House of Commons Hansard Debates for 06 Sep 2013 (pt 0002)

As I said, only two licences have been issued in the United Kingdom under the 1981 Act. We monitor carefully the compliance by the contractor with the

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terms of the licence, and we are not aware that any company has applied for a licence and been refused, or had its licence revoked. I can reassure Members who are worried that there is no evidence that the regime is in any way putting anyone off.

Mr Nuttall: I mentioned in an intervention that I had been interested to hear that an application had been granted under the existing legislation. That prompts this question: if that licence is valid under the existing legislation, why is there a need to change it? Also, will that company have to reapply under the new legislation?

Alistair Burt: I doubt it very much. Speaking off the top of my head, I imagine there would be a passing-on provision that would assume that those who had complied with the terms of the 1981 Act will be, as it were, automatically passported under new legislation. The new legislation will expand the scope of the minerals being sought and cover associated issues. I am sure I can assure my hon. Friend that nothing in relation to the practical operation of the new legislation would require what he asks about.

My hon. Friend the Member for Shipley asked how the licensing regime in the UK compares with those in other countries. Because of the scale of the issues involved here, very few states have any legislation on deep-sea mining. We are confident that UK legislation balances the need to ensure proper control over contractors with the need to avoid having an over-burdensome regulatory regime.

My hon. Friend also asked how long it takes to issue licences. We act very quickly. We have worked with contractors to ensure that licenses are issued promptly. The most recent licensee expresses happiness with its relationship with the Government.

On the ISA, my hon. Friend asked how overlaps are avoided. That question reminds me of the situation in the Klondike, as represented in the 1950s black-and-white B-movies we remember so fondly, when people would go out and stake the land. Occasionally, I believe, fisticuffs might have been involved if there were disputes. We have moved on from that, although it is still a first-come, first-served business as the licenses are processed. The ISA is the stakeholder and once it has granted a licence for a particular piece of the sea bed, that is it. That prevents any overlap. The system ensures there is no problem in terms of competing claims.

The hon. Member for Brent North raised some environmental concerns. We have made it clear that the ISA should consult relevant NGOs in developing mining regulations. That goes to the heart of the issue of where we go from here. As has been made clear, the expectation is that the licences being sought will be for exploration. There is a distinction between exploration and exploitation. Exploitation under the wider scope of the legislation is not expected in the next four or five years. At present the ISA is consulting member states about what their regulations should be for that mining and exploitation. The UK has a crucial role to play in that, given our history of, and engagement in, environmental protection. We are engaged with the ISA in working through the new regulations that will govern mining.

As far as UK-based NGOs are concerned, there is an understanding that this is going to happen and it will not be stopped. Accordingly, it is a good thing for the

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UK to be involved and NGOs are very supportive of our engagement. There has been a meeting between officials and the WWF in relation to this Bill. I understand it is content with the way we are going about things. A further meeting is promised and we will keep in close touch. Bearing in mind the record of some other states, the fact that a British Government—of any party—should be involved in dealing with these issues should be of comfort to international NGOs. We will be fully engaged.

Let me again deal with the point about section 5 of the 1981 Act to which we may return in Committee. My note from my colleague says that nobody has suggested before that section 5 is inadequate, and that although the Act can change the duties imposed on the Secretary of State, it is for the ISA to establish environmental standards for applications from other countries. We have our own standards, but a double lock and a double check are in place. I am happy to go into that in further detail in Committee, making sure that I have got absolutely up-to-date information on how this has been handled. I am very content with the general reassurance I can give that it is not complacency but experience to date that leads me to believe that there has not been a challenge. However, we will double check and then see whether there is any need for any increased provision. If there is, I am sure that my hon. Friend the Member for South East Cornwall will be the first person to introduce it.

My hon. Friend the Member for Dover (Charlie Elphicke) raised the issue of fracking. As I said at the beginning of my remarks, we are hundreds of miles away from that; it is not an issue in relation to this Bill and there is no connection with this activity. My hon. Friend the Member for North East Somerset raised issues relating to our companies being disadvantaged compared with US companies, and I believed we have covered that. I do not think there is any evidence of that happening, and I hope that we have the balance right between that problem of international regulation and the prosperity agenda and the like.

I have answered a number of specific questions, but I have not dealt with some key parts of the Bill that I would like to address. Of course, if hon. Members have further questions, I am happy to take interventions. The 1981 Act was passed at a time when the prospects for a United Nations agreement on deep-sea mining were uncertain. The United Kingdom, along with a number of other countries, therefore decided to enact its own legislation to enable the Government to license British companies to undertake deep-sea mining. That was coupled with a system under which the various other countries that had enacted legislation would reciprocally recognise each other’s licences.

The 1981 Act provides for the Secretary of State to issue exploration and exploitation licences, and for licences issued by reciprocating countries to be recognised. It also made provision for the revocation of licences where, for example, there was a threat to safety or the welfare of persons, or there was a need to protect the fauna and flora of the deep-sea bed—even then, such issues were a matter of concern to this House. As we have discussed, the Act also included provision in section 5 to place a strong obligation on the Secretary of State, in exercising his or her powers, to have regard to the protection of the marine environment. That is likely to be unchanged by the new Bill, but I have given a commitment to the House that we will take a hard look at whether there is

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genuinely any need to consider that further, and we will do so. The Government expect any company that we sponsor, as well as those sponsored by other states, to comply with the highest environmental standards.

Although certain UK companies were interested in deep-sea mining, in fact no mining was conducted in accordance with the licences issued under the 1981 Act. The UN convention on the law of the sea was adopted in 1982, with part XI dealing with deep-sea mining. However, the United Kingdom, again in the company of a number of our allies, did not find those provisions acceptable. We did not believe that they were conducive to encouraging commercial companies to engage in deep-sea mining. We therefore did not become a party to the convention at that time, even though most of the other provisions were acceptable and, indeed, welcome, to us.

I should add that I very much endorse what my hon. Friend the Member for South East Cornwall said about the importance of the convention; it has rightly been called the “constitution of the oceans”. The United Kingdom is a strong supporter of the convention, which we believe, overall, provides an appropriate balance between the rights of the various users of the seas. As a maritime nation, it is especially important to the United Kingdom that the international rules on the law of the sea should be clear and fair. A number of colleagues have mentioned that our good friend—and our closest or oldest ally, whichever is the current term—the United States has not yet ratified the convention. I know that the Administration in Washington have expressed an eager desire to do so, and we wish them well with the endeavour. We look forward to their participation in the convention and, in particular, to their playing a full role in the ISA.

Jacob Rees-Mogg: I am grateful to the Minister for giving way. Under the treaty of Windsor of 1386, our oldest ally is Portugal.

Alistair Burt: This is a fact never lost on the Foreign and Commonwealth Office. I also have in my room at the FCO a copy of a treaty with Algeria that dates back many centuries; we have such treaties scattered around the place. There are many claims to be our oldest ally and we can be quite sure that the facts would prevent the United States from claiming that. For the avoidance of any doubt, however, let me make it clear how close and warm our relationship is with the United States across the board. Environmental protection and the law of the sea is another area where the House can expect the warmest and closest engagement between us and the US. We look forward to the US’s playing a full role in the International Seabed Authority.

