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The Government are fostering further work to promote the understanding of natural capital issues and improve the evidence used in policy making. We are funding the work of the UK climate impacts programme, which helps organisations to assess the effects of climate change on construction, working practices, service delivery and health in their localities. It is funding a £1 million national ecosystem assessment, which will report in 2011 and be the first comprehensive analysis of the UK's natural environment and the benefits that it provides to society and economic prosperity. It is also supporting the economics of ecosystems and biodiversity study-a major international initiative that aims to draw attention to the global economic benefits of biodiversity, that highlights the growing biodiversity loss and ecosystem degradation, and draws expertise together to enable practical action.

So far, I have focused on taking account of natural capital in policy making. Including elements of natural capital in the public accounts is a relatively recent concept; it is being discussed as part of the wider debate but is not yet the subject of fully worked-out and agreed accounting standards and practices.

The Government are keen that the UK should remain at the forefront in developing best practice in relation to public accounting. We therefore propose the introduction of a system of regular sustainability reporting, including related expenditure, by all Departments in their annual reports and accounts. That will begin in 2011-12. As a minimum, Departments will be required to report annually their performance against their sustainability targets for greenhouse gas emissions, waste minimisation and management, and their use of finite resources.

A great deal of work has already been done and continues to be undertaken to improve the framework for policy making in relation to the natural environment, climate change and sustainability. Valuation research has already been published in relation to a large number of assets, and further research is ongoing.

Barry Gardiner: I realise that I did not leave my hon. Friend a full quarter of an hour to answer the debate, but will she respond specifically to some of my questions? I asked specifically whether her officials will be engaged in working towards the Nagoya conference later this year.

Sarah McCarthy-Fry: I have taken on board all my hon. Friend's questions, and I assure him that all those points will be considered. I shall take them to Treasury officials, so that we can consider them. In principle, of course, we want to improve our accounting systems to take account of natural capital, and we want to improve our evidence base for policy making.

As I said, it has been concluded that the current policy framework goes a long way towards ensuring that sustainability concerns are reflected in decision making. The interdepartmental group on sustainability is due to report again in the spring, with more specific recommendations on the potential improvement areas already identified.

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Non-Domicile Tax Status

1 pm

Norman Baker (Lewes) (LD): I am pleased to have the opportunity to raise the topical issue of non-doms, which is important in terms of both income to the Government and an ethical approach to politics. I do not pretend that it is a new issue; in November 1995, a Labour party policy paper said that

In one of its publications, the Inland Revenue said that one defect of the remittance basis of non-dom status was

One might have hoped that a progressive Government would have dealt with that inequity early on in their term of office. Instead, we had to wait, after applying constant pressure, until 2002 for the announcement of a review. When it finally came forward, we hoped that the changes to the arrangements would lead to far-reaching consequences. In the 2002 Economic and Fiscal Strategy Report, the Government said:

That was provisionally adopted in 2002. I will come back to the word "fair" as I move on. In 2003, the publication of the discussion document ensued, and there was a long gap in which nothing much appeared to happen despite the fact that a number of Members of Parliament from both my party and the Labour party were asking questions about why so little progress had been made.

In April 2007, we ended up with some progress, but it was not sufficient. I raised the matter myself in an oral question to one of the Chancellor's colleagues on 12 July 2007. I asked somewhat cynically whether the inordinate amount of time that the review was taking was in any way connected with the large sums of money given to the Labour party by those who qualify for non-domiciled status. Heaven forbid that that should be the case, and it was disgraceful of me to suggest it. Nevertheless, there was not much of a denial from the Financial Secretary. What is extraordinary is that despite the length of the review-over all these years-the Government seem to have amassed very little information on which to base their forward projections. For example, the question I asked the Paymaster General, the right hon. Member for Bristol, South (Dawn Primarolo), on 23 April 2007 elicited this response:

I would have thought that knowing whether someone is registered to vote in this country is quite a good indication of whether they are domiciled in this country. I was not alone in asking those questions. The hon. Member for Birmingham, Selly Oak (Lynne Jones) asked in 2007 about the effect on the economy of non-domiciled
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residents' tax status. One might have thought that after four years of review, that, would have been clarified. The Minister at the time, the right hon. Member for Normanton (Ed Balls), said:

In 2002, we were told that one of the purposes of the review was to support the competitiveness of the British economy. Yet, four years on, no assessment has been made of what that was. It seems a rather curious review that does not seem to go far in its depth.

