Standing Committee E
Tuesday 23 June 1998
[Mrs. Gwyneth Dunwoody in the Chair]
(Except clauses 1, 7, 10, 11, 25, 27, 30, 75, 119 and 147)
Adoption of single currency by other member States
Amendment moved, No. 92, in page 142, line 14, leave out
`annulment in pursuance of a'
and insert `affirmative'.--[Mr. Heathcoat-Amory.]
Mr. David Heathcoat-Amory (Wells): In your temporary absence, Mrs. Dunwoody, we were debating clause 158, and in particular our amendment to it. That amendment seeks to ensure that regulations promulgated under the clause would at least be considered by the House under the affirmative resolution procedure.
I hope to explain the importance of the matter by indulging in a bit of history. Previous Parliaments have been worried by the use of secondary legislation, in particular the use of so-called Henry VIII clauses, which empower the Government to use secondary legislation to amend or repeal primary legislation. Clause 158 is practically a definition of such a clause.
Mr. Ross Cranston (Dudley, North): I asked the right hon. Gentleman a question on the Floor of the House, which he avoided answering. Did he vote for the previous Government's deregulation legislation, which was replete with Henry VIII clauses? Will he now answer that question directly?
Mr. Heathcoat-Amory: I am glad that the hon. Gentleman is conforming to type, in that he is being helpful. Through you, Mrs. Dunwoody, I can promise the hon. Gentleman that I shall shortly give a straight answer to that very question, which proves our point and which is unintentionally helpful to our case.
The Donoughmore committee report of 1932, which considered the question of Henry VIII clauses, found that nine Acts of Parliament introduced between 1888 and 1929 contained such clauses. Interestingly, those clauses were transitory provisions designed to help bring the Acts into operation, and they were therefore time limited. The Donoughmore committee said that a case could be argued for the occasional use of Henry VIII clauses in that way. However, the committee concluded that that use must be demonstrably essential, and justified on each occasion by the Minister ``to the hilt''. The committee also concluded that such clauses should be purely machinery arrangements intended to bring the legislation into effect. The committee further concluded they should be time limited clauses that would endure for a maximum of one year after the bringing into effect of the relevant primary legislation.
The report seemed to have the desired effect. The use of Henry VIII clauses ceased completely until the war years, when the special conditions that applied to wartime legislation brought the use of secondary legislation once more to the fore. After the war, the increased use of such legislation caught the House's attention, particularly during the 1970s and 1980s. No doubt when the Paymaster General replies to the debate, he will give examples of where both Conservative and Labour Governments have used Henry VIII clauses. I remind him that the previous Conservative Government were responsive to criticisms. The Library has helpfully given me a list of examples where such clauses were deleted or reconsidered by the Government, in particular, the Statutory Sick Pay Bill 1990, the Local Government Bill 1992 and the Leasehold Reform, Housing and Urban Development Bill 1992. Moreover, when the undesirable increase in the practice was pointed out to the Government, the Lord Chancellor said in 1992 that in future he would ensure that the affirmative resolution procedure would normally be used for all orders of this kind. I invite the Paymaster General to give a similar assurance.
The hon. Member for Dudley, North (Mr. Cranston) mentioned the Deregulation and Contracting Out Bill. That Bill was special because it took specific powers to do a specific job, which was to relieve burdens on business by amending legislation. Unlike clause 158, it ensured that all such orders would be passed by an affirmative vote of both Houses of Parliament. If the hon. Gentleman cannot see that difference, he cannot understand the purpose of our amendment.
The Deregulation and Contracting Out Bill also set down a requirement to consult interested parties. That too is absent from the clause. More importantly, the draft orders that gave effect to the deregulation measures had to go before two specialist Committees--one in another place and one in this House. Detailed procedures were set out for the laying of the orders before Parliament for a minimum length of time. That specific change in procedure was in addition to a requirement that there should be a positive vote in Parliament before the orders should take effect. That explanation disposes of the hon. Gentleman's point.
The main issue is whether it is appropriate to use Henry VIII clauses for financial matters which go to the heart of what Parliament is here to do. We observed in previous debates that Parliament obtained powers over taxation only after a long struggle in the 17th century. We should not give them away without clear justification.