As I have said, the UK, in common with other industrialised countries, did not feel able to participate in the original convention because of the terms of part XI. There was a general recognition that it was unsatisfactory for the industrialised countries to remain outside the convention. So in 1990 the then Secretary-General of the United Nations, Mr Perez de Cuellar, convened informal consultations, which continued for several years. The UK played a key role and the result was the adoption by the United Nations General Assembly

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of an agreement on the implementation of part XI of the convention in July 1994. Such agreements assisted the UK’s joining the convention.

The part XI agreement is particularly pertinent to the Bill. It remedied the major defects of the original convention and, in particular, it addressed the costs to states parties and ensured that they were kept to a reasonable level. It clarified and streamlined the procedures for the approval of applications to explore for or exploit the mineral resources of the deep-sea bed. The agreement reduced the possibility for the so-called Enterprise, an international organisation composed of states parties, to participate in exploitation or exploration. It emphasised that decision making in the authority should normally be by consensus. It resolved satisfactorily the problem of how to ensure equitable representation of all states in the council, including the industrialised and developing states, as well as the consumers of metals and land-based producers.

The agreement ensured that any transfer of technology to developing countries should be by agreement. It also stated that the development of the resources of the area should take place in accordance with sound commercial principles. It emphasised that the system of payments to the authority should be fair to both the contractors and to the authority and established a finance committee, on which the United Kingdom has a member, which has a key role in scrutinising the finances of the authority.

The adoption of the part XI agreement paved the way for the United Kingdom to become a party to the convention in July 1997. When the UK became a party to the convention, we considered whether the 1981 Act was sufficient to enable us to comply with our obligations under the convention. At the time it was concluded that it did—although, as I think it is fair to say, only just. Obviously the intention behind the 1981 Act was not to implement the convention, which had not even been adopted when the Act was enacted, but the essential elements were thought to be sufficient. In particular, as we have seen, the Act provided for the issue of licences to prospective contractors and we are satisfied that that gives the United Kingdom sufficient powers in relation to such contractors to comply with the requirements of the convention, particularly that the sponsoring state should have effective control over its contractors.

The International Seabed Authority is the body that under the convention is responsible for regulating deep-sea mining. It has its seat in Kingston, Jamaica. The House will be aware of the extent of my portfolio in the FCO—Iraq, Iran and various countries throughout the middle east—so I hope it will not mind if I apply to the Foreign Secretary to suggest that it might be necessary for me to visit the ISA in Kingston, Jamaica at some point, with, of course, an appropriate delegation including Members of the Opposition, to ascertain that the proposals made by my hon. Friend the Member for South East Cornwall in her Bill will be accepted by the authority. With the permission of the House, I will make that request to the Foreign Secretary. However, that is a digression.

Barry Gardiner: Will the Minister give way?

Alistair Burt: Of course, and I will check on the tickets before we go.

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Barry Gardiner: Just to correct the impression that may have been given to the House by the hon. Member for North East Somerset (Jacob Rees-Mogg), the treaty of Windsor in 1386 was of course a treaty between Portugal and England, and as so often with the hon. Gentleman, the key is, who is the—

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I think the hon. Gentleman is testing the patience of the Chamber a little bit, and I will be quite honest with him. We have had a lot of long interventions, and the last thing I want to get into is a history lesson from either side of the House, because other Bills want to get a hearing, and I am sure he has an interest in those as well.

Alistair Burt: Thank you, Mr Deputy Speaker.

The procedures for handling applications to explore for minerals on the deep sea bed are set out in the regulations adopted by the authority—one set for each type of minerals, polymetallic nodules, polymetallic sulphides and cobalt-rich crusts. The applicant makes an application to the authority, and pays the fee of $500,000. But as we have indicated, there is a certificate of sponsorship from the state party concerned; it is stipulated in the convention that all applications must be sponsored by a state party.

Because of the concerns voiced about environmental protection, I have taken the liberty of obtaining a copy of the two applications for licences that we have made under that sponsorship. The House will be pleased to know that in both, the issue of environmental standards is put forward by a representative of the United Kingdom, who makes the application on behalf of the company being sponsored. So environmental protection is at the heart of the application that is made by the United Kingdom when sponsorship applications are made.

Mr Russell Brown: For clarity, would the Minister be prepared to put copies of those documents in the Library for other Members to inspect, should they wish?

Alistair Burt: I do not know yet, because these are applications relating to commercial companies. I will check. My understanding is that when the application is made to the ISA, there is a nomination process which is led by a speech or a recommendation by the representative of the sponsoring state, to explain that it backs the application. So the document relates to a specific company. I genuinely do not know whether these are public documents. If they are, I do not think there would be any problem, but I must check.

However, I do not think there would be any problem in my reading out the appropriate section in one of the applications. It states:

“As was made plain last year—and indeed the United Kingdom has said on a number of occasions in the Assembly and the Council—the United Kingdom is committed to ensuring the highest environmental standards for companies which it sponsors under Part XI.”

Again, our experts have looked at the application by this particular company and are entirely satisfied that the company will be applying the highest environmental standards. I know from my personal contacts with the company that they feel equally strongly about the need to do so.

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So not only is there a pledge on behalf of the United Kingdom Government, and accordingly we can be held to that, but there is a recognition, because it is a narrow field and people know one another, of the importance of it personally to those involved. I say that simply to give a sense of how seriously environmental protection is taken; the House need not be worried that it is glossed over in any way.

The standard clauses for exploration contracts granted by the ISA are also covered by published documents, which set out what environmental monitoring is necessary. Those documents are available. We might talk to the Library about making any of these documents available before the Committee, so that Members will see what the ISA says, what we say, and so on. I hope that that will help.

Having made the sponsored application, the applicant makes a presentation to the legal and technical commission of the authority. As I have said, in the case of applications sponsored by the United Kingdom, the Government send representatives to speak during the presentations in the legal and technical commission, to demonstrate not only our support for the applications but the responsibility that we take as a Government for them. I hope that is reassuring. After approval by the legal and technical commission, the applications are forwarded to the council.

We were very pleased that the first application sponsored by the UK was successfully approved by the International Seabed Authority in 2012, and that the contract between the British company and the authority was signed earlier this year. The second application was put to the legal and technical commission this year, although, disappointingly, it was not approved by the commission because of lack of time. We hope, however, that the application will be approved by the commission next year. We are convinced that it is a first-class application.

I would like to pay tribute to the staff of the International Seabed Authority, particularly its Secretary General, Mr Odunton of Ghana, and his deputy, Michael Lodge, who is British. We have found them knowledgeable and helpful, and we have enjoyed a fruitful working relationship with them over many years.

My hon. Friend the Member for South East Cornwall rightly referred to an event in March this year to mark the signing of an exploration contract granted by the International Seabed Authority to a UK-registered company. That licence, for the exploration of polymetallic nodules, is in an area of the mid-Pacific ocean at depths of around 4 km below sea level. The Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts), who spoke at the event, called the new venture a

“huge vote of confidence in the UK”,

and declared that we have the skills and technology to make it a success. As a number of colleagues have said, we want the United Kingdom to be a world leader in this regard. He talked of how the decision to grant a licence reflected British technological strengths in areas such as marine engineering and marine science, and how it would give British companies and British scientists the opportunity to undertake groundbreaking work in fields such as deep sea biology.

