Mr.
Hammond: I take your guidance, Sir Nicholas, that it would
be improper for the Minister to refer to another Bill but what I asked
her was why the Government do not consider it appropriate to treat
these residual stranded assets in National Savings and Investments in
the same way that they are proposing to treat similar assets in banks
and building societies?
I am sorry
to press the point but it is not good enough to have Ministers saying
the reason we are doing this is because of equality of treatment with
regard to interest and then when it is pointed out that
the products in question do not bear interest not to have an explanation
as to why they are proceeding in this way. Surely the code to which the
Minister referred, admirable as I am sure it is, cannot have any
relevance to a product that has no interest payable on
it. The
Chairman: If I can help the Committee and perhaps give the
Minister a little time to sort out an answer for the hon. Gentleman,
this clause is not about stranded assets. That is my advice and I
believe it is correct. Perhaps the Minister will seek to respond to the
hon. Gentleman as far as the question relates to this
clause.
Kitty
Ussher: Thank you, as ever, for your clarification, Sir
Nicholas. It does of course relate to assets held by National Savings
and Investments as a result of the savings schemes which have not been
claimed. We are not discussing what they should be spent on, which will
come under future legislation. It is simply an accounting change. It
moves them from one bit of the Government estate, to use that phrase
broadly, to the national loans fund. It updates, modernises and
consolidates such pots within the national loans fund, as opposed to
their being administered by the Commissioners for the Reduction of
National Debt, which tends to involve portfolio management services. I
hope that that provides clarification. I seem to have caused some
discussion among my advisers regarding the hon. Gentleman’s
point about the interest rate, so perhaps he will permit me to write to
the Committee at a later
date. 5.30
pm
Mr.
Hammond: I will pay those who are not in the room the
compliment of saying that none of them looks old enough to remember
national saving stamps, so they might not know off hand whether they
bore interest or
not. The
Minister has not addressed the question of what ultimately happens to
the money. I accept that this is an accounting transfer and I had hoped
that she would have felt able to explain what the ultimate treatment
would be. I am advised by my hon. Friend the Member for Fareham, who
has been closely involved with the other Bill, which we shall not
mention, that national savings are not included within it. If I may say
so, I think the Minister is being a tad disingenuous in suggesting that
this has nothing to do with that issue, because it is still unclear to
us why national savings are treated differently. If it is more
appropriate, I am happy for my hon. Friend to pursue that question when
that other Bill, in due course, comes before the
House. Question
put and agreed
to. Clause
157 ordered to stand part of the
Bill.
Clause
158EU
emissions trading: criminal
offences Question
proposed, That the clause stand part of the
Bill.
Mr.
Hammond: It is perhaps unusual to have something so
controversial so near the chronological end of a Bill of such a size,
although, of course, we still have to deal
with clauses that have been taken out of chronological order. Unless the
Minister gives us some concrete assurances on this issue, we could have
the last vote that we need to press in the chronological sequence of
the Bill’s
text. The
clause enables the Treasury to create, by regulation, criminal offences
in relation to the allocation for payment of EU emissions trading
scheme allowances. The background to the measure is that, in August
2006, the UK submitted to the European Commission its national
allocation plan for phase 2 of the EU emissions trading scheme, which
runs from 2008 to 2012. That plan sets out the basis by which
allowances are allocated by the Government to firms participating in
the scheme. The national allocation plan committed the Government to
allocating 93 per cent. of the total available without charge, and to
auctioning 7 per cent. The scheme is expected to continue after 2012
with a third phase, and I understand that the Government would like a
higher level of auctioning in future allocation rounds.
The
Government apparently envisage the need for provisions to create
criminal offences relating to wrongful disclosure of confidential
information in allocations for payment—that is, I assume, the
disclosure of bid information at auctions. One is bound to ask,
“Why now?” We are amending a provision that was passed
only in the Finance Act 2007. What has changed in the meantime to lead
the Government to think that criminal offences are required when they
were not introduced in the 2007 Act or the draft regulations published
under it? On the surface, this might seem like a tidying-up exercise,
and the tucking away of the clause at the end of the Bill tends to
reinforce that view. However, we know that we always have to read the
small print, and we are 100 per cent. with the Government about trying
to ensure that the emissions trading process operates well and that the
allocation mechanism is
effective. Leaving
aside the incompetence issue—why the Government are doing this
now when the principal legislation was passed only last year—the
clause actually gives rise to serious concerns of principle. How can it
be acceptable for the Treasury to be given powers to create, by
statutory instrument, a new category of criminal
offence? The
explanatory notes talk in terms of a quite narrow category of
offence: “wrongful
disclosure of...information in allocations for
payment.” However,
that is not reflected in the open-ended power in the clause that we are
being asked to consider. The Financial Secretary circulated a note to
members of the Committee in which she said that the Government
“currently intends” to use this power for an offence of
wrongful disclosure. However, she very pointedly did not rule out using
the power to create other offences. Nothing in the Bill limits the use
of the power to the creation of an offence of wrongful
disclosure.
