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Lord Kingsland moved Amendment No. 33:
The noble Lord said: Before I speak to the amendment, perhaps I may say to the noble and learned Lord the Attorney-General that I did not intend to take him to task for straying into Clause 20 when we were supposed to be discussing Clause 14. I do not blame him for doing that. It was my siren sounds that proved too great a temptation to him.
The amendment refers to subsection (2) which deals with the issue of confidentiality. I shall be brief. Let me begin by reassuring the noble and learned Lord that my purpose is entirely to probe. I wish to test the boundaries of the provision. As evidenced by our earlier debates, we are all agreed that the statutory duty of confidentiality in respect of taxpayer information is entirely welcome. That said, it seems that that drafting of paragraph (a) could have the effect of undermining this important principle.
As I read it, this paragraph delivers a broad widening of the scope for disclosure available to HMRC, with no restriction on the persons or bodies to whom information could be given, on the character or scope of the information to be disclosed, or on any further onward disclosure. In effect, in the absence of any specific restrictions on the face of the Bill, any official of HMRC—and that in itself is a broad category of persons—will be able to disclose any information to any one at any time, subject only to the disclosure being for the purpose of one of the functions of HMRC.
The noble and learned Lord will, I am sure, discern that a major cause of my concern is that this could have the effect of relieving HMRC of any requirement to obtain further statutory gateways permitting disclosure in specified circumstances. In turn, this would severely limit the capacity of Parliament to scrutinise properly each individual extension of disclosure powers. That would be an undesirable state of affairs. Accordingly, I trust, or, at least, hope, that the noble and learned Lord will offer me some comfort. I beg to move.
Lord Goldsmith: I hope that I can meet the noble Lord's request. Clause 18 provides, as the legislation for the predecessor departments did, for prescribed circumstances where disclosure is permitted. As I said at Second Reading, the disclosures allowed for by Clause 18(2)(a) could range from advice to Ministers on policy matters to day-to-day operational activities. I would ask noble Lords to note that this ability to disclose for their functions already exists in the predecessor departments. The existing legislation allows staff of Inland Revenue or Customs and Excise to disclose in accordance with their official duties.
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The noble Lord is concerned to explore the breadth of the power, but it is important to note that the purpose for which disclosure may be made is constrained by being,
Both are important. "Function" means the functions given to HMRC by Parliament—the collection and management of revenue—and those which are ancillary to it, such as management functions, provision of training for staff and so on. Staff will not be able to use this paragraph any time they feel like it. It must be for the purposes of the function.
Nor does it do away with the need for statutory gateways, the noble Lord's other point, because this is simply business as usual for the department. Current legislation already allows Inland Revenue and HM Customs and Excise to disclose in accordance with their official duties and they cannot choose to say something is their function—their functions are what their functions are, as given by Parliament.
Regarding the second part, there are already controlled, limited circumstances about when such disclosures can be made. Controlled, limited circumstances will continue to be the order of the day under the new body. I hope that the noble Lord will accept the essential point that it is important for HMRC and its customers to be able to take part in the sort of activities that I have outlined and that it is necessary to have the provision for disclosure for that purpose. I hope that the noble Lord will be reassured.
Baroness Noakes: Perhaps I may intervene briefly. The noble and learned Lord referred to the existing law where the derivation table is from a Finance Act. This House does not have the opportunity to review finance Bills—which troubles some of us—which means that a number of important areas of law are not scrutinised by your Lordships' House. It occurs to me that these particular powers, when they were set up in 1989, will not have been scrutinised. That is a general comment on the way that finance Bills are examined in another place. The noble and learned Lord referred to "controlled and limited circumstances". What are they?
Lord Goldsmith: As regards the first part of the noble Baroness's questions, I am talking about an existing state of business which has operated, as she said, for 15 or 16 years. We are simply proposing to take that forward. Given the time, it would probably be more accurate if I included what I had in mind in relation to the controlled and limited circumstances that I shall write to her when we have completed the Committee stage.
Lord Kingsland: I am most grateful to the noble and learned Lord for his response. He will recall that, in my opening remarks, I expressed my concern in the context both of a widening of the scope of disclosure available to HMRC and an increase in the numbers of
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persons and bodies to whom information could be given in comparison with the existing situation. Am I right in interpreting the noble and learned Lord's reply that I am simply wrong about that and ought not to be concerned? Is he, in effect, saying that the Bill simply endorses the status quo with respect to the scope of confidentiality and the number of people involved? If so, that would be the end of the matter.
Lord Goldsmith: The answer is yes, it does, except for the position of the prosecuting authority, RCPO, which we will deal with later in the Bill.
