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Mr. Tyrie: Yes, that is dead right. We do not want to find Ministers getting a bit closer to the business of collecting the money. However, we do not want the iterative process, with a distinction between those who have to collect it and those who are thinking up policy—which has historically made for a reasonably well-functioning tax system—to be fundamentally altered. The review makes it clear that the Government intend to alter that process; that is not denied. By altering the process—as is set out in the O'Donnell report and the Treasury Committee report—the Government may put pressure on what has previously been assumed to be a perfectly satisfactory level of protection on the point of ministerial direction. We could have lived with that, because we always have done so and have got used to it. However, that protection will not be so robust now in the defence of what we want to see defended.
2.45 pm
I want to end by drawing the point a bit further. I said a moment ago that Treasury officials will find themselves sitting on the wrong side, although to Revenue officials down the corridor that may sound like a good idea. One group of them will have signed the oath and another group will not have done. To start with, there will have to be a Chinese wall between those two groups. One group will know about some cases coming up and that is why they will be concerned to get a particular clause in, and another group will not know about the cases as they discuss a particular measure. I think that that is perfectly possible but it would require a lot of attention. What worries me is that there could eventually be some leakage. It is absolutely crucial that taxpayer confidentiality is maintained. The moment that people think that there is not proper taxpayer confidentiality, the revenue base
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will be at risk because people will get very nervous about what they tell the Revenue authority.
Worse still would be the appearance or allegation that pressure, coming ultimately from politicians, was being put on a business or a wealthy individual, although I strongly suspect that that would be untrue. That would be extremely unfortunate. I will not go on about the Vodafone case, but that was an illustration of the fact that, whatever the reality, just the appearance of the weapon of the public domain has partially eroded big companies' trust in what is being kept confidential.
We shall discuss the oath later, but I say in passing that I wonder whether, far from getting rid of it, we may be able to extend it to those officials working on policy alongside Revenue officials to enable them to hear some of the conflicts of information that may lead the Revenue to make proposals.
Having said all that, I feel that clause 10 will not do; it needs much greater clarity and we need to know what is meant by ''a general nature'' and ''a specific nature''. We need more reassurance from the Minister. We are not minded to support the clause.
Mr. David Laws (Yeovil) (LD): Welcome to the Chair, Mr. Hurst. We had a useful debate on the clause during this morning's sitting, particularly when we discussed the amendments tabled by the hon. Member for Sevenoaks (Mr. Fallon). I had intended to leave all my comments on this part of the debate. However, we had a very interesting debate on amendment No. 3, which was pressed to a Division. It is a pity that the Government did not accept the thrust of that.
However, the debate is focused in particular on concerns about the ambiguity of the—relatively short—clause 10 and therefore about the supposedly arm's length nature of the relationship between Ministers and the Revenue and Customs. How will that work in practice? The hon. Member for Chichester (Mr. Tyrie) said that he was unclear about what ''of a general nature'' means in practice, and he is right to be so. I ask the Paymaster General how she would feel if she were told by a member of the Government that in the Treasury she was to remain liable and accountable to the Chancellor, but that she was expected to comply with any directions of a general nature given by the Prime Minister or some other member of the Government. It would be very unclear what ''of a general nature'' meant and how that would limit her normal powers of independence. What would that boil down to in practice?
I do not want to go back to our earlier discussion, but the hon. Member for Sevenoaks tabled an amendment whose effect would have been to take out the words ''of a general nature'', and he said that that was a probing amendment. If it had been accepted, I would have been, if anything, slightly more concerned about the final situation. We would have been left with a situation in which the commissioners were obliged to comply with any directions given by the Treasury. That would have
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sounded even more worrying, and would be even more liable to result in interference by Ministers in commissioners' day-to-day operations.
The Paymaster General has given us a little insight—I hope that we shall get more from her on this—into the working relationship between herself and organisations such as the Inland Revenue and Customs and Excise, which are in theory at arm's length from her, but for which she is accountable in the House of Commons. Very often, for example for initiatives such as tax credits, Parliament will want the Minister to take a close interest in the effectiveness of a policy.
The hon. Member for Chichester mentioned the development of tax policy and how the clause would work in those circumstances. Can the Paymaster General enlighten us as to how the relationship would work in practice at present, in a situation where, for example, we have had concerns about the operation of the tax credit system? Where a relatively simple system of rules and regulations is applied by the tax credits department of the Inland Revenue to particular cases—for example, in the case of overpayments—but where the Minister has concerns about how the policy affects people on low incomes and how the rules and regulations are interpreted, how would the Minister relay her concerns? Would it be in the form of a direction, or through some sort of debate? The nature of that relationship is critical to the right drafting of the clause.
