Written evidence
Response from the previous Government
to our predecessor Committee's Second Report of 2009-10, The Work
of the Committee in 2008-09, dated 27 March 2010
The State of Human Rights in the UK
1. Serious, sustained allegations that the
UK has received information from countries which routinely use
torture, or has been more actively complicit in torture carried
out by others, puts the UK's international reputation as an upholder
of human rights and the rule of law on the line. (Paragraph 15)
The Government notes the Committee's conclusion.
However, the Government considers its position is clear that the
UK stands firmly against torture and cruel, inhuman and degrading
treatment or punishment. There is no truth in the suggestion that
it is our policy to collude in, solicit, or participate in abuses
of prisoners.
We have taken a leading role in international efforts
to eradicate torture. We support the work of international organisations,
including the UN, against torture, and work around the world to
promote effective criminal justice systems to both prevent torture
and ensure perpetrators are brought to justice.
Wherever allegations of wrongdoing are made, the
Government takes them seriously, and refers them, if necessary,
to the appropriate authorities to consider whether there is a
basis for inviting the police to investigate. This is not a theoretical
possibility - it has happened, and there are ongoing police investigations
as a result.
Intelligence from overseas is critical to our success
in stopping terrorism. All the most serious plots and attacks
in the UK itself in this decade have had significant links abroad.
So our agencies must work with their equivalents overseas, some
of whom may have different legal obligations and different standards
to our own in the way they detain people and treat those they
have detained. But that cannot stop us from working with them
where it is necessary to do so to protect our country and our
citizens.
Whether sharing information, which might lead to
the detention of people who could pose a threat to our national
security; passing questions to be put to detainees; or participating
in interviews of detainees, we do all we can to minimise, and
where possible avoid, the risk that the people in question are
mistreated by those holding them.
Once published, our consolidated guidance to Agency
staff and service personnel will make clear the careful and considered
way we approach these situations.
There is no truth in the suggestion that the Government
has "sidestepped parliamentary scrutiny" of these issues.
These serious issues are subject to robust parliamentary scrutiny
both during debates in the House and by parliamentary committee.
The Intelligence and Security Committee, in particular, is a key
organ of parliamentary accountability for the work of our security
and intelligence Agencies, as the courts have recognised. The
Committee is a creation of Parliament, not of Government. It is
an independent body made up of senior members of both Houses of
Parliament, which does not stint in criticism where it is appropriate.
One of the Committee's core functions is to review
policies of the Agencies and report back findings to the Prime
Minister and Parliament on an annual basis. In addition to its
annual reports, the Committee has conducted detailed investigations
on the "Handling of Detainees by UK Intelligence Personnel
in Afghanistan, Guantanamo Bay and Iraq" (2005) and "Rendition"
(2007). Both these reports have been published.
The Committee also reported to the Prime Minister
in March 2009 on "Alleged complicity of the UK intelligence
and security agencies in torture or cruel, inhuman or degrading
treatment" and has considered the Government's consolidated
guidance to Agency staff and service personnel. We expect their
findings on both these issues to be made public shortly.
2. We have consistently argued that the system
of control orders, by which the activities of terrorism suspects
who have not been prosecuted can be regulated and curtailed, is
bound to lead to breaches of the ECHR, particularly because people
subject to control orders are not given the details of the case
against them. In a series of judgments during the session, the
courts have reached broadly similar conclusions, culminating in
decisions of the Grand Chamber of the European Court of Human
Rights and the House of Lords, which have caused the whole system
to unravel. (Paragraph 16)
The Government has consistently disagreed with the
JCHR's assertions relating to control orders. The Government's
position on the control order regime was set out in detail in
its memorandum to the Home Affairs Committee on post-legislative
scrutiny of the Prevention of Terrorism Act 2005 (Cm 7797), which
was laid before Parliament on 1 February 2010.
The regime is not 'bound' to lead to breaches of
the European Convention on Human Rights (ECHR). As a result of
various House of Lords judgments, the 2005 Act is fully compliant
with the ECHR.
Nor has the system unravelled. As set out in the
16 September 2009 quarterly report to Parliament on control orders,
the Secretary of State for the Home Department considered that
the control order regime remained viable following the June 2009
House of Lords judgment in Secretary of State for the Home Department
v AF & Others [2009] UKHL 28 (AF & Others), but intended
to keep that assessment under review as more cases were considered
by the courts. The High Court has upheld four control orders since
the House of Lords judgment, following proceedings that were compliant
with the Article 6 test laid down in AF & Others. The Government
therefore remains of the view that the regime continues to be
viable.
The independent reviewer of terrorism legislation,
Lord Carlile has reached the same conclusion. In his fifth annual
report on the operation of the 2005 Act, laid before Parliament
on 1 February 2010, he states that 'abandoning the control orders
system entirely would have a damaging effect on national security.
There is no better means of dealing with the serious and continuing
risk posed by some individuals.' He also emphasises that in reaching
this conclusion he has 'considered the effects of the Court decisions
on disclosure. I do not consider that their effect is to make
control orders impossible.'