In 2008, we had an announcement that represented the worst of all possible worlds. It did nothing to deal with the rich oligarchs of whom the Government appear to be so enamoured these days, yet it introduced a £30,000 poll tax for non-domicile qualifiers, which hits people such as university lecturers temporarily resident in my constituency and elsewhere. In other words, it clobbers the small fry and lets the big fish off the hook. That cannot be regarded as fair or sensible. After four or five years waiting for this review-or 14 years since the Labour party first proposed it in 1994-I have to say to the Minister that, coming from Lewes with a huge tradition of fireworks, I know a damp squib when I see one, and that was a damp squib par excellence. Even worse, in his Budget speech on 12 March 2008, the Chancellor said:

We now have the Chancellor apparently tying the hands of the next Government-whoever that may be-the next Parliament and future Chancellors over how they deal with the matter. That seems to be unconstitutional as much as anything else.

Non-domicile tax status is an important matter for the Treasury, because it is to do with income, fairness and equity in the taxation system. Why should my hard-working constituents in Lewes, Newhaven, Seaford, Polegate and elsewhere, who do an honest day's work and pay their taxes in full, have to put up with a regime that sees freeloading millionaires swan around avoiding tax apparently with the help of Her Majesty's Revenue and Customs and the Treasury? For the Chancellor's party, I have to say that such an unfortunate position seems to be a long way from Keir Hardie, Clement Attlee and even Harold Wilson.

Further consideration must be given to this matter, and not simply for reasons of income, fairness and equity but because of the integrity of the political process-something that has been the focus of many of our minds for some time, not least because of the MPs' expenses issue. There is a general consensus, in words at least, that Parliament needs to clean up its act. We cannot have clean politics in this country until we set and apply a very clear principle, which is that no Member of Parliament, whether in the Commons or the Lords, should be sitting here if they declare themselves to be non-domiciled for tax purposes. That is a very clear position that we should adopt. It is perhaps the reverse
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of Reverend Jonathan Mayhew who said in 1750, "No taxation without representation." I think that we should have no representation without taxation.

A party that fails to tackle its own internal non-domicile issues can barely hope to be taken seriously if it then pretends to argue for a clean-up of politics, which the Minister will be pleased to know leads me on to the Conservative party and its problems with its own members. I have to refer to Lord Ashcroft, who bails out the Conservative party to a very large degree. He took a seat in the Lords in October 2000. At the time, it was reported that the then leader of the Conservative party, the right hon. Member for Richmond, Yorks (Mr. Hague), had insisted that Lord Ashcroft end his tax exile before taking up his seat. That assurance was apparently given. It was a most interesting condition. The Honours Scrutiny Committee attached the condition to his peerage that

In other words, that should have happened before the end of 2000. More than nine years later, we are still no clearer in definitive terms about whether he has taken up that tax status. What we have had from Conservative spokesmen is a series of evasions punctuated by embarrassed silences when they are asked about those matters on radio and television programmes.

Back in 2001, I wrote to the right hon. Member for Richmond, Yorks, who was then the leader of the Conservative party and who is now the shadow Foreign Secretary, about these matters and I asked him 10 questions about Lord Ashcroft. Let me just list a few of those questions:

I would suggest that those questions and other questions that I put were quite germane. The reply that I received was not from the then leader of the Conservative party, but from the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale), his Parliamentary Private Secretary at the time, who said in a very short reply that

No answer came forth from the Conservative party to those germane questions. However, I did receive a letter-

Mr. Peter Atkinson (in the Chair): Order. I am sorry to interrupt the hon. Gentleman, but he should be slightly careful in that the debate is on Government policy on the tax status of non-domiciles and not on the official Opposition's policy on the tax status of non-domiciles. I would be grateful if he reflected that in his remarks.

Norman Baker: Yes. I was hoping to make the case that the Government need to change their policy and that was my intention in what I said. I am sorry that that was not clear in my remarks. However, I am giving a couple of examples to show why it is necessary for the
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Government to change the position that they have adopted, which is inadequate for the challenge that we face in cleaning up politics in the House across all parties. That is the case that I am making.