Lord Kingsland: I am most grateful to the noble and learned Lord for that reply, which was most helpful. I shall look at the additional features on the landscape, which are the powers of the prosecuting authority, and, depending upon my conclusions, come back or otherwise on this matter on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland moved Amendment No. 34:
The noble Lord said: The purpose of the amendment, taken with the clause stand part Motion, is clear, namely to delete Clause 20.
My first reading of that provision provoked a question in my mind as to why the Revenue and Customs authorities might need to resort to a public interest test as a justification for the disclosure of information. The reasons for doing so are entirely unclear, at any rate to me, and I would be grateful if the noble and learned Lord could clarify the Government's thinking, ideally by giving some specific examples.
As things stand, I cannot see what the public interest exemption adds to the already extant statutory gateways that permit disclosure. For example, albeit that they are not mentioned in Schedule 2, powers to disclose for any purpose connected with criminal prosecution or investigation are already provided for by Section 19 of the Anti-terrorism, Crime and Security Act 2001, while the Social Security Administration (Fraud) Act 1997 grants powers to disclose to the Department for Work and Pensions for social security purposes. By the same token, to cite just a few examples from Schedule 2, Section 24 of the Teaching and Higher Education Act 1998, Section 20 of the Immigration and Asylum Act 1999 and so on also grant powers of disclosure.
One possible answer, of course, might be the following. The joint code of practice that emerged from the revenue departments in connection with the provisions of the Anti-terrorism, Crime and Security Act states:
It is legally obliged to keep customers' affairs completely confidential. The code continues:
"Information can only be disclosed where legislative provisions permit the disclosure of information or where the customer involved has consented to the disclosure. The approach of HM Customs and Excise is similar, but disclosures may also be made where there is an overriding public interest in doing so."
This suggested to me that Clause 20 may be necessary because of the different cultures of the Inland Revenue and the Customs and Excise services. Perhaps the clause could be justified because of differences of nuance in the legal powers. So, having checked the reference in the transposition note, I looked up Section 182, subsection (6)(a) and (c) of the Finance Act 1989. It states:
"For the purposes of this section a disclosure of any information is made with lawful authority if, and only if, it is made—
Yet we are unable to establish any correlation between that and the drafted text of Clause 20. Here I would be grateful if the noble and learned Lord the Attorney-General could perhaps explain the methodology of how the one was derived from the other. I say again, we simply cannot see what purpose the public interest exception is intended to achieve.
The noble and learned Lord the Attorney-General will again realise that a great deal of our antipathy towards this clause stems from our preference for statutory gateways for disclosure to be enshrined clearly in primary legislation. But it goes even deeper than that. In particular, I echo the concern expressed by the Joint Committee on Human Rights about the uncertain scope of the exception. Paragraph 1.23 of its report states:
"The kinds of purposes for which public interest disclosure is permitted are not therefore defined on the face of the Bill, but left to be specified in regulations made by the Treasury. Moreover the regulation-making power is extremely wide".
We would go further. It is so broad as to create the possibility that all the welcome safeguards that the Bill contains could be overridden. For example, if the regulations were to define a public interest purpose or disclosure as "to assist the regulatory functions of" a government department, the effect would be to give HMRC an almost unfettered power to disclose taxpayer information under almost any circumstances. That simply cannot be a correct approach in law.
As an addendum to this, it is also worth considering some interesting statistics, unearthed by the Privy Council review chaired so outstandingly by my noble friend Lord Newton of Braintree, on the Part 3 disclosure provisions of the Anti-terrorism, Crime and Security Act. It would seem that, between January 2002 and September 2003, the Inland Revenue made 19,909 disclosures under the Act, whereas Customs and Excise made 796.
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Bluntly, it is extremely hard to credit that Customs and Excise, given its culture of close liaison with the police and security services, could have made over 19,000 fewer disclosures than its tax-collecting counterpart. Rather, it is tempting to conclude that the discrepancy arises because the bulk of Customs disclosures post 2001 are still being made on the basis of public interest, with correspondingly less requirement for scrutiny and record keeping than is required by the anti-terrorism Act.
I do not know what view my noble friend's committee took of Customs practice in this regard. Its report was silent on this, although it does say that the Inland Revenue had,
Be that as it may, what matters here is that there are legitimate grounds for supposing that a public interest exception has the effect of weakening the safeguards of the disclosure regime.
All in all, we are most unhappy about the clause. Is its inclusion in the Bill really justified? As the Joint Committee on Human Rights makes plain:
"the Explanatory Notes also refer to 'other public interest reasons' compatible with Article 8, without specifying which such reasons are relied upon to justify the powers to use information. We would remind the Government that the onus is on it to specify the precise aims which are relied upon in Article 8(2) as justifying the interference with Article 8 rights".
Those are our sentiments exactly. I beg to move.
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