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12 Mar 2009 : Column 1365
Lord Lyell: I apologise to the noble Lord, Lord Wallace, and to the mover of the amendment for being late, but I have listened to what my noble friend had to say and I really worry for the noble Lord, Lord Wallace. What my noble friend is saying is entirely in line with the amendment. If the noble Lord, Lord Wallace, would be good enough to look at the amendment, he will find that paragraph (x) includes the Pitcairn, Henderson, Ducie and Oeno Islands. I was fascinated to know why those islands will be specified as British for tax purposes. I am sorry if that is surprising to the noble Lord, Lord Oakeshott, who pays considerable attention to detail, but it has been explained by my noble friend. I am certain that my noble friend will not take long and has no intention of abusing the House.
Lord Selsdon: I was about to get to the third lot, which is of course Anguilla, Bermuda, British Antarctic Territory and British Indian Ocean Territory. As your Lordships will know, the noble Lord, Lord Avebury, introduced a proposal a few days ago that someone from Oeno, or I have forgotten what island, should be treated as a British citizen, because in the Indian Ocean other islands are occupied. The second list is a perfectly reasonable list of all those territories that are British Overseas Territories under the 2002 Act. The two together constitute Her Majesty's Territories. We should recognise that Her Majesty gives us our Letters Patent and our Writs of Summons.
What does that mean and why are those territories important to us? Your Lordships should be aware that we as an island have little future unless we are international. With the balance of trade deficit in visibles of £100 billion, we must look back to where we traded historically and where we can create added value. Why are those people British citizens? It is because, historically, we traded with them and they were part of our empire.
We forget that in these days of lack of resources and materials, we should take another look at the coastlines of the world and the territorial waters. Your Lordships will be aware that the Commonwealth has more coastline than any other territories in the world put together. You will have seen not so long ago in discussions on the marine Bill that on the map that shows where the territories are, 50 per cent between somewhere and somewhere else includes Rockall. If the Royal Marines had not got there and that British subject had not stuck a flag up, we would not have been able to claim the extraterritorial waters.
I suggest that where we have a British territory, we should claim the territorial waters up to 50 per cent towards the mainland so that, with those islands, we would have substantial authority. After all, 92 per cent of all CO2 is absorbed by the sea, so there is a green element to this.
That is not just a stupid idea. I wanted to identify what were British territories. Here, in an amendment to a Bill, they are all there. I have the details of all their populations; I have everything that your Lordships would expect me to know. Of the total of 221 countries in the world, the British are the most dominant in terms of potential area, although not necessarily in wealth.
We come to the further grouping, which is Her Majesty's Realms. That started me off because of Australia, my family relationship with Australia and
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“For the purposes of this Act, a member of the House of Lords who was born in any country of the Commonwealth”,
but for those who are citizens of Her Majesty's Realms, they,
the country that they are from. That is perfectly reasonable.
Having identified Her Majesty's Realms and all territories with which we are related and trade, we now come to the question of citizenship, passports and relationship. I will argue until the end of the day that your nationality is one of the first things that triggers anything related to tax: which passport do you have? Some amendments propose that those who go off and work for international agencies should not be taxed. This is the wrong way round. If you are British, you should pay tax in the country in which you are resident, and if you attend the House of Lords you should certainly be resident here for more than 90 days. Should your Lordships wish it, you would expect me to have a list of those who have not been here for more than 90 days.
One of the obligations is regular attendance here and regular participation. If you look at the taxation related to where you are resident, you must also accept that people can be resident in other countries because they may live and work there as well and they may have dual nationality. They will also have dual tax requirements. In England, people must be resident for 90 days. In other countries, it may be 180 days or 120. It is a complete nightmare to harmonise, and where there are no double taxation agreements there will be a problem.
Ordinary residency is also a very complicated issue, as I pointed out to the noble Lord, Lord Oakeshott. You cannot just be deemed to be ordinarily resident; you are ordinarily resident once you have been back in England, if you have worked or been abroad. Noble Lords should realise that 12 million, or 15 million, British nationals live abroad. You are deemed to be ordinarily resident there after a period of time, but my principle is that if you are to be appointed a Member of the House of Lords, you will be here and will be taxed as a resident.
