Mr.
Hands: My hon. Friend makes an interesting point. He is
right: it is not exactly the same. The easiest thing for me to do is to
refer him to the lengthy debate that was held on this very point during
the consideration of last year’s Finance Bill by the Committee
of the whole House.
It would also
be helpful to get clarification from the Minister about cases where an
MEP gives up his or her position voluntarily to take on office in a
national Government. The Government do not appear to be particularly
expert at these provisions. Indeed, my hon. Friend the Member for
Rayleigh (Mr. Francois) drew attention to the
case of an MEP who was appointed Europe Minister recently, rather
embarrassingly in the course of the Prime Minister’s press
conference, the day after the European elections. He pointed out that
she would be unable to take on the role unless she first stood down as
an MEP. That seemed to be news both to the MEP and the Government,
despite the fact that anyone familiar with the European Parliament will
know that MEPs come in and out of national Government quite often in
other countries, requiring them to step
down. Returning
to clause 56, what will be the tax status of the severance arrangement
for that particular MEP who is now, or maybe is not or perhaps soon is
the Europe Minister or is perhaps just the acting Europe Minister? I am
still not sure of her status. I think the public have a right to know,
not least because she is listed on the No. 10 website as being a
recipient of a full ministerial salary, unlike many of her Lords
colleagues, or soon-to-be colleagues, who have also been appointed to
the Government and/or attend
Cabinet. I
have asked the Minister a number of questions during this short debate
on MEPs’ pay arrangements. I shall summarise them again.
[Interruption.] I have eight questions. First, is
the assumption correct that the tax for the benefit of the Communities
is the one derived from the 1986 Council regulation? Secondly, which
part of the EU does the tax raising and where does the tax go? Thirdly,
have there been cases since 1968 where someone has been paid by the EU
Commission or the EIB and has been taxed twice because of the lack of
this clause? Is the clause absolutely necessary?
Fourthly, the
Minister will need to explain the obscure coefficients I mentioned
earlier when referring to the EIB website to try to see whether we
really are comparing like with like on these matters. Fifthly, which
tax regime will apply post-2009 to MEPs’ pensions and transition
payments? Sixthly, are MEPs as a class of persons now, or were they
ever previously, exempted from national income taxes raised in Belgium,
France or any other country where they declared themselves to be
resident? Seventhly, what about a UK-resident but non-domiciled MEP,
like the UKIP MEP I mentioned earlier? I cannot say with any degree of
certainty that that is her status—I have made a number of
inferences—but I would be grateful for an explanation of how
that sort of person is, or might be, treated under clause 56. Finally,
what will be the tax treatment of any severance package of an MEP who
steps down voluntarily under the new statute, and how will that compare
with the existing
arrangements? We
do not, of course, oppose the clause. It would not be right for MEPs to
be taxed on their full salaries and other entitlements in their
entireties by two separate tax authorities. However, we have many
questions and seek a number of clarifications on the whole
matter.
Mr.
Jeremy Browne: Thank you for giving me the opportunity to
make the main speech on the clause, Mr. Atkinson.
I also support the Government’s intentions, although I may
express my support in different terms. I congratulate the hon. Member
for Hammersmith and Fulham on his customary rigour in seeking
ministerial clarity on some individual cases, as well as on the broad
principles under
discussion. I
wish to make three brief points. First, I see the logic behind all MEPs
being paid the same, although some may feel that it is another step
down the path towards an EU Parliament that assumes a national profile,
rather than one that is an amalgamation of different nation states.
Similarly, I see the merit and wisdom of UK MPs being paid the same,
regardless of their individual contributions to our deliberations. I am
comfortable with that broad
principle. Secondly,
I see the logic of phasing in the arrangements. I am willing to be
corrected, but I vaguely remember the Conservative party leader, the
right hon. Member for Witney (Mr. Cameron),
recently talking about closing the existing parliamentary pension
scheme to new entrants. If he did make that point, it would similarly
involve a phasing, interim arrangement whereby existing MPs would
continue to benefit from the current system, rather than a blanket
arrangement whereby all MPs, regardless of the length of their service,
were required to switch over to the new arrangement. In that context, I
see some sense in applying interim arrangements to the European
Parliament as
well. Thirdly,
I see the sense in taxing MEPs at the same rate as their constituents.