3. The Government is, of course, to be commended
for introducing the Human Rights Act; but too often subsequently
there has been a lack of leadership to use the Act to its full
potential, ensure that public bodies promote human rights as well
as do the minimum necessary to comply with the legislation, and
respond to court judgments which have narrowed the scope of the
Act from what Parliament originally intended. (Paragraph 20)
As the Committee notes, the Government introduced
the 1998 Human Rights Act, which has been a significant development
in ensuring the human rights of individuals within the UK. The
Government does not accept the Committee's conclusions relating
to a lack of leadership on human rights. As outlined in the Government's
response to the Equality and Human Rights Commission's Human Rights
Inquiry Report, since the 1998 Human Rights Act came into force,
the Government has aimed to encourage a culture within public
authorities in which human rights principles are seen as integral
to the design and delivery of policy, legislation and public services.
The Government remains committed to the Human Rights
Act and to demonstrating that the Act is a common sense way to
realise our common values. Following the review of the implementation
of the Human Rights Act, the findings of which were published
in July 2006, the Ministry of Justice (MoJ) has taken forward
a programme of work to implement the recommendations of the review.
As part of this programme of work, an ad-hoc Ministerial
Group was established with a specific function to provide senior
level oversight and leadership to the implementation programme.
This group met three times in 2007 and was than concluded because
it had delivered the outcomes it was set up to achieve. There
continues to be a nominated Minster who has responsibility for
human rights in each major Government Department. The Senior Human
Rights Champions Network, which was established in 2007 to provide
support to the Ministerial Group, continues to meet every three
months to share good practice and information across Whitehall
and is an important vehicle to maintain human rights momentum
within Departments.
MoJ is leading Government Departments as they embed
human rights within their policies and practices, and lead the
implementation of a human rights framework in their agencies and
sponsored bodies. The Department continues to provide support
to other Government Departments in reviewing their own provision
of guidance, training and access to legal advice on human rights
in the sectors for which they are responsible. Government Departments
are taking various steps to implement a human rights framework
throughout their Department, their agencies and their sponsored
bodies. Examples of this are the Department of Health's Human
Rights in Healthcare Project, and the Human Rights in Schools
Project being taken forward by MoJ in partnership with the British
Institute of Human Rights and input from the Department for Children,
Schools and Families and Amnesty International.
Following the review of the implementation of the
Human Rights Act MoJ has also been working with the UK's inspectorates
and regulatory bodies to provide leadership for the implementation
of a human rights approach within these bodies. This has included
publishing a guide, entitled 'The Human Rights Framework as a
Tool for Regulators and Inspectorates', which aims to show how
a human rights framework can be a valuable tool for these bodies,
and to provide practical advice on how to integrate human rights
within their practices. A regular forum, co-chaired by the EHRC,
has also been established, for these bodies to share information
and examples of good practice; and MoJ will be working with inspectorates
and regulatory bodies to assist them to assess the training needs
within their organisation.
To address the number of damaging myths that have
grown up about the Human Rights Act, MoJ Press Office works with
officials and counterparts in other Government Departments to
provide the media with correct information about the Act. This
includes identifying misleading articles and articles which incorrectly
cite the Act and clarifying the situation with the media. The
principal Government Departments each have a nominated press officer
who can liaise with the MoJ Press Office when necessary to ensure
this is done as rapidly as possible.
In addition to providing leadership on embedding
human rights within public authorities, the Government has also
established the EHRC which, under Section 9 of the Equality Act,
has a statutory duty to:
- "promote understanding of the importance
of human rights",
- to "encourage good practice in relation
to human rights", and
- to "promote awareness, understanding and
protection of human rights", and
- to "encourage public authorities to comply
with section 6 of the Human Rights Act 1998"
Following the publication of its human rights strategy
in November 2009, the EHRC is planning to hold a meeting with
key stakeholders in February 2010 where the Commission intends
to discuss how it plans to implement its strategy, including the
recommendations of its Human Rights Inquiry. The Government is
looking to the Commission to take a strategic approach to human
rights and to translate the actions recommended by the Inquiry
into specific initiatives.
4. We are concerned that human rights will
again become a political football, with serious debate on the
choices facing the UK kept on the touchline in favour of noisy
recitals of the myths and distortions with which we are so familiar.
Politicians on all sides must be clear about what they intend
to do and the practical impact of their proposals. We would oppose
any suggestion that rights encompassed in the Human Rights Act
should no longer be protected or should not be enforced in UK
courts, or that the UK need not fully comply with judgments of
the European Court of Human Rights. (Paragraph 21)
5. Whatever decisions are taken on the shape
of the human rights framework in the UK, we are of the view that
Parliament, Government and the people we serve will continue to
benefit from a dedicated human rights committee with an unflinching
focus on whether human rights are being protected and promoted
sufficiently in the UK (Paragraph 22)
The Government notes the Committee's comments.
Pre- and Post-Legislative Scrutiny
6. We draw to the attention of both Houses
the Government's undertaking, in 2006, that a coroner may refuse
to suspend an inquest in favour of an inquiry under the Inquiries
Act 2005 if he reasonably believes that the inquiry will not comply
with Article 2 of the ECHR (Paragraph 29)
We believe that the Government's 2006 view, which
stopped short of an undertaking, still applies in most circumstances
when an inquiry into a death, or a series of deaths, is established
under the Inquiries Act 2005.