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The 1981 Act was sufficient to do the job—to ensure the UK Government had sufficient jurisdiction and control over the UK company in order for it to sponsor its first application in 2012. Now we want to ensure that British companies are able to take up the opportunities available to explore for different mineral types—the point made by the hon. Member for Brent North—namely polymetallic sulphides and cobalt-rich crusts, and we want to ensure that we are fully compliant with UNCLOS.

The Bill is really about the balance between commercial companies’ need to find the resources that the world seeks and environmental protection. It is also about saying, “The United Kingdom is open for business in this sphere.” We can say to any company that seeks the United Kingdom’s sponsorship of an application for polymetallic sulphides or cobalt-rich crusts, “Yes, we can sponsor your application.” But at present, without this Bill, because of the changes in technology, if they were applying for minerals outside the scope of the legislation, we would have to turn such companies away. That is why the change is necessary. The Government simply do not believe that that would be the correct position for our country to be in. At its heart, the Bill is designed to enable the United Kingdom to take advantage of the opportunities that this new, emerging and very exciting technology offers us.

As we have discussed this morning, the Bill is quite a technical measure, with all the substantive amendments to the 1981 Act being set out in a schedule to the Bill. I could say a good deal about each of the amendments, but that might stretch the patience of the House, so I will not go through them in any great detail. We have covered a lot in the interventions and discussions that we have had. The point to make is that the Act is being brought up to date in relation to the sort of minerals that are now available for exploitation and in relation to changes in the law. It deals with some of the technical aspects relating to Scotland and other jurisdictions, but it keeps at its heart the need to balance commercial opportunity with environmental protection, which has already proved to be successful. But none of us is naive, and none of us can forget that there are states that operate differently. Without being absolutely certain that international regulation will follow the sort of intentions that we in this House would have, the Government will not be happy. In our dealings with the ISA, we will look to ensure that that works its way through.

The amendments in the schedule refer to changing definitions of the minerals to be exploited, appropriate dates for corresponding contracts with the ISA, the tightening up of the licences, and ensuring that reciprocal recognition is brought up to date. They provide for important work to be done to arbitrate disputes and deal with the international tribunal for the law of the sea and to ensure that it is relevant in relation to this work. They remove redundant terms and bodies and ensure that the terms used in the Act are up to date.

As we have heard, despite the Bill’s title and the 1981 Act, no mining or exploitation has been conducted in the deep sea by a UK company or any other company. Even with the most optimistic outlook, this is probably five years off for polymetallic nodules and longer for other mineral types.

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The International Seabed Authority developed regulations for the exploration of polymetallic nodules some 10 years ago. To date it has issued 13 contracts and is in the process of issuing more. They are all for areas in the Clarion-Clipperton fracture zone in the equatorial north Pacific ocean, except for one in the central Indian basin of the Indian ocean. Exploration regulations for polymetallic sulphides were agreed in the past few years, with the authority issuing contracts to China, Russia, Korea and France, and cobalt-rich crust regulations were only agreed in 2012, since when there have been only a couple of applications.

Of the total of 23 contracts awarded or pending, over half were submitted in the past few years. That gives an indication of how the pace of interest and demand has changed, which is another reason why my hon. Friend the Member for South East Cornwall has proposed this Bill at this stage and why it is important to support it and make progress.

At this year’s annual meeting, the ISA’s council discussed a paper on the process towards development of a regulatory framework for the exploitation of polymetallic nodules. As I have said, so far the activity in relation to deep-sea mining has been confined to exploration, but the time for exploitation—that is, mining—is coming. I know that the secretariat to the authority is acutely aware of the challenges that will be posed by the development of regulations for the exploitation of polymetallic nodules. It has, therefore, sensibly engaged a well-respected team of consultants to look at the issues. I have here a copy of the consultants’ report, which is on the authority’s website. It sets out clearly and carefully the issues with which the authority will have to grapple. It is entitled, “Towards the Development of a Regulatory Framework for Polymetallic Nodule Exploitation in the Area”, and I commend it to the House and to colleagues who have expressed their interest in the affair today.

It is worth reiterating two points that the UK made clear in our statement. First, we emphasised that polymetallic nodule exploitation must be conducted in accordance with the highest environmental standards. Secondly—I believe we were alone in the states that spoke to make this point—we called for full engagement with all stakeholders, including contractors, technology providers and non-governmental organisations, in the development of a regulatory regime. I hope that that is of interest to the House and its needs.

I repeat those points because they are essential and lie at the heart of our approach. It is only by working together to develop a regime that we will be able to strike the right balance between protecting the environment and encouraging commercial enterprises. Stakeholders need to pool their knowledge and expertise, including that in the economics of deep-sea mining, the technology available and the biology of the environment involved, in order to begin to understand the full picture and reach the best solutions. We see environmental NGOs as important contributors in that process. Officials already engage with NGOs at authority meetings. I had a meeting with officials in advance of this Second Reading debate and have promised more consultations in advance of future meetings. We see this as an ongoing collaboration.

The Government believe that, given the advances in technology, a likely increase in future demand for mineral resources and a steady if not increasing cost for those resources, deep sea-bed mining is inevitable. It is a question of when, not if. In other words, deep-sea

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mining is going to happen and we could not stop it even if we wanted to. The fact that companies have started to take up exploration licences from the ISA when previously they were the domain of research institutes is a sign of a new phase in development. A UK-registered company is one of those that have taken up a licence and it is our clear intention to be at the forefront of this emerging industry. It is important that the UK should be in that position. This is an opportunity for us to ensure that our values, particularly in the protection of the environment, should be taken into account.

We believe that this Bill, modest though it is in some ways, is a crucial stepping stone in ensuring that the United Kingdom can be in the right place to influence developments. We believe that, as a responsible sponsoring and licensing state, we will be able to fulfil our obligations to ensure that the highest environmental standards are adopted and applied by our licensees in the work that they carry out. I can also assure the House that we will make use of our leadership role as a sponsoring state to try to ensure that the best possible practices are adopted when the ISA develops a regulatory regime for mining.

In conclusion, the Government believe that the Bill will signal our support for and readiness to uphold UNCLOS, provide leadership in calling for and upholding the highest possible environmental standards, and ensure that the UK aims to make the most of the opportunities offered by this increasingly important industry. I cannot commend the House enough for the attention it has paid to my hon. Friend the Member for South East Cornwall’s Bill and I cannot commend her enough for proposing it. I look forward to taking it further with the consent of the House, with the intention of maintaining the balance we have all strived to achieve in the past few years.

Jacob Rees-Mogg: On a point of order, Mr Deputy Speaker. The Minister referred to placing papers that contain confidential information in the Library. You

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will be aware that Mr Speaker ruled in 2006 that any confidential papers that are referred to ought to be placed in the Library with the confidential information removed. Will that practice be followed today?

Mr Deputy Speaker (Mr Lindsay Hoyle): That is obviously a matter for the Minister, but as the hon. Gentleman is going off a previous ruling, I am sure the Minister will take it on board.

Alistair Burt indicated assent.

1.21 pm

Sheryll Murray: The explanatory notes that accompany my Bill state that a copy of the impact assessment will be available in the Vote Office. I understand that it is not, but I will ask that it be made available to interested Members before the Committee.

