Commissioners for Revenue and Customs Bill
Mr. Laws: Will the right hon. Lady give way?
Dawn Primarolo: Let me finish my point because it is very important. I will consider the hon. Gentleman's example. He does not want tax credits to be in the remit of the new department. If ever he thought that he might want to implement that, he would require primary legislation. If he decided that some other function needed to come into the remit of the new Her Majesty's Revenue and Customs that was not connected with the tax base, but that he thought would be sensibly administered by the department as an agency for another Department because it could do it efficientlyI cannot think of such an examplethat could be done by an Order in Council.
That restriction maintains the integrity of the tax system. It keeps the administration of those functions at arm's length from Ministers as those functions, and the powers that attach to them, cannot be transferred.
In the case of other functions, other ministerial Departments already exercise powers intended to facilitate, for example, criminal investigations. Those Departments exercise those powers effectively and responsibly. The arrangements for parliamentary scrutiny of any future transfer are, with the exceptions that I have tried to explain, exactly the same as those that apply to transfers between ministerial Departments, subject to the additional protection for revenue functions. Those arrangements work effectively. Nobody, including PCS, has ever raised any complaints about the sensible way in which transfers between ministerial Departments operate.
I am trying to be clear. I understand clearly why it is important for PCS, the other unions and the staff in the two departments that are soon to be the new department to be clear about the Government's intention. I understand their fear but I am trying to make it clear that, while understandable, it does not apply. Those arrangements already work for ministerial Departments and have done so for a long time. However, the Bill provides the additional protection of a ring fence for Her Majesty's Revenue and Customs department on all revenue and tax-credit functions.
So there can be no transfer of anything connected with either tax credits or taxation in any shape or form from the new department by an Order in Council. The Government are merely putting in place the arrangements that work for other ministerial Departments. That means that the transfer of a functionfor example, the collection of student loans, carried out by the Inland Revenue on behalf of the Department for Education and Skillsis possible. A function could go in and out. The transfer of taxes is not possible. They are the core functions of the department and are subject to a restriction.
Let us be absolutely clear, because the department has a crucial function. Any transfer of anything to do with tax and its associated powers, or tax credits and national insurance, would require funding legislation, not an Order in Council. A power cannot be transferred under the provision without the associated function for which that power is bestowed. I want to keep repeating that point because it has caused misunderstanding. People think that the departments will be broken up and that tax functions will disappear somewhere else, or that there is some other agenda; the hon. Member for Yeovil keeps referring to that. Her Majesty's Revenue and Customs will have responsibility for revenue, tax credits and national insurance and those responsibilities cannot be transferred under the clause.
Mr. Laws: Will the Paymaster General give way?
Dawn Primarolo: Let me finish my point because it is very important. I will consider the hon. Gentleman's
That restriction maintains the integrity of the tax system. It keeps the administration of those functions at an arm's length from Ministers, as those functions, and the powers that attach to them, cannot be transferred.
In the case of other functions, other ministerial Departments already exercise powers intended to facilitate, for example, criminal investigations. Those Departments exercise those powers effectively and responsibly. The arrangements for parliamentary scrutiny of any future transfer are, with the exceptions that I have so clearly tried to explain, exactly the same as those that apply to transfers between ministerial Departments, subject to the additional protection for revenue functions. Those arrangements work effectively. Nobody, including PCS, has ever raised any complaints about the sensible way in which transfers between ministerial Departments operate.
I am trying to be clear. I understand why it is important for PCS, the other unions and the staff in the two departments that are soon to form the new department to be clear about the Government's intention. I understand their fear but am trying to make it clear that, while understandable, it does not apply.
As to the powers to restrict functions, once again, revenue functions cannot be transferred. Beyond that, we would need to consider whether transferring functions would need to be restricted in another way.
Mr. Laws: Could the Paymaster General give more insight into what makes one item in an area of responsibility a ring-fenced item whereas another is not? For example, will the child tax credit effectively be ring-fenced, in that primary legislation would be needed to transfer it, whereas child benefit and child trust funds will not be?