Lord Wallace of Saltaire: I recall intervening many years ago on Lord Shore, who was a rather long-winded Member of this House whom many of us will remember. As he entered the 25th minute of a speech in Committee, I pointed out that the Companion says that long speeches tend to weary the House. He sat down within 30 seconds. I thought that that was a very good reaction to a gentle comment.
Lord Selsdon: This is a perfectly reasonable statement to make. This is not a long speech; this is a long amendment, which covers a whole range of countries.
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I will not repeat what I said last time. My point is that, if you are a British citizen, you should be allowed to be a British citizen. Everything that I have down here is correct; it has been checked again and again. The suggestion is that any residents of Commonwealth countries—the Queen is also the head of the Commonwealth—should be entitled to be a Member of the House of Lords if they are invited to be so. Noble Lords should know that several people in this House are not British subjects in the full sense of the word but come under this heading. My noble friend Lady Gardner of Parkes, is partly domiciled in Australia. She is a very honourable woman indeed, and has disclosed all this. Why should she be forced to change? You cannot change your domicile of origin unless you surrender all relations with that country, including membership of your clubs. That is an unfair imposition and totally wrong.
Domicility is a very difficult issue—I mentioned this when some noble Lords were not here—but domicile of origin is a clear matter. Another scenario is even more worrying. Domicile of origin should relate to your taking the domicile of your father at birth, with the right to change at the age of 16. Not so long ago, there was a case in which a woman went to court to say that your domicile of origin should relate to the domicile of your mother as well, and she won. In the case of domicility, are we saying that domicile of origin relates only to the domicile of the father, or can it also relate to the domicile of the mother?
These may be tiny issues, but they should be raised in Committee, otherwise you have a completely imperfect Bill. It is, in fact, a useless Bill. I have used that phrase before. It does not mean that it has no use, but it has less use than anything that anyone else can think of.
I may have made a hopeless speech, but I make the point that we should deal with people who are British. The British and citizenship should come first. I beg to move.
The Deputy Speaker (Lord Haskel): If this amendment is agreed, I cannot call Amendments 2 to 10 and Amendment 12 because of pre-emption.
5.45 pm
Viscount Astor: In preparation for my noble friend’s amendment, I printed a copy of an HM Treasury document, Reviewing the Residence and Domicile Rules as they Affect the Taxation of Individuals: A Background Paper.It is certainly a worthy document that gives a lot of background information. What is interesting is what it has to say on the historical perspective:
“The current rules on residence and domicile can be traced back to the introduction of income tax in 1799 to meet the cost of the Napoleonic wars. The regime has changed little since its introduction”.
In 1799, before the noble Lord, Lord Oakeshott, could accuse us of trying to avoid paying tax, we were trapping furs up the Hudson river. Indeed, I am not sure that my family knew that the Napoleonic wars were going on. What this shows is that the rules have been around for a long time and that the noble Lord, Lord Oakeshott, wishes to make some important changes.
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I have before me the so-called White Paper published by the Government, although it can be regarded more as a Green Paper because it sets out a menu of options. On nationality requirements, it states that the Government’s view is that,
- “there is no case for changing the current nationality and citizenship requirements for membership of the second chamber in advance of any wider changes in this area”.
That seems clear enough. Indeed, I am not entirely clear about the nationality requirements for this Chamber at the moment. No doubt the Minister can enlighten your Lordships. However, the important thing about this White Paper, one that I believe was endorsed by my noble friend on the Front Bench, is that the Government propose that,
- “in the absence of any other changes to nationality requirements for membership of the legislature, British citizens and qualifying citizens of the Commonwealth (including citizens of British Overseas Territories) and citizens of the Republic of Ireland would be eligible for membership of a reformed second chamber”.
That is a clear statement by the Government that they want to encourage people living in the overseas territories, the list of which is included in my noble friend’s amendment, to come and attend this House should they be picked by the Appointments Commission. I think that the commission said, and the Government agreed, that it would look only at possible candidates for your Lordships’ House who agreed to be resident in this country. That is fair enough because, if you are resident in this country, you pay English taxes. However, the noble Lord’s Bill does not just include residents; it covers residents and domiciles.
