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Norman Lamb: Will the Paymaster General clarify whether determining the scale of the penalty is provided for in guidance or in regulations? I hope that she will forgive my ignorance, but I should be grateful if she would clarify how guidance is given to officers on determining the scale of the penalty.

Dawn Primarolo: It would have to be taken into consideration whether an employer had made a genuine, and quite minor, mistake. In such cases, it is best that the mistake is just corrected. The example that I gave earlier, however, involving the complete failure of an employer to pay a large number of employees without explanation, was not a minor mistake. In such cases, we need to ensure that the penalties bite. They are not intended to be used in cases of genuine mistakes, of which the tax system has a great deal of experience, when employers and employees have done their best to get things right. Any penalty we sought in such cases, if we sought one, would have to be proportionate to what had gone wrong. There is no automatic trigger. The aim is to ensure compliance and for there to be no need to use the penalties, rather than the reverse. We do not want to assume that whatever penalties are available will be used.

Several points were made about the Government's raising national insurance by 1 per cent. It is important to remind the House—although this matter is not connected to the Bill, it was mentioned in the debate, so I shall respond—that the 1 per cent. increase, which was supported by the general public, was the biggest ever sustained growth and investment in the national health service, amounting to more than £40 billion extra being spent until 2007–08, compared with 2002–03. As my right hon. Friend the Chancellor pointed out, it spreads the burden as widely and as fairly as possible, matching costs to ability to pay. Pensioners are not affected by those changes, as they do not pay national insurance. That ensures that the national health service remains free at the point of need, and accessible to all irrespective of income—I understand clearly that those are principles to which the Conservative party does not subscribe. That money pays for 80,000 more nurses—

Mr. Ruffley: Will the right hon. Lady give way?

Dawn Primarolo: No. That money pays for 80,000 more nurses, midwives and health visitors, 25,000 more doctors and 100 new hospitals in the United Kingdom—extra spending that is widely welcomed.

Mr. Ruffley: Will the right hon. Lady give way?

Dawn Primarolo: No. With which bit of "No" is the hon. Gentleman struggling—the n or the o?

6 Jan 2004 : Column 221

Hon. Gentlemen sought to suggest that the arrangements in the Bill were made because of the 1 per cent. increase, which was not a stealth tax and which was clearly demonstrated and explained and widely supported. The issue at stake—as I tried to explain, but which they could not quite grasp—is that the change is necessary because any employee can receive shares whether or not they have earned above the earnings limit. The additional 1 per cent. is payable only for those earning above the upper earnings limit. Of course, those employers will be particularly affected, and the explanatory material on that has been absolutely straightforward. To say that the 1 per cent. has caused us to table the clause, however, is simply wrong. It is not the case.

Mr. Ruffley: Will the right hon. Lady give way?

Dawn Primarolo: No, I want to make progress.

During the debate, hon. Gentlemen sought to raise a range of issues that are not connected to the Bill, to which I now seek to respond. The hon. Members for North Norfolk and for Bury St. Edmunds raised the issue of funded unapproved retirement benefit schemes and their absence from the Bill. We were considering including in the Bill a change to the national insurance treatment of payments to FURBS, which would have moved the national insurance liability from class 1 to class 1A. The proposal has recently been overtaken, however, by our thinking on the future of unapproved schemes under the simplified regime for pensions and the Government's pension simplification proposals published on 10 December 2003. Under those circumstances, given the potentially short-lived nature of a change in the Bill, I considered it more sensible to await the outcome of the consultation.

Under the new regime, the national insurance status of payments into non-registered schemes will depend on the benefits paid out of the scheme, rather than being subject to national insurance in all cases. There will be no charge on national insurance contributions when benefits paid out are consistent with the general benefits that can be paid from a registered scheme. That will encourage employers to fund genuine pension benefits. It was on that basis that the proposal was removed.

The hon. Member for Bury St. Edmunds, whom I thought was an experienced Member of the House—but there we go—knows perfectly well that regulations are produced after a Bill is passed. I can confirm, however, and it is my practice as a Minister in dealing with the Finance Bill and other Bills, that I will be more than happy to provide the Committee with the detail that has been requested on the draft regulations. I sincerely hope to be in a position to make those draft regulations available to the Committee in time for its discussions.

Mr. Ruffley: When?

Dawn Primarolo: Before the Bill is completed. Clearly, the hon. Gentleman would wish to have sight of them before that.

The hon. Member for Hertford and Stortford (Mr. Prisk) asked what would happen if a family trust divorced from the original family company could no

6 Jan 2004 : Column 222

longer pay its share-based benefits. I know of only one case of a trust being unable to pay benefits without creating a national insurance liability for the new employer, but if the hon. Gentleman knows of other cases perhaps he will tell me of them. The matter had been discussed at length with officials and with the parties involved. While I appreciate the difficulties, I am sure the hon. Gentleman is not suggesting that we should legislate for a single case.

