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Lord Henley: My Lords, the Minister said that the Bill would be available some time early next year. He also stated that it would be available for another place to discuss it through its own Select Committee. Can he give the House an assurance that committees of this House will have the opportunity to discuss the Bill, particularly in the light of the fact that the Bill will appear early next year and I understand that we are likely to be sitting over Christmas? Perhaps we can discuss it then.

Lord Williams of Mostyn: My Lords, I understood on Saturday morning that we would sit on Boxing Day. I have not yet had the nerve to tell my wife. Certainly, if your Lordships' House wishes a committee to scrutinise the Bill that is a matter for the usual channels in the normal way. The fact that we wish the Select Committee to give this matter close scrutiny--after all, it is chaired by Mr. Rhodri Morgan--indicates that we welcome informed, scrupulous examination.

Lord Stoddart of Swindon: My Lords, I congratulate my noble friend on introducing a pre-legislative Bill. That could have occurred over the past 18 years. Can my noble friend assure the House that the Bill will be widely cast and will cover relationships not only between Ministers and others but also between civil servants and big business and civil servants of the European Commission?

Lord Williams of Mostyn: My Lords, I accept gratefully the congratulations offered to me by my noble friend. The precise detail is presently under discussion. There are a number of difficult areas and my noble friend identifies some quite subtle ones. That is one of the important purposes of having a full period of public consultation during which these various matters can be fully and openly discussed.

Lord Holme of Cheltenham: My Lords, the noble Lord will be aware that the publication of this Bill has

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been delayed several times. I believe that the House would be grateful to know the degree of certainty that he now ascribes to publication early next year. We would like to see the Bill and to have a high degree of certainty that it will be published as he says in January or February.

Lord Williams of Mostyn: My Lords, I do not believe that I mentioned either January or February--doubtless by unfortunate oversight. It may be in the early part of next year. We are committed to the Bill and I believe that we have made a good start.

Lord Holme of Cheltenham: How?

Lord Williams of Mostyn: My Lords, the noble Lord asks "How?". First, in the Home Office Jack Straw set up the Lawrence Inquiry with the fullest possible public scrutiny. He directed that reports of the Chief Inspector of the Prison Service should be published promptly. They are no longer kept mouldering for 18 months. The noble Earl, Lord Russell, asked for the disclosure of the contract relating to detention at Campsfield House. I said that I would look into it. I promised to see to it, and it was placed in the Library.

We have done well. We believe in the Bill. We shall bring it forward in the early part of next year. I have no doubt about that.

Lord Campbell of Croy: My Lords, arising from the question of the noble Lord, Lord Stoddart, does the Minister agree that because our system of government depends on Cabinet collective responsibility it is essential that the documents passing between Ministers and the Civil Service before decisions are taken by the Cabinet are protected? Otherwise our whole system will have to be changed.

Lord Williams of Mostyn: My Lords, the noble Lord makes an important point: that if one wants candid, informed advice either from officials to Ministers or between colleague Ministers it is self-evident, I should have thought, that it cannot all be available contemporaneously. We have to push the balance as far towards openness as we conceivably can.

Channel Islands/Isle of Man: Financial Centres

2.50 p.m.

Lord Wallace of Saltaire asked Her Majesty's Government:

    What benefits the United Kingdom derives from the continuing development of offshore financial centres in the Channel Islands and the Isle of Man.

Lord Williams of Mostyn: My Lords, the development of the Channel Islands and the Isle of Man over recent years as important international financial centres derives from their handling a wide range of financial business and increasing their dealings with all

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parts of the world. As indicated in the recent review by Mr. Andrew Edwards of financial regulation in the islands, their business has grown to be genuinely international. It is not possible to quantify the particular benefits derived by the United Kingdom from these developments. However, I refer the noble Lord to the figures in the review which illustrate the continuing close links between the islands and the United Kingdom.

Lord Wallace of Saltaire: My Lords, I thank the Minister for that reply. I am anxious to consider the costs as well as the benefits. I am sure that the noble Lord has read Article S9 of the Edwards Report, which states:

    "Offshore centres generally are sometimes criticised for maintaining tax regimes that divert business from onshore jurisdictions and deprive them of tax revenues".
The remainder of the report deals with the process of sustaining and developing the scope of those offshore centres. Is it in Britain's long-term interests to encourage the further development of centres closely associated with the United Kingdom which exist to encourage the avoidance and evasion of tax?

Lord Williams of Mostyn: My Lords, the noble Lord asks about benefits. Perhaps I can help him by considering Article 2.6.4 of the Edwards Report, which states:

    "The banks"--
in the Channel Islands and the Isle of Man--

    "invest a high proportion of their deposits and other liabilities in or through the UK".
In Jersey, which has deposits of £100 billion, 48 per cent. is lodged in the United Kingdom; in Guernsey the figures are £50 billion and 34 per cent., and in the Isle of Man, £20 billion and 55 per cent. Plainly there are significant advantages to the United Kingdom financial centres from those transactions.

Lord Waddington: My Lords, will the Minister help me on this point? What right has the European Union to interfere in the affairs of the Channel Islands and the Isle of Man so far as concerns their tax structures?

Lord Williams of Mostyn: My Lords, the Channel Islands and the Isle of Man are not fully part of the European Union, as the noble Lord rightly implies. The constitutional position in the Channel Islands and the Isle of Man remains the same as that I described, I think last week. They are Crown dependencies. They have internal legislatures; and the United Kingdom, let alone any other party, is only entitled to intervene and impose legislative solutions as a matter of last resort.

Lord Cledwyn of Penrhos: My Lords, can the Minister undertake to arrange the transfer of two or three of these financial centres from the Channel Islands to the island of Anglesey where they would be perfectly safe and where they are much needed?

Lord Williams of Mostyn: My Lords, I know that my noble friend is the representative of another

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offshore island, but so far as I am aware people in North Wales normally keep the cash under the bed rather than in the bank.

Lord Barnett: My Lords, can the Minister spell out the benefits we gain from the tax arrangements in the Channel Islands and the Isle of Man? Have the Government any plans to do anything about them, even if the proposals are initiated in the European Union?

Lord Williams of Mostyn: My Lords, we have our European obligations which we attempt to discharge. But we constantly remind our colleagues in Europe that the constitutional arrangements for the Channel Islands and the Isle of Man are not the same as the arrangements between Her Majesty's Government and the European Union. My right honourable friend the Chancellor of the Exchequer is always alert to see whether or not there is any improper leaching of tax revenue from the United Kingdom exchequer. That is part of his continuing duty.

Lord Henley: My Lords, the Minister mentioned the Edwards Report which was published earlier this year. The noble Lord will remember that that investigation into the financial affairs of the Channel Islands was announced without any consultation with the Channel Islands governors. Can he give an assurance that any further reviews of the financial regulations of either the Channel Islands or the Isle of Man will be conducted in a spirit of full consultation and co-operation with their respective governments rather than the Home Office acting as the mere agent, it appears, of the European Union?

Lord Williams of Mostyn: My Lords, that is quite wrong. The review which the Home Secretary announced was announced publicly for the first time in another place. The Speaker of another place is rightly jealous of the fact that public announcements should be made first in another place. I myself ensured that the lieutenant governors in all the islands were notified in advance. A very harmonious relationship exists between the governments of the islands and the Home Office. They have promised full co-operation. The Home Secretary has asked me to chair a committee which will start work in the early part of next year, namely January, to see how we take matters forward.

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