The only
limitation on the power to create new offences by statutory instrument
relates to the maximum penalty that could be imposed in respect of such
offences, which is the maximum penalty set out in the European
Communities Act 1972. Incidentally, it would be interesting if the
Minister could tell the Committee what those maximum penalties are. Are
they turnover-related
penalties? Why
does the wording of the clause not reflect the narrow category of
offence that the Government are apparently envisaging? I do not want to
sound too
pompous or parliamentarian about this, but it really is not good enough
for the Government to come along with enabling clauses in a Finance
Bill that allow the creation of new criminal offences by statutory
instrument. Much as we
have all appreciated the Financial Secretary’s guidance in the
now significant number of letters and notes to members of the Committee
during our consideration of the Bill, that does not limit in any way
the Government’s ability to use the provision to create new
offences at a later stage. We have, in fact, a catch-all clause, and
there is no excuse for Parliament to sanction granting the Government
such wide new powers to create new classes of criminal
offence. I
have not been able to identify any safeguards, and we do need
assurances about the provision’s scope. If the Minister reads
into the record at this stage of the Bill’s progress that these
powers will be used only in respect of offences related to unauthorised
disclosure, we might be satisfied. However, we must have a clear
commitment that these powers will be used in only that way. Perhaps the
Government will be able to tell us that they are confident that they do
not need to use these powers any more widely, in which case I will ask
them to consider whether they could bring forward an amendment on
Report to limit the scope of the powers to only the disclosure of
information. If they do not do that, we will certainly want to do
so. Before
I ask a question about the draft regulations, I draw my hon.
Friends’ attention to the fact that the clause covers offences
committed by not only companies—those in the marketplace will
mainly be corporate players—but officers of companies or members
of partnerships, including limited liability partnerships. Therefore,
individuals could find themselves on the receiving end of this
provision.
I have to
admit to being slightly perplexed by the draft regulations that have
been circulated. The Financial Secretary was kind enough to circulate
draft emissions trading scheme regulations for 2008, which I take it
have not been laid—I cannot find any record of them having been
laid. We also have in front of us draft regulations amending those
draft regulations. Why have the Government not simply withdrawn, or not
laid, the initial draft regulations and incorporated into them the
provisions of the second draft regulations? Instead, they have tabled
the second draft regulations, which say:
“These
Regulations may be cited as the Community Emissions Trading Scheme
(Allocation of Allowances for Payment)
Regulations” and
they go on to amend the first draft
regulations. I
do not know of a precedent for presenting a statutory instrument, even
in draft form, that amends an existing draft. Surely it would be more
sensible—I will be very happy if the Minister is able to say
that she will do this—to take both drafts away so that before
the principal regulations are laid before the House, the provisions of
the amending draft regulations are incorporated so that we have to deal
with a single measure. Otherwise, as I understand it, the first
substantive draft will be laid before the House and go through all the
processes to become regulations, and immediately thereafter the
Government will have to lay the second draft regulations to amend the
first regulations. If it would help the
Minister, I can probably find something else to say for a few
moments— [Interruption.] I am trying to help
the
Committee. Mr.
Bone: Since I have served on the Joint Committee on
Statutory Instruments, I have never seen such a procedure. Such a
measure would normally be withdrawn, so I think that we do need
clarification on that
point.
Mr.
Hammond: My hon. Friend reinforces my point. I have been a
Member for only 11 years but I have never seen such a procedure. I was
completely startled by it, so I look forward to the Minister’s
clarification.
