Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I beg to move amendment No. 177, in page 24, line 10, leave out ''has been'' and insert

''was at the time of the claimed entitlement''.

Mr David Amess (Southend West, Conservative)

With this it will be convenient to take the following amendments: No. 178, in page 24, line 12, leave out ''has been'' and insert

''was at the time of the claimed entitlement''.

No. 179, in page 24, line 14, leave out paragraph (d).

No. 180, in page 24, line 17, leave out paragraph (e).

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Amendment No. 177 takes us to clause 10(2). Amendment No. 178 reflects a similar change to the language in the following paragraph. Paragraphs (b) and (c) are affected. As drafted, the Bill refers to a power by regulations to enable an officer of the Inland Revenue to require persons of a specified description to produce information to that officer. Clause 10(2) describes classes of person

''which may be specified by regulations under subsection (1)''.

Clause 10(2)(b) includes in the definition of classes of person who may be specified by regulations to be required to produce information

''any person who is, or has been, the spouse or partner of such a person as is mentioned in paragraph (a)''.

I do not want to suggest that we are on an inexorable slide towards a police state, but clearly that could be a wide-ranging and all-encompassing provision. I suspect that it is quite unreasonable to include anyone who has ever been the spouse of a person mentioned in paragraph (a)—that is, a person claiming to be entitled to statutory paternity pay—among those subject to a requirement to produce documents and information.

The amendment seeks to limit the liability of a former spouse or partner to a person who was a spouse or partner at the time of the claimed entitlement referred to in paragraph (a). It seems to me to be reasonable to demand information from such a person, but unreasonable to include any former spouse or partner in the definition.

Mr George Osborne (Tatton, Conservative)

Does my hon. Friend agree that the clause would allow the introduction of a system, which I suggested earlier in the Committee, to have the mother of a child countersign an assessment made to claim paternity pay? The Minister did not think that that was a good idea, but my hon. Friend did.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I heard my hon. Friend's suggestion and I hope that the Minister took it on board. I am not sure that the paragraph would grant to the Secretary of State the power to require countersignature that he is seeking. I take it to be more about the investigation of suspected fraud and abuse. We are anxious to support the war against crime in relation not only to social security fraud, but to more general anti-terrorism measures. However, as the Opposition we are required constantly to be vigilant in defence of the legitimate freedoms of individuals. This measure, taken literally, is an unwarranted extension of the power of the Secretary of State.

Mr Mark Prisk (Hertford & Stortford, Conservative)

Does my hon. Friend agree that the measure could prove to be wholly impractical if there is not a sensible time limit as suggested by amendments Nos. 177 and 178?

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

There could be great difficulties. It is necessary to define the information that is required to be kept in the form of records that can be sought. We do not want people to be vulnerable to penalties for not having information that they could not reasonably be expected to know that they were required to retain. That applies to employers in particular. That deals with amendments Nos. 177 and 178.

Amendment No. 179 is a probing amendment. As the Minister will be aware from other matters that are being dealt with by his Department, the employment agency sector feels put upon by much of the legislation that is coming from the European Union, which creates additional burdens for that booming area of business. I can understand why it is necessary to have the power to require information from people carrying on an agency business—that is, supplying temporary or long-term workers and being remunerated for doing so. However, the definition in the Bill is

''an agency or other business for the introduction or supply to persons . . . of persons available to do work or to perform services''.

That would include agencies whose sole business was the making of introductions, whereby an employer enters into a contract directly with the employee and pays a fee to the agency for making the introduction. It would not be appropriate for that type of business to be vulnerable to being classed as a person specified in regulations as someone who is required to produce documents and records for the Inland Revenue. I cannot envisage what documents such a business or person could have that could possibly be relevant.

I am also slightly nervous about paragraph (e), and amendment No. 180 probes the Government by seeking to remove it. When one is trying to draft lots of probing amendments late at night, that is by far the easiest way of doing it. One can then think the next day about exactly what one wants to ask. A person who works for any of these agency businesses would be required to produce documents to an Inland Revenue officer. There may be a technical legal reason why the law has to bite on the employees of such businesses. However, we would not want a ''servant or agent''—as the Bill quaintly describes an ordinary employee—to be vulnerable to penalties because they were unable to produce a document that their employer was supposed to keep for the Inland Revenue. I wonder whether it is over the top to have a specific ability to make regulations requiring employees of agencies to produce documents directly to an officer of the Inland Revenue. I should have thought that it would be more appropriate to define the person who is required to produce the document as the business itself, which would act through the agency of its servant or agent in producing the document and handing it over.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The hon. Gentleman is right: clause 10 is important in providing the necessary backstop for dealing with the minority of employers and employees who do not want to co-operate. It will be essential to counter fraud and negligence.

