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Lord Campbell of Alloway: There appears to be agreement, but not quite for the same reason. I support my noble friend. We are setting up a new public body within the meaning of Article 8 of the European Convention on Human Rights. We have commissioners, but if they are to have power under some new structure to appoint non-executives, surely that should be stated in the Bill. We do not know whether the new structure will operate as the old structure did. So when you are making a new structure, surely a delegated power of appointment should be on the face of the Bill.

The other point is that the commissioners can set the conditions. That goes without saying. But it does not go without saying that they should not be regarded as staff. If that is the position, it should be stated in the Bill. We have a new structure and we do not know whether it is going to assimilate the old structure. We do not know enough about it. Frankly, the whole thing warrants clarification.

Lord Goldsmith: I seem to have difficulty in getting the point across, so perhaps I may reiterate it. This body will be a government department. Existing codes, guidance and requirements will apply to it. It is not the same as a private sector body; it is not the same as an agency; and it is not the same as some public body which is being established outside government departments.

The legislative approach which has been adopted is the same as that in relation to the predecessor department in Customs; for example, there is no statutory board in relation to Customs. Why is it necessary to say on the face of the Bill—

Lord Campbell of Alloway: I thank the noble and learned Lord for giving way. We are drifting into a misunderstanding. I am saying that it is a public body within the meaning of an article. I am not referring to it as being an ordinary public body outside that meaning. That is all.

Lord Goldsmith: Absolutely. It is not in the same category as other non-governmental public bodies or private sector bodies which are established. The current arrangements for the Inland Revenue and for Customs and Excise are that both engage non-executive directors. In neither case, so far as I am aware, is there any specific legislative provision for
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that to take place. There is no need for there to be specific legislative provision to appoint non-executive directors. I note that the noble Baroness's amendment is not a requirement to appoint them but simply purports to give a power to appoint—a power which it is not necessary to include because it is not necessary to have a specific legislative power for that to be done. It is therefore not necessary to have such a specific legislative power in relation to the precedent of departments and it is not necessary to have a specific legislative power here.

Secondly, it was stated that non-executive directors are not employees. In line with the recommended practice for central government departments, the non-executive directors of the predecessor departments are not employees. The same arrangements will follow forward into Revenue and Customs, and so I see no need for either of the parts of the amendment that the noble Baroness has moved.

I go further than that. She identified that the amendment seeks to put a limit on the numbers of non-executive directors, which does not correspond to modern corporate governance practice in the private sector. Increasingly in modern private sector corporate governance, the proposal is that at least half of a board should be non-executive members. The noble Baroness says that she proposes a limit for the purposes of debate. Why should that limit be right? Even if it is right today—which it might be—should it be enshrined for all time? To my mind, that is a fatal objection to the amendment.

I want to return to the point that I made at the outset—that is, this is a government department. In a private sector body there may be votes on the management board, but one does not see that in a central government department. Equally, in a central government department the head of the department, the Permanent Secretary, is necessarily not a non-executive. He is a civil servant. That does not correspond to modern practice in the private sector.

So, while I have sought to recognise the importance of good corporate governance arrangements throughout the debate on this and other amendments, the simple application of private sector models to a government department does not necessarily work. It is better to accept the requirements set out for government departments, including those that will be set out in the code for corporate governance arrangements for government departments, which the Treasury is working on at the moment.

Lord Brooke of Alverthorpe: I have some sympathy with the views that have been put forward by the noble Baroness. I recall the changes that came in in the old Inland Revenue—I go back to the Revenue. It is a government department, but it decided to introduce non-executive directors. It introduced them because it saw the world around it changing, particularly in the private sector, and it needed to make some amendments. It also had difficulties with its glass ceiling and gender balance. There was a view that that was the opportunity to get
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some women seen around the Board of Inland Revenue, which had hitherto been comprised solely of males. But we have moved on.

Again, we come to the document—I do not have a copy of it, but one has kindly been loaned to me—that sets out the governance. It states that the concept of sound corporate governance practice has developed considerably over recent years. That indicates the flexibility that HMRC requires to be able to adapt to new requirements without the need to amend legislation. It goes on to say that details on HMRC's governance arrangements will be published and available for parliamentary scrutiny. When will they be published and will it be done during the course of the examination of the Bill?

This is an unclear area. This is a government department and will continue to be one, but it appears that it is a government department that will have non-executive directors. I do not believe that this can be left so that when we are dealing with the legislation we have no idea of the terms and conditions that will govern the way in which they will work.

Lord Goldsmith: I hope to make it clear to my noble friend that there are present arrangements in relation to both constituent bodies in which non-executive directors are involved. The terms and conditions on which they work are clear. It is anticipated that those arrangements will continue, but it is important that arrangements should be capable of evolving over time.

I hope that my noble friend will agree that it is not necessary to say on the face of the Bill that there may be non-executive directors, any more that it was necessary previously to say that there may be non-executive directors in relation to the Inland Revenue. Had it been a requirement of law that that should be on the face of the Bill, the Inland Revenue would not have had the benefit of the involvement of the noble Baronesses, Lady Noakes and Lady Wilcox, without specific legislative change.

Lord Brooke of Alverthorpe: I am not necessarily pressing that this should be included in the Bill. I am saying that as we deal with the legislation, we shall need greater clarity in this area. If I gave the impression that I referred to terms and conditions alone, I was not doing so; I referred, too, to roles and responsibilities, which have not been clearly defined hitherto, as far as I could ascertain. They need to be given greater clarity, even though they may not necessarily be included in the Bill. I hope that we can get a fairly early sight of that rather than have to wait a long time for it.

Lord Goldsmith: I want to be as helpful as I can to my noble friend and to other Members of the Committee. On creation, details will be published of top level governance, including on the Internet site. Any changes thereafter will be published the same way and there will be reports to Parliament. In the mean time, I shall see what further detail I can provide by way of satisfying noble Lords' concerns as to whether
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the terms and appointments of non-executive directors and others will be clear to them and therefore to others. The best way in which to do that would be for me to set down in a letter what I can say in that regard, which I shall send to all Members of the Committee who participate in the debate.

I hope that the Committee will feel more reassured that the need for clarity in governance arrangements is absolutely understood, and the real debate has been not about that and the importance of such arrangements but about how much needs to be included in the Bill.

Lord Brooke of Alverthorpe: I am grateful for the assurances that the Minister has given me. I said that I was not pressing hard for the matter to be included in the Bill—and, after what the Minister has said, I feel much more comfortable with the response.

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