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Lord Goldsmith: It may be helpful for me to start by explaining the structure of the clause, because I hope that it will answer some of the questions raised by the noble Baroness, Lady Noakes.

The Bill establishes HMRC as a non-ministerial department. That is driven by the important principle that the administration of revenues should be conducted at arm's length from Ministers. Those Revenue functions are the driver for HMRC's establishment as a non-ministerial department. The effect of making it a non-ministerial department is that the sensible machinery of government change arrangements that exist in the Ministers of the Crown Act 1975 would not apply. It is my understanding that the way of bringing in the powers in the Ministers of the Crown Act is precisely to make the deeming provision, which new Section 5A(2) would have, namely to treat for purposes of the Act the commissioners as Ministers of the Crown. It is not for any other purpose; it is simply the way of bringing in the benefit of those other powers.

However, while that would bring in the ability to use the powers in the Ministers of the Crown Act for machinery of government changes, that is subject to an important restriction. I respectfully take issue with the noble Baroness in saying that it is a narrow restriction; it
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is not narrow, because the Bill prevents the transfer out from HMRC under this provision of any of the Revenue and tax credit functions that HMRC will inherit from the Inland Revenue and Customs and Excise. That is the effect of new Section 5A(3), that an Order in Council may not provide for the transfer of functions specified in Section 5(1) of the Commissioners for Revenue and Customs Bill. Section 5(1) is the collection and management of revenue for which the commissioners of Inland Revenue were responsible, the collection and management of revenue for which the commissioners of Customs and Excise were responsible, and the payment and management of tax credits for which the commissioners of the Inland Revenue were responsible before the creation of this new section.

That carves out of this power altogether the important collection and management of revenue and payment and management of tax credits that would be the responsibility of the two predecessor departments. That is an important restriction, which means that what drove this to be a non-ministerial department will remain, in the sense that those functions cannot be transferred in and out using this provision.

There will be other powers, and things have moved on a lot since 1975, when the Ministers of the Crown Act was passed. The role of HMRC will be more varied than the role that either the Inland Revenue or Customs and Excise had in 1975; with child benefits, statutory payments in the new department, and other functions. In relation to those, which do not fall within this properly protected area, there is no reason, in the Government's view, why responsibility for those powers and areas of government activity should not, like any other government activity, be subject to the possibility of moving them from one department to another under the machinery of government changes that exist in the 1975 Act.

So I am saying that we should keep out of these provisions the important revenue tax credit business. Other provisions should be subject to the same possibility of change as for other government departments. The 1975 Act works well; it has been used on many occasions. There is no intention at the moment to transfer any particular business. That is not at all what is in mind. I am reminded that my right honourable friend the Paymaster General in the other place wrote to the Committee setting out the Inland Revenue business that could be transferred out. The noble Baroness may have seen the letter, but I am happy to provide a copy for her to see the sort of things involved. However, I hope that she will be reassured by what I have to say. I will put it in short form.

If the department had been established as an ordinary ministerial department, these provisions would simply have applied automatically. We accept that it is sensible and right to make the department non-ministerial to maintain the distance from Ministers, which means that the provisions cannot apply. We do not allow them to apply to the core tax credit and revenue issues, but there is no reason why they should not apply to the rest.
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The disadvantage of the noble Baroness's proposal is that, if there were a requirement for a positive affirmative resolution, there would have to be parliamentary time for any change in relation to one of these other areas, whatever the significance and however little the controversy might be. It would not be a good use of parliamentary time and there is no reason why the provision should not be subject to the same sort of rules as other government business. I hope that that is sufficient to reassure the noble Baroness on this point.

Baroness Noakes: I thank the noble and learned Lord for that explanation and I would be grateful if he would provide a copy of the Paymaster General's letter because that was not passed on when I inherited some papers from my colleagues in the other place. The concerns still arise about what could potentially still be transferred out. Issues do not arise about what could be transferred in: the issue is what might be transferred out.

