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John Healey: I will give way one last time. I am sure that other Members who have contributed to the debate would like me to be able to answer their points as well.

Mr. Laws: I am grateful to the Economic Secretary for giving way. I remind him that he has almost two hours in which to respond, so there is no particular hurry. I have accepted that we will not get an answer from him on the issue of net cost, but does he really think that setting an arbitrary target for job reductions of 3,200 for this merger, which we now understand is based only on a guesstimate from other mergers, is the right way to get the support of the staff for the significant changes that he has discussed today?

John Healey: It is not an arbitrary target—it is a realistic target. What has been done for HMRC is exactly what has been done and is being pursued in other departments.

My hon. Friend the Member for Bexleyheath and Crayford (Mr. Beard), who has served for some time with distinction on the Treasury Committee, urged us not to lose sight of the wood for the trees. Like the hon. Member for Yeovil, he stressed the main concern, which should be to close the tax gap, as he put it, and reduce it almost to the point of elimination of evasion. I want to underline that HMRC has public service targets set throughout the current spending review period and throughout the period of the initial stages of integration, which cover reducing the amounts of unpaid VAT to the Exchequer and reducing the underpayment of direct taxes.

My hon. Friend the Member for Bexleyheath and Crayford also gave some indication of the potential gains for business: a single inspector; single inspection visits; and a single point of contact. I am sure that he looks forward to the publication, which my right hon. Friend the Paymaster General mentioned, of the consultation paper on further steps and changes in powers in January. We look forward to his views and those of the Treasury Committee as part of that consultation. He was also concerned that integration should not distract the departments from their continuing duties. The Treasury Committee was right to
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stress that, and Ministers have made that clear to the new chairman, David Varney, who has certainly made it clear to his staff that that cannot be the case.

The hon. Member for Sevenoaks asked why the Government have changed their mind since 2000, which was a point echoed by the hon. Member for Bury St. Edmunds. It is less that we have changed our mind than that we have undertaken a serious study, led by the permanent secretary to the Treasury, which gives us a better basis as Ministers to take such a decision to move to integration. It is also based on a couple more years of experience in government of such large-scale mergers than when the Committee first took evidence and produced its report. I welcome the second report from his Committee, as I have made clear, and its conclusions.

The Committee urged us to treat this as a staged process, and to evolve the new department rather than to do it in one go, although, curiously, the hon. Members for Sevenoaks and for Hexham then started raising concerns about the second stage of the process. I hope that the former will be reassured by confirmation that the consultation on this second stage will begin in January, and that it is clear to him that we do not expect that to be completed in time for the setting up of the new department under this Bill. My right hon. Friend the Paymaster General has made it clear that we regard the Finance Bill in 2006, or appropriate legislation, as the likely timing for introduction of the succeeding stage. Of course, we will delay no longer than necessary, as to do so would be to delay gaining the benefits that we set out to achieve from integration.

On the concern raised about geographic location and the move of Customs and Revenue staff to Parliament street—I will come on to the similar point made by the hon. Member for Torridge and West Devon (Mr. Burnett) in a moment—location is not an issue. The existing convention whereby Ministers and their officials do not intervene in individual cases will be strictly maintained. As now, Ministers and their officials will not have access to individual taxpayer and customer information in the Treasury.

The hon. Member for Torridge and West Devon asked where the new RCPO staff would be housed. They will have two offices, one at New King's Beam house in London and one at Ralli Quays in Manchester. They will share those larger Government buildings with some HMRC staff and some staff from other Departments. However, the respective operational areas will be quite distinct. RCPO staff will report directly to their new director, who will be accountable to the Attorney-General and not to Treasury Ministers.

The hon. Gentleman asked about the extra staff in the Customs and Excise Prosecutions Office since the line of accountability led to the Attorney-General rather than Treasury Ministers. The new arrangement is settling down, as he said, and the numbers have also been settled: there are just over 200 staff. The hon. Gentleman also asked about resources for the extension of the functions of the IPCC to the new HMRC. They are still being agreed, and for reasons that he will understand I cannot yet give him a definite answer. He asked about confidentiality, the principle of new powers, the quality and nature of investigators' training post-Butterfield and the external scrutiny that we deem necessary for
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investigators post-Butterfield. I look forward to discussing and probing those matters with the hon. Gentleman in Committee.