I thank hon. Members on both sides of the House for their support for the Bill today. My hon. Friend the Member for Worthing West (Sir Peter Bottomley) brings a lot of experience, because he sat in the House during the passage of the 1981 Act. I thank my hon. Friends the Members for Bury North (Mr Nuttall), for Shipley (Philip Davies), for North East Somerset (Jacob Rees-Mogg) and for Dover (Charlie Elphicke), who all made valuable contributions. I also welcome the contributions from the hon. Members for Brent North (Barry Gardiner) and for Dumfries and Galloway (Mr Brown). In particular, I thank my hon. Friend the Minister for all the support he has given in ensuring that the Bill reached this stage. I hope the House will support the Bill, so that it can move to Committee.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

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United Kingdom Corporate and Individual Tax and Financial Transparency Bill

Second Reading

1.23 pm

Mr Michael Meacher (Oldham West and Royton) (Lab): I beg to move, That the Bill be now read a Second time.

At the outset, I want to say that this is the only time I can remember witnessing a Government Front-Bench spokesperson engaging in a time-wasting filibuster on the scale we have seen today. It was an abuse of the House. The Deep Sea Mining Bill is widely regarded as a Government hand-out Bill and yet the Minister took more than an hour over it—two or three times longer than he would have taken over a Government Bill. The practice needs to be stopped.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I say to the right hon. Gentleman that I did stop the Minister at the beginning of his speech over time-wasting? The right hon. Gentleman may remember that I interrupted the Minister to suggest that he moved on to the subject at hand. The Chair did its job. The right hon. Gentleman is in danger of questioning the Chair if he is not careful.

Mr Meacher: I was not in any way referring to you, Mr Deputy Speaker; I was saying that the regulations and procedures of the House need to be examined in a way that prevents an abuse of that kind.

Mr David Nuttall (Bury North) (Con): Will the right hon. Gentleman give way?

Mr Meacher: No, I am not going to give way.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I will help both Members. We are not going to carry on in this vein. I want to hear about Mr Meacher’s Bill, and I am sure he wishes to get on with it. I want to hear about its content.

Mr Meacher: I am entirely of the same mind, Mr Deputy Speaker.

Tax avoidance and financial transparency, or perhaps I should say the lack of financial transparency, have of course been high on the Government agenda for the past two years. They even led Prime Minister to make tax transparency and trade his central international focus at the G8 at Lough Erne in June. However, having marched his troops up the hill, rather like the Grand Old Duke of York, the Prime Minister has since proceeded to march them down again. Rather little of significance—that is being generous—has happened on the tax and transparency front since then.

At the G8, the UK published an action plan on tackling some of the issues involved, but it is not unfair to say that it was decidedly modest in its ambition. The same can certainly be said of the scope of the subsequently announced consultation on disclosing the beneficial ownership of companies. The Government have, of course, published the general anti-abuse rule, but as has often been said, it will cover only the most egregious forms of tax abuse and is consequently in danger of appearing to legitimise lesser forms. The GAAR is

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rather like the lobbying Bill that is currently before the House—the Government are extremely keen to be seen to be doing something, but they have no intention whatever of actually doing much. If we are really serious about tackling tax avoidance and the financial opacity of our tax system, a more robust approach is needed. That is what my Bill is intended to offer.

The Bill was drafted by Richard Murphy, who is the founder and director of Tax Research UK and, I think everyone will agree, one of this country’s foremost tax accountants. I am extremely grateful to him, as I believe the whole House should be.

There are two drivers behind the Bill. One is the demand for fairness and social justice. The country is in the middle of a deep economic recession caused by the bankers, yet the Government have imposed on the victims the liability for meeting the ensuing very high national debt and budget deficit.

Mr Nuttall: Will the right hon. Gentleman give way?

Mr Meacher: No, I am not going to give way. The hon. Gentleman was one of those who engaged in the filibuster, and I am not giving him any more time.

By and large, those victims are the poorer and poorest households, which bear no responsibility whatever for the crash five years ago. According to the Sunday Times rich list, the wealthiest 1,000 persons in the UK—just 0.003% of the adult population—have increased their gains by a staggering £190 billion since the crash. Most of that has now been squirreled away in tax havens, hidden behind nominee shareholdings or secreted in opaque trusts. Frankly, that is utterly intolerable. It is high time that the very richest people in this country made a fair contribution to resolving the financial crisis. The Bill would help them to do so.

The second driver behind the Bill is sheer, plain, down-to-earth, honest-to-God common sense, if I can put it like that. My right hon. Friend the Member for Edinburgh South West (Mr Darling), the last Labour Chancellor, reduced the budget deficit by about a third by the end of 2010 through his stimulatory measures, but it has now been stuck at about £120 billion after flatlining for most of the past three years.

The current Chancellor has, through his enormous expenditure and benefits cuts, persistently squeezed virtually every last drop of demand out of the economy. That is a counter-intuitive and self-destructive policy if ever there was one, because it has plainly not reduced the deficit, but extended austerity indefinitely. A policy that will reduce the deficit significantly is patently needed. The obvious way to do that is to take public sector-driven stimulatory measures to kick-start real growth, but as the Chancellor has a fetish for cutting and is adamantly opposed to giving the public sector any role in promoting growth, I submit that my Bill is the next best option.

First, following the revelations of which we have heard repeatedly in the past few months of colossal tax scams perpetrated by US multinationals Starbucks, Apple, Facebook and Amazon—I recognise that those scams are more or less exactly the same as those perpetrated by a great many UK multinationals—the Bill proposes that the tax details and implied tax liabilities of both the wealthiest individuals and the biggest corporations are made public, and that the beneficial owners of companies

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who hide behind nominee shareholdings are also made known. That has repeatedly been discussed but never done. My Bill proposes that it should now happen. The tax enforcement that will result from what is revealed will raise tens of billions of pounds for the Exchequer and significantly deplete the deficit and interest payments on the debt. Therefore, the Bill tackles the extreme opacity in the tax affairs of both the largest companies and the wealthiest individuals in the UK by requiring that the tax returns of the top 250 in each group are put on public record.

Four criteria are used to define the 250 largest companies, starting with the FTSE 100. The Bill will ensure that other companies with substantial sales, profits and numbers of employees are also required to disclose. As a result of my Bill, companies that seek to avoid UK corporation tax but that still have a significant undertaking in this country will, for the first time, be required to disclose the full range of their tax dispositions. On individuals of highest net worth—to use the commonly used phrase—the Bill will reveal how income is commonly shifted into capital gains, and in turn reduced by allowances and relief. In respect of both companies and individuals, the data will enable the tax abuse that, according to Her Majesty’s Revenue and Customs and Treasury data, costs this country at least £35 billion a year, to be effectively addressed for the first time.

Secondly, multinational corporations have, as hon. Members know, hidden their activities behind complex and often secret corporate networks that conceal their tax liability—the networks are set up to do that—especially if a subsidiary is incorporated in a tax haven. The Bill requires any multinational corporation to publish the accounts of all its subsidiaries on public record.

Thirdly, the Bill requires that companies identify their beneficial owners and pass the details to Companies House. That is important because the registered legal owners can easily disguise who is behind a company, and thus present an entirely false view of its structure. For example, many quoted companies list only some of their shares on the stock exchange; the rest are in beneficial ownership. Limited liability partnerships are widely used for tax abuse, because members of an LLP are taxed, but not the partnership itself. If the details of ownership are known and put on the public record, the tax liabilities can be correctly assessed. Unlimited companies are almost routinely inserted into major corporation group structures in order to disguise ownership or control, often in ways that are designed to mislead about the true nature of transactions being undertaken. Obviously, foreign branches must be included if an enormous loophole is not to be created in the disclosure of beneficial ownership.

