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Lord Marsh: My Lords, does the Minister agree that the treaty is quite clear; there is no bail-out provision? However, in addition to the costs referred to by the noble Earl in his Question, there are also the pension funding deficits. In Germany and France, they are running in excess of 100 per cent of GDP and in Italy at something like 70 per cent against 10 per cent in the UK. Those figures cannot be ignored. Somebody will have to meet the bill at some time.

Lord McIntosh of Haringey: My Lords, I have given the most recent figures for government

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expenditure on pensions in the three countries referred to in the Question. Of course the noble Lord is right; at some stage somebody will have to pay for this. All the three countries concerned are urgently making reforms to their own pension arrangements. This country will still not be affected because of Article 104 of the EU Treaty.

Lord Grenfell: My Lords, with reference to the second part of the noble Earl's Question, perhaps the Minister will forgive a brief promotional soundbite. I commend to the noble Earl, Lord Clanwilliam, the report, published yesterday, of your Lordships' Select Committee on the European Communities, on taxes in the European Union. Does my noble friend agree that, as noted in that report, co-ordination, where justified, rather than harmonisation, is how the Commission now more accurately describes its tax policy? When the Paymaster General gave evidence to our committee, she stated:

    "tax harmonisation is not on the agenda ... in the European Union".

Lord McIntosh of Haringey: My Lords, I have not had an opportunity to read the report of the committee chaired by my noble friend. That is a pleasure I shall reserve for the holidays. I can certainly confirm that the Paymaster General was right. The tax harmonisation implications of the noble Earl's Question are simply not true.

Lord Saatchi: My Lords, is the Minister familiar with the great lawyer's dictum, "Never trust a man who says, 'trust me'"? On the issue of pensions and tax harmonisation, is that not exactly what the Minister is asking the House to do? Is not the standard lawyer's response the right one? Of course, we trust the noble Lord; we know him to be an honourable and reliable man. It is his heirs and successors whom we doubt. What tangible offer can he make to reassure the House that the darkest fears of noble Lords on both sides of the House will not come true?

Lord McIntosh of Haringey: My Lords, I have never asked the House to trust me. I asked the House to trust in the facts. The facts are that any change in tax structures of the kind being referred to, other than those of limited circumstances already provided for in the treaty which has been in place for a long time, would require unanimity. As the Chancellor said when the question last arose, that is simply not going to happen.

Lord Clark of Kempston: My Lords, does the Minister not agree that the time bomb, so far as it relates to pensions, is the disparity between occupational pensions in this country and those of our partners in the European Community? If there is indeed going to be harmonisation, surely anyone who understands taxation is aware that that will apply to pensions. If there is a disparity between occupational pensions and the state pension, someone must find the balance. Would not that duty fall on British taxpayers?

Lord McIntosh of Haringey: My Lords, I do not know how many times I shall have to say this.

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Article 103 of the treaty states that there are no circumstances in which we can be called upon to bail out other European countries. Those countries which spend too much of their government expenditure on pensions are at risk. Under the terms of the growth and stability pact, they cannot meet the problem by excessive borrowing. They must deal with it either by cutting spending or by raising contributions. That is the issue which they are engaged in attacking at the moment. Under no circumstances will there be any consequence for British taxpayers.

Lord Peston: My Lords, may I ask my noble friend to reflect on his remark about how often he has to answer the previous question? Is he not aware that once mythology takes over, there is nothing a rational person can do to destroy it? He must simply accept that these days that is the frame of mind of noble Lords opposite who cannot face reality in any way.

Noble Lords: Hear, hear!

Lord McIntosh of Haringey: My Lords, all I can advise noble Lords opposite to do is to stop taking the tabloids!

Inheritance Tax: Exempt Chattels and Security

3.22 p.m.

Lord Chesham asked Her Majesty's Government:

    What advice they would give in relation to security measures to be taken by owners of conditionally exempt chattels for inheritance tax purposes who are required by the Inland Revenue to open private houses to the public.

Lord McIntosh of Haringey: My Lords, the Inland Revenue does not make owners open their private houses just to show their chattels. Many owners have already chosen to give public access by opening their houses, and others may find that that is the most convenient way to give improved access for the future. Owners know their own circumstances best and know best where to look for security advice if they want it.

Lord Chesham: My Lords, I thank the Minister for that reply. Will the Minister comment on the fact that items may in fact now be placed in museums or galleries and not actually be on display but be available for view because there is a great shortage of display room available in galleries and museums? If the items were simply kept in museums to be viewed by appointment, might that solve the problems of a great number of people?

Lord McIntosh of Haringey: My Lords, I believe that the noble Lord is referring to the response I gave to a debate on that subject at the end of May, in which I said that we were open to any suggestions about how to achieve the reasonable public access, which is the requirement of conditional exemption and which has so

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far not been achieved in far too many cases. Clearly, I cannot give any answer which could be taken as a judgment on what negotiations might take place between an individual owner and the Inland Revenue. However, the idea of a clearing-house which I put forward is being actively pursued by the Department for Culture, Media and Sport. The idea to which the noble Lord refers of achieving access on demand rather than by prior appointment through the deposit of an item in a public space is certainly one of those being considered.

The Earl of Kintore: My Lords, I ask the Government what security advice they would give to owners of exempt chattels, a description of which must appear on the Internet in such detail as to make it obvious who owns the chattel and where it is probably located.

Lord McIntosh of Haringey: My Lords, I do not know whether my noble friend has interrogated the Internet. I have, and while it gives details about the chattel itself, the only detail of its location is that of an agent identified by the owner of the exempt chattel. I can find no way of identifying the location of the chattel except by approach to the agent. Our objective for the future is that there should be enough detail on the Internet and on the V&A list to ensure that there will be reasonable public access to the chattel.

Lord Saatchi: My Lords, I do not wish to appear in any way churlish about the friendly answer given to my noble friend a moment ago. Just for the sake of students of the history of that particular branch of tax law, does the Minister agree that this is in fact a textbook case of the law of unintended consequences? In this case, the Government, wishing to correct the vagueness of a certain tax law, have in fact ended up creating an even worse muddle. If I have understood correctly, having abandoned their first idea of a public right to roam over people's private houses, the Government's new plan is that the owner of a piece of 16th century Chinese porcelain should put it in a van, drive it 100 miles to a museum, place it in a dark basement for between five and 25 days, then collect it and put it back where it was in the first place. Have I understood that correctly?

Lord McIntosh of Haringey: My Lords, I do not believe that the noble Lord has understood the position from the very beginning. Conditional exemption--which is exemption from inheritance tax--was given on the basis that there would be reasonable public access to the chattel exempted from tax. That was the deal. It was intended that access by prior appointment would be the very last resort. The change which has taken place is not that of the 1998 Budget, but in the application of the original deal, which has been widely disregarded so that access by prior appointment is the norm rather than the exception. The result has been that a large number of chattels which the public are entitled to see because tax revenue on them has been forgone are not in fact available.

Lord Strabolgi: My Lords, is my noble friend aware of the large exhibition at the Fitzwilliam Museum in

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Cambridge of those conditionally exempt items? That is a precedent which could well be followed. What will he do to encourage other major museums in different parts of the United Kingdom to follow that excellent precedent?

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