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"( ) Any direction given under this section shall be in writing and a copy of it shall be laid before each House of Parliament within seven days of its issue."

The noble Baroness said: Clause 11 allows the Treasury to give directions of a general nature to the Commissioners for Revenue and Customs. That is similar to the existing power for the Treasury to direct the Inland Revenue and Customs and Excise. While the wording is somewhat different, it replicates the majority of the substance of the current relationship.

Clause 11 conceals an extension of the powers of direction to the collection and management of Customs and Excise—for example, the collection of VAT. We shall not object to that but I observe that the Explanatory Notes have been less than open and honest about it, which I regret. The Bill has been portrayed as one which does not extend existing powers. That is not in all instances an accurate description. I believe that it is incumbent on the Government to be open about that, for example, in the Explanatory Notes.

It has to be admitted that whenever we consider Bills and find powers of direction, especially when the Treasury is involved, our hackles rise. We always suspect the worst when the Treasury is involved and we usually try to delete such powers—rarely with success, it has to be said.

I have read the debate which took place in Standing Committee E in another place and can see that the accountability of Treasury Ministers to Parliament requires Ministers to have some explicit powers to direct the Commissioners for Revenue and Customs. I can also accept, in principle, that the words "of a general nature" are intended to convey that Ministers should not give directions as to how the tax system operates in specific cases. In particular, Ministers must not have the power to instruct the Commissioners for Revenue and Customs in relation to the affairs of individual taxpayers. It might have been better to formulate the power in terms which explicitly excluded individual taxpayers, but I shall not pursue that today.
 
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I have seen the recent correspondence from the noble and learned Lord the Attorney-General and the noble Lord, Lord Holme of Cheltenham, in his capacity as chairman of the Constitution Committee of your Lordships' House. I thank the noble and learned Lord for providing us with copies of that correspondence earlier this week; it was extremely helpful. I look forward to hearing what the Constitution Committee thinks of the noble and learned Lord's reply. However, for today, Amendment No. 26 seeks not to strike out the power of direction but to make directions subject to parliamentary procedure.

The amendment responds to residual concerns about the use of the power of direction, not to the power itself. In the hands of Ministers who are less than scrupulous—and I make no suggestion that this is a concern with current Ministers—such a power of direction could be manipulated to achieve a specific result while being dressed up as a general direction. Anyone who has looked to Russia and seen what has happened in relation to Yukos through the operation of the tax system will want to ensure that that could never ever happen in this country.

Amendment No. 26 simply requires that any direction made under Clause 11 should be made in writing and that a copy is to be laid before each House of Parliament within seven days. The way in which the power of direction is being used in practice will then be open and transparent. Parliamentarians and others who follow proceedings in both Houses will then have the opportunity to satisfy themselves as to the appropriateness—or otherwise—of the use of the power of direction.

It was suggested in another place that Treasury Ministers directed the Inland Revenue and Customs and Excise all the time, sometimes informally. The noble and learned Lord's letter to the chairman of the Constitution Committee has some flavour of this. I think that this confuses routine dialogue between Ministers and civil servants on the direction. This is a non-ministerial government department so Ministers do not direct the workings of the department in the same way as they do in, say, the Treasury.

Of course, those Ministers will be constantly involved with the commissioners and other officials about policy and other matters. When that happens, there will be a great many conversations about issues and there will usually be agreement as to how the Commissioners for Revenue and Customs are to proceed. But where there is no agreement, Ministers will have, in effect, a reserve power to intervene under Clause 11.

It is difficult to see exactly how the power might be used but perhaps there could be a direction to clamp down on a particular class of taxpayer in circumstances that the commissioners did not think were cost-effective or consistent with other policies they were operating towards that class of taxpayer or other classes of taxpayer; or perhaps Ministers might issue a ban on making compulsory redundancies even
 
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though the commissioners thought it necessary to do so in the context of the management of the collection of tax and the administration of the tax system.

Whatever the underlying reason, the purpose of the amendment is to ensure that Parliament is told that the direction has been made and to allow, if appropriate, a debate on the reasons for the direction being made.

In another place the Paymaster General argued that the Freedom of Information Act would provide sufficient safeguards. I do not think that it is reasonable to expect parliamentarians to invoke that Act as a substitute for proper disclosure to Parliament on matters where it can be seen in advance that Parliament will have an interest. Surely the issue of a direction in circumstances in which the commissioners would not wish to act is an area in which Parliament will have a natural and legitimate interest. I beg to move.

Lord Newby: The problem I have with the amendment and with the clause is a definitional one of what constitutes a direction. Indeed, the noble Baroness alluded to this issue in her speech. As she said, the way in which the Revenue departments work with Treasury Ministers involves a dialogue. It is very similar to the way in which senior civil servants work with Ministers in any other department. Therefore, the way in which decisions are taken is very often not by way of a war order—a capital "D" direction—but as a result of papers going back and forth between departments over a period and agreement being reached on how to proceed. The problem that the noble Baroness runs into is how to decide what constitutes a direction and, in her mind, the matters that are really important and where there is a difference of view, as opposed to the considerable run-of-the-mill activity between the two departments.

When I was the private secretary to the chairman of Customs and Excise I acted as a form of conduit for most policy submissions from Customs to the Financial Secretary to the Treasury, who at that stage was the noble Lord, Lord Sheldon. He and his officials responded to those matters and on a day-to-day basis there was a great deal of paper going backwards and forwards and a great many decisions were taken—quite often with the Treasury stating, "This is what we want to do". In most people's parlance, that would constitute a direction but, in my view, there can be little reason for Parliament scrutinising that kind of exchange and decision-making in this case when compared to what happens in every other department.

There is an issue about the ordinary, run-of-the-mill doing of business and the probably very few cases—the noble Baroness has referred to some theoretical possibilities—where Ministers attempt successfully, via a direction, to get the Revenue departments to do something that they do not want to do. One of the problems in the debate is neither in another place nor here. Has anyone come up with a concrete example of where there has been a direction which has caused any problems? That is a pity.
 
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Regarding the question raised by the noble Baroness about avoiding a Yukos operating in the United Kingdom, I was intrigued to hear the Chancellor of the Exchequer saying in China that he had had some discussions with Customs and Excise about deferring VAT for Rover—a classic case of a single taxpayer's business being subject to ministerial influence, if not direction. If the Chancellor goes to see the chairman of the board of Customs and Excise and says, "I've had this good idea about Rover. How about deferring the VAT for a couple of months?", it is quite difficult for the chairman, unless there is a categorical legal reason to prevent it, not to go along with that. Although I do not believe that there has been any impropriety in the way that the Chancellor has behaved—because there is some flexibility on VAT in certain cases—that is a straightforward case of a Minister interfering in an individual taxpayer's affairs.

Therefore, in reality there is a bit of a blurring of definition. If we could narrow down what was meant by a direction—with a capital "D", as opposed to the directions that go on all the time—I would have rather more sympathy with the amendment. I am worried that it may be unworkable as it stands.

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