I would be the first to recognise that to presume that a company bent on tax avoidance or other dishonest purposes will necessarily comply with its obligation to disclose its beneficial owners is, frankly, naive. The Bill would therefore also place a new obligation on UK banks to report the information they collect on their limited company clients under money-laundering regulations, including the real trading address of a company, who its directors and beneficial owners really are, and where they are located. The banks would be required to submit that information to Companies House, which would then be required to publish it. The banks

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would also have to supply the information to HMRC, which would then be required to demand a tax return from any company with a bank account.

The sanctions—and sanctions are the only thing that will make the legislation work—for failing to supply any information demanded from the company by Companies House or HMRC would be either the removal of limited liability status or making directors and beneficial owners liable for the debts. Under the Bill’s provisions, HMRC would also be granted the power to access the company’s bank account data, so that estimated tax assessments could be raised if the company refused to supply accounts. Again, the directors and beneficial owners would be held responsible and would have to pay the consequential tax.

In order to avoid an obvious loophole, the requirement for a company to have information on its beneficial ownership and its accounts on public record—on its own website, or wherever—would be extended to the tax havens in Britain’s Crown dependencies and overseas territories, although of course only if the company in question had a beneficial owner outside that territory.

Finally, the Bill deals with the question of trusts and would require that they, too, declare the true identity of their settler, the trustees and beneficiaries to HMRC. If they do not, the sanction would be that the trust property would pass to the Crown. Trust data will also be placed on public record, but only in the case of those with significant assets or income, and those that control companies—I am not worried about trusts that are relatively trivial in their economic impact. Those measures are necessary to enforce the requirements. The information has always been available to the Government, but under both parties there has been an unwillingness to use the measures that are patently available to ensure that tax is paid in accordance with what Parliament has determined.

It is no exaggeration to say that the effect of these measures on the UK system’s capability would be nothing less than transformational. We have repeatedly been shocked by multinational corporations and their armies of City lawyers and accountants regularly running rings around the UK tax authorities—sometimes, one might think, with the apparent complicity of Government—but that is not inevitable or irreversible. My Bill will redress a massive injustice in tax burdens, put a stop to enormous tax abuse by large companies which has persisted for far too long and make a huge contribution to reducing the budget deficit. I commend it to the House.

1.40 pm

Jacob Rees-Mogg (North East Somerset) (Con): It is a pleasure to follow the right hon. Member for Oldham West and Royton (Mr Meacher), partly because I disagree with almost everything he has said, but also because it is rather refreshing that Opposition Members are willing to say it. Most of them hide their true socialist credentials, but the right hon. Gentleman is a socialist red in tooth and claw. That is admirable, because it gives us on the Conservative Benches something to get our teeth into and oppose.

I disagreed with the right hon. Gentleman from the very outset of his speech. I disagree with the way he examined the financial crisis and the blame he places. He puts it exclusively on the bankers, but it is not as simple as that. It takes two to tango—not, I must

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confess, something I do very often, if ever. The crisis needed people and institutions to borrow the money that the bankers were lending. It needed the regulatory system that was set up by the last Government, which took the Bank of England out of regulating the banks.

Sheila Gilmore (Edinburgh East) (Lab): In criticising the lack of regulation, is the hon. Gentleman suggesting that his party leader was wrong to say in opposition that there should be less regulation?

Jacob Rees-Mogg: That is a complete non-sequitur. The issue is bad regulation, not too much or too little. It is perfectly logical to argue that there was too much bad regulation prior to the financial crisis and not simply think that we need more to solve the problem. I would argue that the Governor’s eyebrow is not something that can be regulated particularly effectively. No Act of Parliament, powerful though Acts of Parliament are, can determine how the Governor should raise his eyebrows or not; on the other hand, that was an effective way of regulating banking and ensuring that banks did not become overextended. Ticking boxes to comply with regulation often ensures that people obey the detail of it, but get away from the spirit. That is certainly what happened with some of the bank capital regulations prior to the financial crisis and some of the behaviour of financial institutions, which followed the letter of the law but got into a great deal of trouble. It was not that there was too much or too little regulation; it was that there was bad regulation.

I disagree with the right hon. Member for Oldham West and Royton on his understanding of the crisis, but I disagree with him even more firmly on the Government’s approach to solving it. Getting the public finances back into good order is the essential foundation for an economic recovery. The idea that the situation could have been improved by spending more each year in deficit, when tax revenues were low and the economy was weak, than we had ever spent in peacetime, is absurd. It would have just put us into a debt spiral. The United Kingdom’s credit would have declined and we would have been unable to finance our annual deficit and our cumulative debt.

Mr Meacher: I was not proposing any increase in public expenditure at all. The whole point of my Bill is that raising money from the extremely wealthy individuals of this country, and possibly also some corporations, would provide the money to generate probably 1 million or 2 million jobs within a couple of years. That would lead to a far bigger reduction in the deficit than anything the Government have done or just concentrating on cutting expenditure.

Jacob Rees-Mogg: The Government had a fiscal tightening and a plan for increasing taxation—which has come through—that forecast taxation going up to over 38% of GDP. Taxation at 38% of GDP is about the highest level that Governments ever achieve. If we go back to Harold Wilson’s prime ministership, we still find that it is almost impossible to get taxation at much more than 38% of GDP. The issue was that spending was so high, not that taxation was too low. The ability to squeeze imaginary rich people to get a lot of money coming in was simply not there. Such fiscal tightening

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on the taxation side as was possible was undertaken by the Government, but had they gone as far as the right hon. Gentleman proposes, any prospect of economic recovery would have been postponed. The tightening would have been too great, which would have harmed the economy. It would have taken money out of the economy simply to put it into the Government’s coffers. That would have led to a shrinkage of the economy, not least because people would have changed their affairs so as not to pay that extra burden of taxation.

Philip Davies: Did not that intervention from the right hon. Member for Oldham West and Royton (Mr Meacher) go to the heart of the difference between his views and ours? His view was that the Government would create all those jobs, whereas it is our view that the private sector companies that he so hates will create those jobs for the economy.

Jacob Rees-Mogg: My hon. Friend is absolutely right. It is certainly my view—I accept that it is not the view of the right hon. Member for Oldham West and Royton—that it is the private sector that creates employment. Every job in the public sector has to be paid for by the taxes of the private sector. The public sector has no ability to create jobs without imposing a burden of taxation either now or in the future. I shall not go into the details of Ricardian equivalence, but the electorate understand that extra spending that is borrowed is merely taxation postponed.

Mr Meacher: In the depths of a recession, the private sector will not take this country or any other country out of that recession. There is £775 billion in corporate cash stockpiles in this country that is not being used. The problem is a lack of demand. The only way to insert demand into the economy is, initially, through a public sector-driven promotion of stimulatory measures. Only when the economy starts to rise will the private sector take off.

Jacob Rees-Mogg: Once again, I do not agree with the right hon. Gentleman’s assertion. Placing an extra tax burden on the private sector during the lowest point in a downturn will make that downturn even worse. The cash that has been built up by the private sector is waiting to encourage the recovery as it begins and as the private sector begins to recover. At that point, people become more confident because they have kept their own money, rather than it having being taken by the Government.

