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Mr. Duncan Smith: I am sure the House appreciates what the Secretary of State says, but will he consider creating the opportunity for questions to be asked across the Floor of the House by presenting a statement, either when the report is produced or immediately thereafter?
Mr. Darling: It is in the nature of the computer--indeed, of any computer, large or small--that the situation appears to change from week to week, sometimes from day to day. I am not sure whether Madam Speaker would allow me to come to the House to make a daily report on what happened in Newcastle the previous night, so I cannot undertake to make a statement. However, I shall ensure that--as is often true of answers to parliamentary questions--the answer, when it comes, is very long and sets out the position as clearly as possible. If the occasion demands it, it is always open to Opposition to ensure through the usual channels that I make a statement or find some other way to allow questions to be put to me on the matter. I would have no difficulty with doing that.
The contract was entered into in 1995, but there have been difficulties with the system under both the previous Government and the current Government. It must be the objective of all of us to get the matter cleared up as quickly as possible, so I am more than happy to answer questions about it.
Mr. Iain Duncan Smith (Chingford and Woodford Green):
I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof:
I noted that the Secretary of State began by exploring the narrow, technical side of the Bill and then drifted into the what-ifs. In essence, he was asking, "Once this is done, where do we go from here?" The right hon. Member for Birkenhead (Mr. Field) also teased out that question with the Secretary of State, and I shall deal with some of the bigger issues later in the debate. Notwithstanding the fact that the Bill is detailed, I think that we must address some serious questions of principle. At the end of the day, it boils down to whether one believes the Government's assurances--and we shall come to that point in due course.
I shall begin with some of the misgivings that were raised in the other place by noble Lords on all sides. Let us deal with the Government's assertions about savings to business. Much has been made of the cost to business generated by dealing with national insurance contributions. The Government contend--with the support of many business leaders--that the Bill will save businesses money. The 1994 White Paper, "Competitiveness: helping business to win", contained proposals to examine
Mr. Duncan Smith:
I will make this point and then give way. I accept--as would any hon. Member--that there will be some administrative savings to business.
Mr. Duncan Smith:
The hon. Gentleman must be patient. We have plenty of time--judging by the number of hon. Members who wish to speak in the debate, it is not as though we are under a great time pressure. I will give way to the hon. Gentleman when I have finished making this point.
We accept that there should be some administrative savings. If those savings are to be realised, the real purpose of the transfer must be to cut the overall cost of the Inland Revenue or the Contributions Agency or both. If there is no cost reduction, businesses will continue to carry an increasing burden, which will be reflected in the cost of employing those who work for them.
Mr. Davies:
On reflection, will the hon. Gentleman accept that he has completely missed the point?
Mr. Duncan Smith:
I am coming to that. My point is that, in reality, we must question to what degree those savings will flow to business. What businesses think they will get is quite important, as is what they actually get.
Mr. Duncan Smith:
The hon. Gentleman must allow me to finish developing my argument and then he can decide whether I have made my point--I dare say he will decide that I have not and I shall take another intervention from him at a later stage.
It goes without saying that, although the Government headline the transfer as a saving to business, that is debatable, given the nature of the proposal and the increasing costs to business. Businesses will be likely to secure serious and general real-term savings--this point is important to businesses, so the hon. Gentleman must bear it in mind--only by cutting overall administrative costs. That is, ultimately, about the number of personnel that businesses employ and the way in which they do business.
The only way in which the Government could achieve their aim--this is the subject of the extended debate on which the Liberal Democrats are very keen--would be ultimately to merge the two systems. That is the holy grail that would deliver huge savings that could be transferred to business through overall tax reductions. The question is how far the Government intend to go--and, whether or not they want to admit it, that is the subject of the debate.
It is worth making the practical point that the Bill will transfer the Contributions Agency at a time when the Inland Revenue faces serious challenges. The Inland Revenue has already experienced administrative problems with the introduction of self-assessment. The Secretary of State was the Chief Secretary to the Treasury in his previous life, although the less said about reincarnation, the better. He will recall that in a written answer on 28 January, the Paymaster General said, in reference to the problems of self-assessment, that of 3.4 million tax statements issued by the Inland Revenue, 870,000 contained superfluous information that it was accepted was likely to lead to failed tax returns by many people who had been misled.
The Inland Revenue has had to undertake to write to all those taxpayers to apologise for misleading them. That is all linked to the complications of self-assessment. I understand that the cost of those letters alone could be £250,000. My practical point, therefore, is that the Government are proposing hastily to transfer the agency when the Inland Revenue faces major structural upheavals in trying to cope with self-assessment.
"this House declines to give the Social Security Contributions (Transfer of Functions, etc.) Bill [Lords] a Second Reading because the effect of the Bill will be to facilitate the ending of the contributory principle, leading to the wider application of the means test, which will have a detrimental effect on the public and particularly pensioners; and because the major practical difficulties in transferring functions relating to social security contributions to the Treasury have not been overcome."
Today's debate will be seen by many as purely technical--in fact, the Secretary of State opened the debate on that basis. However, Opposition Members
believe that the legislation is more than simply technical and that some elements of principle must be addressed. Although I accept that the Bill, in all its detail, is very functional, exploring that detail will require a strong and concerted effort in Committee. It is, however, a hugely important Bill, not purely a technical one, and it is a significant part of the Government's legislative programme because it deals with those matters of principle of which the House is aware.
"how the work of the Inland Revenue, Customs and Excise and Contributions Agency can best be co-ordinated to minimise costs on business arising from tax collection and compliance."
Following consultation on that basis, an amalgamation was ruled out--although closer co-operation was encouraged to reduce the general burdens. In 1995, my right hon. Friend the Member for North-West Hampshire (Sir G. Young) said:
"It was concluded that the overlap between the Revenue and the agency did not warrant an amalgamation of the two businesses. In addition, any efficiency gains would be outweighed by transitional costs and disruption to both departments."--[Official Report,14 June 1995; Vol. 261, c. 516.]
Mr. Geraint Davies (Croydon, Central)
rose--
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