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In response to the Minister, and with no reflection on his position, I suggest that he puts this case to the noble Lord, Lord Mandelson, to see whether he would be prepared, independently of this debate, to undertake a review of the circumstances under which this error occurred and retrospective liability was incurred. I would be grateful if the Minister would respond to that suggestion.
The noble Lord, Lord Mandelson, is responsible for business. His language on previous occasions has been very supportive of doing everything that he can to support businesses in these tough times. He would-or should-be horrified that this is happening in a Government where he has significant and growing influence. Would the Minister put that proposal to him, given that the possibility of debate in this House is being stymied by a technical provision? As the Minister responsible for government-that was a Freudian slip, because I think that he is responsible for government-or rather, as the person responsible for business, could the noble Lord, Lord Mandelson, be encouraged to hold a cross-departmental inquest into what has happened with the Valuation Office Agency in respect of the retrospective levying of taxes?
That is a serious proposal that warrants consideration. We are talking about the potential impact on 1,600 portside operators in 55 ports around the country that are already suffering immensely because of the global economic downturn, changes in rates and the cost of commodities. To impose a further levy would be wholly terrible. It is an act of political spite-I cannot think of a stronger way to put it. It is equivalent to cutting
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This House had expressed a clear view on this issue on not one but two occasions in the Division Lobbies. The ports and the portside operators then heard that there could be closures because of an arcane rule on financial privilege where no financial privilege is at stake. All we are talking about is a mechanism of legislation, which would bring this Bill into line with the way in which other Bills should be, but which was not applied in the case of the portside operators. I urge the Minister to take cognisance of the great anger which is felt out there.
This feeling of anger is exacerbated and not abated by admissions of guilt by the Government. Successive Ministers in the other place, this place and in Committee have come forward with their apologies. They have said, "It has been a dreadful mistake. We have got it completely wrong.". In the non-domestic rating regulations debate, the noble Baroness, Lady Andrews, said:
"I start by saying that the Government are deeply concerned",
about the retrospective element. She continued:
"Those concerns were set out in a letter from the right honourable Stephen Timms and the right honourable John Healey, from my own department, to the Treasury Sub-Committee on 10 February. They said:
'We have consistently said, in the current economic conditions, the Government is concerned about the impact of backdated rates liability on the trading prospects of businesses and we believe that there is a general case to assist businesses receiving large, unexpected backdated liabilities that have to be paid immediately, as the position for a number of port occupiers has demonstrated'".-[Official Report, 18/3/09; col. 299.]
The Government have admitted culpability of the need for action. The amendment which we tabled and sent down to the other place was entirely consistent with that view declared by the Government. The Valuation Office Agency initiated this mistake. Again, I call on the noble Baroness, Lady Andrews, the predecessor of the Minister who will respond today. I mention those remarks just in case he wishes to repeat them. The Valuation Office Agency is not under the control of the department. The noble Baroness made the point that it is in the control of Her Majesty's Revenue and Customs. She said:
"The VOA has acknowledged, in response to the Treasury Select Committee, that there were serious failures of communication, particularly with the occupiers, and by implication that too much reliance was placed on information being provided by the port operators. Andrew Hudson, head of the VOA, indicated to the Select Committee:
'With the benefit of hindsight we have learned a lesson and please God this does not come up again'".-[Official Report, 18/3/09; col. 300.]
It is too late for hundreds of jobs that have already gone in our ports and for the many businesses facing hundreds of thousands of pounds of backdated claims. But Andrew Hudson is saying that,
it will not happen again. Why should it have happened at all? In 2005, a business believed that it was not liable, but found out that it has liability only by accident in 2008 as a result of a court case. Then the sums, which were incorrectly calculated leading to an
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In our mailbags, we have received responses from the portside operators. It is not me who is making these protests. These statements come from businesses which are at the sharp end and are in very difficult situations. I received a letter from Barry Holt, director of TTS Shipping, who noted that the House voted against the amendment placed before it. He also noted his great affection for his business and the livelihood of his staff. He said that he uses 42 stevedores in Hull who rely on his business and that he employs hundreds of hauliers and contractors on a subcontract basis. He believes that as many as 250 members of staff may now be faced with a backdated claim, which may run into hundreds of thousands of pounds.