Mr. Prisk: I am grateful to the Minister for finally giving way. Would she be receptive to submissions on the subject? A number of outside experts—including ProShare, which I know she strongly supports—have made clear their anxieties.

Dawn Primarolo: I am happy to confirm that I will consider any submissions on issues in the Bill that are made to my officials and subsequently to me, but it is not incumbent on the House to alter primary legislation to correct a matter which a trust has the power to change, or which places a trust in difficulty as a result of its own decisions.

I am grateful for the opportunity to explain the issues that have arisen today. I look forward to the Committee stage, when we can expect to debate a number of points at more length. Again, I commend the Bill to the House.

Question put and agreed to.

Bill read a Second time.


Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 6 November 2003],

The House divided: Ayes 306, Noes 145.

6 Jan 2004 : Column 223

Division No. 21
[4:27 pm


Adams, Irene (Paisley N)
Ainger, Nick
Ainsworth, Bob (Cov'try NE)
Alexander, Douglas
Allen, Graham
Anderson, rh Donald (Swansea E)
Anderson, Janet (Rossendale & Darwen)
Armstrong, rh Ms Hilary
Atkins, Charlotte
Austin, John
Bailey, Adrian
Baird, Vera
Barnes, Harry
Barron, rh Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, rh Margaret
Begg, Miss Anne
Bennett, Andrew
Benton, Joe (Bootle)
Berry, Roger
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Boateng, rh Paul
Borrow, David
Bradley, rh Keith (Withington)
Bradley, Peter (The Wrekin)
Bradshaw, Ben
Brennan, Kevin
Brown, rh Nicholas (Newcastle E Wallsend)
Brown, Russell (Dumfries)
Browne, Desmond
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, Andy
Cairns, David
Campbell, Alan (Tynemouth)
Campbell, Mrs Anne (C'bridge)
Campbell, Ronnie (Blyth V)
Caplin, Ivor
Casale, Roger
Caton, Martin
Cawsey, Ian (Brigg)
Challen, Colin
Chapman, Ben (Wirral S)
Chaytor, David
Clapham, Michael
Clark, Mrs Helen (Peterborough)
Clark, Dr. Lynda (Edinburgh Pentlands)
Clarke, rh Charles (Norwich S)
Clarke, rh Tom (Coatbridge & Chryston)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann (Cynon V)
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Connarty, Michael
Cook, Frank (Stockton N)
Corbyn, Jeremy
Corston, Jean
Cousins, Jim
Cruddas, Jon
Cryer, Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunningham, rh Dr. Jack (Copeland)
Cunningham, Jim (Coventry S)
Cunningham, Tony (Workington)
Curtis-Thomas, Mrs Claire
Dalyell, Tam
Davey, Valerie (Bristol W)
David, Wayne
Davies, Geraint (Croydon C)
Davis, rh Terry (B'ham Hodge H)
Dawson, Hilton
Dean, Mrs Janet
Denham, rh John
Dhanda, Parmjit
Dismore, Andrew
Dobbin, Jim (Heywood)
Dobson, rh Frank
Donohoe, Brian H.
Doran, Frank
Dowd, Jim (Lewisham W)
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Edwards, Huw
Efford, Clive
Ellman, Mrs Louise
Ennis, Jeff (Barnsley E)
Farrelly, Paul
Field, rh Frank (Birkenhead)
Fisher, Mark
Fitzpatrick, Jim
Fitzsimons, Mrs Lorna
Flint, Caroline
Foster, rh Derek
Foster, Michael (Worcester)
Foster, Michael Jabez (Hastings & Rye)
Foulkes, rh George
Francis, Dr. Hywel
Gardiner, Barry
Gerrard, Neil
Gilroy, Linda
Goggins, Paul
Griffiths, Jane (Reading E)
Grogan, John
Hain, rh Peter
Hall, Mike (Weaver Vale)
Hall, Patrick (Bedford)
Hamilton, David (Midlothian)
Hamilton, Fabian (Leeds NE)
Hanson, David
Harman, rh Ms Harriet
Healey, John
Henderson, Doug (Newcastle N)
Hendrick, Mark
Hepburn, Stephen
Heppell, John
Heyes, David
Hill, Keith (Streatham)
Hinchliffe, David
Hodge, Margaret
Hood, Jimmy (Clydesdale)