The Minister's earlier comments suggest that she fears that Opposition Members want her to publicise and be accountable for every element of her relationship with the Inland Revenue, Customs and Excise and the new body. We certainly do not expect that; we do not expect to see her popping into her diary her engagement with Mr. David Varney and others. But we are interested in cases when the Minister or her Department have given clear policy directions or advice to the Inland Revenue and Customs and Excise that may have an effect on how Government policy is implemented. Sometimes, directions could have a material impact on how Government policy is implemented, even though they might not change existing rules and regulations laid down in statute or elsewhere. The operation of the tax credit system is a good example of that. It would be interesting to hear more from the Minister about that.
I was disappointed that the Minister did not accept another amendment tabled by the hon. Member for Sevenoaks on the issue. The amendment moved by the hon. Member for Chichester is not perfect, in that it does not deal with some of the issues highlighted in the early discussions, but at least it focuses the Government on their responsibility to allow the two bodies day-to-day responsibility and independence, as far as possible, unless they want specifically to interfere and lay down clear instructions that might otherwise counteract what the departments concerned are doing.
These are quite important issues. They may seem somewhat esoteric, but one can certainly imagine circumstances in which they would lead to significant problems in the operation of Government policy, if
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not under this Government, then under some successor Government.
Mr. Michael Fallon (Sevenoaks) (Con): I am grateful to you, Mr. Hurst, and you have been generous in allowing such a wide-ranging debate on the amendment. I am sure that you were right to do so, because this is an extremely important, although brief, clause. I hope that you will forgive me if I do not progress some of the arguments made about the nature of Treasury directions. As the debate has unfolded, both through the amendments that I moved this morning and the amendment moved by my hon. Friend the Member for Chichester, the Committee has become less clear about what we mean by a direction ''of a general nature''. I hope that the Paymaster General can give us a little more on that.
First, it is not clear to me at all what we mean by ''the Treasury''. That, presumably, is officials and senior officials as well as Ministers. This clause is not limited to ministerial direction. In fact, it means that a senior official involved in tax policy could give the commissioners a direction. I should be grateful if the Minister would comment on that.
Secondly, as my hon. Friend the Member for Chichester argued, it is all the more important to be clear about what a direction ''of a general nature'' is, because we now have a unified department that is virtually inside the Treasury building itself. That is precisely why we need the relationship between Ministers and officials, commissioners and their staff to be as clear as possible when they are sharing the same cafeteria, when they are walking the same corridors, when they may be promoted or moving along different career paths within the same building, and when a number of them are moving from tax policy on one side of the House to tax policy on the other. We must get this relationship right.
Mr. Hurst, in your absence this morning we heard a blurred definition of what ''directions'' might mean from the Minister. She referred to her discussions. She referred to decisions, matters she might perhaps have discussed with the commissioners that they may have wanted a steer on. She would give a decision and commissioners would then go and act on it. She referred at one stage to diaries. We are not talking about decisions, discussions or diaries. We are talking about formal directions that the Treasury decides to issue to the commissioners.
I can well envisage the circumstances in which such directions are issued. For example, there may be a discussion about the use of resources. Halfway through a financial year, it may become clear that Ministers want far more priority accorded to one particular area of work than another, which is not covered by the annual remit that the Paymaster General referred to this morning, but is a creature of time and changing circumstances. The commissioner may say, ''That is fine; I am happy to do that'', but they should have a direction to do it. If that is not the kind of direction ''of a general nature'' that this clause is intended to cover, I should be grateful if the Paymaster General would perhaps give us some examples of directions ''of a general nature'' without going into detail, perhaps describing one or two that
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have been given under previous legislation, or the sort of direction that she has in mind.
The other suggestion that I would make to the right hon. Lady and the Committee is that if we are still unclear as to what a direction ''of a general nature'' is, perhaps we ought to include a definition of it in the Bill. The easiest way to do that would be to include a definition of ''direction'' in clause 46, the interpretation clause. After all, I see that in subsection (2) of that clause we define ''function''. If we define ''function'', I see no reason at all why we could not be clearer and define in the statute itself what we mean by a direction ''of a general nature''. Until we do this, the uncertainty surrounding this clause, the lack of clarity as to what a direction is, this hinterland between the annual remit given to the commissioners and their daily operational activity, this grey area between the two, will remain grey. Both sides of the House will be unclear as to exactly what kind of direction the Treasury is giving the commissioners and their staffs.
We need more clarity in this area, and I think the Committee now realises that the Paymaster General ought to provide it.
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