Mr Nuttall: Does my hon. Friend agree that, contrary to what has been said, it is the private sector that is leading the way in this recovery? The fact is that the private sector has created 1.3 million new jobs since the last election.

Jacob Rees-Mogg: I am very glad that my hon. Friend has put it in that way. Sometimes, the Government claim that they have created 1.3 million private sector jobs, and that is a turn of phrase that I particularly dislike. It is not the Government who have done it; it is the private sector.

I am particularly enjoying discussing the right hon. Gentleman’s Bill. It is sometimes alleged that politics has all become too similar and that all the parties agree.

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That might be true of those on our Front Benches, but there are still some of us on the Back Benches who are willing to put forward in a more forthright way the views that we hold according to our respective political traditions. That certainly makes the debate in the Chamber more interesting.

Having set out my broad-brush objection in principle to what the right hon. Gentleman has proposed, I want to move on to the details of the Bill. And here it gets worse. The Bill is an astonishing, fundamental attack on some of the basic principles that we ought to enjoy. As a taxpayer—I am sad to say that I am not in the top 250, although I would not mind if I were—I have a right to privacy. The Government do not have a right to publish my financial information; that is my private, confidential affair. I am not advocating tax evasion, which is a criminal activity. It is quite right that it should be criminal, and the Government should enforce those laws. However, the prevention of that crime does not require the Government to deny people their fundamental right to privacy.

People’s most personal and intimate financial details, as set out in their tax return, should not be made available to all and sundry, and it is quite right that the tax authorities should maintain vigorous rules of confidentiality, even when appearing before Select Committees of the House of Commons. It is a right that we all enjoy as British subjects that our financial affairs are a private matter. Yes, we have to pay a degree of taxation and, yes, we have to make declarations to the Revenue, but we do so on the understanding that they will be kept confidential. Once this begins with the top 250, the next stage will be the top 1,000 and it will develop further so that nobody has the right to maintain privacy of their own financial affairs. I thus oppose this provision very strongly.

I oppose less strongly the requirements for disclosure by public companies because they have exchanged a right to privacy in return for limited liability, so they are expected to make disclosure and are obliged to do so to their shareholders. Clause 1 deals with “Disclosure of financial information by large companies” and from the perspective of a shareholder as an investor, I believe that I am entitled to such information anyway; and with large public companies, the shareholder list is so extensive that, once that information is given to shareholders, it is effectively in the public domain.

I add at this point that my background and career have been in investment management, so I know that the more information we get from listed companies, the easier it is to do the job of an investment manager and the better the investments it is possible to make. Perhaps inadvertently, then, the right hon. Gentleman will help the investment community in that, if clause 1 were introduced, financial analysts in the City of London would practically be dancing with joy at their ability to find out every single financial statement of large private companies. It might be quite helpful in stopping them from hiding unwelcome, loss-making subsidiaries somewhere at the bottom of the balance sheet, tucking them away under a contingent liability. Because this is essentially dealing with already public companies, I would make no objection to the clause, but I would maintain the privacy of individuals—and of trusts.

I do not think that trusts should be attacked in this way. Trusts are, in fact, one of the glories of the British legal system. They are much less understood on the

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continent, but they allow many protections to be built into ownership. Trusts allow the protection of minors in how they are structured and they allow continuity in the holding of assets, including allowing some of this country’s great historic treasures to be kept within the country through the trust structure of ownership. Putting unduly onerous charges on them and requirements to report would, I think, be unreasonable.

Looking at the detail, the idea is that, if trusts do not meet the requirements, their income should go to the Crown. That is what happened in the Court of Wards in the 17th century. It was one of the things that caused such trouble between Parliament and the King because the Crown was able to take the estates of minors and effectively ruin them during the minority of the beneficiary. We moved away from that type of arbitrary rule of giving power to the Crown—in this context, it is not a personal Crown; the Crown is the Executive—to do things such as take funds from private property, not in the form of tax, but in a regulatory way, squeezing income for a certain period until onerous requirements are met.

I think that would be an extraordinarily unsatisfactory way of proceeding. It would undermine the right of property—again a fundamental right that we ought to enjoy. Going back to the Magna Carta, the Crown cannot take property away from people unless there is a judgment—a judgment in a court—against them; it cannot be done on the basis of some failure to meet some bureaucratic standard. This seems to me to illustrate where the Conservative, a believer in the rights of property and a believer in the individual, stands up against the socialist, a believer in the collective and the rights of the collective to override the rights of property. I stand four-square in favour of the rights of property and four-square, too, in favour of the rights of the Crown dependencies, by and large, to regulate their own affairs.

The Bill is again onerous in what it requires to be done, by Order in Council, for territories that, by and large, are no longer treated as mere colonies. The Crown dependencies are allowed to develop and run their own affairs and have their own elective councils to take charge of those affairs. The Bill is a throwback to how this country behaved in the 19th century when we felt we had a greater right to order about the non-dominions—with dominions starting, first with Canada, in the latter part of the 19th century. We seem to be taking the Crown dependencies back to a period before dominion status started to be granted. I consider that to be undemocratic, and unfair on them. It attacks their fundamental livelihoods, namely, their ability to provide financial services and a degree of confidentiality at the same time.

There is a fundamental disagreement—and I am not entirely of the Government’s view either—about the attempt to elide tax avoidance and tax evasion. It is very important to be clear about the difference between the two. Tax evasion is criminal, illegal deliberate breaking of the tax law; tax avoidance is following the law as it is written. It seems to me that, when people are being accused of avoiding tax, it is the job of Parliament to pass good laws that make that avoidance difficult, and to make the tax collectible by Act of Parliament, rather than turning the position the other way round and saying “We are not very good at writing tax law, and therefore we will make you disclose absolutely everything

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so that, ex post facto, we can determine how much tax we think you ought to have paid.” That strikes me as fundamentally unjust.

It has been a solid principle of British law for decades formally, but for centuries effectively, that the individual taxpayer does not have to arrange his affairs so as to increase the amount of tax that the Revenue is entitled to take. It is an important part of justice that the law should be clear, and should be enforced fairly.

Philip Davies (Shipley) (Con): I entirely agree with my hon. Friend. It seems bizarre that people should be criticised for following the law of the land.

The Government have introduced a new concept, that of “aggressive tax avoidance”. Given my hon. Friend’s expertise, I wonder whether he can explain to us the difference between tax avoidance and aggressive tax avoidance.

Jacob Rees-Mogg: My understanding of aggressive tax avoidance is that it is, in fact, tax evasion when the Revenue has not yet got around to taking action. One of the schemes reported in the newspapers involved some comedian whose name escapes me: he is modern, and apparently very funny if you like that sort of thing. What he was doing struck me as evasion, not avoidance, although that was not directly his fault. It seemed to me that the scheme was so far removed from any sensible understanding of the tax law that “aggressive tax avoidance” was essentially a euphemism for “We will try to scrape things back rather than charging people.” I should prefer to see Her Majesty’s Revenue and Customs using the law as it is, and testing the law in the courts to establish whether such activity really is evasion. If it proves to be evasion, people should be punished accordingly, and if it proves to be avoidance, it should be considered legitimate.