I turn now to TransAtlantic, which wrote to the noble Lord, Lord Mandelson, about this. It wrote to say that,
"TransAtlantic is now facing rates bills in excess of £1.1m on the properties that we occupy in statutory docks and harbours in the United Kingdom".
This is something which has had a very significant effect, as was picked up by the Daily Telegraph. It has reported that many people, including the Liverpool Chamber of Commerce, have written en bloc to express their concern about the real impact on Mersey Docks. They have an action group-Mersey Docks Rating Group-which is campaigning about the effect that this is having. Most worrying of all are the many representations from overseas operators who are now making representations to the Government to say, "Listen-we are just going to take our business elsewhere".
The Government may or may not realise-I am sure that they do-that actually shipping is the most mobile of all businesses. They can take their business across to Rotterdam very easily, and they are doing that: there is evidence that that is happening. There were threats that it might happen by DFDS, P&O and other organisations. This is a very serious situation. Sitos has made the following representations:
"The unloading of the ships in Hull is undertaken by Global Shipping Services Ltd at an extremely competitive price to us. As Global have received backdated demands of £1.9m, we fully expect to see a sharp increase in costs to us as they struggle to meet these payments. This in turn we would attempt to pass back to",
clients and customers, thereby making it uncompetitive.
The scale of this problem is very significant, and very real, as is the anger which is going to be felt because this amendment-which was passed by a majority of 60 in this House, and which is trying to save real jobs-is being stopped from being debated further in this House because of a technical measure. There are other people who wish to make similar points on this, but I do think it is a shameful way for the Government to treat this House, when the House has considered this issue extremely carefully and arrived at a considered view in respect of these hard-pressed businesses.
The Government should have some guts: if they actually feel that they have the case on their side, they should allow the amendment to go ahead, and for the opinion of the House to be tested again. The fact that
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Lord Jenkin of Roding: My Lords, my noble friend has made an extremely powerful speech on the merits of the issue we are discussing. As he has said, the reason why we are deprived of the opportunity to reinforce the vote, which we had at an earlier stage, to pass the amendment, is that the Commons has pleaded financial privilege. I took the same point as my noble friend did when he read the words, "because it would affect the levy of local revenue". He said that it really is no more than "could have". It is as weak as that. But I am advised that the final words of the reason,
are the traditional words of a House of Commons determined to assert its financial privilege.
The House will not be surprised that I shall touch once again on the issue of financial privilege being claimed by another place. I am delighted to see the Leader of the House in her place. I hasten to say that she is not here to listen to me because she has other business, but I am pleased to see her here. I hope that noble Lords will forgive me if I return for a moment to the previous instance where a claim for privilege on behalf of another place was hotly criticised in this House, or at least to the extent that the rules allow. I should like to bring us up to date on what has happened since then.
I refer of course to what was Part 11 of what is now the Planning Act 2008, which introduced the community infrastructure levy. The Bill provided that only another place should approve the regulations, of which there will be a great many. I do not intend to recapitulate the whole sad history, but the issue came to a head at the Report stage of the Bill in this House when an amendment to provide that both Houses should approve the regulations was defeated by six votes. I moved an amendment at Third Reading which recognised that while we could not oppose the vote by the House on Report, the House should at least have a say. The amendment was carried by three votes, but another place rejected even that modest request.
The significance lay in what was said during the debate in this House on 25 November 2008. I should like to draw the attention of noble Lords to one or two quotations. My noble friend Lord Strathclyde said that:
"Parliament should not accept the use of the privilege amendment in cases of doubt simply to stifle debate".
he was referring to the Leader of the House-
- "to consider this matter carefully with her colleagues in another place, with Members of this House and perhaps with the Clerk of the Parliaments and his opposite number in another place to see how this issue can be resolved".
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The noble Lord, Lord Goodhart, who was working with me on the amendment and who at the time was the chairman of the Delegated Powers and Regulatory Reform Committee of this House, said:
"Whatever the outcome of this debate, however, I believe that today should not be the end of the matter. We are facing a constitutional issue of some real importance and I believe that your Lordships' House should consider the problems which arise from this Bill".
