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Lord Williams of Mostyn: My Lords, I am sorry to repeat myself. This is a purely consequential order, following on a decision which has already been made. Some of your Lordships did not agree with it; the majority did. Your Lordships would have looked at me with some disfavour if I had attempted to reopen the issue today. If anybody had pressed me to do so, I should have refused for the single reason that the noble Lord, Lord Elton, with his invariable scruple, identified right at the beginning of his remarks.

However, those are questions of taste and judgment upon which we all have different views. I share the view that the noble Lord, Lord Elton, nobly set out because I bear in mind that he was a member of the group which I chaired and he did not share the conclusions of the majority. Nevertheless, he made the point scrupulously that that decision has already been taken by this House.

The noble Lord, Lord Strathclyde, also took the same principled stand; namely, to urge this House to approve the Motion which is tabled in my name. I listened to your Lordships. We needed no vote. It seemed to me that the feeling of the House in the privacy context was very substantial. That is why I brought forward this measure as soon as I sensibly could. If I had left it until later in the year, I believe that your Lordships, quite reasonably, would have inquired of me, "What is the reason for the delay?"

Yesterday I moved a consequential procedural Motion in the usual way and today I am doing exactly the same. It is not for us today to re-open the issue that has already been decided. I do not propose to enter into that debate. The noble Lord, Lord Strathclyde, called it the "Williams code", so at least one Welsh family will be happy. He said that it was my "gift". I hope that it was not regarded in that way; I hope it was regarded as a service. I could be wrong--it is possible.

If I am wrong, we shall meet that situation, with the amendment tabled by the noble Lord, Lord Elton. He was good enough to discuss it with me--I hope I met his concerns--and I suggested that a review after 18 months would be prudent and reasonable. I cannot guarantee him government time--the Chief Whip tells me that there is no such thing. I reiterate my promise--I am happy to stand by it--that, when challenged 18 months after March of next year, we shall have the opportunity to debate these matters. In these circumstances it is inevitable that not everyone is pleased, but on 2nd July we had a full debate and there

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was a majority in favour of what was put forward, which is now the subject of this procedural resolution. I beg to move.

Lord Elton: My Lords, the noble and learned Lord cannot move his Motion until I have had my say.

Lord Williams of Mostyn: My Lords, the noble Lord is quite right and I apologise.

Lord Elton: My Lords, I thank noble Lords who have deployed, even if on the margins of good order, their concerns about what will happen under the code because that will direct the attention of those who supervise our procedures to where it is most needed. My noble friend Lord Marlesford is anxious that even a year may be too soon and that I should not be satisfied with 18 months. There is nothing in what I am proposing or in what the noble and learned Lord the Leader of the House is offering that prevents any noble Lords tabling a Motion in the next six months. This amendment states that it shall not be later than a certain date; that does not mean that it shall not be earlier.

The impatience of my noble friend Lord Marlesford may gain him sufficient friends to start a movement in that direction. I do not encourage him to do that because, having reflected on the opinion of the Leader of the House, which I was courteously given yesterday, I am minded to conclude that 18 months may be better than a year. If in the first six months things go disastrously wrong, your Lordships can take the matter into your own hands; if it does not, we shall want a good slice of experience on which to base our decision. Your Lordships can take what steps you believe are correct 18 months after March next year.

The noble and learned Lord, Lord Williams, has declared his friendship for my noble friend Lord Ferrers. In due time the register will reveal, if not the closeness of, at least the depth of knowledge of that friendship, because he will now have to put down everything that he knows about my noble friend's interests. I see that my noble friend is looking somewhat anxious.

Earl Ferrers: My Lords, my noble friend Lord Elton has answered the point that was agitating me. If the noble and learned Lord regards me as a friend--he said that that fact is an interest--I intended to ask him, but of course I forgot, whether that entitled him to put down all my personal interests as a friend of his in his register entry. I hope not.

Lord Elton: My Lords, I do not believe that the Leader of the House is to be drawn into breaking the rules of order further by answering that point.

Lord Williams of Mostyn: My Lords, the noble Earl and I have been friends for some time. I do not know what his shareholdings are; I do not know what his land-holdings are; I do not know the financial interests of his spouse, relative or friend, or of any hospitality

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or gifts. As I said the other day in the context of the question put by the noble Baroness, Lady Park of Monmouth, if one does not know, one cannot be influenced. The only thing that influences me about my friendship with the noble Earl, Lord Ferrers, is that I believe we agree on virtually nothing, but we never quarrel about anything.

Lord Elton: My Lords, in future we shall choose our friends with care. In conclusion, I regret I omitted to acknowledge the importance of the introduction of the word "private" into the code. The greatest damage that can be done to this House will be by the premature feeding to the press of allegations and suspicions that they then pursue, like the hell-hounds that many of them are. I counsel all noble Lords to regard that privacy as sacrosanct until the moment at which either the procedure makes it necessary for it to become public, or the person accused feels that it is in his or her interests to make it so.

I believe that we have done all that we can. If the Leader of the House will signify that the debate that he proposes, which cannot be in government time--because there is no such thing--will be in prime time--your Lordships all know what that is--on a government Motion, I shall yield to him and I shall be happy to ask your Lordships' permission to withdraw my amendment.

Lord Williams of Mostyn: My Lords, all time in this House is prime, but I understand what the noble Lord means and I give him that assurance. From my recollection, I believe that that is a little more generous than that which we received when we were in opposition.

Lord Elton: My Lords, I can think of no courteous reply to that so I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Motion agreed to.

British Overseas Territories Bill [H.L.]

12.46 p.m.