I understand where the hon. Gentleman is coming from. He wants to make sure that Inland Revenue officers have no power to dig around in issues that should not concern them. I draw his attention to the overriding principle set out in clause 10(1), which contains the word ''reasonably''. The information must be reasonably required in order to check out whether there is an entitlement to statutory paternity or adoption pay. That provides an absolute safeguard in that an Inland Revenue officer must have good grounds for supposing that the person from whom he wants to obtain information has information relevant to the matter in hand—indeed, that it is critical to the matter in hand.

If the Bill were drafted in the way set out in the amendment, an additional and unnecessary step would be imported into the process. The officer would have to prove the former partner's or employer's status at a specific time, which would be unworkable. Indeed, their status might be part of the dispute. An employer could argue that an employee left their employment on a date before the entitlement to statutory paternity pay started, while the employee could argue that they were still employed. To sort that out, the Inland Revenue officer would need to see payroll and personnel information, but the employer could refuse to co-operate by maintaining that they were not the employer at the time of the entitlement. It would be difficult for the Inland Revenue to pursue that if the amendment were carried. I am sure that the hon. Gentleman can appreciate the problems that that might produce.

The amendment is not necessary because the effect is already achieved by the clause. Nor is it workable because it would import an additional complexity into the operation of the clause.

Mr Mark Prisk (Hertford & Stortford, Conservative)

Will the Minister enlighten me as to whether the Data Protection Act 1998 crosses over here and whether the providing of information and documents is compliant with the 1998 Act?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

It is entirely compliant with the 1998 Act.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

The Minister has made a persuasive case against amendment No. 178 in relation to an employer. On amendment No. 177, which deals with former spouses or partners, will he tell us what information he thinks the Inland Revenue might reasonably require from a former spouse or partner?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

Whether there was a relationship with the child.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

At the time?

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

Yes; at the time. This may be something that is happening after the event—[Interruption.] It will be something that is happening after the event: I can always rely on my hon. Friends to spot the unintended consequences of my remarks.

The point about reasonable requests in clause 10(1) would cover asking a former spouse from years ago about something entirely immaterial. If the amendment were carried and we took out

''has been, the spouse or partner'',

it would be extremely difficult for the Inland Revenue to pursue someone who was the spouse or partner at the time that an issue occurred, but who was no longer the spouse or partner.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

No; I am sorry, that is not right. The amendment would replace the phrase ''has been'' with

''was at the time of the claimed entitlement''.

I think that the Minister is saying that, in practice, it would be reasonable for an officer of the Inland Revenue to seek information from a former spouse only if that person had been were the spouse when the entitlement arose—exactly the requirement in the amendment.

I suspect that the Minister is not going to change his mind in an instant, and given that we are pushed for time I do not want to press the matter further. He seems to have made it clear that there are no reasonably foreseeable circumstances in which it would be acceptable for the Inland Revenue to pursue a spouse, except where the person concerned had been the spouse or partner at the time that the entitlement arose and, by implication, the fraudulent or negligent claim was made. If the Minister is saying that, although he prefers to retain the more permissive language, he suspects that, in practice, the language of subsection (1) will apply a constraint similar to that which amendments Nos. 177 and 178 would apply, I am content.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

If we had time, I am sure that both the hon. Gentleman and I could think of circumstances in which the Inland Revenue might seek to gather information from a previous spouse or partner.

On agency workers, it might help the Committee if I provide some practical examples. Given the pressure of time, I apologise for doing so, but it is right that we deal with the matter properly. Many agency workers are likely to qualify for statutory adoption pay and statutory paternity pay, just as many are entitled to statutory maternity pay. They might be employed earners under the normal statutory definition for social security purposes, or treated as such by virtue of regulations that apply across the board in many social security and tax circumstances, including national insurance. In those circumstances, they will qualify for statutory pay, so it makes sense for the Inland Revenue to be able to require information from employment agencies if necessary.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I do not think that the Minister has addressed my point. I fully understand why the provision needs to bite on employment agencies that supply labour, but I cannot see why it need bite on

those whose business is the introduction of persons available for work: employment agencies that place full-time employees with their prospective employers and, having made the introduction, take a fee and depart the playing field. In those circumstances, I cannot see that such agencies have anything to offer the Inland Revenue.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

My instinctive reaction is to say that I see the hon. Gentleman's point, but we might accept such an amendment only to discover subsequently that the Inland Revenue did indeed need to investigate an introduction by an employment agency. For example, it might need to establish the date on which an introduction was made because there was an argument about the date on which the 26-week period began. It would be foolish to adopt an amendment that made it more difficult for the Inland Revenue to deal with the—albeit few—people who try to claim fraudulently, be they employers or employees.