Of course, there is a slight difference in that the provision should
very much apply to us in this House, because we set the rates of
taxation for our constituents, which is not true of MEPs. Nevertheless,
I see the sense in MEPs paying the same rates of taxation, whether they
be higher or lower than at present, as the people they represent.
However, under the salary level, MEPs would not, as was perhaps
inferred by the hon. Member for Hammersmith and Fulham, be eligible to
pay the 50 per cent. rate on their income unless there was a massive
change in the rate of exchange between sterling and the euro. That
causes some difficulty, as we have seen in trying to work out whether
football transfers have broken records, because the pound is at such a
weak level that it affects comparisons between the UK and the eurozone.
However, seeing as the dominant EU currency is the euro, it seems
logical to pay MEPs at the euro rate rather than at, for example, the
Danish krone rate, or at a more significant currency rate, such as
sterling.
Mr.
Hands: I am trying to follow the hon. Gentleman’s
argument. We all know that the Liberal Democrats’ policy is to
join the euro at the earliest possible opportunity. I wonder how he
feels about national parliamentarians who are elected by a country but
who are paid directly by the EU, rather than by their national
taxpayers. Will that have an impact on whether they view their duties
as being to their home country or to the
EU? 11.15
am
Mr.
Browne: That is not something that causes me sleepless
nights. I can see the merit in having the European Parliament
administer the pay of its Members. I would
of course expect the six MEPs who represent the south-west of England to
have foremost in their mind the concerns of the residents of the
south-west of England, but I would not expect them to have those
concerns exclusively in their minds. If they were able to advance
animal welfare standards across the EU, for example, in a way that was
advantageous to farmers in Somerset, who currently feel that they have
to adhere to superior standards of animal welfare, I would regard them
as discharging their function effectively. There are all kinds of roles
that MEPs may play, and they might feel that they can make a
contribution by advancing some of our European values in other parts of
the world to the advantage of citizens there, so I do not wish their
remit to be too narrowly confined.
Mr.
Hands: I certainly agree with part of the thrust of the
hon. Gentleman’s argument: that MEPs have a responsibility to
their constituents and also to look at the wider picture, in the same
way as debating the clause in Committee is beyond our remit in relation
to our constituents in Taunton and in Hammersmith and Fulham. I wonder
what his view is on the change of who is making the payments. Does he
feel that the fact that Europe is paying UK MEPs, rather than the UK
Exchequer, will make no difference to how they view their loyalties, or
that that will make some tangible
difference?
Mr.
Browne: My feeling is that it would almost certainly make
no difference, but I have never served in the European Parliament and
so have difficulty putting myself in the mindset of one of its Members
and trying to decide what my primary motivation would be. I imagine
that I would be highly motivated by the desire to serve the people in
the region that elected me and consider the interests of the people in
the country I came from. I would also be motivated by a desire to see
the EU shaped in a way that conformed to my ideals and values. All
those factors would be considerations that would rest with me,
regardless of whose name was on the payslip I got at the end of each
month.
Mr.
Browne: I give way to the hon.
Gentleman.
The
Chairman: Order. Before the hon. Gentleman intervenes, I
say that the Chair is motivated by wishing to discuss clause 56. I
think that we had perhaps better leave the motivations of MEPs to one
side.
Mr.
Binley: With respect, Mr. Atkinson,
does not the hon. Gentleman recognise the old phrase, which I am sure
most west country people would recognise, that he who pays the piper
calls the tune? There is a symbolic aspect to this business that ought
to be taken into account. One owes one’s loyalty to the person
who hands out one’s pay packet. That is the point; will he
recognise
it?
Mr.
Browne: The Conservatives are obsessed by symbolism, with
regard to the EU, and I am interested in practicalities. I apologise
for having a less romantic
view of politics than the hon. Gentleman does. I observe that the EU is
funded through contributions made by member states, and the question
whether MEPs are paid directly by that money raised in the UK, or
through the mechanism after the money has gone to the EU, I suspect,
will not have as big a bearing on their deliberations as some members
of the Conservative party fear.
Mr.
Browne: However, I am always open to more conspiracy
theories.
Mr.
Stuart: Perhaps it is not surprising that the hon.
