Crime (Expenditure)

Ways and Means – in the House of Commons at 9:15 pm on 15th June 1993.

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Motion made, and Question proposed,

That provision may be made preventing expenditure involving crime being deducted or being included in expenses of management.—[Sir John Cope.]

Photo of Alistair Darling Alistair Darling Shadow Spokesperson (Treasury) 10:16 pm, 15th June 1993

I shall raise a short point in what I imagine will be a relatively short debate.

The resolution is in general terms, as are all such resolutions. Although its scope is comparatively wide, there must be some limit to exactly how wide it is intended to go. Its purpose is to allow the Government to table amendments to the Finance Bill, which is currently being considered in Committee, to strike at certain payments being claimed as expenses when such payments might involve crime.

The point that I shall address involves the definition and scope of such payments when considering the question of preventing expenditure involving crime. There may well be circumstances in which payments may be claimed as an allowable expense or deduction in the expense of management against the Revenue. For example, I want to know whether it will be possible, within the scope of the resolution, to table amendments that might help the Inland Revenue to identify payments that may not have been claimed as such, although in reality they are payments in connection with crime.

I can envisage a situation in which someone wishes to claim an expense but, for whatever reason, he or she is not willing to disclose the true nature of it. Therefore, I should like the Minister to tell us whether he anticipates that it will be possible within the scope of the resolution to table an amendment or new clause that would require a recipient of a payment to disclose that the payment had been made.

I have two examples in mind. First, I refer to the case of the Bank of Credit and Commerce International. The Inland Revenue and, indeed, others have had reason to question whether many of the payments that have been made are legitimate and whether they are an allowable expense. Clearly, if the recipients of those payments had had to declare the source of them, the job of the Inland Revenue would have been made that much more easy.

The other case is perhaps a live issue. It concerns donations that may have been made by an individual when he or she was insolvent or an individual who may have caused a company over which he or she had control to make payments that involved crime. I have in mind in particular, for example, donations made to a political party where the political party at the time it received the payment may have had no reason to believe that it could have come from money resulting from crime but subsequently realised that that was the case. If, for example, political parties were required to list the sources of donations and payments received, it would make it much easier for the Revenue and other authorities to see where the money had come from and to determine whether it involved crime, as envisaged in the resolution.

Photo of David Winnick David Winnick , Walsall North

Does my hon. Friend agree that a political party, particularly a political party represented in the House of Commons, should have the clear, moral and, one hopes, legal responsibility—if the Government accept what my hon. Friend is saying—to ensure that donations, and in Nadir's case substantial donations, made to it, bearing in mind the source and the creditors, are returned promptly, if only to ensure that creditors who are owed money receive it? The political party should not continue with sums which it should never have received in the first place—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. The hon. Gentleman is talking outside the scope of the ways and means resolution.

Photo of Alistair Darling Alistair Darling Shadow Spokesperson (Treasury)

I anticipated that at some point, Madam Speaker, you might be moved to make that point, which is why I have tried to contain my remarks within the constraints of the resolution.

I think that I am entitled to ask whether within the scope of the resolution it would be possible for us to to table an amendment requiring a political party to disclose the source of its donations. If it is, we most certainly will do so within the scope of the Finance Bill. I should be grateful if the Paymaster General will let us know what exactly he had in mind in drafting the resolution as he has. It mentions "preventing expenditure involving crime". That seems to be a wholly laudable and praiseworthy objective. Did he have in mind a political party which might receive money that may have come from crime? Do the Government have in mind that resolutions might be tabled to strike at the present practice where payments can be made and political parties are not obliged to reveal the source of the payments, which makes it that much more difficult not just for the Revenue but for the public to draw their conclusions about the nature and characteristics of the recipient, in this case the political party that has received these sums?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South 10:22 pm, 15th June 1993

It would have been helpful to the House if the Paymaster General, instead of trying to get the resolution through on the nod, had explained its content and purpose. That would have helped Members who are seeking to find out the Government's aim in tabling the resolution. Certainly, on the face of it, it is laudable. As the House knows, it is linked to the Finance Bill Committee and what is tabled there will determine whether the resolution is of benefit. We do not know why the Government have tabled the resolution, which is why we are probing for information. If we were tabling amendments, we would be probing for information.

I echo the sentiments of my hon. Friend the Member for Edinburgh, Central (Mr. Darling). Are the Government trying to ensure control over expenditure that is subsequently found to have been based on criminal actions to prevent it from being allowed against tax either directly or for management purposes when the management of a company or part is for criminal purposes? Or is it some other area of activity that they have in mind? Will a general clause to that effect be tabled in the Finance Bill Committee?