I was about to say that the only other response that I received to my letter to the right hon. Member for Richmond, Yorks was from Lord Ashcroft's solicitors, who were basically not particularly pleasant towards me.

I referred to some of the quotes that we have heard on TV and radio, but it is important that all three main parties in the House commit themselves fully to an open regime. If we do not do that collectively, we will not be able to clean up politics in a way that is very important and that we can all hopefully agree on. The reality is that a position of "Ashcroft's taxes nothing to do with me, says Cameron", which was a headline in The Independent, is not a sufficient response from the leader of the main Opposition party in the House.

I conclude on this matter by noting that my colleague in the Lords, Lord Oakeshott, wrote to Lord Ashcroft in December 2009, asking him very bluntly whether he was a non-dom, to which no response has been forthcoming.

There have been suggestions from the official Opposition that they have plans to change the taxation regime that relate to those people who do not pay full UK tax. Of course, those suggestions do not deal with non-doms in the same way.

I also want to refer to potential parliamentary candidates. It seems to me that, if we are to clean up this place, it is important that the Government should not simply review their policy with regard to the declarations by Members of Parliament and Members of the House of Lords, although those declarations are important in terms of non-domicile status, but should consider whether it is necessary to review their policy on non-domicile status in so far as it reflects declarations by parliamentary candidates. We now have a more open regime in the House for Members of Parliament to declare what they earn and we are moving in the right direction on that issue, but no such restrictions or requirements apply to parliamentary candidates. It seems to me that when voters go to the polling booths, whenever that may be this year, they are entitled to decide, particularly in the present circumstances with all the expenses problems, whether they approve of the ethical, financial and moral positions adopted by their parliamentary candidates in so far as they relate to their public duties. However, that is clearly not the case at present.

As another example in regard to parliamentary candidates, I give Zac Goldsmith, who has said:

Of course, as the Minister will confirm, that is simply not the legal position, because non-domicile status is a matter of choice after someone is 16 and not a matter of fact. One must conclude that the attempt to avoid paying proper taxes in this country by Mr. Goldsmith, as appears to be the case, is one that undermines both the House and politics generally. I also reflect on the fact that he has spent £250,000 or more in the Richmond Park constituency trying to buy the seat-money that should have been paid to the Exchequer in proper taxation. It is one thing to bribe the electorate; it is
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another for the electorate to be bribed with their own money, which appears to be what is happening in that constituency.

I hope that I have made the case that the position regarding non-dom status is not satisfactory in this country; that the review that the Government conducted and concluded in 2008 has, in fact, been inadequate; that the Government have not dealt with the big fish, who continue to escape proper taxation while hard-working families pay it; and that the Government have, in fact, only clobbered small fry with a £30,000 poll tax-people who should not be clobbered in that way when a better and much more equitable solution would be to have no tax and then full tax applied after seven years. I have also given an indication of how the current arrangements undermine the integrity of Parliament and the integrity of what we are trying to achieve in this place by tidying up politics.

Therefore, I hope that the Government will first commit to review the non-dom rules and, secondly, that they will undertake before the election to take urgent action in line with the Bill that my colleague Lord Oakeshott introduced in the House of Lords to ensure that no Member can sit in either the Commons or the Lords unless they have given a clear indication that they are paying taxation in full in this country and are domiciled here. If the Government are not prepared to do that, they must explain why.

1.15 pm

The Financial Secretary to the Treasury (Mr. Stephen Timms): Let me begin by congratulating the hon. Member for Lewes (Norman Baker) on securing the debate. I welcome the opportunity to set out the Government's policy on the taxation of non-domiciles. I recognise the strength of feeling that he and others have expressed and I want to respond to that strength of feeling in my remarks today.

Of course, there has been a good deal of debate about this issue recently, prompted in particular by the case that the hon. Gentleman mentioned at the conclusion of his remarks: the media and political interest in the tax status of the Conservative parliamentary candidate for Richmond Park, Zac Goldsmith, who is of course standing against the hon. Gentleman's colleague, the hon. Member for Richmond Park (Susan Kramer). What that issue has highlighted, again, is the fact that there might well be Members of Parliament-current Members or indeed prospective Members-who do not pay UK tax in full on all their income. However, before addressing that issue, I will follow the hon. Gentleman's lead by first outlining the Government's policy on the taxation of non-domiciles more generally, because that policy rightly provides the context for this debate.

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