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Dawn Primarolo: I want to put this on the record: thousands and thousands of families in the hon. Gentleman's constituency are benefiting from tax credits. I have repeatedly told him that I know that there are problems going back to the introduction of the system when the computer system did not work. If he sends me details of the cases, I will ensure that they are looked at, but I cannot believe that he has thousands and thousands of them.
Mr. Laws: The Paymaster General knows that I am taking this matter seriously because she has in her diary an appointment for me to come and discuss it, which I welcome. If the Treasury was being a little more open in the parliamentary answers that it is giving to hon. Members on both sides of the House, we would have a better understanding of the chaos in the tax credits department and the problems that that is causing to many constituents.
New clause 1 and the associated amendments would allow us to return to the merger in the future and consider it in terms not of the smaller issues that we have rightly debated over the past few weeks, but of the big picture of the problems that it is supposed to address. We would be able to establish the net situation in relation to costs and benefits, the effect on the tax gap and the effects on customer service standards and the compliance burden.
To echo the hon. Member for Chichester, I hope that the Paymaster General, who has already been generous in some of the amendments that she has accepted, will surprise us by indicating that she is willing to follow this route or some variant of it.
Mr. John Gummer (Suffolk, Coastal) (Con): First, I wonder whether any large company contemplating the amalgamation of two very large departments and making significant redundancies as a result would think it right to look back in two years' time to ensure that it had done it properly. If the Government decide not to do that, or something like it, I suspect that they will find themselves out of line with what any other large organisation would do.
Secondly, the Government have everything to gain by doing that because, although there are many examples of the hopeless introduction of new technology, the best successful examples come from the Inland Revenue.
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Perhaps it would have been a good thing had there been such an arrangement after the introduction of the new technology for self-assessment, because had lessons been learned from that, the Government would perhaps find themselves with less egg on their face. It is important to do this because it may point not only to failures but to successes, and the Government are very much in need of administrative successes. Indeed, any Government who would inherit the effects of the new clause should think the same.
Thirdly, I want to echo a point that was made by the hon. Member for Hayes and Harlington (John McDonnell). There is a genuine feeling among those who work for Customs and Excise and for the Inland Revenue that there is some incomprehension in the Government about the way in which the system works, what will happen and whether there is an opportunity for the sort of cuts that have been recommended. On balance, I believe that there is probably much opportunity for saving. However, it is essential to maintain and improve the morale of those who work for us in those departments. It is necessary for them to believe that what happens now has been considered in detail.
I fear that I can guess what advice civil servants have given the Paymaster General. I am sure that they have advised her to express general agreement with the new clause, to give significant encouragement to people who want the investigation by saying that they will get what they want but not quite in the way that the new clause proposes and to suggest that there is no need for the detail of the new clause because the Government will ensure that, in principle and in general, its demands are fulfilled, but that they would prefer not to have the new clause.
I hope that the Paymaster General will have the courage of her convictions and refuse go along with what the civil servants suggest. Of course they do not want a detailed arrangement. Of course it is easier to have a general acceptance that we will reconsider the matter carefully in two years. They do not want to be asked to be precise about what has happened so that we can use the example for better governance in other spheres. I hope that she will accept the new clause in its entirety, perhaps with the amendments that the hon. Member for Hayes and Harlington tabled, so that we know now what will be done then, and so that it is done properly and not in a way that is convenient to cover up things that have gone wrong. That has happened not only under this Government but Governments for a long time.
Mr. Michael Fallon (Sevenoaks) (Con): Mr. Speaker's selection means that we have a wide range of amendments to consider and I want to speak briefly about only those to which I have put my name and those that I support.
Amendments Nos. 4 and 5, which the hon. Member for Hayes and Harlington (John McDonnell) tabled, are important. I fully understand that, as was explained in Committee, the power to transfer functions under the Ministers of the Crown Act 1964 has existed for a long time and been exercised. However, it is important to maximise parliamentary scrutiny, as he argues, over any transfer of functions in the instance that we are considering because the powers of the Revenue and of
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Customs and Excise, together with the prosecuting powers, are formidable. It is important that there should be maximum parliamentary scrutiny of any further change. I therefore support amendments Nos. 4 and 5.
