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The Earl of Caithness: My Lords, with respect, I say to the Minister that I did not slate the Government for that. I said that I thought that they ought to be exempt from development land tax. It is not clear in the Bill whether they are.
Lord McIntosh of Haringey: My Lords, I beg the noble Earl's pardon. I misheard him. We continue to consult on that and other complex commercial transactions, in order to make the tax fair. I hope that I have covered some of the detailed points made on stamp duty land tax.
I shall comment on the missing trader fraud issue, which surprised my noble friend Lord Sheldon, among others. My noble friend asked whether the amount of fraud could be as great as £1.7 billion to £2.75 billion. The fact that, as I said, we have discovered only today a fraud of £120 million shows the seriousness of the problem.
The question raised by the committee chaired by my noble friend Lord Peston was about safeguards to protect legitimate businesses. Those safeguards
include the right to appeal Customs decisions to the VAT and duties tribunal; and a requirement for Customs to prove that the business knew or had reasonable grounds to suspect that VAT had gone unpaid or that evasion was likely to take place. Those legal safeguards are backed up with statements of practice that set out clearly how and in what circumstances the measures will be applied. There have been representations about a two-stage review but we do not want a delay that will allow fraudsters to continue in their fraud; we want to crack down on those frauds as quickly as possible.It has been suggested that it is difficult for legitimate businesses to recognise a dodgy deal. One example was that of mobile telephones. Those who trade in those sectors are surely aware of market prices from day to day. In most cases of fraud, transactions take place significantly below market value. That is similar to buying cigarettes on the street, as one can near where I live in north London, for significantly less than one pays in the shops. One entertains the fond delusion that one is not buying smuggled cigarettes but all those selling and buying them know that smuggled cigarettes are involved. If businesses have a legitimate low-price deal, they can produce evidence of it and the disputes will be considered by an independent tribunal.
Few comments were made on the electronic VAT issue, although the noble Lord, Lord Freeman, referred to it. However, even he was not particularly critical of the Budget's proposals.
I have given much consideration to the matters raised by the Select Committee. I turn to the wider issues, the first of which is that of parliamentary scrutiny. Several noble Lords—even such experienced people as the noble and learned Lord, Lord Howe of Aberavon—described parliamentary scrutiny of the Finance Bill in another place as a disgrace or as having seriously deteriorated. The total time available for scrutiny of the Bill this year has been comparable with that for Finance Bills over many years under governments of both parties. When there was a complaint about that this year, further Standing Committee time was allocated. Within the total time, the allocation was agreed by the usual channels and I am not aware that there was a particular dispute about that because the Opposition always lead in deciding which issues are to be scrutinised.
On stamp duty land tax, twelve and a half hours were spent on it in Standing Committee and two and a half hours on Report. That is a substantial amount of time. The noble Lord, Lord Higgins, and others, who raised criticisms in that regard, seemed to think that something sinister had been going on in the House of Commons. I do not believe that that is the case. The freedom within a fixed allocation for the opposition parties to decide what they want to debate is the right way to proceed, given that the Government have embarked on programming of government business. It is not for me in this House—or, I suggest, for anyone else—to criticise that.
Lord Higgins: My Lords, the fact is that that was programmed and was not agreed by the Opposition.
The Minister should read Hansard of 1st July. It was suggested by the government spokesman that that was the case, but it was not true, as Hansard clearly indicates.
Lord McIntosh of Haringey: My Lords, the total amount of time was not agreed by the Opposition but the allocation of time within the programme was agreed by them.
Lord Higgins: My Lords, that is the point. The total amount of time was not agreed. The amount of debate was curtailed. There was not adequate time to debate the details of the Finance Bill. That is clear from the fact that many clauses were not debated at all.
Lord McIntosh of Haringey: No, my Lords, that is not clear from the fact that many clauses were not debated at all. There have been guillotines on business in the House of Commons for many years under governments of both parties, but it really is not our business to debate that. Within the allocated time, which is always a matter of controversy, which clauses are debated and which are not is a matter largely for the Opposition to determine.
Lord Northbrook: My Lords, the time may be the same but the Bills themselves are so much longer.
