Commissioners for Revenue and Customs Bill
Dawn Primarolo: The debate about the amendments goes to the heart of the issue; the balance to be struck in the new Department, and its relationship with Treasury Ministers. The Department needs to be accountable, through Ministers, to the House and its Select Committees, and to the Public Accounts Committee and the Treasury Select Committee through their Chairmen. It is not unique in that respect. However, some Departments have other functions, whereas this is its core function. In the interests of taxpayers' confidentiality, it has to protect information even from Ministers, and it has to administer the lawlegislation passed by this Housewithout interference from those Ministers, or anybody else, to give favours. It also has to ensure that Ministers develop policy in a proper way, without favour. The balance of accountabilities, within the Department and between it and Parliament, is complex.
Revenue and Customs is, first and foremost, a Government department. The clause is essential in setting the limits of ministerial control, because of the important sets of obligations that the Department needs to discharge to the taxpayer, to the law and to the Minister in assisting in the development of policy. Ministers are accountable to Parliament for that Department. Therefore, they require powersI hesitate to use the word, but I cannot think of an appropriate substituteover the way in which commissioners exercise their functions. Without such control, HMRC would be autonomous and the important link of accountability to this House, which the hon. Member for Sevenoaks and others are keen to see remaining strong and vibrant, would be broken. While ministerial control is essential, right and proper, and it is important to ensure that Ministers' control is at arm's length so that they cannot intervene in the affairs of individual taxpayers.
Some might argue that there is a bit of a blur between operation and policy. For example, tax credits is a policy, but the way in which it is delivered, which is operational, is none the less of great interest to the House and I, as Minister, was held to account for it. In those circumstances, I was most certainly under pressureif I did not feel it already, which I didfrom individual Members as well as from debates and the Select Committee. I was being encouraged to be involved in that area of operation. The definition of ''direction'' is somewhat difficult. Lots of things apart from the clause converge to comprise the Minister's responsibilities and duties. Those are separate from the accounting officer regulations and the civil service code on how the Department should perform.
The clause seeks to set out the relationship between the Treasury and the commissioners, and deals with the exercise of their statutory functions as transferred to them under clause 4. Clause 10 carries forward the existing nature of the Treasury's oversight of the
replaces different expressions of general Treasury control used in previous legislation covering Customs and Revenue, and applies to all the functions of the commissioners provided for under the Bill. Clause 10 will not change existing arrangements, and does not disturb other Treasury controls, such as those that apply to other Government Departments.
The key issue is whether the Bill should limit the Treasury's power over the commissioners. Clause 10 recognises that a limit is required for one overpowering and overriding reason. It is a continuing commitment for the Government, and all hon. Members, to safeguard the collection and management of revenue and to keep taxpayers' confidentiality at arm's length from Ministers. Clause 10 limits the Treasury's power to requiring the commissioners to comply with
thus preserving the situation in which the Treasury does not have the power to direct the commissioners' actionsas a Minister, I do not have such a powerover specific taxpayers. I understand what the hon. Member for Sevenoaks seeks, and it is crucial to reassure not only the House but all those who read our proceedings. They need to know that there is no way in which present or future Ministers could ever demand information of the department; it is not appropriate they should have it and, frankly, it would be totally wrong for them to have access to it.
By removing limits to the Treasury's power over the commissioners' exercise of their statutory functions, amendment No. 2 would provide no safeguard on the level at which the Treasury might exercise direction. It would allow the Treasury, but not Ministers, to intervene in the affairs of individual taxpayers. I do not believe that that was the intention, but we simply cannot allow it. I am trying to explain why we used those words, and how we approached the problem.
I turn to amendment No. 3. Again, because HMRC will be a Government Department, albeit a non-ministerial one, it will operate by and large along the same lines as all Departments. In that context, a direction should not be considered as a single decision or document. Rather, directions arise from the entirety of the relationship between the Treasury and the department. If a ministerial decision raised issues of propriety or regularity, it would be subject to the normal arrangements; the accounting officers would raise the issue directly with the Minister, request an instruction if necessary, and report that instruction to the Comptroller and Auditor General. In practice, however, HMRC proposals are often made to
Clearly, on key issues there is likely to be a significant dialogue between Treasury Ministers, the commissioners and their offices. The outcome is a ministerial decision which may have the effect of a direction, even though, almost invariably, there will be an agreement on the way forward. Departments have always operated in that context.
