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Mr. Peter Atkinson (Hexham) (Con):
It is a great pleasure to follow my hon. Friend the Member for Sevenoaks (Mr. Fallon), who, in his position as Chair of
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the Treasury Sub-Committee, has done a very thorough job in picking over the bones of this dry but important Bill.
There was not much levity in the debate apart from that provided by the hon. Member for Luton, North (Mr. Hopkins), who described his experiences in trying unsuccessfully to pay duty on wine. Sadly, he has left the Chamber; I was going to advise him that if he really wants to be done over by Customs on arriving back in this country, he should not look so honest and should drive a white van laden to the springs with wine.
Another moment of levity came from the Paymaster General during her rather long and sombre speech, when, as my hon. Friend the Member for Sevenoaks said, she told us that she wanted to improve the taxpayer experience.
Dawn Primarolo: I am not bothered what the hon. Gentleman thinks about my speech or its tone, but I gave way endlessly to hon. Members, mainly to his hon. Friends, out of courtesy, and to rebuke me for that seems a bit foolish, as it will not encourage me to do it again.
Mr. Atkinson: I am sorry that the Paymaster General is upset, but she leaped to her feet a little too soon. I understand why she spoke so fullyit is a detailed matter and she had to deal with many interventionsbut I merely wanted to ponder on her use of the term, "taxpayer experience". That almost sounds as if dealing with one's tax is a form of entertainmentthere is a tourist attraction in Ayrshire called the Tam O'Shanter Experienceand I had a vision of the Paymaster General trying to make taxation more exciting.
The main unanswered question about the Bill is what lies behind the renewed enthusiasm for the merger. Until now, it has been a classic example of something that lots of officials think a good idea, so it gets taken off the shelf, dusted down, put back, forgotten about and eventually taken back down again. I would be rather worried about an idea that Mr. Gladstone considered and rejected. We missed out some of the history, because Prime Minister H. H. Asquith had a nibble at it when he merged Customs and Excise.
As my hon. Friend the Member for Chichester (Mr. Tyrie) said, another unanswered question is whether the exercise is worth the candle. We will find out as the Bill progresses. I suspect that my hon. Friend was on to something when he suggested that the Chancellor wants to do this to set an example before he starts to lay about Government Departments. He could have triggered it through a series of timed statutory instruments; indeed, he could have postponed secondary legislation almost indefinitely. The merger is to proceed so incredibly slowly that it does not need to have a great deal of effect, but it enables him to say to other Ministers, "We've put our house in ordernow put yours in order."
Another unresolved matter, which I hope will be resolved shortly in the winding-up speeches, concerns how many staff will be involved. The figure seemed to
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change almost daily between the Chancellor's first announcement in March and the evidence given to the Treasury Sub-Committee in October.
Some years ago, the Conservative Government considered what to do about the Inland Revenue and Customs and Excise. It was the subject of much discussion. One suggestion was that the Inland Revenue should merge not with Customs and Excise but with the then Department of Social Security. That option has not been considered. As the Inland Revenue increasingly becomes a tax and benefit-paying operation, it almost makes sense for it to be part of the Department for Work and Pensions rather than merging with Customs and Excise, which, as we have heard, has a different philosophy from the Revenue.
The original Excise men were military figures, with their cutlasses and armed ships. Indeed, they chased the forebears of my constituents who had a readily available supply of illegal whisky stills in the Northumberland hills. The Excise men would wreck the stills. It was said that they were given a reward if they found a still, so when a still burned out, its owner would tell the Excise man who then "discovered" it and collected a reward. The distiller would receive half, which helped him to build a new still further up the hills. That was Northumbria a long time agobut it is rightly said that the philosophy of the two departments differs greatly.
Customs and Excise clearly has much more of a policing role. That is well set out in the various submissions to the Treasury Committee by the Association of Chartered Certified Accountants, which is worried, probably rightly, about the gung-ho mentality that exists in the Customs service, as opposed to the gentler, more considered approach of the Inland Revenue. I know from experience of running a disorderly businessin its early daysthat the VAT man was a sight tougher than the tax man. Anyone who fell behind with VAT payments had little leeway, whereas it was always possible to negotiate some settlement with the Inland Revenue. There are genuine concerns about the different attitudes.
Let me comment on the problems that the Revenue experiences in paying the tax benefits. I am sure that all hon. Members have had constituency cases of overpayment of tax credits that are now being reclaimed, in some instances with a great lack of care for the victim. Obviously, some people must have realised that they had been overpaid, but others did not. They read the forms and thought that they were getting it approximately right. I have a constituent who received £150 in tax credits and has had the sum reduced to £30 a month. That has made a serious difference to her life. To echo my hon. Friend the Member for Sevenoaks, it is almost impossible to get through to the helpline. My constituent came to me to circumvent the difficulty of contacting the helpline.