My question is this, and it is as much for the noble Lord, Lord Hunt, on the government Front Bench as it is for the noble Lord, Lord Oakeshott: did he expect, when he wrote this, a candidate from a British Overseas Territory appointed to your Lordships’ House automatically to change his domicile as well as his residence? The noble Lord will be aware that you can be resident in more than one country, but you can be domiciled in only one. Given that, the amendment moved by my noble friend Lord Selsdon is very apt. It seeks to ask the Government what they mean in their statement about including the citizens of British Overseas Territories as possible candidates for membership of this House. In fact, they have gone further than my noble friend because I do not think that he has included citizens of the Republic of Ireland, whom the Government seem to want to include. Of course, if you are a citizen of the Republic of Ireland and you move to this country, you have an automatic right to vote here. What I do not know is whether the Government, in considering someone for inclusion in this House, would ask them to move their domicile from the Republic of Ireland to this country. It is an interesting area and my noble friend has brought up an important subject.
Perhaps I may say one thing to the noble Lord, Lord Oakeshott. In the debate on Second Reading, I made it entirely clear that I was in favour of any Member of your Lordships’ House who is resident in this country paying all their taxes. However, following that, I took my wife on holiday—sadly, not to a tax haven, but to somewhere quite expensive. I suddenly
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I want to make it clear to the noble Lord, Lord Oakeshott, who I am sure was misquoted even by such an important and well regarded newspaper as the Daily Telegraph, that I and, I think, all my noble friends on these Benches who attend your Lordships’ House are in favour of paying their taxes. That does not mean that we necessarily agree with everything in the noble Lord’s Bill.
Lord Trefgarne: One of the difficulties with a Bill such as this, which sets out to correct what the noble Lord sees as a difficulty, is that in correcting one difficulty new difficulties are created. Like my noble friend Lord Astor, I, too, am in favour of every Member of your Lordships’ House paying their taxes. When I read the reports to which my noble friend referred, I, too, wondered how they could have originated in the newspaper that I read, which happens to be the same as my noble friend reads. Is it possible that someone in the Liberal Democrats’ machinery is leaking the alleged views, which are wrong, of my noble friend? I hope that the noble Lord, Lord Oakeshott, will disclaim responsibility for those most unfortunate and quite improper reports referring to my noble friend.
On the amendment tabled by my noble friend Lord Selsdon, I should like to ask him whether he is entirely satisfied that the lists of the various countries are correct. I ask that because, during my somewhat inglorious short career as a junior Minister, I came across a number of curiosities, one of which I draw to your Lordships’ attention: the island of Rockall.
Back in 1981, I was honoured to be appointed Parliamentary Under-Secretary at the Department of Trade with responsibility for shipping matters. The late Lord Biffen was the Secretary of State. After a while, I was asked whether I agreed that the Department of Trade should continue to pay for the light on Rockall, which was apparently for shipping purposes. Shipping purposes had apparently receded and our lights over Rockall were more of a political nature at that time rather than of a marine or maritime nature. I was advised to write to my opposite number at the Foreign Office saying that the Department of Trade would no longer be responsible for looking after the shipping light on Rockall and that in future, as it was a diplomatic matter, it should fall to the Foreign Office.
Sadly, I was immediately reshuffled to the Foreign Office and someone said, “Minister, we have received this rude letter from the Department of Trade”. I was then obliged to write a letter back to my successor at the Department of Trade saying that the letter that I had written to the Foreign Office was complete rubbish and that the Foreign Office declined to have anything to do with it. What happened to the light on Rockall is
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Lord Strathclyde: I am puzzled. Are my noble friends Lord Trefgarne and Lord Selsdon saying that Rockall somehow should be treated not as part of the British Isles, but that it could have its own citizens as part of a wider definition of British citizenship and that those people could sit in the House of Lords? I thought that it was very difficult to live on Rockall.