Gentleman, as a Liberal Democrat, is not too worried about where the
money comes from, but I put it to him that receiving one’s pay
cheque from an organisation that never has its accounts signed off
because they are subject to so many questions would undermine the
confidence with which one served. If I were an MEP, I would wish to be
paid by the Exchequer of this
country.
Mr.
Browne: All I can say is that I hope that Conservative
MEPs, who will share the hon. Gentleman’s anxiety, will forgo
their pay until they feel that the auditing arrangements within the EU
are administered to a more satisfactory standard. That seems to be the
logical inference.
I am
extremely concerned about value for money, so I am concerned by all
kinds of statements made by different parties in the House, but I do
not wish you to think that I am straying from clause 56,
Mr. Atkinson. The Conservative leadership could
certainly pay their stamp duty, for example, which would be helpful to
the Exchequer.
Dr.
John Pugh (Southport) (LD): Is it not the case already
that MEPs claim from the European Union for travelling expenses and
other things? We know that certain prominent Conservatives made ample
use of that fund.
Mr.
Browne: That is my understanding. I have been shocked by
the loose attitude that some Conservative MEPs have adopted towards
value for money for the taxes that I pay in good faith hoping to see
improvements in public services. That point is directly relevant to
clause 56, Mr. Atkinson, and I am more than
willing to take interventions on it. If you are not keen to expand to
that conversation, I will move on to my concluding remarks.
One can only
observe that the Conservatives are keen to talk in broad-brush
principles and are keen on symbolism, but are less keen on value for
money when it comes to Conservative MEPs. Everybody who sees the
formation and the practical workings of the European Union and its
Parliament in pragmatic and non-paranoid—that may be an accurate
way to describe it—terms can see merit in an administrative
system of this type. It is important that politicians who serve
constituencies in the United Kingdom pay levels of taxation
commensurate with those of other UK residents. On that basis, I, like
the Conservative party, am an enthusiast for clause
56.
Mr.
Bone: It is a great pleasure to follow the hon. Member for
Taunton and my hon. Friend the Member for Hammersmith and Fulham, who
made such an excellent but unfortunately short speech. I owe the
Government Whip an apology because I was very annoyed at the last
sitting that we could not continue into the evening as he had choked
off debate on the clause. I now understand why—he had obviously
anticipated a longer debate on it than I had.
My hon.
Friend the Member for Hammersmith and Fulham was right in putting the
Conservative Front-Bench position and saying that we would not vote
against the clause. However, my leader, my right hon. Friend the Member
for Witney, has shown great leadership in saying that Back-Bench
Conservative Members do not have to follow the Whip in Committee, so do
not be surprised if there is a Division, Mr.
Atkinson.
The
clause gives rise to a number of interesting points but I will try to
keep entirely to the clause. It has opened up a lot of new ideas that I
was not aware of. The Government are right that double taxation should
not be allowed and, if a country is taxing a British citizen, that tax
should be allowed against British tax. Unfortunately, we are not
talking about another country; it is that thing called the European
Union, which is supposed to be a Union of nation states so, by that
definition, it cannot have tax-raising powers. Before we debated this,
I thought that that was the position. Now I understand that it may not
be the
case.
Mr.
Field: Without wishing to put too many cats among the
proverbial pigeons, does my hon. Friend agree that if the EU were a
tax-raising institution, it might spend less money, which might be a
good thing?
Mr.
Bone: I quite agree. The problem we have is that the
Government are rightly trying to solve a problem for British citizens,
who should not be taxed in two places and should get relief against it.
That is what clause 56 does, and I agree with it. However, should we be
allowing that taxation in the first place when it is not another
country but this organisation that is imposing a tax on British
citizens? Should not the Government fight this tooth and nail and tell
the MEPs not to pay the tax because it is an
outrage? I
hope that the Minister will be able to deal with the following
technical point. The taxation that will be charged will be through
self-assessment at the end of the year. I assume that MEPs receive
their money in euros each month. How will that be converted into
sterling for taxation purposes? Will it be done on a monthly basis when
the money is remitted or at the end of the year when the tax is
decided? That could be a significantly different tax charge. As I
understand the clause, it will mean a loss of money to the Exchequer. I
stand to be corrected, but it appears that there is a European tax
charge that will go into the European Union’s coffers which will
then be set against the tax that the MEPs would have paid. That
difference will be a loss to the UK Exchequer. How much will that
loss
be?
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