Has the resolution been prompted by the fact that the Government find themselves in an extremely embarrassing position—although they are extremely hard faced about it —because they received half a million quid from a man who was facing serious fraud charges? There is no doubt that there must have been some allocation of expenditure in Asil Nadir's company, either directly by that company, or through management expenses, that was involved in criminal activities. No doubt the company was seeking to set those activities against corporation tax. I have no doubt that the resolution is concerned precisely with that point.

If the Government are tabling the resolution to close a loophole, that is welcome to the Labour party and, I hope, to Conservative Members. I hope that they are ashamed that they have been financed by the criminal activities of Polly Peck.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

If Maxwell had been found out earlier, criminal charges might have been levied against him.

If a clause based on the resolution had been passed in a Finance Bill some years ago, any illegal expenditure of a criminal nature by Robert Maxwell would have been revealed in Labour party accounts. The difficulty is that nothing is shown in the Conservative party accounts, because it does not hold them. That is a source of concern not only to Opposition Members but, I very much hope, to Conservative Members.

Photo of Mr David Ashby Mr David Ashby , North West Leicestershire

The Home Affairs Select Committee heard evidence only last week from one gentleman who had asked the Labour party time and again for the source of its funding. It refused to tell him who was donating to it. The hon. Gentleman has got his party quite wrong; it is the most secretive party in the country.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I am not going down roads that would bring me into possible conflict with you, Madam Speaker. I will not get involved in arguments concerning the Home Affairs Select Committee.

I am concerned about the resolution. It should allow the Government to table a clause to the Finance Bill to prevent expenditure involving crime being deducted for tax purposes or included in the expenses of management. If legislation based on the resolution is to have effect, however, the Inland Revenue must know about such expenditure. It cannot know if the necessary information is not provided.

Since a current case is based on the activities of Asil Nadir, it is legitimate to ask why the Conservative party is not prepared to publish its accounts.

Recent revelations have also been made about commercial lobbying organisations. Lobbying is part of the management exercise, because managements use commercial lobbyists. It is quite clear that Asil Nadir used such an organisation to get to the heart of Government by making representations to the Minister of State, Northern Ireland Office, the hon. Member for Hampshire, East (Mr. Mates), and the President of the Board of Trade, the right hon. Member for Henley (Mr. Heseltine). The resolution will prevent the expenditure of commercial lobbying organisations.

Photo of Mr Donald Dixon Mr Donald Dixon , Jarrow

What about the watch?

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

I am not sure whether that would be considered a management expense.

Commercial lobbying organisations are used extensive-ly in this place and it is time that that stopped. I t is also time that the report of the Select Committee on Members' Interests, published nearly two years ago, was debated in this place. That is another matter, however, which I am not prepared to discuss because it is outside the scope of the resolution.

There are some important issues involved. It would have helped if, instead of simply trying to allow the measure to slide through on the nod, as I anticipate the Minister hoped, he had explained its purpose. Can he assure the House that, if amendments are tabled in the Committee considering the Finance Bill that ensure that full account is given by political parties when they receive various donations—as they all do—the general public and particularly the Inland Revenue can check whether any criminal activity is involved? They will gain the information retrospectively and, when anyone is found to be conducting criminal activities, it will be possible to ascertain whether any claims are being made for allowance against taxation or management expenses.

If the Government are seeking to save face by not introducing legislation that directly requires all political parties to publish their accounts, we will shrug our shoulders and say that the Government are trying to look a little more dignified in the face of adversity, but we welcome the legislation. If the Government are not introducing the legislation for that purpose, will the Minister assure us that, in Committee, the Government will not oppose such a proposal, which is tabled in the interests of full, democratic accountability and ensures that expenditure or management expenses involving crime are not allowable against tax? That must be a laudable aim, and I expect all Conservative Back Benchers to welcome that attitude—if it is the Government's attitude.

I hope that it is the Government's aim, and I look forward to comprehensive assurances from the Minister on that matter. It is time that the Government took action to get rid of the sleaze that is currently engulfing them. It is a form of corruption of the political processes in this country which is bringing into disrepute, not only the Conservative party, but perfectly honest and decent members of the Conservative party who are completely opposed to it. They are also being engulfed in sleaze.

Photo of Peter Bottomley Peter Bottomley , Eltham 10:32 pm, 15th June 1993

I suspect that the hon. Members for Edinburgh, Central (Mr. Darling) and for Bradford, South (Mr. Cryer) would not be popular if the Daily Mail newspaper group found that it could not obtain tax relief on the payments that it is having to make to its pension fund to make up for the money that was stolen from the fund.

