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Sir Michael Spicer (West Worcestershire) (Con): The hon. Gentleman mentions the 2000 report. I chaired the Sub-Committee that produced it. Does he accept, both in the context of efficiency and the tax take, that part of the answer to his question depends on whether the Inland Revenue or Customs takes the lead in the merger? One of the things that we encountered was that Customs was a much less effective and efficient organisation than the Inland Revenue.
Mr. Laws:
I am grateful to the hon. Gentleman for that. He speaks with great expertise, having chaired that particular inquiry. One thing that came out of the inquiry as it related to simplification was that merging the two departments, with their different histories, traditions and knowledge base, would work only if the individuals in the combined department can handle the complexity of the tax system. That requires the Government to ensure that the tax system is simplified.
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We could no doubt speak for some time about the problems with IT systems throughout government. The hon. Member for Chichester referred to those. That will also be an enormous challenge for the new department, potentially at a huge cost, which was mentioned a number of times in evidence taken by the Treasury Committee.
To sum up, there is an enormous job to be done if the planned merger is to realise the promised benefits. This small Bill is a first and rather simple step down the route towards a merged department. We shall scrutinise the detail in Committee, but its delivery and implementation will determine whether, in the years to come, it is a great triumph or a terrible disaster. The way in which it is implemented, and the way in which Treasury Ministers and those in the new department lead the merger, will have a massive impact on whether it is a success or failure.
We are glad that the Treasury Committee has undertaken to continue to monitor the merger. We will also watch it closely. The Government have our support for the Bill as a whole, but only if they allow managers to focus on the big potential prizes, and not if the process is driven simply by their short-term political imperatives or the need to outbid the Conservative party in cutting back on the jobs of those people who work in the public services.
2.55 pm
Mr. Kelvin Hopkins (Luton, North) (Lab): I am sorry that I missed the first part of the speech of my right hon. Friend the Paymaster General, but I heard the other speeches, and very good they were too. I compliment in particular my hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard), whose speech was excellent.
My concern is whether the Bill will close the tax gap or have the opposite effect. Given Labour's commitment to public services, anything that brings in more revenue to the Government is important. Some commentators have suggested that the Chancellor has a bit of a revenue gap. I would not necessarily argue that, but if he has, the extra revenue will help in the coming years.
There is also talk of staff cuts. I have close relations with the civil service union, the Public and Commercial Services Union, which is worried about employment. Its members are dedicated public servants who are committed to the broad common good. The union wants the new department to do its job properly and wants it to be properly resourced.
I hope that the new arrangements for prosecutions will also help to close the tax gap. If prosecutions are more effective, that will encourage those who are evading or avoiding tax to pay their taxes, as all good citizens should, so that we have more to spend on essential public services. However, the staff cuts worry me.
I have some anecdotes of my experiences. Three or four years ago, I took it on myself to visit our local VAT inspectorate. I was impressed with what I saw. It was explained that had it got more staff, it could collect more revenue. The rough estimate was that every additional VAT inspector collected five or six times his salary in VAT every year. I wrote to Treasury Ministers,
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suggesting that we should have more inspectors because we could clearly bring in far more to the Exchequer than the cost of their salaries, which would be a good thing in every way. I got a bland reply, mentioning staff costs. I am afraid that I did not get a positive response.
I also took it on myself a little while ago to visit customs officers at Luton airport. Again, the same story. They were doing a good job of catching people who were involved in smuggling drugs in particular. They wanted more staff so that they could do an effective job because they were stretched. Again, I wrote off, saying the same thing.
PCS members and officers tell me that the same is true of personal and business taxation. With more tax officers specialising in those fields, they could collect more revenue, at a multiple of their salaries, so more staff rather than less would be good. It may be that other staff who are not inspectors and who are not directly concerned with tax collection could have their jobs modernised with IT systems or whatever, but inspectors can collect many times their own salaries. I ask my hon. Friend the Economic Secretary to give that serious thought.
I also had the experience—again, this is an anecdote, although I am sure the experience is not uncommon—of returning from the continent 15 years ago. As one does when returning from holiday in France, I had a certain amount of wine in my car.
Andrew Mackinlay (Thurrock) (Lab): For your own use.