Lord Trefgarne: My noble friend is entirely right. As far as I know, no significant number of people lives on Rockall, but it is visited on a regular basis. I believe that a naval party goes ashore every so often just to check up on it. I am not trying to be facetious; I am trying to draw attention to difficult issues relating to some of the territories included in my noble friend’s amendment and, indeed, to some that may not be included. It is important that we treat places of a similar status in an equal manner. I hope that my noble friend is satisfied that the three lists included in his amendment are correct. If not, we may have to reflect further on what he is proposing.
Baroness Gardner of Parkes: As I have been mentioned in the debate, I shall comment on the amendment, even more on the Bill itself and on what the amendment is trying to do to correct it.
Like the noble Lord, Lord Paul, I featured on the front page of the Times as someone who was about to be expelled from the House for being non-domiciled. I have spoken to the noble Lord about it and we are both in exactly the same position. We were born overseas in a Commonwealth country and we have always retained our citizenship of that country, but we are resident and ordinarily resident here and pay taxes in this country.
I have every sympathy with the Bill in relation to taxation—that is fine, as everyone in the House should be paying their taxes, although I wish that they were not as bad as they are—but to require that we should all change our domicile is an extraordinary demand. I really cannot accept the word “domicile” in the Bill and the amendment is an attempt to change that. You retain your domicile of origin all your life unless you take deliberate steps to change it, and I would be unwilling and reluctant to change my domicile. Therefore, if the Bill did not contain “domicile” it would make more sense. On the taxation issue, as the noble Viscount, Lord Astor, said, I am all for everyone paying their taxes. There is no argument about that; it is the question of domicile.
If you demand that the only people who can be in this House have to be of British domicile you will rule out not only Australians but the whole of the Commonwealth. I remember an occasion when Mrs Thatcher, as she was then, visited the Australian High Commission and was told that there was only a short lease left on the beautiful property and that the high commission was considering moving outside London.
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The amendment that my noble friend has moved contains some very nice provisions. For example, the first part gives me a sunset clause, because it would not bring in any of the provisions until after the passing of the Act. That is very nice and it might help the noble Lord, Lord Paul, and me. Subsection (1C) then states that we can all become British citizens without losing our own national citizenship. However, as Australia is a sovereign state, Britain cannot decide that Australia cannot revoke your Australian citizenship. As I have explained, until quite recently—certainly within the last 10 years—had I ever applied for a British passport my Australian nationality would have been revoked. So, even if my noble friend’s amendment were passed, it would be all very well to say that you can now be British, but you cannot say what the other country should do. You can only say what Britain will do if the Government accept the legislation. I believe that Canada is the same and will not allow its people to have British citizenship and retain Canadian citizenship. Again, its law may have changed.
As to point made by the noble Lord, Lord Goodhart, that nationality is not important, nationality is very important to people of whatever nationality. He said that it was not dependent on domicile.
6 pm
Lord Goodhart: With respect to the noble Baroness, I did not say that nationality was unimportant. I believe it is extremely important. What I said was that nationality has no bearing on the tax liabilities of people resident in this country or elsewhere.
Baroness Gardner of Parkes: I thank the noble Lord for that, and I accept what he says. However, I then understood him to say that taxation status was dependent on domicile. That is the whole argument that I am on about; taxation and domicile are not related except in so far as the Treasury is the body that controls this. Now, whatever your domicile, if you are ordinarily resident here you are liable for a British tax on whatever assets or income you have anywhere in the world.
People are given an option as to whether they choose to pay a lump sum or on their total worldwide income, but none of that has anything to do with you needing to change your domicile. The Government have covered the taxation issue with tax law, not by saying that everyone must change their domicile. I find that strange.
The question of deeming was raised. I do not have any problem with the point about deeming. I am ordinarily a resident here, but when I die I would be deemed resident even if I had not been here for so many years, and inheritance tax applies to worldwide income on death. Australia has a double-taxation
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Lord Strathclyde: Vote Conservative.
Baroness Gardner of Parkes: Yes, the Conservatives are planning to go a little way towards it, but still not enough for some people.
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