However, as has been made clear in extensive debate,
in both Houses, during the course of what became the Counter Terrorism
Act 2008 and the Coroners and Justice Act 2009, there are some
extremely rare circumstances when an Article 2 compliant inquest
cannot be held. This is because there is centrally relevant material
which cannot be disclosed to the coroner, a jury (where summoned)
or to the family of the person who has died, and an inquest cannot
therefore fulfil its purposes.
During the course of debate, Ministers acknowledged
that these circumstances are so rare that they apply to only one
current case, and that this case was not drawn to their attention
until August 2007. At that time, a coroner ruled that he was
unable to proceed with an Article 2 compliant inquest because
particular material was unable to be disclosed to him.
Subsequently, and in both Bills referred to above,
the Government has put forward several different models for how
Article 2 can be complied with.
The solution reached is that if the Lord Chief Justice
believes an inquiry should be established, then he will nominate
a judge to chair the inquiry and the Lord Chancellor will advise
the coroner with responsibility for investigating the death that
he or she should suspend his or her investigation.
The subsequent inquiry will have access to the material
which was unable to be disclosed to the coroner, and the bereaved
family will have a Counsel to the Inquiry to review and ask questions
about material that cannot be disclosed to them. In the Government's
view, these proposals comply with Article 2 requirements.
There would be no purpose in either the coroner proceeding
to hold a parallel inquest, or resuming the inquest at the conclusion
of the inquiry, given that he or she would not be able to see
the sensitive material. There would therefore be no prospect
of such an inquest being Article 2 compliant.
7. We welcome requests from members of the
public to investigate Government policy or practice which may
not comply with the UK's human rights obligations (although bearing
in mind that we cannot investigate individual cases). Where time
allows, we will endeavour to take up matters within our remit
with the Government and to provide a response to those who raise
matters with us explaining the action we intend to take or the
reasons why we have decided not to act. (Paragraph 31)
The Government notes the Committee's position.
8. We look forward to receiving the fruits
of this work: scrutiny of the Finance Bill is central to the work
of Parliament and we require additional information than that
which is normally provided in order to perform our scrutiny role
properly (Paragraph 33)
Following publication of the Finance Bill, the Government
will provide the JCHR with a memorandum identifying the fully
retrospective provisions within the Bill, (i.e. not including
those about which a budget or an in-year announcement has been
made), in order to aid the Committee's scrutiny of the legislation.
Timeliness
9. During the session we reported on nine
bills before Report stage in the first House and one before Second
Reading in the second House. (Paragraph 34)
The Government notes this information.
Recurring Themes
10. We welcome the Government's willingness
to amend the Marine and Coastal Access Bill to meet our concerns
about compliance with Article 6 of the ECHR in the light of the
Tsfayo judgment. We look to the Government to build on its approach
to dealing with Tsfayo in this context in future legislation.
(Paragraph 37)
The Government would like to make clear that its
reasons for amending the Marine and Coastal Access Bill in this
respect should not be taken to imply any acceptance by the Government
of the view that the Bill, as introduced into the House of Lords,
or at any intermediate stage of its proceedings to date, was not
compatible with Article 6(1) ECHR. The reasons for the Government's
view on compatibility with Article 6 (1) were set out in a letter
from Lord Hunt of Kings Heath to the Chairman of the Joint Committee
dated 27th February 2009, published as an Annex to the Committee's
Eleventh Report of Session 2008-9 (at Ev.25). The Government stands
by the views expressed there.
The Government remains of the opinion that the decision
in Tsfayo relates only to the specific facts of that case.
Quality of Explanatory Notes
11. Following the example set by the Department
of the Environment, Food and Rural Affairs with the Marine and
Coastal Access Bill and the Government Equalities Office with
the Equality Bill, Ministers should provide us with a redacted
version of the human rights memorandum circulated within Government
when a bill is introduced. We recommend that Government guidance
on the introduction of legislation should be amended to give effect
to this proposal in time for the first session of the new Parliament.
(Paragraph 42)
The Government has continued to work hard throughout
this Parliament to improve the quality of the human rights analysis
contained in the Explanatory Notes and we welcome the Committee's
acknowledgement of this improvement. In addition, as the report
notes, Bill teams are increasingly providing detailed memoranda
or letters to assist the Committee in its legislative scrutiny.
Whilst Bill teams are encouraged to draw on the analysis
in the ECHR memorandum when preparing explanatory notes, the Government
remains of the opinion that it is not appropriate for redacted
versions of all ECHR Memoranda automatically to be sent to the
Committee. The principal purpose of the Memorandum is to provide
legal advice to Legislation Committee when Bills and Draft Bills
are considered for introduction, and it may contain advice from
Law Officers which, as the Committee is aware, is privileged legal
information.
