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Baroness Noakes: Before I consider what to do with my amendment perhaps the Minister would answer two questions. First, who decides how many commissioners there will be? A linked question to that is: why should there not be any parliamentary limit already placed on that decision? Secondly, the noble and learned Lord said that Ministers would be consulted if there were to be a new appointment. I was not clear on what he was saying about the involvement of Ministers in the appointment. It is very important to ensure that appointments within the Civil Service are free of ministerial involvement. So, what is the nature of the ministerial involvement in the appointment of any commissioners?

Lord Goldsmith: On the first question, as I was seeking to make clear, it would be for the commissioners to consider the number of commissioners needed
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appropriately to run the department. But to do that in consultation with Ministers and subject to the report to Parliament, which would give Parliament the opportunity, as always, to express a view if it was unhappy with how the department was going.

On the extent of the involvement of Ministers in a particular appointment, as I have again indicated in relation to external appointments, there needs to be the full and proper involvement of Civil Service commissioners in the selection and appointment—selection by interview including independent panel members. It follows that the ability and the involvement of Ministers after that process has taken place is necessarily a very limited one. I hope that that reassures the noble Baroness on the process, and that it will produce people of the quality and independence required.

Lord Campbell of Alloway: Perhaps I may ask the noble and learned Lord what the merit is in leaving it to the commissioners to decide how many or who should be a commissioner and so on? It is all very messy and vague. Surely, it is for the Government to decide initially how many commissioners there should be, and there should be some machinery for adapting it to future needs in a very wide fashion. The Government cannot just remove all responsibility for doing anything and say that the commissioners can get on and decide what to do. That is not the right approach.

Lord Goldsmith: The noble Lord asks why we should leave it to the people whose responsibility it is to run the department. That is what the commissioners are there to do. Why should we leave it to them to decide how to run it? With respect to the noble Lord, it seems to me very right and proper to recognise that as the people who have the responsibility for running the department, and in running it as a non-ministerial department, they should be the first to indicate what is necessary in order to run the department well, efficiently and properly. However, as I have said, the Government do not abandon all responsibility for this because Ministers need to be consulted. Appointment by Letters Patent will require consultation with Ministers before those letters can be issued. That seems to me to be a very appropriate combination of government input—in the noble Lord's terms—together with leaving it to the people whose job it is to run the department to determine how best to do so.

What is being proposed is not in any event an amendment which puts a responsibility on government to determine the number of commissioners, it is Parliament putting a straitjacket on what might turn out to be an inappropriate number—inappropriately small or inappropriately large—when one looks at changing circumstances. That ultimately is the critical point. If I may say so with respect, the noble Lord's point does not seem to me to touch on whether it is necessary to state in the Bill what the number of commissioners would be. I hope that the arrangements that I have outlined will provide sufficient reassurance that this department will be run properly and well by
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fully competent, fully qualified and appropriately appointed commissioners. Surely that is what matters most.

Lord Sheldon: My noble and learned friend will be aware that when civil servants are appointed, there is a certain amount of independence in the method of appointment. Of course, in many departments the Minister will be consulted. That is normal. But when one is dealing with £400 billion of revenue, the involvement of the politicians may be a little less certain in these matters. So should there not be a greater level of independence?

My noble and learned friend mentioned consultation. I was a little uneasy about that word because it looks as though there could be considerable input by Ministers into the appointments process. That could be quite dangerous in situations where substantial sums of money are involved and where there may be a considerable interest by the person becoming involved.

Lord Goldsmith: I have experience of dealing with appointments involving the Civil Service appointments procedure. As my noble friend may well recall from his time as a Minister, it is a very independent process in which, whatever the level of the appointment, Civil Service Commissioners will, following interview, identify the person whom they regard as being the best for the job. The ability of a Minister not to appoint the person who has been put forward is extremely limited. It is certainly not a question of a Minister being able to choose a person for the job. It is an independent process which produces an independent Civil Service, and it is right that that should be so.

I was focusing particularly on the concerns expressed by the noble Baroness and, to some extent, on those expressed by the noble Lord, Lord Campbell of Alloway, about consultation on the number of commissioners—the central point of the first part of the amendment. That requires Letters Patent, and therefore necessarily consultation with Ministers is required before the Letters Patent are issued.

Baroness Noakes: I have found this debate a little unsatisfactory because it seems that the Government have not taken this legislative opportunity to define the central features of the new organisation. Customs and Excise and the Inland Revenue have grown as they have, and I have tabled this and a number of similar amendments in order to tease out how the Government see them going forward.

Basically the Government are saying, "We can do almost anything we like because there won't be any rules written down". For example, no rules will be written down about how people are to be appointed. When an external appointment is made, a Civil Service procedure will be followed, but that will not be the case when an internal appointment is made for a commissioner post. The same rigorous selection process would not be applied other than at Permanent Secretary level, but not all the commissioners will be at Permanent Secretary level if the current practice is followed.
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I was trying to say that we should be setting out features of this new organisation based fundamentally on how it is currently operated so that we can be clear about how it will go forward. I am not clear that it will be enough for the commissioners to decide what their own organisation will be, for them to consult Ministers and then to report that in their annual report. The report is always published at least seven months after the end of the year and therefore, broadly, the parliamentary committee reviews it when almost another year has elapsed. How can that parliamentary committee, which has no powers other than to say, "We don't like it", get involved? The Minister spoke, for example, of the need to remain flexible because corporate governance changes. Yes, indeed it does. However, I do not believe he will find that a single one of my amendments would create inflexibility. I can point him to a number of recent statutes which have created other bodies which have needed to create bodies with sufficient flexibility to be able to cope with anything over a reasonable period of time. I do not believe that by constraining as I suggested I was trying to put a straitjacket around it.

I feel that the Bill has a hole in it; that is, what kind of organisation it is that we are creating? We are saying that we create commissioners and they create their own organisation and somehow, a year and a half after the event, a parliamentary committee might be able to catch up with some of that. I do not believe that that is a satisfactory way, in today's world, for the Government to be creating a major body with major interfaces to the public. I shall withdraw the amendment at this stage because we shall be returning to some of those themes later. However, I record that I find the noble and learned Lord's approach unsatisfactory. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Noakes moved Amendment No. 3:

"( ) The Commissioners shall collectively be referred to as the Board of Revenue and Customs, and one of the Commissioners shall be designated as the chairman of the Board."

The noble Baroness said: As we had an extensive debate on the previous amendment, I will try to take this one at a little more speed. Again, it teases out another aspect of how the organisation is to be run.

The Bill provides merely that there will be commissioners and that they can organise themselves as they like. When one creates an organisation, one should have some sense of how it is to be run. It is relatively clear that both Customs and Excise and the Inland Revenue are organised into boards and they have chairmen. That is perfectly normal for any kind of organisation, whether it is in the public or private sector. Sometimes they are called councils, not boards, but that is the general impression and what we would expect to find for any body being created in any sector.

The Explanatory Notes state that it is customary for one of the commissioners to be designated chairman in the Letters Patent. I am not sure when that first arose, but it now appears to be the practice that one person is designated to be the first among equals to lead the
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organisation. My amendment is therefore designed to reflect that practice. It is difficult to envisage any organisation which does not have a designated leader.

The amendment deals with fundamentals—it does not apply complicated, straitjacket corporate governance—providing that there is a chairman and that the commissioners form a recognisable body. This is an opportunity to reflect organisational practice as we find it in the 21st century and has been practised for at least a century if not longer. It is an opportunity to place on the face of the Bill some elements of the organisation so that we do not have to leave it to the commissioners to work everything out for themselves. I beg to move.

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