He then went on to mention the Counter-Terrorism Bill, where exactly the same point had been made: a Lords amendment returned because it was claimed to be subject to financial privilege. The noble Lord, Lord Howarth of Newport, whom I am delighted to see in his place, also made a powerful speech, but he cited the noble Lord, Lord Filkin, the chairman of the Merits Committee of this House, as saying that he,
- "notes that we see very many statutory instruments which impose fees and charges which have never hitherto been seen as outside the purview of this House and the Merits Committee".
Coming from such a source, that was a powerful argument. The noble Baroness, Lady Hollis of Heigham, was extremely disturbed and said:
"I find this the beginning of an extraordinarily slippery slope and I am profoundly worried. I hope that my noble friend the Leader of the House can find a way through this".
The noble Baroness, Lady Andrews, who was in her place a few moments ago, had a very uncomfortable time trying to defend what had been put in front of her, but she did so by saying:
"They raise issues that go far beyond the Bill's narrow limits in the precedents they raise".
When I wound up the debate, I said:
"We have established that these wider constitutional concerns are felt in all parts of the House and, as my noble friend Lord Strathclyde said, this issue cannot be allowed to rest. This is unfinished business".Official Report, 25/11/08; cols. 1359-67]
So it is, and that is why I have come back to the issue today.
4.30 pm
The noble Baroness the Leader of the House was kind enough to write to me the next day in her own hand, and I have her permission to quote from her letter:
- "the importance of yesterday's debates in terms of the wider questions of 'respective rights, rules and privileges of the two Houses'".
Those were my words in the debate.
"I will give careful consideration as to how best we can pursue the matters raised".
She was as good as her word. Early in the following Session, on 14 January, she invited me to meet her to discuss the issues. I made a careful, short note of the meeting, in which I reported:
"The leader made it clear that she is very well aware of the seriousness of the issues surrounding the Commons claims of financial privilege and also of the strength of feeling in all parts of the House following the debates on Part 11 of the Planning Bill last Session. She intends to have discussions with a number of concerned Peers and others in the House before approaching her colleagues in Government. This will include, among others the chairman of the Merits Committee ... She sees her task now to seek to avoid, so far as possible, similar conflicts in future
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I hope I have recorded accurately the sentiments which the noble Baroness expressed to me on that occasion. The next month, on 10 February, she issued a memorandum to the House and attached to it a paper from the Clerk of the Parliaments setting out the history, the scope, the practice and the procedures affecting claims of financial privilege. Significantly, that paper had attached to it a table of figures which I certainly found very interesting. They were the figures of where privilege had been claimed, or might have been claimed. It is arranged in two columns. It runs from 2000-01 to 2007-08. The two columns are: "Number of Lords' Amendments agreed to by the House of Commons where financial privilege was waived" and "Number of Lords' Amendments rejected and a financial privilege reason was sent to the Lords".
The number of amendments that were waived was nearly 300, actually 293; the number where the Commons insisted on it was only 42. The overwhelming number of Lords amendments potentially involving privilege had actually been waived by the Commons. I will come back to that in a moment.
I saw the noble Baroness the same day. She was kind enough to give me advance notice. I quote again from a note:
"She explained that she has raised the issue with Members of the Government and with First Parliamentary Counsel. In future he will draw his colleagues' attention to the matter so that they are aware of it from the outset ... She explained that she is now trying at all times to pre-empt cases where there might be a possible questionable use of financial privilege".
I suggested to the noble Baroness that perhaps a good starting point for this would be the Cabinet Office's Guide to Making Legislation. Thisis a very substantial document indeed. I may be wrong, but I got the impression that the noble Baroness perhaps had not seen it before. It is a detailed compendium of instructions and advice to departments planning legislation. Curious enough, in its 150 pages-I counted them this morning-there is no mention of Commons financial privilege. It is not an issue which the Cabinet Office has thought necessary to draw to the attention of departments. However, the noble Baroness was kind enough to say that she would take this matter up, and my question for the Minister who is replying to this debate is whether the guide has now been amended to reflect the issue of Commons financial privilege. I gave notice of that question this morning.
The case before us has been admirably and forcefully stated by my noble friend. The issue has arisen over the amendment to the BRS Bill. It was not part of the Bill when it was first introduced and, therefore, the pre-emptive strike which the Leader of the House would perhaps otherwise have been able to make could not arise. The issue, as my noble friend explained, is the retrospective application of the business rates legislation to ports operators all over the country. I endorse what he said: I have had a lot of letters, too, from ports around the country expressing their huge disquiet. The amendment was simply to make it clear that the regulations to be made under the Bill,
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- "may not impose ... retrospective liability to pay a BRS without error or default on the part of a ratepayer".