I suspect that my right hon. Friend the Paymaster General will tell the House that the measure will provide a ways and means cover for an amendment which I believe, following correspondence that I have had with my right hon. Friend, is likely to be tabled. The amendment would be designed to ensure that, if a business is feeling forced to make illegal payments for illegal purposes to an outside organisation, that will no longer be liable for tax relief. If the measure is as simple as that, I think that the Opposition would want to support it.

Photo of Mr Roger Evans Mr Roger Evans , Monmouth 10:33 pm, 15th June 1993

Does the resolution involve any change in the practice of the Inland Revenue in disclosing information about taxpayers' affairs to the police and the prosecuting authorities? In tribute to the late Sir Alan Herbert, who made great sport in literature from the anomalies involved in taxing prostitution and suggested that the commissioners of the Inland Revenue could be prosecuted for living off immoral earnings, may I ask whether any change in practice in that aspect of the law is envisaged?

Photo of Sir John Cope Sir John Cope , Northavon 10:34 pm, 15th June 1993

The answer to both questions of my hon. Friend the Member for Monmouth (Mr. Evans) is no. There is no change in practice in relation to disclosure to the police or immoral earnings.

The purpose of the resolution is to permit the Government to introduce what now appears as new clause 8 on the Finance Bill amendment paper relating to expenditure involving crime. That is the amendment's sole purpose. It is not for me to define the scope of the resolution in full. If hon. Members have suggestions which they think are within the remit of the resolution and the House is wise enough to pass it, they must see what they can do to carry through their suggestions.

Nothing in the motion extends the Revenue's powers to seek information, and I remind the House that political donations are disallowed for tax purposes. The proposed new clause does not apply in any way to that matter.

The hon. Member for Edinburgh, Central (Mr. Darling) asked for information to be made available not just to the Inland Revenue but to the public on the source of donations. I remind the hon. Gentleman that all information that the Inland Revenue receives about the affairs of taxpayers is rightly confidential. That is how it should be and how it will remain.

Photo of Alistair Darling Alistair Darling Shadow Spokesperson (Treasury)

I would certainly not advocate that the Inland Revenue should disclose the affairs of a taxpayer to anyone who is not entitled in law to receive such information. I said that if political parties had to disclose the source of their money in a register that was open to inspection by the public, both the Inland Revenue and the public could see who had made payments. If the Revenue or another authority suspected that payments had been made by someone who they suspected was engaged in illegal activity, they could follow the payment from source to clarify matters. I seek a degree of openness, especially by the Conservative party in the light of what has happened to its donor Mr. Asil Nadir.

Photo of Sir John Cope Sir John Cope , Northavon

The proposed new clause and the resolution that makes it possible do not address that point for any political party, nor should they in the context of tax legislation. The resolution will ensure the introduction of new clause 8, which is in the selection list of the Committee. That clause would allow the Revenue, when computing income for tax purposes, to disallow payments which themselves constitute the commission of a criminal offence by the payer. They would be bribes of one sort or another contrary to the Prevention of Corruption Act 1916 and the prevention of terrorism Act. The new clause is carefully directed.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Would it be applicable to someone who wanted to procure a knighthood or other honour by way of political donations? That sort of thing happens. As it is a crime involving the corruption of public bodies, it would surely be covered by the resolution's general proposal.

Photo of Sir John Cope Sir John Cope , Northavon

That may be so if the payment constituted a criminal offence in the circumstances that the hon. Gentleman suggests. If it did, it would be covered by the new clause.

Photo of David Winnick David Winnick , Walsall North

I understand that the resolution tries to ensure that companies do not profit from crime. For that reason, we obviously welcome it, and that will be made clear in future debates on the Finance Bill. Would not it be consistent to make it clear that political parties should not profit from crime? The Government rightly say that companies should not profit from crime. If there is any evidence that a party, say, the Conservative party, has received money from a criminal source to buy a knighthood or anything else, should not that party make sure that the money is returned? I refer to the Nadir business, because the Conservative party has undoubtedly received money from a corrupt and criminal source.

Photo of Miss Janet Fookes Miss Janet Fookes , Plymouth Drake

Order. Before the Minister replies to that intervention, may I say that an extremely narrow point is being debated. I hope that it will not provide a platform for a general and irrelevant debate.

Photo of Sir John Cope Sir John Cope , Northavon

I think that the hon. Gentleman has misunderstood the point of the new clause, which is to attack not a company that profits from crime but a payment made by a company, which is not a profit but a loss as it is a payment. It refers to a payment which a company or an individual makes which itself constitutes a criminal offence. The hon. Gentleman has misunderstood the purpose of it. It is the other way round. It may be that he did not misunderstand it but was trying to make another point. If I responded to it, I would fall foul of the strictures of the Chair, and I am not prepared to do that.

Question put and agreed to.

Resolved,

That provision may be made preventing expenditure involving crime being deducted or being included in expenses of management.