In light of the Government's continuing commitment
to improving the quality of information received by the Committee,
and the need to ensure that the ECHR Memorandum fulfils its intended
purposes effectively, the Government will not change the Cabinet
Office guidance at this time. The Committee may be interested
to note however that we have recently updated the Cabinet Office
guidance on Making Legislation to include a link to the Explanatory
Notes to the Criminal Justice and Immigration Bill, which received
Royal Assent in 2008. These were praised by the Committee in their
Sixth Report of Session 2007-08 for providing a detailed analysis
of the human rights issues arising.
Committee Amendments to Government Bills
12. We look forward to the House of Commons
being given the opportunity to agree that amendments to bills
(and motions) can be tabled in the name of a select committee,
as long as the amendments have been agreed formally without division
at a quorate meeting (or, in the case of a joint committee, by
a quorum of Commons Members). We also welcome the Procedure Committee's
recommendation that committee amendments should have priority
in selection for decision under programming. (Paragraph 44)
The Government notes the Committee's view. This is
a matter for the House of Commons itself.
13. We particularly welcome and endorse that
Committee's view that "there should be a presumption that
no major group [of amendments] should go undebated". (Paragraph
45)
The Government notes the Committee's view.
Civil Society input into Legislative Scrutiny
Work
14. The House of Commons should be given an
early opportunity to debate changes to procedure arising from
the report of the Wright Committee, including a new approach to
the allocation of time for Report stage debates which will enable
the Commons to debate legislation more thoroughly than is often
possible at present. (Paragraph 45)
The House debated the recommendations of the Select
Committee on Reform of the House on 22 February and 4 March.
15. We welcome engagement with members of
the public, NGOs and others about the human rights issues raised
in bills. (Paragraph 46)
The Government notes the Committee's position.
16. The publication in draft of the Government's
legislative programme has helped us plan our work and attract
more civil society input and should now be regarded as a routine
part of the legislative cycle. (Paragraph 47)
The Government welcomes the Committee's comments
on the draft legislative programme.
UN Convention Against Torture
17. This formulation of the Government's view,
which we had not previously encountered, does not assuage our
concern that the UK may be in systematic and regular receipt of
information obtained by torture overseas and may, as a result,
be "complicit" in torture as that term is defined in
the relevant international standards. An overseas security agency
may well use torture without being encouraged to do so by the
fact that the information thereby obtained ends up in London.
In any event, it is unlikely that the UK Government would come
to know or believe that its receipt of such information was acting
as an encouragement to torture. (Paragraph 63)
With regard to the passive receipt of intelligence
obtained by torture, the Government's position on State complicity
is explained in our response to the Committee's report 'Allegations
of UK Complicity in Torture'.
The reality is that that the precise provenance of
intelligence received from overseas is often unclear. Where there
is intelligence that could save British - or other - lives, however,
we believe that we cannot reject it out of hand. This is the
same conclusion reached by Lord Justice Brown in his judgment
in the 2005 House of Lords Appeal[1]
on cases related to the Anti-Terrorism, Crime and Security Act
2001:
"Generally speaking it is accepted that the
executive may make use of all information it acquires: both coerced
statements and whatever fruits they are found to bear. Not merely,
indeed, is the executive entitled to make use of this information;
to my mind it is bound to do so. It has a prime responsibility
to safeguard the security of the state and would be failing in
its duty if it ignores whatever it may learn or fails to follow
it up."
Furthermore, it is only by working with international
partners and making our position on torture clear that we can
seek to eradicate this abhorrent practice worldwide.
Rt Hon Michael Wills MP
Minister of State, Ministry of Justice
Submission
from the previous Government on retrospective measures in the
March 2010 Finance Bill, dated 1 April 2010
Introduction
1. In the Summary of the Twentieth Report of 2008-09,
the JCHR commented that:
"Finance Bills are long and complex and it is
difficult for us to identify clauses with retrospective effect
which may engage the ECHR. Consequently, we recommend that the
Government should in future provide us with a Memorandum accompanying
the Finance Bill, identifying any provisions in the Bill which
have retrospective effect, together with an assessment of the
retrospective provision and a detailed justification for retrospectivity."
2. This Memorandum seeks to meet that request in
respect of the Finance Bill 2010. The Government considers that
the Bill is compliant with the rights protected under the ECHR
and the Chancellor has certified the Bill to this effect. As this
is the first such Memorandum, some background is set out on the
different categories of retrospection typically found in a Finance
Act.
RETROSPECTION IN THE FINANCE ACT
3. As the Committee will be aware, Article 1 Protocol
1 (A1P1) protects the right to peaceful enjoyment of possessions.
Taxation is, in principle, an interference with the right guaranteed
by the first paragraph of A1P1, since it deprives the person concerned
of a possession, namely the amount of money which must be paid.
However, this basic right is not absolute. The second paragraph
of this Article expressly provides that a State may enforce such
laws as it deems necessary to secure the payment of taxes or other
contributions. The key legal principles on A1P1 in relation to
tax, and to retrospection in taxation legislation, are summarised
by the European Court of Human Rights on page 11 of MA v Finland
(emphasis added):
"According to the Court's well-established case-law,
an interference, including one resulting from a measure to secure
payment of taxes, must strike a 'fair balance' between the demands
of the general interest of the community and the requirements
of the protection of the individual's fundamental rights. The
concern to achieve this balance is reflected in the structure
of Article 1 as a whole, including the second paragraph: there
must be a reasonable relationship of proportionality between the
means employed and the aims pursued.