Mr. Nick Gibb (Bognor Regis and Littlehampton): Is my right hon. Friend aware of any instance in the past where statutory instruments have decided the rate of tax, as in clause 87?
Mr. Heathcoat-Amory: My hon. Friend makes a good point. He will know that the Law Society and other professional bodies have written to the Government making precisely that point. We are all used to secondary legislation setting up the mechanics of taxation, but for it to decide the rate of tax takes us further. Ministers have tried to defend their use of secondary legislation by giving the number of instances when it has been or would be used, but we are discussing a step change that takes us into new areas. This is a qualitative rather than quantitative change. Indeed, the use of secondary legislation in the clause was described by the Law Society as unprecedented. I want the Paymaster General specifically to address the issue of taxation and financial legislation.
The 12th edition of a book called ``Constitutional and administrative law'' by Bradley and Ewing contains a chapter that is devoted to delegated legislation, and it refers to the delegation of taxing powers. It says:
``We have seen how vital to the development of parliamentary government was the insistence that Parliament alone could authorise taxation.''
It goes on to observe that modern pressures and the nature of modern government have made it necessary for Parliament to delegate some of those taxing powers to Governments. It refers in particular to the working of customs duties and the fact that since 1961 the Government have had the power to vary certain classes of indirect taxation by order of the Treasury. It asserts that each of those powers is subject to parliamentary control in that audit-imposing import duties or those that vary indirect taxation cease to have effect unless they are confirmed by a resolution of the House of Commons within a limited time. That authoritative study reminds us that the affirmative resolution procedure is, and always should be, used in relation to matters of taxation.
The clause contains no such provision, which is a serious matter. Only the house has those taxing powers. Other statutory instruments are also debated in another place, which has, in some ways, a superior procedure for sifting and sorting statutory instruments and for debating the necessary ones. However, dealing with statutory instruments relating to taxation is a privilege of the House of Commons alone--the entire procedure takes place here, and they cannot be stopped in another place.
Pages 585 and 586 of Erskine May make it clear that under the negative procedure those statutory instruments are almost never debated or scrutinised in any way. They are referred to a Committee only at a Minister's discretion. If that Committee refuses to take note of them, they can still be passed on the Floor of the House without debate, again at a Minister's discretion. There is no procedure whatsoever for ensuring that Back Bench Members of Parliament have an opportunity to scrutinise or debate them. The fact that they can be debated only in the House means that Parliament as a whole will never debate them.
Another feature of secondary legislation is that it cannot be amended--statutory instruments relating to taxation are unamendable. There is a glaring gap in the Bill, in which the Government state--no doubt for good intentions--that matters of taxation that are consequential on the introduction of the euro will never be properly scrutinised. We will never debate such matters relating to direct taxation, income tax, capital gains tax or corporation tax--the whole raft of direct taxation--although doing so goes to the core of our duties and responsibilities.
Doubtless, the Government will say that the proposals are necessary and that their intention is that there should be no abuse of the powers.
However, intentions are temporary and transitory, and we are legislating for the long term. Therefore, this is an opportunity to ensure, at the very least, that these matters are scrutinised under the affirmative resolution procedure. I would like the Paymaster General to approach the matter in a slightly less blustering way and to concede as did the previous Conservative Lord Chancellor, that there is an issue here. He believed that all important measures, even outside the field of taxation, should be passed under the affirmative resolution procedure. That would ensure that, however inadequate our procedures may be, there would be an opportunity for Members of Parliament to scrutinise matters of taxation.
Mr. John Burnett (Torridge and West Devon): Clause 158(4)(a) gives the Government carte blanche power,
``to impose charges to taxation''.
That power is subject to regulations made under the negative resolution procedure. We object strongly to the arbitrary and inadequate procedure that is proposed for the regulations. As Members of Parliament, we are here not least to safeguard the public against the excesses of the Executive. The clause is deeply objectionable and constitutionally flawed as it delegates to the Treasury power to impose a charge to tax. The regulations should be subject to the affirmative resolution procedure, and we strongly support the amendment.