I also support the hon. Gentleman on new clause 2. Indeed, I hope that he is encouraged by the fact that it has a great deal of all-party support. It is important that we include a specific duty on the commissioners to secure best value for property and IT systems. Pace the remarks of my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), the record of the Revenue with IT is not wholly unblemished. There have been instances of technology being introduced too quickly or ministerial demands being made on it too late or revised too late in the day. Our constituents have consequently suffered.
Such criticism certainly applies to property. I do not want to rehearse the Mapeley STEPS—strategic transfer of the estate to the private sector—fiasco, when the Revenue's entire property estate was transferred overseas, apparently without any Minister knowing that that had occurred. We do not want to debate all that tonight but the new clause would at least secure a duty to seek best value. Before the Paymaster General rises to point out that the Mapeley contract still represents best value, it is important to remember that the property estates of the two combined departments is a formidable Government property estate. It constitutes hundreds of tax and customs offices throughout the country. It is therefore all the more important that the duty of best value is attached to the new commissioners who will run the combined department. After all, if the two departments are to be merged successfully, we would expect some rationalisation of the estate. However, we ought to consider the fact that, sadly, it is the experience of business that we never quite get the full savings that we envisaged when we planned these things on the back of the envelope in the first place. It is therefore all the more important, not only because of the Mapeley STEPS fiasco but because the estate will presumably be rationalised, that a specific duty to provide best value should be placed on the commissioners in respect of both property and information technology systems. New clause 2 would achieve that. It would also usefully bolt on a piece of additional parliamentary scrutiny.
It is all very well for the Public Accounts Committee or my own Treasury Sub-Committee to pick up these scandals and ask all the questions afterwards. How much better it would be if, when a major change such is this is proposed, it were subject to proper parliamentary scrutiny at the time, before it could go wrong. Had the Mapeley STEPS arrangement been put to the House, and had we been told—even Ministers do not appear to have been told—that all our tax offices were to be transferred overseas, which hardly encourages the rest of us to pay our taxes here, I am sure that the proposal would not have gained parliamentary approval, either on this side of the House or the other. New clause 2 is therefore to be commended.
Let me return to new clause 1, which was moved by my hon. Friend the Member for Chichester (Mr. Tyrie) and which I have also signed. It is an important and comprehensive new clause. When the Sub-Committee reported on the proposed merger, having studied the O'Donnell review and taken evidence on it—including evidence from the permanent secretary himself—the
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biggest single risk that we identified in the process was that the collection of revenue might be put at risk by the disruption caused by the merger. We urged Ministers to focus on that and, to their credit, I think that they have recognised the danger.
This is a truism, but when mergers in business are contemplated and followed through, the management often end up being distracted from the core task of running the business by running around making sure that the merger is being carried through successfully. Mergers can distract senior management from the running of the business, and if such distraction were to put the collection of revenue at risk in this case, it would be very serious indeed.
The second argument for new clause 1 is that it asks for the review to include a proper cost-benefit analysis of the merger. I would prefer such an analysis to have been carried out right at the beginning. It is an extraordinary lacuna in the O'Donnell review that he was not able to say—and Ministers have not subsequently been able to confirm—exactly what the savings would be. No business would proceed on that basis. Business A would not merge with business B without being able to tell its board of directors exactly what the cost savings were likely to be. It might not achieve its target, but there would certainly be one. To merge these two very large organisations without even an idea of the likely cost savings, and without carrying out even the most perfunctory cost-benefit analysis, still strikes me as extraordinary.
I would have preferred such a review to take place before the merger proceeded. However, it is now going to proceed, so it is a good idea for us to be able to come back in two years' time to find out what the costs and benefits are. I certainly support new clause 1 and I think that my hon. Friend the Member for Chichester has attracted more and more support for it as the debate has unfolded. I hope that he will feel encouraged to push it even further.
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