Furthermore, in determining whether this requirement
has been met, it is recognised that a Contracting State, not least
when framing and implementing policies in the area of taxation,
enjoys a wide margin of appreciation and the Court will respect
the legislature's assessment in such matters unless it is devoid
of reasonable foundation...
Nor does the fact that the legislation applied retroactively
in the applicants' case constitute per se a violation of Article
1 of Protocol No. 1, as retrospective tax legislation is not as
such prohibited by that provision. The question to be answered
is whether, in the applicants' specific circumstances, the retrospective
application of the law imposed an unreasonable burden on them
and thereby failed to strike a fair balance between the various
interests involved."
4. Finance Acts invariably contain measures which
have retrospective effect. The overall analysis of fairness turns
to a significant extent on the degree to which P is being deprived
of legal certainty by not being able to predict the legal consequences
of P's actions.
5. It follows that a distinction may sensibly be
drawn between legislation which imposes a set of legal consequences
of which P cannot be aware because P's action pre-dated any possible
awareness of the legislation (unannounced retrospective effect),
and legislation which imposes a set of legal consequences of which
P is aware because the proposal to legislate has been announced,
and the legislation is not to be made to apply before the making
of the announcement (announced retrospective effect).
'UNANNOUNCED' RETROSPECTIVE MEASURES
6. The Finance Bill 2010 contains one measure with
unannounced retrospective effect, that is clause 46 (Relationships
treated as loan relationships etc: repos). The amendments made
by this clause are to be treated as always having had effect (so
that as a consequence the clause has effect from 1 October 2007,
the date on which the legislation which is being amended was introduced).
This measure was announced on 9 February 2010 together with the
draft clause.
7. Sale and repurchase (or repo) transactions are
commonly entered into by financial institutions and provide a
safe form of financing. The relevant legislation, section 550
of the Corporation Tax Act 2009 (and the predecessor legislation,
paragraph 4 of Schedule 13 to the Finance Act 2007), was designed
to ensure that the tax treatment of repos follows accounting practice.
It has been asserted that it is possible to interpret the legislation
as meaning that certain payments (known as manufactured payments)
received by companies do not have to be taken into account for
tax purposes if the securities to which they relate are not recognised
on the companies' balance sheets. If that were the correct interpretation,
companies could seek to deduct for tax purposes manufactured payments
that have contributed to their accounting profits. By excluding
these payments, companies' taxable profits could be significantly
lower than their actual profits.
8. The repo legislation was introduced following
full consultation with the stated aim that such transactions are
to be taxed in accordance with their accounting treatment and
economic substance. The interpretation which is being advanced
leads to an outcome inconsistent with that aim. It is an interpretation
which was not advanced during the consultation period even though
the types of repo transaction to which the legislation relates
are routinely carried out by large banking groups. If this interpretation
is correct, it would inevitably lead to a number of challenges
in respect of past transactions (that is those preceding the date
of the announcement) even though on entering into them the groups
had expected to be taxed in accordance with the accounting treatment.
This would result in a significant and unexpected tax windfall.
9. This clause will restore certainty and make it
clear that manufactured payments must be taken into account in
calculating the profits chargeable to corporation tax if those
payments are taken into account in computing accounting profits.
The clause cannot result in any company being charged to tax on
more than its actual profits but prevents the possibility of relief
for artificial losses.
10. The legislation will have effect from 1 October
2007, which is the date that the legislation that is now being
amended came into effect. In order to protect the general body
of taxpayers from the possibility that some taxpayers could obtain
an unintended and unexpected windfall and, to give certainty,
it is considered appropriate for the legislation to be made with
such retrospective effect. It is therefore considered that the
legislation is within the wide margin of appreciation afforded
to the State in tax matters, and does not breach any Convention
rights.
'ANNOUNCED' RETROSPECTIVE MEASURES
11. Finance Acts normally contain certain measures
which have been announced at some point during the previous year
and which take effect from the date of their announcement. These
are known as 'Rees Rules' announcements, named after Peter Rees
QC who first articulated the principles during the Finance Bill
Standing Committee debate of 6 June 1978.
12. A 'Rees Rules' announcement is made where it
is necessary, in order to mitigate tax avoidance or for exchequer
protection, that a measure have immediate effect. In each case
the announcement comprises a precise Ministerial warning of the
intention to legislate with retrospective effect, accompanied
by draft clauses (or in some cases a very detailed technical note)
and the clauses giving effect to the statement are included in
the next available Finance Bill.