I return to the subject of people acting on behalf of employees, their spouses or partners. On amendment No. 180, I can assure the Committee that the Inland Revenue would never directly contact such an agent without the express permission of the employee, their spouse or partner, the employer or an employment agency. The most common example is an accountant or payroll bureau acting on behalf of an employer. Employers often authorise the Inland Revenue to deal directly with their agents on tax and/or payroll matters. If the amendment were accepted, the Inland Revenue would not be able to contact those agents when it needed to make inquiries about statutory adoption pay and statutory paternity pay, despite having written authority to do so, which it needs in all cases, as I have explained. It would have to go back to the employer to obtain the necessary information, even though the information is probably held by the agent.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

That confuses me a little. I am not a lawyer, as I freely admit and proclaim from the rooftops, but I would have thought that if the Inland Revenue has a certain right in relation to a person, it would, where that person has an agent acting for him, be able to deal with the agent, but ultimate liability would lie not with the agent but with the person. That is important because in the next clause, if we get there, we will find that penalties fall on people specified in clause 10 for failing to produce documents. That would make an agent liable for failure to produce a document on behalf of his client or principal. That seems to me to be out of kilter with what I would have understood to be the normal arrangement -that an accountant handing over data to the Inland Revenue would be doing so on behalf of his principal.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

The clause is about pursuing information, and the amendment would prevent the Inland Revenue, even where it had written permission from the employer, which it would have to have before it went to the agent, from pursuing information from someone who deals with the employer's payroll

arrangements week in and week out. That is the purpose of subsection (2)(e), which the hon. Gentleman seeks to remove in amendment No. 180.

I have tried to give instances where the provisions will be necessary, within the overarching necessity that the requests for information may reasonably require the information set out in subsection (1). I hope that on that basis the hon. Gentleman will seek to withdraw the amendment.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

I have already said that I shall seek to withdraw amendment Nos. 177 and will not press amendment No. 178. I do not find the Minister's argument with regard to amendment No. 179 persuasive. The reason for raising the issue was, as I said earlier, that the employment agency sector feels that it has taken rather a bashing lately from his Department, largely as a result of things coming from Europe rather than things dreamed up in Victoria street. However, it is important to place it on the record that this is another burden on a sector that has been under pressure.

I do not follow the logic of the Minister's argument on amendment No. 180. He gave the example of an accountant who is acting as an agent for an employer and has been given authorisation in writing by the employer to pass documents to the officer of Inland Revenue. In those circumstances, it would seem to me that the agent is transparent. He is merely the hand that passes the documents to the Inland Revenue on behalf of the employer. He cannot have any liability for failing to produce those documents; it is the employer's responsibility. If the agent is acting on the employer's written instructions, the employer should remain liable.

The Minister did not acknowledge that subsection (2)(e) gives the Inland Revenue the power to knock on the accountant's door and say, ''To hell with your principle. I reasonably require you to hand over this, that or the other document. You will now do so on pain of a penalty under clause 11.'' That is not the same as enabling the Inland Revenue officer to obtain information from an agent whose principal has willingly consented to the agent acting in that way. That is my difficulty with this matter.

Mr Alan Johnson (Minister of State (Employment and the Regions), Department of Trade and Industry; Kingston upon Hull West & Hessle, Labour)

Does the hon. Gentleman accept that the agent himself might be the problem here? The agent himself might be behaving fraudulently by pocketing the money received for bogus adoption leave or statutory paternity pay. The result would be that we could not require information from the agent. I gave an example of an accountant, the example most likely to occur, where an employer has given written permission to approach the agent. The hon. Gentleman is quite right to say that it is difficult to think of circumstances in which that would not be enough, unless the agent was involved as well, or was the cause of the problem.

Mr Philip Hammond (Runnymede & Weybridge, Conservative)

Of course the Minister is right. The agent, this poor hapless accountant, might well be the guy at the heart of the scam, but so might the next-door neighbour or the chap running the corner shop down the road. I do not think that accountants or agents have a monopoly on benefit fraud. I think that the Minister is right to say that the agent might be someone whom the Inland Revenue needs to address, but I suspect that the regulations under subsection (1) will be drafted broadly enough to allow Inland Revenue officers to require documents from anyone whom they reasonably believe to be involved in a benefits fraud. I would be surprised and disappointed if that were not the case. Subsection (2) spells out some particular cases.

In view of the time and of the outrageous guillotine that has been imposed on the Bill, and notwithstanding the fact some matters remain unresolved, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 ordered to stand part of the Bill.