those regulations are not passed by Parliament, the clause does not become effective. We shall address the issue in consultation with the organisations that have contacted us in the past few days."--[Official Report, Standing Committee B, 13 February 1997; c. 58, 53.]
I am grateful to the Exchequer Secretary: in the fairly lengthy and complex debate in Committee about the differences between the Scottish and the English and Welsh court procedures, he accepted that important principles were at stake and said that the Government would try to deal with them through regulations.
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