13. The clauses in the Finance Bill 2010 which are
subject to a 'Rees Rules' announcement are as follows:
- 25 & Schedule 4 Sideways relief etc
- 27 & Schedule 5 Capital allowance buying
- 28 & Schedule 6 Leased assets
- 30 Sale of lessors: consortium relationships
- 32 & Schedule 8 Gifts of shares etc to charity
- 35 &Schedule 10 Foreign currency bank accounts
- 37 &Schedule 12 Reliefs and reductions for
foreign tax
- 38 Asset transfer to non-resident company: recovery
of postponed charge
- 41 & Schedule 14 Unauthorised unit trusts
- 42 & Schedule 15 Index-linked gilt-edged
securities
- 45 Connected companies: release of debts
- 48 Apportionment of asset value increases
- 49 Extension of special annual allowance charge
- 53 Reversionary interests of purchaser or settlor
etc in relevant property
- 55 SDRT: depositary receipt systems and clearance
services systems
14. ln each case it is considered that the retrospection
is fair and proportionate and therefore the legislation is within
the wide margin of appreciation afforded to the State in tax matters,
and does not breach any Convention rights. The Government is able
to show for each measure that it is aimed at anti-avoidance or
exchequer protection, and that it gave clear warning in an established
manner that retrospective legislation would be passed, so that
the taxpayer could arrange their affairs accordingly.
BANK PAYROLL TAX
15. Clause 22 and Schedule 1 introduce Bank Payroll
Tax (BPT). The measure has effect from the time of the announcement
on 9 December 2009 (12:30pm) and as with the 'Rees Rules' measures
mentioned above, a precise ministerial warning was published alongside
draft clauses. The retrospection is only from the time of the
announcement. Unlike the 'Rees Rules' measures, the aim of the
measure is neither anti-avoidance nor exchequer protection.
16. BPT will be payable by taxable companies - broadly
speaking banks or building societies or certain financial and
holding companies within bank or building society groups. BPT
will be chargeable on the aggregate of the amounts of chargeable
relevant remuneration awarded during the chargeable period to
or in respect of relevant banking employees of the taxable company.
BPT will be charged at the rate of 50%. The chargeable period
will be from 12:30pm on 9 December 2009 to 5 April 2010. Draft
clauses were published on 9 December 2009 and the tax will not
apply to contractual arrangements entered into before that date.
17. There have been some amendments to the draft
clauses as published in December 2009 but these are either relieving
or clarificatory in nature. The measure includes anti-avoidance
provisions and collection and machinery provisions, including
penalty provisions for failure to make a return or to pay the
tax when due. The penalty provisions will not be retrospective
as they will only apply to future conduct.
18. It is considered that the measure falls within
the State's margin of appreciation under A1P1, and therefore does
not breach any Convention rights. BPT serves a legitimate aim
in the public interest, namely to encourage change in the remuneration
practices that contributed to excessive risk-taking by the banking
industry. The Government wishes to encourage the development of
sustainable long-term remuneration policies that take greater
account of risk and facilitate the build up of loss-absorbing
capital. Given the unprecedented economic situation created by
the financial stability crisis it is important that this measure,
to encourage sustainable long-term remuneration policies, applied
to discretionary bonuses awarded during the 2009/10 bank bonus
season.
OTHER RETROSPECTIVE MEASURES
19. In the ordinary course of events the Budget takes
place in a given year before the start of the financial year.
So a fiscal measure is announced at the Budget, subsequently enacted
in the Finance Act, and is in certain cases given legal effect
from the start of the financial year. Such clauses amount to legislation
with announced retrospective effect, and so we do not mention
them here. Also, we do not mention any retrospective relieving
measures, i.e. changes which are wholly to the advantage of the
taxpayer.
Rt Hon Stephen Timms MP
Financial Secretary to the Treasury
Submission from the Government
on retrospective measures in the July 2010 Finance Bill, dated
1 July 2010
Introduction
1. In the Summary of the Twentieth Report of
2008-09, the JCHR commented that:
"Finance Bills are long and complex and it is
difficult for us to identify clauses with retrospective effect
which may engage the ECHR. Consequently, we recommend that the
Government should in future provide us with a Memorandum accompanying
the Finance Bill, identifying any provisions in the Bill which
have retrospective effect, together with an assessment of the
retrospective provision and a detailed justification for retrospectivity."
2. This Memorandum seeks to meet that request
in respect of the emergency Finance Bill 2010 (to become the Finance
(No.2) Act 2010). The Government considers that the Bill is compliant
with the rights protected under the ECHR and the Chancellor has
certified the Bill to this effect. A similar Memorandum was provided
to the Committee in respect of the Finance Bill 2010 (which became
the Finance Act 2010, c. 13). That Memorandum provided background
information on the different categories of retrospection typically
found in a Finance Act. It is not proposed to repeat that background
information here.
'Unannounced' retrospective measures
3. The emergency Finance Bill 2010 does not contain
any charging measures with unannounced retrospective effect.
'Announced' retrospective measures
4. Finance Acts normally contain certain measures
which have been announced at some point during the previous year
and which take effect from the date of their announcement. These
are known as 'Rees Rules' announcements.
5. A 'Rees Rules' announcement is made where
it is necessary, in order to mitigate tax avoidance or for exchequer
protection, that a measure have immediate effect. In each case
the announcement comprises a precise Ministerial warning of the
intention to legislate with retrospective effect, accompanied
by draft clauses (or in some cases a very detailed technical note)
and the clauses giving effect to the statement are included in
the next available Finance Bill.