I do not think it is possible to say that there is the law, there is the non-law, and somewhere in between there is something that the Government would quite like us to do. There are an awful lot of things that the Government would quite like us to do. At one point, they wanted us all to eat five vegetables a day. Indeed, they probably still want us to eat five vegetables a day, but that cannot be law. It is wrong to try to say that good behaviour, generosity and charity should be a matter of law. That is a different concept. The law, with all the might and power and sanction behind it, is a more absolute thing than that.

Mr Nuttall: Does my hon. Friend accept that there might be such a person as a diligent tax avoider—someone who reads the legislation, spots a loophole, and decides to take advantage of it?

Jacob Rees-Mogg: Sometimes the Government want people to avoid tax. Sometimes they allow people to do that because, although they do not much like it, they cannot stop it. Let us take, for example, people who bring cigarettes into this country from abroad. There is an agreement with the European Union that, if people have bought cigarettes in another member state, they are entitled to bring them in. In that way they collectively avoid, probably, billions of pounds’ worth of tax. Duty

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free is tax avoidance, a form of tax avoidance that some of us rather enjoy when we have been a bit further afield than the European Union. Pension funds are tax avoidance. Individual savings accounts are tax avoidance. All those elements of tax avoidance are elements of which the Government approve. It is, I think, unreasonable to say that people should arrange their affairs so as not to take advantage of legitimate tax avoidance that is in the legislation—and who is then to decide whether the tax avoidance provided by pension contributions is legitimate or the tax avoidance provided by some business start-up scheme has suddenly become illegitimate? It is the law that should be deciding these things, and the best way to solve the problem is not by denying people the right to privacy, not by confiscating their property, not by excessive and onerous burdens on the taxpayer, but by having a much simpler and clearer tax system without the Government giving all sorts of incentives to do one thing rather than the other.

We need a more Ronald Reagan-style approach to taxation where deductions are removed and rates come down. That leads, by and large, to more people paying their tax. If we go down the other route and have an incredibly onerous reporting system and put ever more burdens on individuals and on trusts, all that will happen is that those on The Sunday Times rich list—a vast number of whom are foreign nationals who have come to live in this country, and who are very mobile and who bring wealth, prosperity and employment into this country—will take up their wealth and leave.

What sort of a nation do we want to be? Do we want to be a nation that encourages enterprise, that believes in freedom, that respects the right of property and, crucially, the rule of law, or do we want to be a nation of arbitrary Government? The choice is very clear, and I am very grateful to the right hon. Member for Oldham West and Royton for bringing before this House the question of whether we want the fundamental arbitrariness of socialism: the belief that the state—the collective—comes first, and individual rights and privacy are trampled upon to ensure that the state can get what it feels like. That is not the nation I want to see us become. I want one, as we have historically been, based on strong and enterprising individuals who obey the law because they feel that the law is part of them and part of the nation they belong to. Therefore, I hope this Bill will be utterly rejected.

2.2 pm

Mr David Nuttall (Bury North) (Con): It is, as always, a great pleasure to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I entirely concur with his remarks and rise to oppose the Bill. I entirely accept that the right hon. Member for Oldham West and Royton (Mr Meacher) has introduced this Bill with the very best of intentions. I am sure he wants to achieve for the people of our country the same as I want to achieve for them: improved conditions and high-quality public services. However, I am by no means convinced that the way to do that is by introducing measures such as those contained in the snappily titled United Kingdom Corporate and Individual Tax and Financial Transparency Bill.

When I first read this Bill, I did not know where to begin in expressing my thoughts as to just how bad a piece of proposed legislation it was. I do not criticise the

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manner in which it has been prepared and written, I hasten to say. I am sure that Richard Murphy, who prepared it, has done an excellent job, and I have read the article he wrote about it. I am sure that he, too, had only the best intentions when he put this Bill together. However, it does absolutely nothing to increase the wealth of this nation. It does nothing to help generate new industry and new services, or to promote economic growth. I am prepared to accept that the Bill is born out of intentions that were good, but I fear that it will have nothing but the opposite effect.

I was surprised and disappointed, perhaps in equal measure, that no explanatory notes accompanied the Bill—there were none in the Vote Office when I asked for them—and no assessment had been provided of its possible impact on British companies and individuals. Without an impact assessment, I can only imagine what the impact would be. I shall discuss my conclusions and imaginings in due course, but I assure the House that they were not that the Bill augured well for this country’s prosperity.

Charlie Elphicke (Dover) (Con): My hon. Friend is making a detailed and thoughtful argument. Does he believe the Bill would be likely to lead to further administration for companies in this country and would increase the regulatory burdens on them?

Mr Nuttall: I am grateful to my hon. Friend for that intervention, which I can answer in one word—yes. I absolutely believe the Bill would increase the regulatory burden on companies. We must draw a distinction here, as my hon. Friend the Member for North East Somerset did. Large, well-resourced public companies may have the capability and capacity to deal with yet another piece of legislation, and, as has been mentioned, there may well be good grounds, particularly for financial analysts, for this information to be in the public domain. However, the Bill goes far, far wider than just the top 100 public companies—the FTSE 100 companies.

My reading of clause 2, on which I am prepared to be corrected if I am wrong, is that the next 150 companies are not necessarily public companies. Subsection (1)(b) refers to

“those 50 large companies, not being members of the FTSE 100, that have, when arithmetically combined with their UK resident related undertakings, the largest by value UK taxable profits before the offset of all tax allowances and reliefs of any sort whatsoever in a year ended 31 March”.

That does not restrict the provision’s scope to public companies, so one must conclude that private companies will be included. The same applies in respect of paragraph (c), which deals with the next 50 largest companies by their

“value of supplies in the United Kingdom, whether chargeable or exempt, for the purposes of value added tax”

and paragraph (d), which deals with

“those 50 large companies”

that have

“the largest liability to make payment of income tax and national insurance contributions”.

In other words, the greatest employers in our land are being attacked by this Bill. I cannot believe that the Bill will encourage those companies, so the answer to the

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question asked by my hon. Friend the Member for Dover (Charlie Elphicke) is yes, it will undoubtedly add to the burden, particularly for the banks.

Charlie Elphicke: I praise the right hon. Member for Oldham West and Royton (Mr Meacher) for bringing the Bill to the House as he is a sincere campaigner against tax avoidance—a concern I share. Does my hon. Friend agree, however, that a better way to tackle tax avoidance is to get rid of the loopholes by simplifying our tax system and making it easier for people to understand?

Mr Nuttall: My hon. Friend is absolutely right. My view—I suspect it might well be that of my hon. Friend, too—is that if the Government wish to increase the tax yield on behalf of the nation and to make it easier for individuals and companies to abide by their obligations, the way forward is to pass simpler tax legislation that we can all understand. I am sure that my hon. Friend has greater expertise in these matters than I do, but I have always found tax legislation particularly difficult to follow. I do not know the latest figures for Tolley’s tax guides, but when I was in practice in the legal profession they were substantial volumes and I suspect that they can only have grown in the past few years. Each one, on one tax alone, is a substantial doorstop.

It is no surprise that loopholes are discovered by accountants and tax advisers because the law is so complex and convoluted. There are so many different taxes, some of which overlap, that there is scope for tax loopholes to arise by accident. Governments do not set out to create tax loopholes other than those that are set out in legislation by design, they are precisely what they are called—tax loopholes.

