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Mr. Greg Knight: I want to start by speaking about amendment No. 18, which is a probing amendment. If the Paymaster General can satisfy me that it is unnecessary, I will not press it to a Division. However, I should like to hear her comments on it.
Amendment No. 18 would add the word "future" to the sentence
so that it would read, "any purpose relating to any future statutory payment". I believe that there are only four sorts of statutory payment: sick pay, maternity pay, adoption pay and paternity pay. The amendment would remove the potential for retrospection from any
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statutory payments. I should therefore like to know whether the Paymaster General envisages the use of the retrospective provisions for statutory payments. If not, should not the amendment be incorporated in the Bill? If she does envisage such use, will she give an example of when it would be justified?
Statutory pay is given for a good reason and people who receive it often spend it almost immediately. If the Government intend to claw it back, the reason for doing that should be placed on record.
Mr. Forth: The concept of retrospective maternity pay is rather interesting.
Mr. Knight: The retrospective clawback gave me cause for concern.
I should like to make some general comments about the speeches so far. We have heard some powerful contributions and I agree with everything that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) said when he set out his concerns. I part company with him because I am not sure whether his amendments would have the effect that he wishes. The intervention of the hon. Member for Twickenham (Dr. Cable) hit the nail on the head. If the amendments are accepted, there may be less, not more, protection in the Bill for matters that my right hon. Friend would wish to have protected.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): Would not amendment No. 16 provide some protection and some improvement on the clause? The hon. Member for Christchurch (Mr. Chope) tried to raise matters for debate in the amendment. However, were he to press it to a vote, he might do more damage.
Mr. Knight: I am still reflecting on whether I would support my hon. Friend the Member for Christchurch (Mr. Chope) if he pressed amendment No. 16 to a Division, but I believe that it would provide greater protection.
I am worried about the human rights effect of the Bill. Others share that concern. It was interesting to read the evidence that was given to the Treasury Committee in December 2004. John Whiting from PricewaterhouseCoopers went as far as to suggest that the avoidance measure that we are discussing
He contradicted the Chancellor's statement that the Bill complies with human rights legislation. He stated:
"There is never any objection to the Government, the Minister, standing up and saying, 'As of today, we are going to block such and such", so let's get that clear . . . The idea that you can stand up and say, or put a written statement down and say, "Right, if something turns up in the future, we don't know what it is, but we reserve the right to come back to today and basically change the way the tax law operates', let's be clear, the system of tax we have in this country is that you are taxed on the basis of what the law says. If, therefore, there is a possibility of retrospectively altering your tax bill, then it does have very interesting human rights implications and it has been mooted that this idea of retrospection could now be vulnerable to human rights challenges if we go that far."
Anne Redston from Ernst and Young gave written evidence to the Committee. She said of the Bill:
"This is a radical new departure for the UK, which has for centuries accepted that tax cannot be levied unless parliament has passed specific legislation authorising its collection."
That principle is enshrined in the Magna Carta. As Simon Schama put it in his "A History of Britain":
"The Magna Carta . . . spelled out for the first time, and unequivocally . . . that the law was not simply the will or whim of the king but was an independent power in its own right."
The history of democratic government in Britain has, as one of its fundamental themes, the establishing of the right of citizens to be taxed not by government fiat but by the clear words of statute, following the introduction of specific legislation. What is the Minister's answer to those charges? Many of us fear that the Bill rips up the rights that were enshrined in the Magna Carta, and that it should not therefore be proceeded with in its present form.
4.15 pm
Mr. Newmark: In respect of the date of retrospection, it is not that 2 December 2004 is a particularly offensive date. It may well have been a lovely day; I do not know, because I was not fortunate enough to be a Member of this House at the time. It might well be reasonable to backdate to that date national insurance contributions that have been avoided by means of "dishonest schemes"—to use the Paymaster General's words—although we continue to disagree on that point.
The implication of the Bill is that we shall set a dangerous new precedent for the way in which the House conducts its business. Would it become a requirement that all financial services professionals should, instead of reading the Financial Times over their cornflakes, thumb through a copy of Hansard, looking for ministerial statements that might affect them two years down the road? Should they believe that whenever the Government express an intention to legislate, they will follow it through? We have had broken promises from this Government before. Should tax advisers warn their clients of the potentially earth-shattering—or at least profit-affecting—implications of the Paymaster General's words every time she addresses us with her customary eloquence? No, that would be absurd. We have endured the loss of clarity in our tax system. We must not endure a further erosion of certainty, otherwise we will become prohibitively uncompetitive as a nation.
Legislation should be proportionate. It is said that this legislation will affect only the dishonest. It will not. It will have a knock-on effect throughout the financial services industry. Will the Minister at least exclude one knock-on effect by confirming that the use of ministerial statements to signal retrospective taxation will not proliferate into a general principle?
Rob Marris:
I shall try to be brief, for the sake of my right hon. Friend the Paymaster General.
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I would be interested to hear from the hon. Member for Christchurch (Mr. Chope) whether the Rees principles to which he referred dealt with tax avoidance. If he said that in his speech, I did not pick it up.
Rob Marris: I see the hon. Gentleman nodding. In the case of this legislation, we have precision, consultation—albeit before the statement—and now the equivalent of a Finance Bill to deal with national insurance. So those principles seem broadly to have been met.
The right hon. Member for East Yorkshire (Mr. Knight) and the hon. Member for Braintree (Mr. Newmark) talked about predictability and certainty. The right hon. Member for East Yorkshire referred to a 1979 legal case, and with his usual generosity, he included a quote to give the House a rounded picture. It contained the words "with appropriate advice". That is at the heart of the amendments, of the issue of retrospectivity, and of the practical sense of where we are at in regard to this possible legislation.
I said earlier—and I will say it again because it is absolutely right to point this out—that the people who engaged in the kind of manoeuvres that might be caught, were the Bill to become an Act of Parliament, as I hope it will, were people who would almost invariably have sought professional advice, unless they were themselves accountants, in which case they would advise themselves.
We are not talking about the average person in the street who has been caught unawares. We are talking about those who, almost invariably, took advice—whether the advice was appropriate or not, we do not know, because it depends on what the accountant told them. There would have been some predictability and certainty from what they were told by their accountant. It is somewhat dodgy of the right hon. Member for East Yorkshire to pray in aid statements made by accountants to the Select Committee about legal matters.
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