6. This Bill contains one measure, clause 9
(insurance companies: businesses transfer involving excess assets),
which was the subject of such an announcement.
Other retrospective measures
7. In the ordinary course of events measures
announced at the Budget take effect from that date. Such clauses
amount to legislation with announced retrospective effect, and
we do not mention them here. Also, we do not mention any retrospective
relieving measures i.e. changes which are wholly to the advantage
of the taxpayer.
David Gauke MP
Exchequer Secretary to the Treasury
Memorandum from the Department
for Education on human rights aspects of the Academies Bill (now
the Academies Act 2010), dated 20 July 2010
LETTER FROM THE BILL MANAGER TO THE LEGAL ADVISER,
JCHR
Academies Bill
I am writing to you as Bill Manager for the Academies
Bill. I am grateful to you for coming to the Department on 9 July
to meet officials and to set out some initial thoughts on those
matters on which the Joint Committee on Human Rights might appreciate
a departmental view.
The Academies Bill had Third Reading in the House
of Lords on Tuesday 13 July, was introduced to the
House of Commons on the same day, and had Second Reading in the
House of Commons on Monday 19 July. The Government hope to receive
Royal Assent prior to summer recess, in order to allow the first
schools which have been graded 'outstanding' by Ofsted and who
have applied to do so, to convert to Academy status at the beginning
of the Academic year in September. We appreciate that to assist
the Committee as much as possible given the timescales involved,
that we should respond as fully now as we are able.
Academies as 'public authorities'
Firstly you asked whether Academies are public authorities
for the purposes of the Human Rights Act, the Equality Act and
the Freedom of Information Act. As we discussed the Government
does consider Academies to be public authorities for the purposes
of the Human Rights Act and the Equality Act. That was the position
taken also by the previous Government, as it stated in its dealings
with the Committee which lead to the 18th and 21st
Reports of the 2005/6 Session. This discussion, of course, predates
the House of Lords decision in YL -v- Birmingham City Council[2]
and it seems to us that in the light of the principles set
out in that judgement, that Academies would clearly fall to be
considered as public authorities (and Lord Mance noted that the
provision of education may be viewed as a non-delegable state
function). Lord Wallace of Saltaire set out the Government's position
at Committee on 28th June 2010[3].
His Lordship said:
"My Lords, I am happy to confirm that this Government,
like the previous Government, accept that academy schools are
public authorities for the purposes of the Human Rights Act and
that, consequently, they are under a duty to act compatibly with
the convention rights in their dealings with parents, pupils and
others…academies will be required to comply with all the
duties in the Equality Act that apply to schools more generally,
with respect to disability, non-discrimination, reasonable adjustments
and the like. It is quite correct that academies are not currently
listed in Schedule 19. However, Schedule 19 will be updated before
the duties come into force in 2011, and academies will be included
in time for that. That will also deal with the suggestion…that
an academy should be a public authority for the purpose of the
Equality Act."
As Lord Wallace promised in that debate, The Parliamentary
Under-Secretary of State for Schools, Lord Hill, subsequently
wrote to Baroness Williams of Crosby about that issue, and a copy
of that letter is attached.
In relation to the Freedom of Information Act 2000,
the Government introduced amendments to the Bill, contained now
in paragraph 10 of Schedule 2 to insert Academy proprietors to
the list of public bodies in Schedule 1 of that Act who are required
to comply with its provisions.
'Equivalent protections'
The second issue you raised was about whether the
legal protections for children and parents of children at Academies
are equivalent to the legal protections available at maintained
schools, in particular in relation to Special Educational Needs
(SEN), Admissions, Exclusions, and Religious Education (RE) and
collective worship. This is an issue which the Committee has raised
before, as the extracts from its previous reports of the 2005/6
Session which you kindly sent, demonstrate.
As the Department indicated at the meeting, the model
funding agreement includes provisions to apply the Admissions
Code; statutory guidance on exclusions (including the right of
appeal against permanent exclusions); and the same rules around
RE and collective worship - including the parental right to withdraw
a child - to Academies. The model funding agreement also includes
SEN provisions, and you will be aware that a Government amendment
to the Bill was tabled for and agreed at Report Stage, which introduces
a statutory requirement that Academy arrangements (Funding Agreements
or grants) must contain provisions imposing obligations equivalent
to those imposed on maintained schools in Part 4 of the Education
Act 1996 and any Regulations made under part 4. This offers additional
reassurance to pupils and parents in Academies that pupils with
SEN will be treated the same at Academies as they are in maintained
schools.
You referred at the meeting to the need for 'equivalence'
between maintained schools and Academies; and this is also a theme
of previous reports of the Joint Committee. As noted above, there
will be equivalent provision for pupils in Academies and maintained
schools in some fundamental respects. However, Academy schools
and maintained schools are intentionally different types of schools,
set up in different ways and controlled and funded through different
mechanisms. In that sense, therefore, there are always going to
be differences between these types of school. As you will be aware
from the case of P -v- Schools Adjudicator[4],
the Courts have rejected the notion that a maintained school represents
a 'gold standard' from which departures must be justified; and
the Department would suggest therefore that it is wrong to approach
this issue from that starting point- or from the viewpoint that
different is necessarily worse.