Dawn Primarolo: The hon. Gentleman is absolutely right with regard to tax credits, which cannot be transferred without primary legislation. He makes an interesting and important point about child benefit or national minimum wage enforcement.
Mr. Laws: The trust fund?
Mr. Laws: Will the right hon. Lady give way?
Dawn Primarolo: If I can answer the hon. Gentleman's first question, I will be more than happy to give way and let him ask another one.
There are some functionsI would hesitate to call them minorthat are ancillary to revenue functions, particularly the national insurance fund. However, I want to check; I feel that I need a little more time to ensure that I can give a clear answer. My absolute intention was only to put the department on a par with the functions of all other Departments and to consider anything that it was doing outside what we might call its core responsibilities.
Mr. Laws: I am grateful to the Paymaster General for being so patient. She seemed to indicate a moment ago that child trust funds would be one of the ring-fenced functions that would require primary legislation for transfer, which was not my assumption. Will she clarify whether that is the case?
Dawn Primarolo: On the hon. Gentleman's other points, stamp duty, stamp duty land tax and stamp duty reserve tax cannot be removed. I said that the child trust fund could not be removed, but he pressed me. The child trust fund is not part of the reserve on tax, whereas tax credits are. Again, I would be grateful if the hon. Gentleman allowed me to come back to him, because those points are important. Of course I will make my answer available to all members of the Committee.
I want to come to the heart of the concerns. Could the department be broken up and is that the intention? Reference keeps being made to that, but it is not the case. The hon. Member for Sevenoaks has rightly made it clear, both in the Treasury Select Committee and in this Committee, that the department needs to focus on the core functions identified in the Bill and that there is a need for protection. However, from time to time there are changes to the machinery of government. All the proposals allow is for those not associated with tax to be undertaken.
I have no knowledge of any changes in the pipeline and would like in concluding to make it absolutely clear to those who work in the two departments that there is no hidden agenda. The Bill does exactly what it says it attempts to do. It does not set the foundations for a future action or a future agenda that is not being spelt out. The Bill makes sensible change where appropriate, transfers functions and flags up the need for change of discretionary powers, where there is agreement by everybody at a staged process. I hope that on that basis, and with that clarification, the hon. Member for Sevenoaks will not press his amendment. If he does, I will have to ask my hon. Friends to oppose it.
Question put and agreed to.
Clause 7 ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
Mr. Fallon: I beg to move amendment No. 2, in clause 10, page 5, line 20, leave out 'of a general nature'.
The Chairman: With this it will be convenient to discuss amendment No. 3, in clause 10, page 5, line 20, at end add
Mr. Fallon: Amendment No. 2 is a probing amendment. Amendment No. 3, which has been grouped with it, is perhaps less so, but I would like to hear the Paymaster General's response.
I raised this point briefly on Second Reading, because I was concerned that the clause was too wide. It seemed to me that the distinction that the Paymaster General sought to make between directions of a strategic character and directions that might interfere or seek to micro-manage day-to-day or operational issues within the Department, which is a perfectly fair distinction, was not covered by the clause.
The clause does not refer to directions of a strategic nature, but simply to directions of a general nature. I am concerned about that. The Paymaster General said that the reason that she wanted the power to issue directions of a general nature was first that she may want to direct strategy at some stage, which is an issue in itself. Secondly, she said that she wanted to be able to use the direction to call the department to account for the overall effect of the actions that it had taken. I do not actually think that that has anything to do with issuing directions. I think that it is a function of ministerial or parliamentary accountability, which can beand probably iscovered in other particular ways.
The difficulty is that when Ministers say that they will deal with strategy and that they will not interfere with day-to-day operations, in the end it is always up to Ministers to determine exactly where that dividing line should fall. The inclusion of the phrase ''of a general nature'' does not help us to draw the distinction that the Paymaster General wishes to draw between directions of a strategic nature and those that might seek to interfere with the day-to-day operation of the Department.
Amendment No. 3 will, I hope, commend itself to the Paymaster General and to both sides of the Committee. If such directions are to be givenwhether they are to be ''general'', as in the Paymaster General's wording, or strategic, as I think she intendsit is important that Parliament is informed of
|©Parliamentary copyright 2005||Prepared 11 January 2005|