Is it necessary or helpful for all such decisions to be copied to the Libraries of both Houses? I have some difficulty in seeing why, when routine directions of Government Departments by other Ministers are not subject to such treatment. Why should this department be subject to it, when it has not impeded or undermined our democracy or the function of this House?
That is not to say that these routine decisions will not be disclosed. Treasury Ministers are fully committed to meeting their requirements under the Freedom of Information Act 2000, just as they were to the previous code of practice, and will make information on ministerial decisions available, whether or not they take the form of a direction, in accordance with the Act. Therefore, I do not consider the hon. Gentleman's amendment, which would result in each and every one of these routine decisions by Ministers being lodged in the Libraries of both Houses, to be either necessary or helpful.
Returning to the incident where the accounting officer considers that a ministerial decision is in conflict with the standards by which we expect Ministers to perform, the existing arrangements adequately cover the reporting of such occurrences to Parliament. For example, the Comptroller and Auditor General, to whom the accounting officer must report any such incident, will draw occurrences to the attention of the Public Accounts Committee, and include coverage in his report on HMRC's annual accounts.
In summary, if the hon. Gentleman really feels he want to push amendment No. 2 to a voteso that the qualification to Treasury authority over the commissioners' exercise of their statutory functions would be removed by the deletion of ''a general nature''I will ask the Committee to reject it on the grounds that it removes all limits on Treasury powers over the commissioners. Those limits are important.
If the hon. Gentleman wishes to push Opposition amendment No. 3, which would require a direction from the Treasury to be placed in the libraries of both Houses, to a vote, I would ask my hon. Friends to oppose it on the basis that the routine exercise of a general Treasury directionsometimes informally, sometimes in the nature of a directiondoes not need
I hope that I have not only covered the hon. Gentleman's amendments, but given an indication of the complexity of the balance that it is important to strike in the department between the relationship of Ministers of the Treasury and the operations of the functions of the departments. I hope that, on reflection, the hon. Gentleman will decide not to pursue his amendments.
Mr. Fallon: I am grateful to the Paymaster General. I think I made it clear that amendment No. 2 was a probing amendment. I can assure her and the Committee that I shall not seek to press it; partly because it was a probing amendment, but also because what she said was extremely helpful and has gone a long way to assuaging some of my concerns.
Having said that, I am bound to say that I found her response to amendment No. 3 far less encouraging and rather puzzling. She spoke about these directions possibly not being a single direction, or that there may be several directions, or a generic direction. At one stage she referred to them as proposals that might go from the Minister to the department. At another stage, she referred to them as decisions by Ministers. Finally, just before she wound up, she referred to them as informal or routine, almost announcements. That is not, of course, the power that has been taken under clause 10. The clause 10 duty is that the commissioners must comply with a direction of a general nature given to them by the Treasury. As it is now clear from the Paymaster General that these are only general directions, not involving the day-to-day operation of the Treasury, it is all the more important that we know exactly what they are.
The Paymaster General has suggested that the directions will be revealed on application under the Freedom of Information Act 2000, but that is not satisfactory. When a direction is issued and the commissioners are forced to comply with itsuch as a direction that the Revenue should take a slightly different approach to certain classes of company paying corporation tax, or that certain classes of individual, such as those non-resident for tax purposes, should be treated more leniently than othersit is extremely important that those people who follow such affairs, such as tax practitioners, know about it. Inviting people to make an application under the 2000 Act to find out whether such a direction might have been made is not helpful.
The Paymaster General also said that if the decisionshe kept using that wordwas unusual, out of the ordinary or out of line, it would have to be disclosed through the accounting officer. That is perfectly true, but where the Treasury issues a general
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