Although the reference to the functions in Clause 5 (1) appears comprehensive, others could be contentious. I would not like to predict what might be contentious, and it would repay looking at the list provided to the Committee, but an example might be child trust funds, which concern the individual circumstances of individual taxpayers and children who are entitled to child trust fund entitlements of various layers. Could those functions be transferred in and out? Should they be capable of being transferred willy-nilly, to use the words of the Member of the Treasury Select Committee in another place, or should they be subject to some form of parliamentary procedure, other than the negative procedure? What is at issue is not the wish to ossify Revenue and Customs as an organisation but to ensure that there is a parliamentary procedure that examines something being taken away from its functions.

Lord Goldsmith: It might help if I intervene for a moment. Of course, I understand that even under the Ministers of the Crown Act there is a parliamentary procedure, but it is a negative rather than a positive resolution. That means that if there is controversy about an issue, it is open for that to be raised and a Motion put forward so that it can be debated.

Baroness Noakes: I completely understand that, but this is not a power that is exercisable without any parliamentary procedure. I am sure that the noble and learned Lord will recognise that on Opposition Benches, that procedure—the requirement to pray against a negative resolution—is one that gives even less opportunity for parliamentary scrutiny in practical terms than an order, which must pass through both Houses of Parliament. That is a fact of life. Given the volume of secondary legislation that gushes out of government departments day after day, those that require a positive parliamentary procedure ensure that Parliament pays attention, which is why, in Opposition, we always seek those powers.

I will consider what the noble and learned Lord said and I would be grateful to receive a copy of the letter. I am sure that the noble Lord, Lord Newby, would be
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as well. We can consider this matter again. My instinct remains that an additional parliamentary procedure would be safer in terms of safeguarding the kinds of functions that ought to remain for a body such as Revenue and Customs. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 [Ancillary powers]:

On Question, Whether Clause 9 shall stand part of the Bill.

The Earl of Northesk: By way of reassurance to the noble and learned Lord the Attorney-General, my purpose is merely to seek clarification. At first blush, the remit of the clause seems extremely broad—so broad as to potentially undermine, if not neuter, many of the welcome safeguards elsewhere in the Bill. While relatively content with the use of "necessary" in the clause, I am rather less comfortable with the use in that context of "expedient . . . incidental or conducive".

I acknowledge that the Explanatory Notes give some useful examples of what is envisaged here; nevertheless, taken to its logical conclusion, it is not impossible to envisage a situation arising whereby, for example, commissioners might conclude that it might be "expedient . . . incidental or conducive" to the exercise of their functions to disclose just about any item of taxpayer information much more widely than the Bill on the surface permits. Certainly, I cannot discern any constraint on the exercise of the clause's powers.

On the related issue, what I like to call the "transposition note"—the table of provisions relating to the predecessor departments—makes it clear that,

The Government have maintained throughout that the process of integration should not result in any extension of powers not already held to either the Inland Revenue or Customs and Excise. As the Minister explained at Second Reading and fleshed out in the context of earlier amendments, the Bill deliberately makes only those changes necessary to establish HMRC. It therefore transfers the powers of the two existing departments to HMRC but ring-fences to prevent their inadvertent extension within HMRC. There are therefore no changes in how the powers can be used as a result of the Bill.

That aspect is reinforced at paragraph 298 of the Explanatory Notes, which states:

And yet to my interpretation no such ring-fencing exists in respect of this clause. Instead, apparently extensive additional powers are conferred on Customs and Excise. Why? In the circumstances, I would be grateful if the Minister would elaborate on the nature of any legacy powers insofar as they may exist for Customs and Excise in this area.
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I willingly acknowledge that I may have misconstrued the construction of the Bill. Perhaps the key lies in the clause's heading—"Ancillary powers". Come what may, I very much hope that the Minister will be able to reassure me that my misgivings are misplaced.

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