As has been mentioned, it is often the Government’s desire to create what might be called loopholes, such as ISAs. I have been waiting to get to this point, as it gives me my second opportunity this morning to refer to ISA. This time, I do not mean the International Seabed Authority but the individual savings account. Before I looked into deep-sea mining, that was the only form of ISA I had heard of. ISAs are a form of tax avoidance set up to replace personal equity plans and were established as a means of encouraging people to save. They were set up to encourage private individuals to save in a tax-efficient manner in that they would not have to pay income tax on the income their account had earned. That could be called a tax loophole, but it is a legal tax loophole set up by the Government.

Let me return to the Bill. We must draw a distinction between tax evasion and tax avoidance. Let us be clear: tax evasion is already illegal, but almost weekly in this House I hear the two terms being confused. People say that someone has been a tax avoider, suggesting that they have acted illegally. Well, if they have, they are not a tax avoider; they are a tax evader, and they should be brought to book and prosecuted. I have no sympathy with them whatsoever. If someone has deliberately under-declared their income, I entirely agree that they should be brought to book by the Revenue and Customs, that they should be prosecuted and, in certain cases, sent to prison. Let us not beat about the bush. I am sure I am in agreement with my hon. Friend the Minister on that. I do not want to go easy on people who have deliberately avoided their obligations to society by breaching our

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tax legislation in such a way as to avoid paying their dues and demands under the law. That increases the burden on everyone else.

Of course, we already have measures in place to provide the mechanism for the Revenue to ferret out these people. It can open up inquiries into their tax affairs, and it frequently does. A whole industry exists around dealing with inquiries into people’s tax affairs. My accountant sent me details of an insurance policy that I could take out for that very occasion. I could pay a premium, and then if my tax affairs were investigated by the Revenue, the policy would cover my accountancy costs while the inquiry was dealt with.

However, returning to the Bill, our Government have already taken a great deal of action on tax avoidance and tax evasion. Since 2010, the Government have collected over £23 billion in extra tax by challenging the tax arrangements of large businesses. I am informed that, by tackling transfer pricing alone, the Government have collected £2 billion since 2010. It may well be that the right hon. Member for Oldham West and Royton is introducing the Bill because he thinks that those figures are not high enough. If the measures in the Bill are such a good idea, why, in the 13 years of the previous Labour Government, under Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was none of these measures introduced? If it is such a good idea now, why was it not such a good idea then? I do not know whether my hon. Friend the Minister ever went to the Treasury team at the time with this Bill and said, “Look, here is the answer to our problems.”

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. The debate is not about then; it is about now, and it is about the Bill before us. I do not want a debate on whether it should have been done in 1985 or 1998; it is about now. I know that you are very good at wanting to get into the detail of the Bill; you must get back to it.

Mr Nuttall: Thank you, Mr Deputy Speaker. I would just make the point that perhaps the reason why such legislation was not introduced by the last Labour Government is that it is not a very good idea. I will attempt to demonstrate, if I may, by looking, as you rightly suggest, at the detail of the Bill, why it is not a very good idea.

Detailed the Bill indeed is, running to 13 clauses. It deals essentially with three elements: the disclosure of the tax affairs of large companies, the tax affairs of individuals, and the tax affairs of trusts. Those are the three primary areas that the Bill seeks to attack. The first of those relates to large companies, which, in answer to the question of my hon. Friend the Member for Dover, we have already established covers not just public limited companies but those purely in the private sector.

The Bill provides that the Companies Act 2006, passed under the last Labour Government, should be amended by adding new section 409A, which would require a company to provide in respect of each one of its related undertakings its registered name; the jurisdiction of its incorporation; its company number; the jurisdictions in which it trades; the trading name it uses in each jurisdiction if that is different from its registered name; the precise nature of its trade, sufficiently described in such a

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manner as to enable those activities to be accurately identified; the percentage of the related undertaking controlled by the company; a statement of the turnover, net profit before tax, current taxation liability owing, number of employees and their total employment cost and the net assets of the related entity for the period for which the company is reporting, whether such data be audited or otherwise; and finally, the web address where the most recent financial statements can be found. If that does not increase the burden on companies, I do not know what does.

The real danger with all this added bureaucracy and red tape is that it makes this country a less desirable place to do business. As I said earlier to my hon. Friend the Member for North East Somerset, there may well be merit in respect of a public company putting this information in the public domain, but I do not see that to be case in respect of private limited companies, which are not excluded. Certainly I do not see the benefit in respect of individuals.

Clause 3 places on HMRC an obligation, no later than 1 March each year, arithmetically to combine for each taxpayer who has submitted a tax return by 31 January in respect of all their taxable income of all sorts, with a few exceptions, and to publish those in descending order of magnitude—in other words, the 250 wealthiest individuals. This clause gives the revenue just one month to complete the task. The tax returns need not be in until 31 January, and within one month it has to have carried out this rather complicated calculation, which I will not go into the details of. Subsection (2) requires HMRC to publish, no later than 15 March each year, the 250 tax returns for the previous tax year ended on 5 April that ranked highest on the listing produced in accordance with the provisions of subsection (1). Subsection (3) requires that they should not be anonymised, and this is the crucial point about this clause—they would all be public information. In other words, the private tax affairs of any individual will no longer be private.

I can draw only one conclusion from that: there is a real risk that, were the Bill enacted, it would cause the wealthiest individuals in our society—I hasten to add that I very much doubt the Bill would ever bother me—to go elsewhere. We as a nation would lose their wealth and the income it produces. To return to the point with which I started, I fail to see how that would benefit what both the right hon. Member for Oldham West and Royton and I want to see, which is improved public services. We would not be able to improve our public services if the wealthiest individuals in our country and all the tax they pay disappeared as a result of onerous and intrusive obligations that the Bill imposes on them. They would simply use their wealth to look around the world, find a more suitable home and tax regime and leave our shores.

I want to address in particular the obligations that the Bill places on our banks, because they give rise to a great deal of complication. Clause 5 requires financial institutions to

“notify Her Majesty’s Revenue and Customs and Companies House that they have opened or closed an account in the United Kingdom for a company within thirty days of that account being opened or closed stating—

(a) the name and registered number of the company;

(b) the address at which they correspond with that company;

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(c) the names and full addresses, dates of birth and nationalities of those persons who they have accepted as having authority to take action with regard to the account;

(d) the names and addresses, dates of birth and nationalities of those persons who they have identified as the beneficial owners of the company in question as required by Regulation 5 of the Money Laundering Regulations 2007;

(e) the number of the account that they have opened; and

(f) the numbers of any other accounts that they maintain for the company.”

I may be reading this wrongly, but there does not appear to be any question whatsoever about the size of the company. It does not say that the company has to be of a certain size; it simply says that if a company opens a bank account, it has a duty to report it. That covers literally thousands and thousands of bank accounts. It would increase enormously the burden on our financial institutions and banks at a time when we want them to concentrate on the much more important task of getting the British economy moving again and on lending to businesses. I do not want our bankers to have to fill in forms and write down the names and addresses of companies and the addresses to which they write. That would stop them doing their primary task, which is to play their part in getting the British economy moving and growing. As we know, it is starting to grow, but there is much more to do.

Let us be clear: no one is suggesting that the Bill does not have the best of intentions behind it. However, the Government have already increased significantly the compliance yield, which is the amount that the Government expect to get from tax—

2.30 pm

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 1 November.