Mr. Hands: I thank the Economic Secretary for her generosity in giving way, and I accept her assurance that no swap or other derivative transactions will be involved. May I take her back to some of the costs of the issuance? I think that we are talking about one-month,
Kitty Ussher: If we think that proceeding with this matter is not in the overall interests of the taxpayer, we will not proceed. However, I point out to the hon. Gentleman that there will be huge reputational advantages if we manage to achieve this proposal. It will attract significant business to the City of London, which will lead to increased taxation revenues.
I return to the fundamental point that I made at the beginning of my remarks: we will do this only if we feel that it is in the national interest. We will proceed up to the point where we can have a full understanding, both of all the benefits and costs and of any regulatory changes that are required. When we have the legal basis for proceeding, we will take a final judgment about whether it is something that a sensible Government would do in the national interest. A preliminary indication shows that the potential wider economic benefits are substantial, which is why we are pushing this as far as it will go.
Mr. Hoban: At what point does the Economic Secretary believe that the cost to the taxpayer of this issuance, compared with other issuances, becomes so great that it is not worth proceeding down this route? There is a premium to be paid for these bills, which will fall on the taxpayer. At what point does she think that it is not worth proceeding, if there is a premium over conventional bill issuance?
Kitty Ussher: As I have already said, we intend the bills to be perceived by the market as conventional products or as near as possible to that. As I have just said, we will make the value-for-money judgment at the appropriate point and provide an update in the pre-Budget report. I cannot quantify exactly what the relative cost-benefit analysis is because we have not done it yet.
Mr. Hoban: I am rather pleased that I have triggered a debate on this issue. It has been interesting.
The Ministers response troubles me, because a large number of areas have yet to be resolved, but the Minister is seeking in the Bill powers to enable the Government to introduce resolutions to implement a sukuk issuance programme. The work does not appear to have been done to justify the economic benefit of such an issuance.
The Minister began by saying that there were two benefits. The first was to signal clearly to the wider market the importance of developing the UK as a centre for sharia-compliant products. It would be good to see London continue to lead the way, but I am not sure that the Government should driving that through the issuance of products. I accept that the Government have taken steps by presenting the third Finance Bill to create a level playing field on tax matters. That is
The second argument made by the Government was about developing retail products, but the Minister gave no indication that there is a significant retail demand to justify a £2 billion programme of issuance. She made some important points about how we can review all sorts of regulatory and tax issues along the way. I am sure that it will help to facilitate the development of wholesale markets, but I do not think she persuaded the Committee of the economic rationale and the benefits for the taxpayer of pursuing that route. However, she expects us to give the Government powers under this clause and schedule 46 to introduce secondary legislation to facilitate the issuance.
There are important points to be made about the structure and the use of scholars. This is a fraught issue, and I have spoken to a number of private sector providers who have tried to structure products with the help of scholars. They got quite a way down the route, but were then been refused permission, or did not receive agreement from the scholars that those would be sharia-compliant products. It is important to understand how the Government will seek to validate these products as sharia-compliant, as significant issues are attached to the measure.
I am uncomfortable that the Government have not made much progress. The Minister spoke about using legislation in the Finance Bill 2009 to correct the issue of double-hitting stamp duty, which suggests that the Government could have waited until 2009 to introduce the provision and have a proper detailed discussion in advance, so that we, as Parliamentarians, knew what it was we were going to pass into law.
Question proposed, That the clause stand part of the Bill.
The Committee divided: Ayes 14, Noes 9.
Division No. 16]
Question accordingly agreed to.
Clause 151 ordered to stand part of the Bill.
Schedule 46 agreed to.
Power of Treasury to make payments
Question proposed, That the clause stand part of the Bill.
Mr. Hammond: One might say that we are going from the sublime to the ridiculous. This part of the Bill is entitled Miscellaneous, and now we discover why. Clause 152 is headed Power of Treasury to make payments. Some of us might have thought that the Treasury already had power to make payments; it certainly seems to have been doing so for some time. It is a parliamentarians delight: wonderfully obscure language. We are going to deal with a situation
where a financial claim relates to...a case where money is paid into a government account, but the money should not have, or need not have, been paid into that account, or...a case where money should have been, or needed to be, paid out of a government account, but the money...was not paid out of that account, or...was paid out of that account, but not as it should have been, or...needed to be, paid.
Justine Greening: Might one of those examples be when all those pensioners sent the then Chancellor, now the Prime Minister, cheques in the post for 74p, or however little the rise in pension was that year?