Hopkins, Kelvin
Howarth, rh Alan (Newport E)
Howarth, George (Knowsley N & Sefton E)
Howells, Dr. Kim
Hoyle, Lindsay
Hughes, Beverley (Stretford & Urmston)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan (Braintree)
Iddon, Dr. Brian
Illsley, Eric
Ingram, rh Adam
Irranca-Davies, Huw
Jackson, Glenda (Hampstead & Highgate)
Jackson, Helen (Hillsborough)
Jamieson, David
Jenkins, Brian
Johnson, Alan (Hull W)
Johnson, Miss Melanie (Welwyn Hatfield)
Jones, Helen (Warrington N)
Jones, Jon Owen (Cardiff C)
Jones, Lynne (Selly Oak)
Jones, Martyn (Clwyd S)
Joyce, Eric (Falkirk W)
Keeble, Ms Sally
Kelly, Ruth (Bolton W)
Kemp, Fraser
Khabra, Piara S.
Kidney, David
King, Andy (Rugby)
King, Ms Oona (Bethnal Green & Bow)
Kumar, Dr. Ashok
Lammy, David
Lawrence, Mrs Jackie
Laxton, Bob (Derby N)
Lazarowicz, Mark
Lepper, David
Leslie, Christopher
Levitt, Tom (High Peak)
Lewis, Ivan (Bury S)
Lewis, Terry (Worsley)
Liddell, rh Mrs Helen
Linton, Martin
Lloyd, Tony (Manchester C)
Lucas, Ian (Wrexham)
Lyons, John (Strathkelvin)
McAvoy, Thomas
McCabe, Stephen
McDonagh, Siobhain
MacDonald, Calum
McDonnell, John
MacDougall, John
McFall, John
McGuire, Mrs Anne
McIsaac, Shona
McKechin, Ann
Mackinlay, Andrew
MacShane, Denis
Mactaggart, Fiona
McWalter, Tony
Mahmood, Khalid
Mallaber, Judy
Mandelson, rh Peter
Mann, John (Bassetlaw)
Marris, Rob (Wolverh'ton SW)
Marsden, Gordon (Blackpool S)
Marshall, David (Glasgow Shettleston)
Marshall, Jim (Leicester S)
Martlew, Eric
Michael, rh Alun
Milburn, rh Alan
Miliband, David
Miller, Andrew
Moffatt, Laura
Mole, Chris
Moonie, Dr. Lewis
Morgan, Julie
Mountford, Kali
Mudie, George
Munn, Ms Meg
Murphy, Denis (Wansbeck)
Murphy, Jim (Eastwood)
Naysmith, Dr. Doug
O'Brien, Bill (Normanton)
O'Hara, Edward
Olner, Bill
O'Neill, Martin
Organ, Diana
Owen, Albert
Palmer, Dr. Nick
Perham, Linda
Picking, Anne
Pickthall, Colin
Pike, Peter (Burnley)
Plaskitt, James
Pollard, Kerry
Pond, Chris (Gravesham)
Pope, Greg (Hyndburn)
Pound, Stephen
Prentice, Ms Bridget (Lewisham E)
Prescott, rh John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Ken
Purnell, James
Quin, rh Joyce
Quinn, Lawrie
Rammell, Bill
Rapson, Syd (Portsmouth N)
Raynsford, rh Nick
Reed, Andy (Loughborough)
Reid, rh Dr. John (Hamilton N & Bellshill)
Robertson, John (Glasgow Anniesland)
Robinson, Geoffrey (Coventry NW)
Rooney, Terry
Ross, Ernie (Dundee W)
Roy, Frank (Motherwell)
Ruane, Chris
Ruddock, Joan
Russell, Ms Christine (City of Chester)
Salter, Martin
Sarwar, Mohammad
Savidge, Malcolm
Sawford, Phil
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheridan, Jim
Short, rh Clare
Simpson, Alan (Nottingham S)
Skinner, Dennis
Smith, rh Andrew (Oxford E)
Smith, Jacqui (Redditch)
Smith, John (Glamorgan)
Soley, Clive
Southworth, Helen
Starkey, Dr. Phyllis
Stevenson, George
Stewart, David (Inverness E & Lochaber)
Stewart, Ian (Eccles)
Stinchcombe, Paul
Stringer, Graham
Stuart, Ms Gisela
Tami, Mark (Alyn)
Taylor, Dari (Stockton S)
Taylor, David (NW Leics)
Thomas, Gareth (Clwyd W)
Todd, Mark (S Derbyshire)
Touhig, Don (Islwyn)
Truswell, Paul
Turner, Dennis (Wolverh'ton SE)
Turner, Dr. Desmond (Brighton Kemptown)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tynan, Bill (Hamilton S)
Vaz, Keith (Leicester E)
Vis, Dr. Rudi
Walley, Ms Joan
Ward, Claire
Wareing, Robert N.
Watson, Tom (W Bromwich E)
Watts, David
White, Brian
Whitehead, Dr. Alan
Williams, rh Alan (Swansea W)
Williams, Betty (Conwy)
Winnick, David
Winterton, Ms Rosie (Doncaster C)
Wood, Mike (Batley)
Woodward, Shaun
Woolas, Phil
Worthington, Tony
Wright, David (Telford)
Wright, Tony (Cannock)
Wyatt, Derek