'Model Funding Agreement'
The third area that was discussed at the meeting
was about the Model Funding Agreement. We confirmed that the draft
Model Funding Agreement has been published and is available on
our website: www.education.gov.uk/academies. We discussed how
the requirements contained in the Funding Agreement are enforceable
by parents, and officials explained that where parents or pupils
have complaints in relation to Academies, they can complain to
the Young People's Learning Agency (YPLA) who are responsible,
on behalf of the Secretary of State, for ensuring that Academies
comply with their Funding Agreement. Parents can ultimately take
their complaint to the Secretary of State, who can ensure that
an Academy complies with their contractual obligations. Parents
also have the option of Judicially Reviewing an Academy, in the
same way that a parent could do if their child was at a maintained
school[5].
We had a discussion about the policy on departing
from the Model Funding Agreement, and officials could not foresee
a scenario where the Department would agree to a departure in
relation to SEN, exclusions or Religious Education. In relation
to admissions, the Bill explicitly allows schools that already
have selective admission arrangements on the basis of academic
performance to convert to Academy status without changing their
admission arrangements and permits schools with a faith designation
to retain this too. Ministers have been very clear though that
no new selection will be allowed as a result of conversion to
Academy status, and all new Academies being opened up will have
to act in accordance with the Admissions code.
'Existing Academies'
The fourth area of discussion was around the 203
existing Academies, which are operating under a previous version
of the Funding Agreement (FA). Officials explained that all existing
FAs do include the requirement to comply with the Admissions Code,
exclusions guidance, and provide for the requirement to teach
RE and provide collective worship, and require Academies to have
regard to the SEN Code of Practice (2001) and statutory guidance
on inclusion. The new FA does go further on SEN, but in practice,
there is no evidence that existing Academies are providing inferior
support to maintained schools. In addition, existing Academies
may switch to the new version of the Funding Agreement because
it provides additional freedoms in other areas and they will certainly
be given that option. As a result of a Government amendment on
SEN made in the House of Lords, and assuming the Bill is passed,
there will now be an obligation that future Academy arrangements
will impose on academy schools the same obligations as those that
apply to maintained schools under Part 4 of the Education Act
1996.
'Complaints'
The fifth issue we discussed was the complaints system
in relation to Academies. The internal school complaints process
for Academies is a requirement contained in the Independent School
Standards Regulations, which also require Academies to publish
their complaints process for parents. After the in-school process
is exhausted, the complaints process for neither maintained
schools nor Academies is set out in statute[6]
- rather it is an administrative process in both cases[7].
As explained earlier, parents can complain about the Academy's
failure to comply with legal or contractual obligations to the
YPLA (unless the complaint relates to a child's SEN statement,
in which case the parent could complain to the local authority),
and ultimately to the Secretary of State. The YPLA will publish
its complaints procedure on its website shortly. Where the Secretary
of State finds in favour of the parent or child - agreeing that
the terms of the FA have been breached - he ultimately has recourse
to the courts to ensure that the terms of the contract are met.
In practice however, this has never been necessary, because Academies
have always complied before this stage if the Secretary of State
concluded there might be a breach. We intend to improve the information
to parents about how to complain about Academies through various
publications such as our information booklet for parents with
children with special educational needs.
'Information'
The final area of discussion centred around the information
made available to children and parents about the proposed arrangements
prior to a school converting to Academy status. An amendment to
the Bill at Report stage in the House of Lords introduced a statutory
requirement for schools to consult with such persons as it thinks
appropriate before the FA is signed. We recognise that we will
need to consider carefully the extent to which in future standard
information provided to parents about the statutory responsibilities
of schools in relation to admissions, exclusions and SEN, will
need to be explicit about the responsibilities of Academies too.
I hope this has provided the necessary reassurances
to you, and to the Committee when it is convened. Please don't
hesitate to get in touch if you require any further information.
1 (2005) UKHL 71 Back
2
[2007] UKHL 27. The reasoning of this Judgement must hold good,
notwithstanding that the actual decision in that case has been
reversed by section 145 of the Health and Social Care Act 2008. Back
3
Hansard, Vol 719, No 20,, col 1609 Back
4
[2006] UKHC 1934 (Admin) per Wilkie J, at paragraph 50. The decision
was approved in R (Elphinstone) -v- City of Westminster [2008]
EWCA Civ 1069 though it did not touch on that specific point. Back
5
The principle that CTCs (and therefore Academies) are judicially
reviewable is long-standing: see R -v- Governors of Haberdashers'
Aske's Hatcham College ex p. T [1995] ELR 350. Back
6
Though there is a statutory obligation on maintained schools to
have a complaint process under S. 29 Education Act 2002. Back
7
The Apprenticeships, Skills, Children and Learning Act 2009 Chapter
2 of Part 10 introduces a statutory complaints system but this
has not been fully commenced and is in pilot only. Back
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