Mr. Hammond: My hon. Friend makes an interesting point, and I was going to go on to ask the Minister to explain just what the issue is here. One can easily conjure up visions of somebody discovering in the Treasury that decadesperhaps centuriesafter practice began, payments were made that were not properly authorised to be made, or receipts were paid in that should not have been paid in. This is billed as a tidying-up exercise but we clearly need to understand what lies behind it. We are told that there have been cases where types of claims could not be paid under the Treasurys existing powers, and we are invited to believe that amounts that might have been paid out were not able to be paid out. Clearly something has triggered the clause; something has happened that has drawn attention perhaps to a problem that has existed for a very long time but has only now become apparent.
It does slightly conjure up the tantalising suggestion that amounts that have been paid erroneously into Government accounts have been trapped there for very long periods. Is there some huge pot of money that we are not aware of, indeed perhaps comprised of all the pensioners cheques[Interruption.] The hon. Member for Taunton is right. I do hope so. I spend a great deal of my time looking, largely in vain, for huge pots of money hidden somewhere in the Government accounts. Generally what I find is that detailed exploration yields huge black holes that were previously undiscovered, rather than huge pots of money.
Mr. Browne: I wish the hon. Gentleman well in his ongoing searches, but I invite him to speculate that the clause may be helpful for the Government as they seek to untangle the mass of tax credits that have been erroneously paid in or out of the various accounts of private individuals.
Mr. Hammond: The hon. Gentleman may be right and it may be that the Economic Secretary will tell us that it is the tax credit debacle and fiasco that is at the root of the problem. It might be better if I now listen to her and then respond.
Kitty Ussher: I am sorry to disappoint both the hon. Member for Taunton and the hon. Member for Runnymede and Weybridge, but the need for the legislation is not as a result of either of the issues that they have raised. The best way to characterise it is possibly as a bank error in our favour which can then be returned, but the issue does not relate to an amount of money that is in error transferred into a Government account, or indeed in error transferred by anyone to anyone involving the Government estate, which can be returned. There has simply been an odd anomalous historical situation where, let us say, due to a processing error, a large amount of money has been transferred into a Government account by mistake, noticed, rectified and sent back perhaps the next day. If it is a large amount of money, obviously we would have garnered some interest as a result of it remaining in our account overnight. In some circumstances, there has been no mechanism for that interest to be paid back to the person it belongs to. The reason we are addressing the matter now is that
Mr. Browne: I am sorry, I thought it was a semi-colon. The example the Minister just gave may not be a vast amount of money for an individual citizen, but it would nevertheless impact on people who have wrongly had their tax credits transferred to the Government in a way that has been unfavourable to them and who have had to wait before being reimbursed.
Kitty Ussher: I am not in any way implying that the amounts involved in tax credit overpayments are insignificant for the individuals involved. The complete answer to the hon. Gentlemans question is that the normal HMRC revenue-raising and disbursement operations are not covered by the proposal before us today; it tends to be large institutions or anything involving a bank transfer that we are dealing with. It goes potentially wider, but the proposal does not cover the individual benefit payments that he rightly raises.
The measure before us is simply to create for the public sector an arrangement that already exists in the private sector. If there is a bank error in your favour between banks, there is a protocol between banks for resolving the interest payments that land in one institution when they should be in another. There is not a similar protocol within the public sector for simple historical reasons. I was asked, Why now? We have had a number of ad hoc cases. By definition, the problem is arising in the private sectorit is giving us money by mistake. It is simply a clerical error and we are giving it back immediately.
I would love to go into details, but obviously it is commercially confidential and would lead to all sorts of excitement if I start explaining which bank has done what. It is not an enormous amount. A couple of cases recently have prompted us to see whether we can work in a more sensible way. There is no Exchequer cost, because, by definition, we were not expecting those amounts to come into the public sphere, so there was no budget for them. The measure before us simply enables us to have a vires for making payments from central
Mr. Hammond: I have two questions. First, implicit in what the Economic Secretary is saying is that this situation has existed for a long period, it was not considered to be material such that it needed to be addressed, and now it has come to be considered material. Does that imply a change in the frequency or magnitude of such errors, because clearly that is the implication? Secondly, although she gave a clear explanation, I think that the whole CommitteeI hope it is not only mewill be dependent upon her explanation, because what is written in the Bill could have much wider ramifications. Will she confirm that this is only about the repayment of interest on amounts inadvertently or erroneously transferred and that it goes no wider?
Kitty Ussher: Yes, I can reassure the hon. Gentleman that it goes no wider than that. With regard to why now, I do not know, but it happens that there have been a cluster of occasions when we have had to consider how to pay back the interest from erroneous bank errors in our favour. We have been able to resolve each of them case by case in rather convoluted ways, but the energy required to do so made us think that we should perhaps make life easier for ourselves, so there is no secret agenda to pay money to anyone. With regard to HMRC, I should probably add that it has ex gratia powers to settle such claims, and it is only the central Exchequer accounts that do not.
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