Tellers for the Ayes:

Gillian Merron and
Paul Clark


Ainsworth, Peter (E Surrey)
Allan, Richard
Amess, David
Arbuthnot, rh James
Atkinson, Peter (Hexham)
Bacon, Richard
Baker, Norman
Baldry, Tony
Baron, John (Billericay)
Barrett, John
Beggs, Roy (E Antrim)
Beith, rh A. J.
Bellingham, Henry
Bercow, John
Boswell, Tim
Brady, Graham
Brazier, Julian
Brooke, Mrs Annette L.
Browning, Mrs Angela
Bruce, Malcolm
Burns, Simon
Burstow, Paul
Burt, Alistair
Calton, Mrs Patsy
Cameron, David
Carmichael, Alistair
Chapman, Sir Sydney (Chipping Barnet)
Chidgey, David
Chope, Christopher
Clifton-Brown, Geoffrey
Collins, Tim
Cotter, Brian
Davey, Edward (Kingston)
Davies, Quentin (Grantham & Stamford)
Doughty, Sue
Duncan, Alan (Rutland)
Evans, Nigel
Ewing, Annabelle
Fabricant, Michael
Flight, Howard
Flook, Adrian
Forth, rh Eric
Foster, Don (Bath)
Francois, Mark
Garnier, Edward
Gibb, Nick (Bognor Regis)
Gidley, Sandra
Goodman, Paul
Gray, James (N Wilts)
Grayling, Chris
Green, Damian (Ashford)
Green, Matthew (Ludlow)
Greenway, John
Hague, rh William
Hammond, Philip
Harris, Dr. Evan (Oxford W & Abingdon)
Heald, Oliver
Heath, David
Heathcoat-Amory, rh David
Hoban, Mark (Fareham)
Hogg, rh Douglas
Holmes, Paul
Howarth, Gerald (Aldershot)
Hughes, Simon (Southwark N)
Jack, rh Michael
Jenkin, Bernard
Key, Robert (Salisbury)
Knight, rh Greg (E Yorkshire)
Laing, Mrs Eleanor
Lait, Mrs Jacqui
Lamb, Norman
Lansley, Andrew
Laws, David (Yeovil)
Letwin, rh Oliver
Lewis, Dr. Julian (New Forest E)
Liddell-Grainger, Ian
Lidington, David
Lilley, rh Peter
Luff, Peter (M-Worcs)
McIntosh, Miss Anne
Mackay, rh Andrew
Maclean, rh David
McLoughlin, Patrick
Malins, Humfrey
Maples, John
May, Mrs Theresa
Mitchell, Andrew (Sutton Coldfield)
Moore, Michael
Moss, Malcolm
Murrison, Dr. Andrew
O'Brien, Stephen (Eddisbury)
Osborne, George (Tatton)
Ottaway, Richard
Page, Richard
Paice, James
Price, Adam (E Carmarthen & Dinefwr)
Prisk, Mark (Hertford)
Pugh, Dr. John
Reid, Alan (Argyll & Bute)
Rendel, David
Robathan, Andrew
Robertson, Angus (Moray)
Robertson, Laurence (Tewk'b'ry)
Ruffley, David
Russell, Bob (Colchester)
Salmond, Alex
Sanders, Adrian
Sayeed, Jonathan
Selous, Andrew
Smith, Sir Robert (W Ab'd'ns & Kincardine)
Smyth, Rev. Martin (Belfast S)
Spelman, Mrs Caroline
Spink, Bob (Castle Point)
Stanley, rh Sir John
Streeter, Gary
Stunell, Andrew
Swayne, Desmond
Syms, Robert
Taylor, Ian (Esher)
Taylor, John (Solihull)
Taylor, Dr. Richard (Wyre F)
Teather, Sarah
Thomas, Simon (Ceredigion)
Thurso, John
Turner, Andrew (Isle of Wight)
Tyler, Paul (N Cornwall)
Tyrie, Andrew
Walter, Robert
Waterson, Nigel
Webb, Steve (Northavon)
Weir, Michael
Whittingdale, John
Widdecombe, rh Miss Ann
Wiggin, Bill
Wilkinson, John
Willetts, David
Williams, Hywel (Caernarfon)
Williams, Roger (Brecon)
Willis, Phil
Wilshire, David
Winterton, Ann (Congleton)
Winterton, Sir Nicholas (Macclesfield)
Wishart, Pete
Yeo, Tim (S Suffolk)
Young, rh Sir George

Tellers for the Noes:

Gregory Barker and
Mr. Mark Field

Question accordingly agreed to.

6 Jan 2004 : Column 226



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