| Previous Section | Index | Home Page |
Mr. Darling: Does the hon. Gentleman accept that one of the ways in which error can creep into the system--I put it no more strongly than that--is if two organisations ask an employer to provide information? The information given to the second organisation may differ slightly from that given to the first because the employer will forget something or say, "I told the other fellow all about that." Mistakes arise when local authorities collect information on housing benefit and so does the Benefits Agency. Is it not better and more efficient for people to deal with one agency that can check that all its information and the national insurance contributions are correct?
Mr. Duncan Smith: The Secretary of State makes a particular point about simplifying the flow of information for business. If it is possible to achieve that aim--that is the question--improved efficiency might result.
My question relates to the way in which the information is gathered and for what purpose. The Secretary of State knows as well as I do that matters are not as simple as they appear to be because two agencies will be gathering and holding information for very different purposes. It is too simplistic to say that it would be good if agencies collected information at the same time because, to a greater or lesser extent, they are collecting different information. I shall return to that point in a moment.
Much of the debate about savings to business is questionable. I used to run a business before I entered the House. Any business would agree to a proposal that saved it a task and therefore represented a saving, but the question is, what is the other side of that equation which may lead to other costs flowing through to businesses? They will not consider those costs because they are not their responsibility. That is what the debate is really about, not just the superficial costs.
In the other place, Baroness Hollis admitted that, over a couple of years, costs are likely to rise by £16 million or £17 million. I do not have the exact figures; I shall have to take Baroness Hollis at her word. Regardless of whether she said that, I would have estimated that there would be a problem because bureaucratic necessities will increase costs. The problem is, who bears that cost? It is not a free-as-air cost; ultimately it must be borne by the taxpayer. That is my point. The Government need to be talking about real savings.
Mr. Geraint Davies:
I have just noticed, while reading about the hon. Gentleman's background, that he has no experience of setting up small businesses. He worked for very large companies. I moved from working for a
Mr. Duncan Smith:
I note the hon. Gentleman's advertisement for his own background, although he should have checked a little more about mine. If he had, he would have seen that the company that I was talking about is a small-to-medium-sized business, not a large business. Its turnover was not what the hon. Gentleman thinks. Most people make that mistake about Jane's. I did quite a lot in that company, but I do not want to get down to the details. That is not the debate. He makes a petty point, which I take, but I do not agree with it.
The Government face a problem of trying to figure out the savings and present them to business. It is very easy to present a superficial case, saying to business, "We will take this away from you, therefore it is a cost saving." The question is whether that is really so. On one hand, the Government are talking up the savings, but on the other, they are admitting that, even in the immediate future, there will be no savings, and, more particularly, given the disruption in the two departments, there are likely to be some increases in cost.
Businesses love to hear wonderful news about savings, but it comes ill from a Government who have significantly raised business costs. That is why I am sceptical, and why one or two businesses are beginning to question the proposals. The Government imposed the windfall tax, which cost business £5.2 billion. Independent assessors estimated that the July 1997 Budget cost business indirectly and directly £14.2 billion. The March 1998 Budget cost business £4.9 billion. It is independently estimated that the minimum wage will cost £8.1 billion. The working time directive is likely to cost almost £7 billion. The European works council will cost£0.085 billion, and this parental leave stuff will cost business £0.11 billion. Overall--admittedly it was not all imposed by the Department of Social Security--business must take into consideration a cost of £39.3 billion.
Even the CBI, which supports the measure because of the hypothetical cost saving, has some reservations. It wonders whether savings really will filter down to businesses, or instead be lost in a swamp of extra costs.
The Minister of State, Department of Social Security (Mr. Stephen Timms):
The CBI does indeed support the measure. Has the hon. Gentleman discussed his argument with the shadow Chancellor? Has he read the deregulation task force report, for which the shadow Chancellor was responsible? It says:
Ms Gisela Stuart (Birmingham, Edgbaston):
Will the hon. Gentleman give way?
Mr. Duncan Smith:
No; I want to make progress.
The Secretary of State discussed the problems of the national insurance computer, and I am grateful for his comments. It is worth mentioning the problems that have affected that computer, but what effect do they have on the Bill? Although the right hon. Gentleman did mention the subject, he did not discuss to what extent problems with the computer may cause problems for the Government in the transfer.
In the other place, my noble Friend Lord Higgins raised the matter with the Government several times, urging them to accept that, unless the problem was resolved before the move across, there could be serious problems. The matter was again discussed on Report when, although not admitting that the computer problems would have any effect, the Government conceded that, in the interim, they would have to do something that they had not anticipated. They have now agreed to make interim payments, which I believe is a result of my noble Friend's persistent pressure. That is to be welcomed, but it shows that the situation with the computer is bound to have some effect on the transfer or on the attitude of members of the public to the transfer, who will want to know what is happening.
