To that end, the Bill introduces a statutory duty for all officers to maintain the confidentiality of information that they acquire in the course of their duties. That replaces the Inland Revenue oath, and for the first time extends it across former Customs and Excise matters, giving statutory backing to existing duties of confidentiality under employment contracts, across a larger range of functions. To reinforce that duty, the Bill provides for a criminal offence of unlawful disclosure of confidential information about an identifiable person by an HMRC officer. That extends the existing provision for Inland Revenue and Customs staff to all functions of the new department. The Bill replaces the existing authority for commissioners in either department to authorise disclosure of information with a much tighter provision that restricts them to authorising disclosures in prescribed, limited circumstances where there is a public interest case for doing so, as defined in regulations. Those regulations will be available for Members to see before the commencement of the Bill's consideration in Committee.
The Treasury Committee identified the importance of maintaining taxpayer confidentiality where the Treasury and Ministers are concerned. The Government strongly agree with the Committee's view, and I can confirm that confidential information about identified taxpayers will continue to be kept in HMRC and will not be passed to the Treasury or to Ministers.
May I take the Paymaster General back a paragraph or two to the streamlining of powers? Will she give the House the benefit of her initial views about
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how that will take place, particularly in relation to culture and tone, tax-gathering and co-operation, and policing-type functions?
Dawn Primarolo: We need to consider whether powers are, for example, necessary, appropriate, proportionate, sanctioned by the correct level of authority, have a right of appeal against them, or are sufficient in a changing environment. The Bill and the consultation give us the opportunity comprehensively to consider those issues.
It will be vital for taxpayersfor all of us as taxpayersto understand exactly what is expected of us and what the sanctions may be if we do not discharge those obligations properly. It is important, in a new department, to try to ensure continuity of powers. This is a huge task, hence the need to consult instead of putting everything in the Bill. Because many of the powers have developed over a long period to deal with specific circumstances, it is much more appropriate that we consider them in the round.
Mr. Michael Fallon (Sevenoaks) (Con): The Paymaster General spoke about confidentiality. Although I welcome the clause on that, confidentiality was a matter of concern to the Select Committee. The department's officers currently have to sign a statutory declaration on taking up employment, and I hope that she will reassure us that including the welcome provision in the Bill does not necessarily relieve officers from signing that individual statutory declaration.
Dawn Primarolo: I assure the hon. Gentleman that officers will be required to sign the declaration. When he reads the points that I made, he will remember that I spoke about the employment contract for the new department. We have improved all the protections that currently exist. If the new department can start at the beginning of the next financial yearparliamentary process permittingthe new confidentiality requirements that I have identified will operate. I cannot express too strongly the importance that I personallyand the hon. Gentleman, the Treasury Committee and, I believe, every hon. Memberplace on a clear and unambiguous commitment to protect taxpayer confidentiality with the necessary functions. It is vital for continuing compliance rates that taxpayers provide information to the Revenue departments. The bedrock of that process is the knowledge that their confidentiality is protected. We should guard that at all costs, and I hope that the hon. Gentleman believes that the Bill provides for that.
The Bill also introduces new arrangements for ensuring the highest possible standards in HMRC in relation to criminal investigations. As my hon. Friend the Economic Secretary announced in September, the Bill extends the remit of Her Majesty's inspectorate of constabulary to provide for it to inspect HMRC's compliance with the requirements of the criminal justice system. It also extends the remit of the Independent Police Complaints Commission, giving it a key role in considering allegations of criminal or gross misconduct by HMRC officers. Those two proposals will implement the recommendation of the Butterfield review that Customs identify how additional external scrutiny can best be introduced into investigation work. Given that
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the departments are merging, I hope that hon. Members agree that it is right to take the opportunity to ensure that the new department is subject to the highest standards of scrutiny and accountability.
The Bill provides for obstruction, assault, or impersonation of HMRC officers to become a criminal offence, thereby consolidating existing provisions that relate to the Revenue and Customs. That ensures that officers can perform their functions within the protection of the law and protects the public from the unlikely event of unscrupulous people passing themselves off as officers.
The Bill aligns the penalties for those offences with their police equivalents, helping to deliver coherence and consistency throughout the criminal justice system. It also restricts the officers who could previously arrest for such Customs offences, so that only officers authorised by the commissioners to exercise the power of arrest for the offences can do that. That tightens arrest arrangements and will remove the power of arrest for the offences from several Customs and Excise officers who currently have it legally but do not need it in their current jobs and are therefore administratively barred from using it.
The Bill establishes a fully independent prosecutions officethe Revenue and Customs Prosecutions Officeto provide independent scrutiny of criminal cases investigated by HMRC. The creation of that office was a key recommendation of the Butterfield review. The director of the prosecutions office will be accountable to the Attorney-General, ensuring a clear separation of responsibilities from HMRC.
Dawn Primarolo: I referred to the employment implications when I identified staff savings of 3,200 by 200708. There was an exchange between several hon. Members and me about that. I went on to demonstrate how that would be achieved in some cases by removing duplication and moving forward on several reforms. I gave the example of the pre-Budget report announcements on the Small Business Service and allowing one tax return for all taxes.
Mr. Laws: I am grateful to the Paymaster General for giving way again so graciously. She is obviously learning from the Chancellor. Will she confirm that the figure of 3,200 is a working assumption, been taken from the example of other mergers, or does it follow detailed work examining specific aspects and estimated savings that might be made?
Of necessity, it is a working assumption at this stage. The merger, the preparation for it and the commitment to spend public money to begin the process cannot startthe two departments do not have the authority to undertake that workuntil the completion of Second Reading. I have therefore been advised of the figure by the prospective chairman and management of the new department. I know that hon. Members will keenly follow the implications.
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However, hon. Members have also pressed me on many occasions over the years to remove duplication, simplify the system and allow one contact point whenever possible for information for a taxpayerI gave the example of a taxpayer's having to give the same information to several different components of the existing department. When we achieve that, we will be more effective, but it is inevitable that fewer staff will be required.
Let me revert to the fully independent prosecutions office. As I said, the director will be accountable to the Attorney-General, thus ensuring a clear separation of responsibilities. The creation of such an office is an important contribution towards maintaining public confidence in the criminal justice system, because it ensures the independence of the prosecutor from the investigator in cases that require criminal proceedings.
That independence matters because it ensures that the prosecutor can conduct a fully impartial assessment of the merits of a case before it reaches the courts. Independence does not, of course, mean distance. HMRC and the new office will work closely together to ensure that the prosecutor's expert and independent advice can be called on to provide guidance on the requirements of the criminal justice system at all times.
This constructive approach to prosecutions, with clearly defined and distinct roles for the investigator and prosecutor, will ensure that the quality of criminal justice work undertaken in HMRC and by the new office is of the highest possible standard.