Baroness Amos: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.--(Baroness Amos.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Serota) in the Chair.]

Clauses 1 and 2 agreed to.

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Clause 3 [Conferral on British overseas territories citizens]:

Baroness Rawlings moved Amendment No. 1:

    Page 2, line 29, at end insert--

"( ) A person who claims British citizenship by virtue of this Act and who exercises his right of abode in the United Kingdom shall be subject to United Kingdom tax regulations."

The noble Baroness said: I begin this Committee stage by expressing the hope that the Minister, unlike during proceedings on the International Development Bill, may be able to concede some of our amendments to save us from dividing. I understand that that may well be a pious hope.

I thank the noble Baroness, Lady Amos, for her constant courtesy. At all times when we have worked together, the Minister has been most helpful. At this late stage, having missed the chance in earlier debates, I congratulate her on becoming a Minister of State, covering both Foreign Office affairs and international development portfolios. I know she will carry out the task admirably as she has always done. I wish her the best of luck. It amused me to see that the Government, who took away the international development ministry from the Foreign Office, have found it necessary to put it back together again.

I am also grateful to the noble Baroness for sending me a letter with many details concerning the Bill. Unfortunately, it arrived only late yesterday afternoon, well after we had tabled our amendments. It answers some of our questions, but I would like further clarification as much of the Bill is complex; for example, on the right of residency, as mentioned in the International Criminal Courts Bill and the Political Parties, Elections and Referendums Bill, where even the noble Lord, Lord Goodhart, could not come to an exact agreement on the definition of "residence". This is an important subject, especially for the 200,000 people concerned.

In the section on rights and responsibilities, there are, as we thought, many rights but few tangible responsibilities. Will the Minister in her answer spell out to your Lordships the nature of those responsibilities? Forgive me if I repeat some of the questions that the Minister has already answered in her personal letter to me. It will, however, enable them to be recorded in Hansard.

I now speak to Amendment No. 1, which seeks to address the tax implications of this Bill. British Overseas Territories citizens attach a great deal of importance to the control they have over their fiscal regimes. It is important that the Bill should not give excessive control of our territories' tax structures to alien influences. Many general financial issues were raised in the Government's 1999 White Paper, several of which have not been addressed in the Bill.

Some territories rely heavily on off-shore banking. Are there any implications for them? Will they be affected by EU legislation in this field? In November 1997 the European Commission published a report on unfair tax competition, proposing three separate measures to deal with this problem: the harmonisation of cross-border payment of interest and royalties made

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between associate companies; the harmonisation of cross-border interests on savings--the so-called withholding tax; and a political agreement between member states to refrain from any business taxation provisions harmful to the Community interest--a "code of conduct for business taxation". "Harmful tax competition" encompasses tax measures that distort the operation of the single market and, in particular, those which damage or distort the tax base and so lead to an excessive loss of tax revenues.

In December 1997 a draft code of conduct was agreed at an ECOFIN meeting. A code of conduct group was subsequently set up, chaired by Dawn Primarolo, to examine tax measures throughout the European Union which may fall within the scope of the code, and to report back to ECOFIN. The 1999 Government White Paper, Partnership for Progress, states:

    "Member states with associated or dependent territories are committed, within the framework of the constitutional arrangements, to ensuring the principles of the Code are adopted in those territories".

Given the status of British Overseas Territories, will the Minister outline how under this Bill the European Union code of conduct on tax measures will affect those territories?

The Organisation for Economic Co-operation and Development (OECD) published a report in May 1998, Harmful Tax Competition, an Emerging Global Issue, which proposed that all OECD states should agree on a list of tax havens and act to ensure that any political or economic links with them, such as tax treaties, did not promote harmful tax competition. In June 2000 Bermuda and the Cayman Islands made a commitment to end harmful tax practices by 2005. Will the Bill in any way change the implications of this report for our territories?

Crown dependencies, such as Jersey and Guernsey, are fiscally independent of the United Kingdom. That means that EU tax legislation does not extend to them. Will the Minister clarify the position of the European Union tax legislation regarding those territories which, under the Bill, would become British Overseas Territories?

Furthermore, it is necessary for the Government to clarify the tax implications for BOTCs taking British citizenship and right of abode. Broadly, the United Kingdom charges tax on income arising in the UK, whether or not the person to whom it belongs is resident in the UK, income arising outside the UK which belongs to people resident in the UK, and gains accruing on the disposal of assets anywhere in the world which belong to people resident or ordinarily resident in the United Kingdom.

However, the issue of status is more complicated than whether or not a person has British residence in the UK. There are questions that need to be addressed. Will the Minister outline the specific tax implications arising from the Bill for BOTCs who become British citizens under the provisions of the Bill and, first, take residency in the UK; secondly, become ordinary residents of the UK; thirdly, have resident status both in Britain and in one of the territories; fourthly, are

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resident in the UK but whose domicile remains in a territory? Will a citizen of a territory who has accepted British citizenship and whose domicile is Britain be subject to the same tax laws as a citizen who has taken British citizenship but whose domicile remains in that territory?

On a more general level, is it possible for a British citizen from an overseas territory to live in the United Kingdom without being subject to UK tax regulations? Do the Government envisage an opt-out system? Would the rate at which tax is paid depend on the duration of the individual's residence in the United Kingdom? It is important that this House be made aware of the nature of the tax regimes and tax laws of each of our territories and how those structures will be affected by this Bill.

The tax issues that I have raised are very complex. Will the Minister ensure that those British Overseas Territories citizens who become British citizens are made aware of the implications for their tax contribution arising from that change of status? I beg to move.

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