Lord McIntosh of Haringey: My Lords, I was going to come to that. It is true that the Bills are longer although the Bill this year, as has been pointed out, is shorter than last year. Why are they longer? Interestingly, they are longer for the reasons which the noble Lord, Lord Wakeham, suggested, which is that 99 per cent of the people of this country are not interested in the detail and 1 per cent are passionate about it. A great deal of the detail of any Finance Bill is, as the noble Lord suggested, directed to that 1 per cent. Why? If we do not direct the detail to that 1 per cent it will cost the Exchequer billions of pounds in lost revenue. It is the unfortunate fact that there is an industry comprising no more than 1 per cent of the population who are very well heeled and spending a great deal of time and money trying to ensure that they pay less tax. The Revenue has to respond, quite rightly, in our interests.
I do not know whether I can respond effectively to much of the remainder of the debate. I will deal with particular questions. The noble Lord, Lord Higgins, asked me what the Section 5 submission contains. In this case it contains the whole of the Financial Statement and Budget report. Section 5 contains the submission which we shall make later in the year on the pre-Budget report. We do it twice a year and the whole document is included.
The noble Lord suggested that the review of the Revenue departments was because of bungles. The Chancellor has paid tribute to the Inland Revenue and Customs and Excise for their modernising agenda and for building in tax credits. The purpose of the review is not to deal with bungles but to build on success.
The noble Lord, Lord Oakeshott, asked me whether in future the Government's response will be ready in time for debate. That depends when the debate takes place, which is a matter for this House and not for the Government. I do not see how I can possibly answer that. He asked how much notice will be taken of the conclusions and gave his answer in advance, not a lot. I hope that I have indicated in my speech today that I have taken a great deal of notice of the conclusions. He suggested that there should be a fixed Budget date because it would bring certainty for business. I believe that that certainty is given not so much by a particular calendar date, but by the fact that we now have two Statements a year—the pre-Budget report, which introduces very effective consultation on Budget matters, and the Budget itself. I know that business organisations appreciate that greater degree of consultation.
Lord Oakeshott of Seagrove Bay: My Lords, I also suggested that it would be easier for Parliament and one might be able to get the response in time.
Lord McIntosh of Haringey: My Lords, I hear what the noble Lord says. The noble Lord, Lord Freeman, made a point about electronic payments. The coercion which is being introduced in this Budget is consistent with the VAT system as it is, including surcharges for default. It is necessary to stop abuse of cheque payment rules and to ensure that large employers pay on time. It will remove the unfair competitive advantage that non-compliant large employers currently enjoy over compliant ones. There will be a later date due for electronic payments, which will ensure that large employers do not lose cash flow. But we must deal with those who use the defects of the bank clearing system—if I may be so bold—to benefit themselves.
I was very interested in the speech of the noble and learned Lord, Lord Howe. I always listen to him with great respect, not least because of his work on the Tax Law Rewrite Project. The Finance Bill reflects lessons from the rewrite Bills, but the Tax Law Rewrite Project takes place within tightly defined guidelines that prevent changes of substance being made. That is why it is necessary to make the changes in Schedule 22.
The proposed new rules follow the structure set down by the Income Tax (Earnings and Pensions)Act 2003, which has been referred to. That structure is the way forward and replacement of blocks of legislation is much preferred to numerous amendments. The Finance Bill builds on the work of the Tax Law Rewrite Project because the tax system keeps moving, as it must. It does not undermine that work, the continuation of which we strongly support.
The noble and learned Lord asked about consultation, about which I want to make a general point and a particular point. We consulted on more than a third of the contents of the Finance Bill. We consulted formally on, among other matters, stamp duty land tax, offshore funds, first-year allowances for environmentally friendly equipment, non-resident
companies, companies owning their own shares and many other points. There was also a great deal of informal consultation.I point out to the noble Lord, Lord Freeman, who asked about consultation on stamp duty land tax, that the consultation is still going on. We had to have a break in SDLT consultation because we cannot consult on rate settings. But apart from that, consultation has been extensive.
The noble Lord, Lord Jacobs, and the noble Lord, Lord Northbrook, asked about RPIX and HICP. I am sure that the noble Lord, Lord Jacobs, will know that it was made clear when the EMU assessment was made on 9th June—and I made it clear in this House—that the intention is that HICP will be used for monetary policy purposes only, and it will certainly not be used as the basis for calculation of changes in pensions or index-linked gilt. I made that point to the noble Lord, Lord Northbrook, in response to a Starred Question after 9th June.
Yes, of course we will continue to publish the retail prices index: we will need it for those purposes. The Monetary Policy Committee remit continues to be RPIX; any move to the HICP target will build on the success. In response to the noble Lord, Lord Saatchi, we have after all the longest period of sustained low and stable inflation since the 1960s.
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