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Baroness Noakes: My Lords, we support my noble friend's amendment. Taxpayer confidentiality is a crucial issue and one that we will be debating throughout our proceedings today. My noble friend has already quoted at length from the latest report from the Joint Committee on Human Rights. The committee was disappointed in the Government's response, and so were we. The issue is safeguards for the taxpayer and we do not think that that has been addressed. My noble friend's amendment is therefore very pertinent.
Lord Newby: My Lords, in principle Clause 17(1), the provision which is causing the noble Lord, Lord Campbell of Alloway, so much concern, looks both innocuous and sensible. It allows the newly merged department to use information it collects in respect of one form of tax, for example, to guide how it views that taxpayer's affairs more generally. On first reading it, I welcomed the clause with no demur. However, we have since read the two reports from the Joint Committee in which concerns have been expressed that this provision is too broad.
What we are really talking about here is the question of proportionality. I should have thought that the "administrative level safeguards" referred to in paragraph 1.8 of the committee's report might well be adequate to address the problem, as the committee suggests. But I fear that even if I were not convinced that those safeguards would do the job, I am certainly not happy with the solution suggested by the noble Lord, Lord Campbell of Alloway, in his amendment. He proposes that in every single case in which information given for one purpose is used for another by the newly merged department, it would have to go to court to seek agreement.
Over the course of a year I imagine that there are literally millions of occasions on which taxpayers' information, particularly on the business side where information is provided on VAT, NIC, PAYE and corporation tax, needs to be considered together in forming a view about a taxpayer's affairs. Under the
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amendment, millions of cases would arise where court orders have to be made. Given that, and notwithstanding any support we may have for the views of the Joint Committee, we fear that this amendment fails the practicality test.
Lady Saltoun of Abernethy: My Lords, I support this amendment and I think it is very important. We are promised identity cards capable of holding a lot of information about individuals. Without the safeguards provided in this amendment, I would be very concerned lest confidential taxpayer information finds its way on to any database being used to provide information to be included on identity cards. That is one of the reasons why I support the amendment.
Lord Brooke of Alverthorpe: My Lords, perhaps I may put a question to the noble Lord. Is he really saying that every inquiry made by the Child Support Agency about the level of income of a particular individual being chased by that agency would require the department, the CSA or the Inland Revenue, as the holder of information since it has access to an employee's tax and insurance details, to get a court order? There are hundreds of thousands of such cases every year.
Lord Davies of Oldham: My Lords, I remind the House that this is the Report stage. Perhaps the noble Lord would answer that question when he replies to the debate.
Lord Goldsmith: My Lords, I shall answer it. My noble friend is absolutely right. I do not know the precise numbers, but he is right to point out that the effect of the noble Lord's amendment would be to require a court order for each and every disclosure which is made. We are not talking about a new approach, but about the present approach. This is what happens at the moment. There is a substantial exchange of information which is not done by court order. To require a court order in each case would be deeply damaging to the way that the new organisation would operate and—dare I say?—deeply damaging to the courts as well. They would find themselves swamped with minor applications for disclosure of information when it is perfectly obvious that this is the sort of thing that has been done for 30 years. In short—although I am afraid that I am about to give a detailed response—the point made by the noble Lord, Lord Newby, is absolutely right. If nothing else, the amendment fails on the ground of practicality.
I shall say a little about the sharing of information. Information is shared between the departments all the time. Moreover, there are substantial safeguards in place to ensure that confidential information about taxpayers is not misplaced. I say that particularly in the hope that it may reassure the noble Lady, Lady Saltoun. I refer to the statutory duty of confidentiality in Clause 18, while Clause 19 provides a criminal offence of unlawful disclosure of confidential taxpayer information. Clause 22 makes it plain that the department will be fully subject to the Data Protection Act 1998, while Clause 3 covers the
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declaration of confidentiality made by officers. All those provisions reinforce the obligations. In addition, there will be stringent internal safeguards to which I have referred before.
5 p.m.
I am grateful to the noble Lord, Lord Campbell of Alloway, for drawing attention to the latest report of the Joint Committee on Human Rights. I note, as the noble Lord, Lord Newby, said, that the Joint Committee on Human Rights in its report issued today says some very reassuring things about the administrative safeguards. It notes in paragraph 1.6 that it found the Minister's response to the questions very helpful. The noble Lord said that the committee stated that the Minister had wholly failed to engage. However, the report states at paragraph 1.6:
"We have found the Minister's response very helpful. We are reassured that there exist numerous procedural safeguards at the administrative level designed to ensure that information is only shared where both necessary and appropriate. We also accept the necessity for administrative level safeguards, giving concrete practical effect to the safeguards contained in the Bill, and that such detailed safeguards need not be spelt out on the face of the legislation itself".
So, thus far, the committee is very supportive of what the Minister has said on the arrangements which will be in place.
It is quite right that the committee adds at paragraph 1.7:
"We remain concerned . . . at the breadth of the discretion to share information internally as it is currently drafted".
However, the committee goes on to say in paragraph 1.8:
"It may well be that the administrative level safeguards supply this omission and make it clear that information is only to be shared internally if such use satisfies a test for proportionality".
Therefore, a narrow point remains in the Joint Committee's report. It is reassured that the administrative safeguards are there. It is prepared to accept that those safeguards will meet the omission that it has identified. The committee thinks that it would be better to say something further, but it does not say that that should be what the noble Lord proposes; that is, that each and every disclosure of information should be the subject of a prior judicial order. The closest that it comes to saying anything about judicial orders is contained in the quotation that the noble Lord read out concerning safeguards. However, all it says there, by reference to the Newton committee report, is that there may be some cases relating to sensitive information—I believe this comes from the Newton report—which would justify prior judicial control, but that that certainly should not apply in all cases. Even if one accepts that, it does not support the noble Lord's amendment.
Lord Thomas of Gresford: My Lords, the noble and learned Lord referred to Clause 19 as a safeguard; that is to say, a prosecution for wrongful disclosure of information. I note in Clause 19(5)(b) that the consent of the Director of Public Prosecutions is required for
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a prosecution for an offence under that clause. Is the purpose of that to prevent a private prosecution by an aggrieved taxpayer whose confidential information has been disclosed in a manner which he thinks breaches Clause 19?
Lord Goldsmith: My Lords, I do not think for a moment that the purpose is to prevent prosecutions involving an aggrieved taxpayer. The effect of the clause is that a private prosecution cannot be brought without the consent either of the Director of Revenue and Customs Prosecutions or of the Director of Public Prosecutions. If the noble Lord is suggesting that this measure has been inserted to stop taxpayers being able to complain and have that complaint properly dealt with, with respect I resent that suggestion. I have said on previous occasions—
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