It is surely not good enough for the Government simply to say that, because they are making a block transfer, it does not matter whether the problems of NIRS2 are in the hands of the Department for Social Security or of the Inland Revenue. That shows some complacency--the Secretary of State did not really answer that accusation. It also shows a failure to recognise that very many pensioners are now aware what is going on and will be deeply worried lest the issue is not resolved.
I therefore ask the Government to think again about timing, even if they are set on other aspects of the transfer. I urge them--if, as expected, the vote goes their way tonight--to consider accepting the amendment tabled by Lord Higgins in the other place, which would delay the transfer until the matter is resolved. I urge the Government at least to consider that and to admit that there will be problems.
The next point that I want to make concerns confidentiality. As we know, the Inland Revenue keeps relatively short-term records on the tax paid by individuals, whereas--as the Secretary of State will know from his previous position of Chief Secretary--the records of the Contributions Agency are cumulative and, of necessity, much more detailed. It is fairly common knowledge that the Contributions Agency is responsible for maintaining the national insurance accounts for more than 65 million customers, 1.4 million employers, more than 3 million self-employed people and a personal pension population in excess of 5.7 million.
I always have an instinctive political concern when someone suggests that administrative amalgamations and transfers make common sense simply because they save money, without examining to what extent the privacy of the individual may be trespassed on. I am fully aware now, as is everyone in the House, that Governments must achieve a balance between their responsibility to the taxpayer and their responsibility to the rights and liberties of those whom they govern. That awareness lies at the heart of this concern.
Reading the House of Lords Hansard, I felt, notwithstanding the soothing words of Baroness Hollis, that that issue was not really dealt with properly. For example, clause 6 of the Bill allows information to be held by the Board of Inland Revenue to be supplied to
That brings me to my final, and main, point. I believe that, in this case, the contributory principle is being eroded. The Government say that that is not the case, but I want to press them on that slightly. Several times I have heard the Government, in the other place and this place, seeking to reassure everyone that the transfer and the amalgamation have nothing to do with the ending of the contributory principle. The Secretary of State made great play about that in the early part of his speech. Yet there were a number of cases when Baroness Hollis stopped short of any undertakings to the contrary or when it could be seen by her words that such a process was a possibility. Today, the Government, in the body of the Secretary of State, seemed also to indicate that, which I think that the right hon. Member for Birkenhead teased out.
For example, on Second Reading in another place the noble Baroness said that the Bill would not end the contributory principle. She went on to say:
I think that that shows clearly that there are other motives. I wish that the Government were clear about these matters. I believe that they are clearly of a mind to do exactly that to which we have been referring. That would be a wrong move--and it is not only the
Opposition who take that view. In a recent qualitative study of perceptions of the national insurance system, Bruce Stafford, the author, found that
"It is a massive and unnecessary burden for employers to have to cope with two separate bureaucracies for matters concerning payroll taxes"?
Mr. Duncan Smith:
I have endless discussions with my right hon. Friend the shadow Chancellor, who is both a friend and a colleague. He will demonstrate clearly that what the Government propose will not work. I know that it is always great fun in this place to try to point out supposed divisions between people; many in the House
"any . . . person providing . . . services to the Board".
Such an open-ended statement makes us question whether a subsection could be used to justify accessing information that is neither relevant nor necessary to the workings of the Inland Revenue. The Government are unable to give a target for savings--which they seemed to suggest that they would be able to do, and which would of course be the plus for taxpayers. In fact, it appears that the opposite is the case, as Baroness Hollis has said. The balance therefore seems to be pretty much all one way. The Government need to reconsider, in light of the concerns raised in the other place about this matter, the concerns that taxpayers may have about transfers of data. They would contend that the transfer of some data is necessary, but there is unease about the unnecessary transfer of data which may fall into the wrong hands.
"This Bill is not the vehicle for major alignment of tax and national insurance contributions. We want to work through that in consultation with representative bodies."
The Secretary of State made roughly the same point this afternoon. He talked about what comes next. I thought that he indicated that there were possibilities that the Government would move towards the erosion, if not the ending, of the contributory principle.
"although the respondents lacked detailed knowledge of the benefit system, in their responses they were strongly committed to the contributory principle."
So there is concern outside the House. The public find that what they feel strongly about is, without any serious or detailed debate, slowing being eroded, and that under the Bill that process could certainly be accelerated.
| Next Section
| Index | Home Page |