Angela
Eagle: The hon. Member for Runnymede and Weybridge implied
that this was somehow a hidden clause. It is in the miscellaneous part
of the Bill simply because there is not a large amount of the Finance
Bill taken up with emissions trading at the moment, so it fitted in the
miscellaneous section. Miscellaneous does not always mean not
important. I suspect that the clause is towards the end of the Bill
partly because of the novelty of the area that we are in. Finance Bills
have been going on for years and have taken on particular forms, but
emissions trading has not been going on for years. It is a new and
developing area of Government policy both domestically and at EU
level—and, soon, internationally. Given that emissions trading
and the issues surrounding it, particularly when it comes to raising
revenue, are relatively novel arrivals on the scene, I suspect that
hon. Members on both sides of the Committee will have to get used to
the evolution of this particular area of activity, because it is set to
grow in importance in the future. Part of the issue with which we are
dealing is the novelty of the circumstances that we are in. We are
trying to design regulations and legislation for a trading system that
is in the middle of developing and of being negotiated, so there has to
be a certain amount of flexibility as the process develops.
This clause
will amend the legislative framework for EU ETS auctions with regard to
the creation of criminal offences for the wrongful disclosure of
confidential information relating to bids. The Government will create
the offence through secondary legislation. As the hon. Gentleman
rightly said, draft regulations were sent to Committee members to
assist today’s
debate. 5.45
pm The
EU ETS was established with a strong lead from the UK, and it is the
world’s most significant international emissions trading scheme.
It is an important step towards establishing a price for carbon, with a
view to ensuring that negative externalities are reflected in
investment and consumption decisions. As the hon. Gentleman pointed
out, the UK’s national allocation plan for phase 2 of the EU ETS
set out the Government’s intention to auction 7 per cent. of UK
emissions allowances. As set out in the UK Government’s vision
for emissions trading, published on 30 October 2006, greater use of
auctioning will help to strengthen the long-term integrity and
efficiency of the EU ETS. It is essential to ensure that the auctions
of EU emissions trading scheme allowances are robust and support the
integrity of the scheme and the carbon market. It is essential to avoid
windfall profits for power generators, which tend to make windfall
profits if they do not have to pay for emissions. That is
partly because we are trying to put in place a scheme in circumstances
in which power generation has been going on before carbon trading or
carbon prices were important. Those circumstances may not be ideal, but
that is another novel part of what we have to
do. The
hon. Gentleman is right that it is unusual to introduce criminal
offences in this way, but it is not unprecedented. There are precedents
for introducing criminal offences in the Finance Bill and in secondary
legislation. The Finance Bill precedent is schedule 22 to the Finance
Act 2000, which introduced such criminal offences with respect to the
tonnage
tax.
Mr.
Hammond: I am not sure whether the hon. Lady is saying
that the Finance Act 2000 introduced criminal offences or the power to
make criminal offences by statutory instrument. Will she clarify the
position?
Angela
Eagle: The 2000 Act introduced the power to make
criminal offences in secondary legislation, and that is the precedent
for which the hon. Gentleman asked. That is not a usual thing to do,
but it is not unprecedented in Finance Bills. There are precedents for
introducing criminal offences by secondary legislation, which the hon.
Gentleman should take into account, including section 47 of the
Transport Act 2000 and section 468 of the Companies Act 2006. There are
also precedents for introducing criminal offences for inappropriate
disclosure of information, which is what we are dealing with, such as
section 206 of the Water Industry Act 1991 and section 393 of the
Communications Act 2003. A more recent precedent that more of us will
remember is section 39 of the Statistics and Registration Service Act
2007. There are therefore precedents for the measure, which is unusual,
but it is not unheard
of.
Mr.
Bone: I am grateful to the Exchequer Secretary for those
examples. Do any of them apply to EU-wide provisions? What discussions
have we had with our European colleagues to ensure that the penalties
for disclosure are the same across the
EU?
Angela
Eagle: My understanding is that that is why the penalties
for disclosure quote the EU legislation, which the hon. Member for
Runnymede and Weybridge pointed out in his comments on the clause. As
for the size of the penalties, I understand that the maximum allowed at
the moment is a £5,000 fine, so we are not talking about huge
amounts of
money. I
want, however, to make the case for introducing criminal offences for
the inappropriate disclosure of information. The auctioning of
emissions and the robust nature of the carbon price will rely on
confidentiality in respect of information in bids, especially if agents
are used. The auctions are designed to allow the use of agents and
intermediaries, and it is important, if the carbon price is not to be
compromised or destabilised by the inappropriate disclosure of
information, to introduce criminal offences, which act as effective
deterrents to destabilising
behaviour.
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