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Lord Haskel: My Lords, can my noble friend tell the House whether self-assessment has had any impact on tax evasion? Do all these complications enable people to evade tax?

Lord McIntosh of Haringey: My Lords, compliance with self-assessment is very high--90 per cent of returns are received on time--and the forms produce of the order of 22 billion a year, so we are talking about very large sums of money. It is difficult to say whether tax evasion has increased or decreased. Obviously, if we knew what tax was being evaded and who was evading it, we would put a stop to it; it is an unknowable statistic in the classic sense. But we have been able more accurately to target inquiries on suspicious returns than was the case in the past.

Lord Tebbit: My Lords, does the Minister believe that it would be helpful to publish an "idiot's guide" to these matters?

Lord McIntosh of Haringey: My Lords, I do not believe that the Revenue would presume to address its main source of income as "idiots".

Lord Shepherd: My Lords, the Minister states that my noble friend Lord Dubs is not an idiot; does he believe that that observation applies also to those who kept the House sitting until a quarter to four this morning? Is the Minister able to give an assessment of the out-turn--the yield--as a consequence of the change from the previous to the present system of assessment?

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Lord McIntosh of Haringey: My Lords, I do not believe that the first question is for me. I was here until 3.28 this morning and was not best pleased, but that is really a matter for the House rather than for an individual.

As to the yield, I gave the figure of 22 billion. As compliance levels are very high, the yield depends on the demand rather than the assessment system. I do not believe that there is any particularly good evidence that yield has been affected by self-assessment. This project was introduced on time and on budget and saves the Revenue money, which enables it to demand less tax in future years. In particular, the self-assessment facility over the Internet means that the processing of tax returns is very economical because there is no extra stage of data entry.

Lord Roberts of Conwy: My Lords, can the Minister say how many people--idiots or otherwise--failed to meet the 31st January deadline? Can he also say what is the anticipated bonus to the Revenue in terms of interest?

Lord McIntosh of Haringey: My Lords, more than 90 per cent of 6.6 million taxpayers using self-assessment met the deadline. Nearly all the others followed within a few days. Therefore, there is no particular effect on interest. It is sad that the vast majority of returns arrive very close to the deadline; in other words, they come close to the period before 30th September, the deadline for the Revenue doing the assessment, and they come close to the 31st January. Again, without calling anyone an idiot, it is perverse of people to run themselves up against these deadlines.

Lord Woolmer of Leeds: My Lords, the Minister referred to tax returns on the Internet. Can he tell us how many tax returns have been submitted on the Internet? Have there been any lessons learned from this year's experience that can be applied to next year?

Lord McIntosh of Haringey: My Lords, about 40,000 individuals submitted their returns on the Internet. In addition, 285,000 returns were submitted by agents on behalf of individuals, partnerships and trustees using the electronic lodgement service. There is still a long way to go before the full value of the Internet return system is achieved. Certainly, when I tried I was told that my tax is kept in a secure category, as are the tax returns of all Ministers and all Members of Parliament. So I would not have been allowed to use the Internet even if I had succeeded in getting a registration number.

Lord Chancellor's Role

11.22 a.m.

Lord McNally asked Her Majesty's Government:

    Whether the role of Lord Chancellor is compatible with that of a party fundraiser.

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The Lord Chancellor (Lord Irvine of Lairg): My Lords, let me say first that this Labour Party dinner was for lawyers, whom I understood to be known Labour Party members or supporters who had generally attended before. Lawyers know all the safeguards built into the legal appointments process, a system on which a former Commissioner for Public Appointments, Sir Leonard Peach, recently concluded:

    "My assessment is that the procedures and their execution are as good as any which I have seen in the Public Sector".

None the less, in order to avoid any possible, however theoretical, perceived notion of a conflict of interest between the roles that a Lord Chancellor properly has under our constitution, I decided for the first time to establish a commission for judicial appointments which will scrutinise the whole system of judicial and QC appointments and its execution. The first commissioner will be appointed next month and there will be a team of deputy commissioners. The commissioner will have access to every piece of paper, every assessment, every opinion and every interview for every applicant. His report will be laid before Parliament alongside my annual report to Parliament on judicial appointments, which was another initiative taken by me. I do not believe that anyone who attended the dinner in question could conceivably have thought that a donation could have bought an appointments advantage.

The noble Lord, Lord McNally, is a well-known supporter of state funding for political parties. Without state funding parties have no alternative but to fundraise. Every Minister, from the Prime Minister down, engages in fundraising, as did our predecessors, as do Shadow Ministers. It is not the case that Lord Chancellors are not party political. They are appointed by the Prime Minister; they take the party Whip; they speak and vote for the Government in Parliament; they sit in Cabinet; and they campaign for their party. Fundraising, unless and until the rules are changed, is part and parcel of the party-political activities of Ministers and Shadow Ministers.

Lord McNally: My Lords, I thank the Lord Chancellor for that reply. I am sure that a number of his learned friends will want to probe him further on the legal aspects of his reply. Perhaps I may ask him two questions on the fundraising aspect. First, what precedent does the noble and learned Lord think his behaviour has set in terms of the relationship between ministerial responsibility and fundraising? Can the Secretary of State for Education and Employment write to deputy headmasters? Can the Minister of Agriculture, Fisheries and Food write to farmers? Can the Minister of Health write to junior doctors? There is a blurring by the behaviour of the Lord Chancellor of his responsibilities as a Minister and his responsibilities as a politician.

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Secondly, the Lord Chancellor may have read in the Daily Telegraph this morning an extremely well-informed article attributed to one of the Lord Chancellor's friends, where it is said that he was led down this route by those rascals in Millbank. Did any of the Lord Chancellor's friends ever suggest that the best course of action for him today would be to come to this House and say that this was an error of judgment which he regrets and for which he apologises? If the noble Lord had done so he would have enhanced the respect for himself, his office and the Government. He missed the chance by not doing so.

The Lord Chancellor: My Lords, first, I have not read the piece in the Daily Telegraph.

Lord McNally: It sounds like he wrote it!

The Lord Chancellor: My Lords, the noble Lord says that it sounds as if I wrote it. I did not. I know nothing about it. If anyone who is a friend of mine was the source and if the account of the noble Lord is correct, I would be very inclined to say, "God, protect me from my friends".

I am simply saying that I do not believe that I have done anything wrong. Nor do I believe that I have broken any current rules. If I did, I would be the first to apologise. There is no real difference between party-political campaigning and fundraising because I believe that fundraising is an inherent part of party-political campaigning. We would be unrealistic not to recognise that.

A great deal has been said about the office of Lord Chancellor being non-party political. That is simply not true. At the great age of 79, the noble and learned Lord, Lord Hailsham, toured the country in the 1987 general election campaign. Lord Kilmuir was even more frequently on the campaign trail. In 1997, the noble and learned Lord, Lord Mackay of Clashfern, took a high political profile to speak out strongly against Scottish devolution. I take the view that, unless and until the rules are changed, a Lord Chancellor is no different from any other Cabinet Minister.

If a debate arose out of this to say that a rule should develop that a Lord Chancellor should be different from all other Ministers as regards fundraising, I would listen to such a debate with a very attentive ear. In fact, I could be quite hospitable to the idea that a Lord Chancellor should be excused from the burden of fundraising.

Lord Strathclyde: My Lords, would the noble and learned Lord the Lord Chancellor do it again?

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