I, too, have read the debate in the other place. It was significant for the number of government supporters, some of them of considerable standing and experience, who expressed themselves forcefully to be against the Government's position. They were the honourable Members for Great Grimsby, for Cleethorpes, for Brigg and Goole and for Birkenhead-Frank Field-yet the Lords amendment was rejected on a whipped vote. The Commons have given us their reason that it,
However, this whole Bill concerns the raising of local revenue by local authorities, so why is it regarded as beyond the scope of this House to debate and vote on a particular amendment that deals with a particular hardship? I shall not repeat what my noble friend said. It seems to be completely absurd, so I have two further questions, of which I have again given notice so that the Minister will have them.
Why was this not amenable to the waiver procedure? The noble Lord, Lord Filkin, whose words I quoted a moment ago from the speech of the noble Lord, Lord Howarth, said that the Merits Committee is always dealing with all sorts of subsidiary legislation which raises charges of various kinds. Given that on the vast majority of potential privilege cases another place has waived the privilege, why could it not do it in this case? Was it because, as my noble friend Lord Strathclyde said, it wanted to dodge an uncomfortable debate and vote?
On my second question, I believe that it has been suggested that the other place, even when it is determined to plead financial privilege, might also give the reasons why it cannot accept the Lords amendment-not just the technical reasons such as it affecting the levy of local revenue or on account of it imposing a charge on public funds but why the substance of it is unacceptable. If it did that, there might be grounds for it to be debated in this House. As it is, we have no option under the conventions but to yield to the Commons plea of financial privilege. It has aroused enormous anger among those to whom I have had to write back to say, "I'm sorry. We can't vote again. The conventions do not allow us to vote again".
I am sure that I am not alone in finding this an extremely unsatisfactory procedure.
Lord Howarth of Newport: My Lords, I look forward to hearing the Minister's reply. I add my plea that he and my noble friend the Leader of the House think seriously and urgently about the issues that have been so cogently described by the noble Lord, Lord Jenkin, to whom everyone in this House owes a debt of gratitude for his vigilance in these matters. We must be concerned about the propensity of the other place-indeed, it is of the Government rather than the other place as whole, because I think that most Members of Parliament are unaware of what they have been doing in this regard-to extend the scope of assertion of privilege. I am unhappy, for my part, to see the rights and responsibilities of this House salami-sliced in fits of inadvertence. I hope very much that my noble friend the Leader will resume her excellent campaign to protect the interests of this House.
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Earl Cathcart: My Lords, I should declare an interest as an accountant and as a director of businesses paying business rates. I have also been a councillor for 10 years. I was not going to speak to this Motion, but I am afraid that I simply cannot resist.
The Government's position seems to defy all logic in three areas. First, when the Climate Change Bill was going through this House, we debated at length whether to include aviation and shipping within the reduction targets in the Bill. It was decided not to, because of the international nature of the businesses and because it was thought that an international solution was needed. What was agreed, on all sides of the House, was that the carbon footprint from shipping was considerably less than that from aviation. So it is amazing that the Government's policy is to have their foot hard down on expanding aviation, at Heathrow and Stansted, and, with this policy, to drive a nail into the coffin of the ports businesses. Surely the logic should be to nurture shipping and its associated businesses, so that, when we come out of this recession, we have a healthy import and export shipping industry poised to take advantage of the upturn. But no, the Government seem hell-bent on doing the very opposite. I am sorry that the noble Lord, Lord Hunt, is not in his place, because he would be grappling with his conscience over this extraordinary government policy.
The second piece of government logic that I want to question is that, despite the Government's stated policy of supporting businesses and jobs in this time of deep depression, here we have a policy that does the very opposite. The public are getting fed up with the Government saying what they think the public want to hear but then either doing nothing or, as in this case, doing the very opposite. The public are seeing through this and are now browned off, not believing a word that the Government say any more. Surely it is time that the Government put their money-or, rather, our money-where their mouth is. I am sorry that the noble Lord, Lord Mandelson, is not in his seat, because even he might have difficulty squaring this circle. This policy makes a complete mockery of his claims to be helping businesses and saving jobs.
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