I will pass on the tributes paid by my hon. Friend the Member for Luton, North (Mr. Hopkins) to the excellent job done by Customs and Revenue staff. He urged us to be prepared to invest in, among other things, more staff when there is a case for doing so, and my hon. Friend the Member for Hayes and Harlington (John McDonnell) mentioned what he described as our "spend to raise" programmes. What we have done in the past has had an impact on the VAT gap, and helped to close the gap in the collection of tobacco excise duties. I was a little concerned when my hon. Friend was reciting his experiences at the port, until he explained that they had happened 15 years ago. He will recall that one of our first moves when we came to office in 1997 was to cancel the Conservatives' planned cut of 300 Customs posts.

David Taylor (North-West Leicestershire) (Lab/Co-op): Will the Minister give way?

John Healey: My hon. Friend is a great friend of mine, but he has only just come in, and I want to respond to points made by those who have been present and contributed to the debate.

I pay tribute to the work of my hon. Friend the Member for Hayes and Harlington as chair of the all-party PCS trade union group, which is one of the most active all-party groups in Parliament at present. He spoke of the improvement in the information that we publish with Bills, but felt that details of staffing changes were still not full enough. As I said earlier, the aim is to cut 3,200 posts as a direct result of integration. That has been signed up to as part of the efficiency plan for the new department, to be delivered by the end of 2007–08.

Mr. Tyrie: Will the Minister give way?

John Healey: No, I will not. I want to finish my response to my hon. Friend the Member for Hayes and Harlington. He will know of the opportunities we are providing; of the redeployment and reskilling of staff affected by the cut in the number of posts; and of our determination to avoid compulsory redundancies whenever we can; and he will know that plans for the development of the new department, and plans for efficiency savings, are being fully discussed with the trade unions.

Mr. Tyrie: Will the Minister give way?

John Healey: The hon. Member for Rochford and Southend, East (Sir Teddy Taylor) asked—

Mr. Tyrie rose—

Madam Deputy Speaker (Sylvia Heal): Order. It is obvious that the Minister is not prepared to give way at this point.
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John Healey: The hon. Member for Rochford and Southend, East waited patiently to make his contribution, and is still in his place. Understandably, he is worried about the employment implications of a number of changes affecting Customs and Excise, and not just its integration with the Inland Revenue. I appreciate the concern that he feels as a diligent constituency MP, and I certainly appreciate the uncertainty felt by the staff. I hope that the reassurances that I gave to my hon. Friend the Member for Hayes and Harlington will also help to reassure the hon. Gentleman and his constituents. Any changes will be fully discussed with the trade unions and with the staff affected. Ministers and senior managers are very conscious of the need to settle the precise plans and the implications for particular posts as soon as possible. As my hon. Friend asked, neither Ministers nor senior managers will forget the people in the departments in making these changes, because they remain at the very heart of everything that we do.

The Paymaster General and I were encouraged by the broad support that we received for the Bill in all parts of the House this afternoon, and we both believe it right that detailed scrutiny should take place in Committee. I should make it clear that, as the Treasury Committee advised and as Members have urged today, we cannot proceed without this legislation. The Bill legally establishes HMRC. It allows it to spend money in carrying out its functions, to deploy resources more flexibly on single visits and returns, and to pool information that Customs and Revenue officials currently cannot share. Although it is currently possible to achieve a good deal of close working and joint activity, a single Revenue department structure and management will indeed bring better strategic focus and benefits to all the department's customers. It will help to tackle the tax gap, to reduce costs for honest taxpayers, and to enable much more coherent and integrated future developments.

Beyond creating a single new department, we have also taken the opportunity provided by the Bill to establish a new and fully independent prosecutions office—the Revenue and Customs Prosecutions Office—and to extend the remits of Her Majesty's inspectorate of constabulary and the Independent Police Complaints Commission. Together, they will provide the extra, external scrutiny of HMRC's criminal investigation work that is a direct consequence of accepting and putting into practice the Butterfield review's recommendations.

In summary, the Bill allows for the legal establishment of HMRC. It confirms the transfer of existing powers for the administration of tax and duty regimes, not their extension. It reinforces the principle of, and protection of, taxpayer confidentiality. It strengthens the independent scrutiny and inspection of criminal investigations work. It sets up a new prosecutions office that is fully independent of HMRC, and will report directly to the Attorney-General. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.
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