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The Minister of State, Department of Social Security (Mr. Stephen Timms): This amendment would require a debate in both Houses before any Order in Council or
regulations could be made by the Secretary of State or the board of Inland Revenue under the powers in the Bill. However, regulations primarily will be about the detailed procedures for appeals to go down the tax appeals route.
I suggest to the House that these are not matters of such sufficient moment that we should set down a mandatory requirement for debates on them. The House will recall that the powers in the Social Security Act 1998 to make regulations about decisions, and appeals to the unified appeals tribunals against those decisions, generally use the negative resolution procedure, as do the Taxes Management Act 1970 powers to make regulations about tax appeals.
I freely accept that the Bill, in clauses 23 and 24, contains broader powers to make secondary legislation, which will also be made under the negative resolution procedure. The appropriateness of this was considered by the Select Committee on Delegated Powers and Deregulation in another place. It is worth quoting from its first report of this Session, dated 9 December 1998, at some length. It states:
In the main, social security regulations are made under the negative procedure, as has long been the case. Nothing in the Bill changes the degree of scrutiny to which the
House has been entitled in the past. In the light of those assurances, I hope that the hon. Gentleman will withdraw his amendment.
Mr. Quentin Davies:
I am grateful to the Minister, but I cannot pretend that I am happy with those assurances. The Government are taking far too many powers to make resolutions that are subject to the negative procedure. There is a strong argument for considering how the House handles statutory instruments upstairs, but that is a different subject and I cannot go into it now. The fact that rafts of new powers to make regulations of this kind are being created both in the Government's social security legislation and in many other Bills should give urgency to that argument. In the light of what the Minister has said, however, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr. Quentin Davies:
I beg to move amendment No. 6, in page 22, line 8, at end insert--
Again, this is unfinished business from upstairs to which we thought it right to draw the attention of the House. The explanatory memorandum refers, on page 251, to a large number of costs, amounting in gross terms to something in the order of £50 million, which will be incurred as a result of bringing together the Inland Revenue and the Contributions Agency. It also talks about savings of £1.4 million in 2000-01, rising to £5.5 million in 2002-03.
Anyone who reads the explanatory memorandum will therefore reach the reasonable conclusion that there will be a net cost to public funds of several tens of millions of pounds at least. It was with more than some surprise, therefore, that we heard the Under-Secretary say in Committee:
Ms Hewitt:
I fear that the hon. Gentleman has addressed amendment No. 5, which was not selected, rather than amendment No. 6, which he moved. If I may, I shall explain why amendment No. 6 should be rejected, and I trust that the hon. Gentleman will be content with that.
Amendment No. 6 deals with the question of the Inland Revenue charging its administrative costs to the national insurance fund in relation to the collection of national insurance contributions. That was an issue on which the hon. Gentleman expressed considerable concern in the Standing Committee, and I trust that I shall be able to reassure him this evening.
My first point is that there is nothing new in the Inland Revenue charging the appropriate amount of its expenditure to the national insurance fund. That happens already, because the Inland Revenue is responsible for collecting 94 per cent. of national insurance contributions and for carrying out most of the associated administration. Of course, the Revenue charges only the cost belonging to its functions in relation to contributions to the national insurance fund.
The second point is that Parliament has already addressed, quite comprehensively, the matter that concerns the hon. Gentleman. The existing law--primarily part XII of the Social Security Administration Act 1992--specifies the expenses that can be charged to the national insurance fund, whether by the Department of Social Security or the Inland Revenue. The Act also rightly requires the Comptroller and Auditor General to examine and certify the accounts of the national insurance fund, in a report that is laid before us annually. In other words, the National Audit Office acts as the external auditor of the national insurance fund as well as of expenditure by the Inland Revenue. The NAO also provides us with an annual report detailing the outcome of its independent scrutiny of the national insurance fund. Nothing in the Bill changes that situation.
Thirdly, the amendment would involve the Audit Commission in the scrutiny of expenditure. Although I have a high regard for the work of the Audit Commission, that extension would not be sensible or appropriate. It would duplicate effort, with both the National Audit Office and the Audit Commission acting as external auditors of the national insurance fund. It would confuse the division of responsibilities between the National Audit Office, which examines the accounts of Government Departments, and the Audit Commission, which audits local authorities and national health service bodies such as hospital trusts.
I hope that I have made it clear that amendment No. 6 is both unnecessary and inappropriate. I hope that the hon. Gentleman will feel able to withdraw it; if not, I must urge the House to reject it.
Mr. Quentin Davies:
I am extremely grateful, as may be imagined, to have had an opportunity to put on the record the considerable concerns expressed in amendment No. 5. The Government have been saved from answering those concerns, and I can see both Ministers laughing, doubtless with great relief. Amendment No. 5 relates to a serious question about the use of public funds, and our points are now on the record. Had I been allowed to do so, I should have wanted to call a vote on it if I had not received the assurances that I required. We do not know whether the Bill will cost or save the taxpayer money, although it seems certain that it will cost the taxpayer a substantial amount. We shall return to that point in another context.
"All the powers in the Bill are subject to negative procedure . . . the Department's memorandum gives an account of each and the Committee finds it necessary here to refer only to the Henry VIII powers discussed in the next paragraphs."
The hon. Member for Grantham and Stamford (Mr. Davies) said that the Bill had an extraordinary number of Henry VIII powers, but in fact it has only two. The paragraphs mentioned at the end of the quotation from the House of Lords Select Committee cover what are now clauses 23 and 24. In both cases, the Committee considered it appropriate that the negative procedure, as provided in the Bill, should apply. Accordingly, the Committee's recommendation, at paragraph 7, was as follows:
"The Committee has noted the two Henry VIII powers. There is nothing in the Bill which it is necessary to draw to the attention of the House."
Let me add to that reassurance. For the avoidance of any possible doubt, nothing in clause 25 downgrades an existing requirement in social security legislation for the affirmative procedure into the negative procedure. If there were any such downgrading, the hon. Gentleman would be quite right to express concern. For example, section 176(1) of the Social Security Contributions and Benefits Act 1992 puts under the affirmative procedure those regulations that increase the rate of class 2 national insurance contributions for certain earners. It would not be right to convert such important matters to the negative procedure, and the Bill does not do so. Paragraph 30 of schedule 3 says:
"In Section 176(3)(a) of the Social Security Contributions and Benefits Act 1992 (statutory instruments subject to affirmative procedure), after 'Secretary of State,' there is inserted 'the Treasury or the Commissioners of Inland Revenue,'."
Paragraph 30 makes it clear, therefore, that powers subject to the affirmative procedure retain that procedure on their transfer to the Treasury or Inland Revenue, and it is right that that should be so.
'(4AA) All such deductions, withholdings and payments by the Inland Revenue from sums due to the National Insurance Fund in each financial year shall be subject to a specific audit and report by the Audit Commission.'.
"There will be savings in public money".--[Official Report, Standing Committee D, 16 February 1999; c. 12.]
We never heard what those savings would be. I am perfectly prepared to believe that, despite the substantial initial costs, the Government may count on some savings in future. I am prepared to believe that they will be so great that even when properly discounted to proper value, the net position is positive. However, if that is so, it does not appear in the evidence that the Government have produced, and the only reasonable conclusion that one may draw from the explanatory memorandum is the reverse impression that there will be a net cost to the taxpayer. It is clear that a further explanation is required, and I hope that we shall hear one now.
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