Mr. James Gray (North Wiltshire) (Con):
My hon. Friend is right. I have a constituent who is being asked for £7,500 that was wrongly paid to him, despite the fact that he phoned the Revenue on every occasion to check that the calculation had been done correctly. He was assured that it was correct until the final occasion, when he was told that a glitch in the computer system had
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resulted in an overpayment of £7,500. His wife is pregnantthey had planned to expand their family based on the department's errors.
Mr. Atkinson: That is a graphic illustration of the trouble that overpayment causes. It has affected many vulnerable people, who now need help because of the mistakes in the payment of benefit. There have also been computer problems and difficulties with the private finance initiative deal, which has also been mentioned.
I remain in favour of considering the merger, but hon. Members need more information about its objective. What are the costs and benefits? Will it improve the service and make the promised substantial savings? Or will it usher in a long period of confusion and muddle, which will cause considerable difficulties to the customers of Customs and Excise and the Inland Revenue?
Finally, there is an issue of accountability that still needs properly to be resolved. The commissioners of the Revenue and of Customs and Excise are appointed by the Crown and are responsible to the Chancellor. Lord Bridges, the archetypal Sir Humphrey, when trying to examine the relationship between the Revenue, Customs and the Government, said:
"The Inland Revenue and HM Customs and Excise are responsible to the Chancellor, and are subject to a measure of Treasury direction. This however means Ministerial direction. The officials of Revenue and Customs do not take orders from Treasury officials."
That was an interesting, if slightly Sir Humphreyish, statement for Lord Bridges to make at that time, and I wonder whether that will continue to be the case under the new regime, or whether Treasury officials will give instructions to the commissioners of the new joint organisation.
Mr. John Burnett (Torridge and West Devon) (LD): As my hon. Friend the Member for Yeovil (Mr. Laws) said, we welcome the thrust of the Bill and the principle of merging the Inland Revenue and Customs. However, we temper our welcome with the important caveat that there will be much more detail in the draft regulations, which we look forward to receiving in plenty of time before we debate the Bill in Committee.
I have for some time advocated the subsuming of the prosecution functions of the Inland Revenue into the Department under the aegis of the Attorney-General, and I strongly support what is now happening in that regard. I also strongly support the establishment of a separate, independent prosecution service and the fact that it is to be inspected regularly by the Crown Prosecution Service inspectorate. I presume that there will be some financial consequences, but it is difficult to judge what they will be. Since January 2003, the Customs prosecutors have come under the Attorney-General, and I wonder what additional staffor perhaps whether fewer staffhave been employed since that time, and whether that has involved savings or additional costs.
I welcome clauses 23 and 24. The recent establishment of the Independent Police Complaints Commission goes a long way towards answering the impossible question:
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who will guard the guardians themselves? It appears to be settling down well, but there are bound to be resource implications for the IPCC taking on this additional work. Do the Ministers have any idea what those implications will be? Some indication would be welcome. My second question relates to a difficult point. The IPCC is, and should be, independent, and it is up to the commission to run itself. However, it would be interesting to know whether the Ministers have a view on whether the police function within the IPCC should be separate from the Revenue and Customs functions.
I want to refer to the matter of tone and culture, but before I do so, I want to say to the House that we shall debate information sharing and confidentiality in Committee, and that we shall also return to the necessary matter of powers. I am grateful to the Paymaster General for setting out just a few of the important points of principle. This impinges on what my hon. Friend the Member for Yeovil said about the Treasury having a function on the macro side of setting tax policy. I hope that clear guidelinesthere are already somein relation to absolutely solid and enforceable duties of confidentiality will be provided for anyone who, under this Bill, has access to Revenue information As has been said, the Revenue has an enviable culture, and the vast majority of people do not want to break the law. Tax law, however, is extremely complex, taxpayers often do not have a clue what the law is, and it is difficult for small professional firms of advisers to keep up with the complexity of the law and its changes.
In my experience, the Revenue is helpful, in so far as it is accessible locally and reasonably willing to give sensible adviceobviously, its view is not necessarily the correct one, but it is helpful. I hope that such local delivery will be a model of the new department, so that Customs specialists will also be at hand in local offices and will accept Inland Revenue practice.
On training, I refer the Economic Secretary and the Paymaster General to Mr. Justice Butterfield's conclusions. Two particular points should be noted from that Customs inquiry, as hundreds of millions of pounds in duty were lost and an unfortunate series of bungled prosecutions occurred. First, Mr. Justice Butterfield recommended that there should be regular refresher training for investigators, and secondly, that investigators should be subject to systematic external scrutiny. In Committee, we will examine these matters in some detail, and we will want to hear exactly what has happened since the Butterfield report, and on what standards of training the new department will insist. I know from experience that the inspector of taxes course is of high quality and is also recognised in the private sector.
To conclude on the question of culture and tone, I practised as a tax practitioner for 25 years, and I do not believe that in the course of that period I ever had cause to complain about the conduct of members of the Inland Revenue. I hope that, in 25 years' time, practitioners will be able to say exactly the same of the new merged organisation.
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