The limits at the time were less than they are now, and I had rather more than the limit. Trying to be a good citizen, that night I drove through the red line, which said "Something to Declare". Everyone else was going through the green line, which said "Nothing to Declare". There was no one present at the red line, so I got out of my car and had to walk a considerable distance. I looked about 20 ft upwards to find the only customs officer on duty, who was waving people through the green line. I said, "Excuse me." He said, "What do you want?" I said, "I would like to pay my duty, please. I have a certain amount of wine above the limit." The officer was astonished. I had written out what I had bought and where I had bought it. I even had those documents that are called factures, which people are supposed to have when they transfer wine across France.
I wanted to do the right thing. I did not wish to be prosecuted. As I have said, there was only one customs officer on duty. That suggested to me that Customs was under-resourced. It may have been that all the other officers were off sick or that Customs was not efficiently organised, but that was not my impression. My impression was that one man had been left at the port all night to wave the people through the green route. I am sure that things are better now than they were then. I am talking of 14 years ago when a public expenditure-cutting Conservative Government were in office, not a proper Labour Government who would know that we have to fund public services properly.
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Rob Marris (Wolverhampton, South-West) (Lab): I assure my hon. Friend that I, as a solicitor, always tried to be scrupulously honest in the same regard. I had the same experience as my hon. Friend, but there were three customs officers on duty.
Mr. Hopkins: It was obviously a larger port or a good day. I do not know.
Mr. Hopkins: It was a larger port. I was at a small port.
I have the greatest admiration for Customs and Excise officers and for income tax officers. I have never found any fault with the Inland Revenue. I only wish that my ability to complete my tax form was half as good as the Inland Revenue's in checking it. Customs and Excise does a splendid job. It is vital to ensure that the Government get their revenue, which they can spend on public services and salaries for all our public servants. We must ensure that that revenue is collected.
I am concerned about the failure to collect taxes. The failure to bridge the gap means that there is effectively a culture of petty criminality among people who are finding ways of avoiding or evading paying tax. That is particularly the case when importing cigarettes, other forms of tobacco and alcohol from the continent of Europe. That is not a good thing. We are a law-abiding society and I think that people like to obey the law. If we fail to police the taxation system and Customs and Excise properly, over time, we will allow that culture of petty criminality to develop.
Allowing vast amounts of tobacco and alcohol to enter the country, illegally or legally at cheaper prices than would be charged in the UK, runs counter to the Government's public health agenda. We should maintain the price of cigarettes and, I suggest, alcohol at the levels that we think are appropriate in Britain. That is a way of constraining people from excessive consumption. We think that the continent has got it wrong—I do, anyway. If it is serious about dealing with alcohol and smoking, it should introduce higher prices. Alcohol prices, as a proportion of disposable income, are now half what they were in the 1970s. Floods of alcohol are coming in from the continent that are not effectively policed or constrained.
The money that is lost by failing to collect duties and taxes on those items is of fundamental importance to the Government. I want the Government to spend money on many other things. For example, free long-term care for the elderly could easily be financed just by collecting the tax on tobacco that is coming in from the continent illegally.
That is an equation that I make frequently. I hope that the Government will take the point seriously. I hope also that the Bill will make a big difference in closing this tax gap. I hope that the Government will not use the measure only as a means of cutting the numbers of civil servants in the Departments, especially as the civil servants that we are talking about, above all, are the ones who collect money. They do not spend money. Their salaries are as nothing compared with the amount of money that they bring in. If we need more of them to collect more money to narrow the tax gap, we should
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appoint more of them. I hope that the Government will take a positive view of these fine and honourable public servants and not look to every opportunity to cut their numbers.
There have been numerous problems with IT systems in the public sector. Is it not time that we looked to have more in-house IT systems rather than relying on what are clearly unreliable private companies? The contracts have gone wrong on so many occasions. Surely it is time that we looked seriously at an in-house public sector IT facility or brought in-house as much as we can of IT systems and services.
I hope that the Government do not seek to outsource any of the services that are undertaken by the Inland Revenue and Customs and Excise. Above all, we need people in these services who have a sense of dedication to the public sector and who believe in and feel that public service ethic. They are people on whom we depend for the civilised society in which we live. It would be a mistake to push them into the profit-making sector. I hope that they will be kept as directly employed public servants and that they will continue to collect the £30 billion or £40 billion that we have heard about so that we can have more to spend on the health service, education and all the other fine public services.
3.6 pm
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