Report received.

Clause 4 ["Her Majesty's Revenue and Customs"]:

moved Amendment No. 1:

Page 2, line 29, at end insert—

"( ) Provision shall be made to ensure that revenue independence and methods as regards investigation and enforcement in the interest of the taxpayer are retained."

My Lords, this amendment proposes as a matter of principle to ensure that provision be made for retention of the extant Revenue independence and methods as regards investigation and enforcement, in the interests of the taxpayer, under the merger with Customs and Excise to form the HMRC—having particular regard to the coercive powers of investigation of Customs and Excise.

The amendment reflects the concern expressed by the noble Lord, Lord Thomas of Gresford, and noble Lords well versed in the expertise of the relevant arcane arts—the noble Lords, Lord Barnett, Lord Sheldon, Lord Newby and Lord Brooke of Alverthorpe, and my noble friend Lady Noakes. My noble friend warned against resort to draconian powers under the Serious Organised Crime and Police Bill, referring to the sensitivity of information and the importance of a proportionate approach, which had attracted attention in the first JCHR report, as engaging Article 8. My noble friend also sought clarification on the making of extra-statutory concessions.

The substance of the common concern arises from the diversity of culture and working methods between the Commissioners of Inland Revenue and the Commissioners of Customs and Excise. The noble Lord, Lord Sheldon, a veritable past master in these arts, said:

"It is not easy to see how these two different kinds of expertise will survive, still less be transferred with success from one part of a new department to another. It is still more difficult, given the present level of work by each of these two departments which are under considerable strain".—[Hansard, 7/2/05; col. 597.]

This amendment seeks to retain that diversity of culture for the Revenue. For example, there is the writ of assistance, which is only available to Customs and Excise on application to the Queen's Remembrancer, a senior Master sitting in the Law Courts. Once granted, it serves as a warrant for forcible entry and as a general search warrant, free from further judicial control—even if nothing sought is found. I am anxious that those procedures should not be resorted to on Revenue enforcement.

The amendment is not concerned with extra statutory concessions as such, but only with retention of the Revenue culture on investigation and enforcement, which is, and was, a matter of common concern in your Lordships' House. On 4 March the noble and learned Lord the Attorney-General sent a long and complicated letter in reply to a request from my noble friend Lady Noakes concerning extra statutory concessions, which, with the greatest respect, would not appear to be relevant to the limited scope of this amendment. I have the document with me, but it is far too complex to read. I beg to move.

My Lords, throughout our consideration of the Bill we have raised concerns about how the new HMRC will operate—in particular, whether the Inland Revenue's approach, which might be characterised as "business-friendly", certainly in comparison with Customs and Excise, will be preserved in the new organisation.

The integration's impact on taxpayers has never fully been explained.We believe that the thoughts that lie behind my noble friend's amendments are very sound. I am less clear that the form of the amendment captures what we need, but I freely accept that my legal knowledge is way below that of my noble friend, so I shall be interested to hear the debate on his amendment.

My Lords, I oppose the amendment of the noble Lord, Lord Campbell of Alloway, both in principle and in detail. I suggest—the noble Baroness, Lady Noakes, has anticipated what I might say—that the amendment is defective. However, if it were rewritten to achieve what I believe to be the noble Lord's aim, it would in fact prevent the new department doing exactly what the O'Donnell review recommended it should do, which I have understood up to now has been widely supported.

I shall examine what the amendment provides. It refers to,

"revenue independence and methods as regards investigation and enforcement".

As I understand it, from what the noble Lord has said, he wants to preserve what he regards as the lighter touch that folklore has it the Revenue provides, compared with that of the draconian Customs and Excise.

I want to make three points. First, I want to challenge the assumption on which the noble Lord puts forward that proposition; secondly, I want to point out why the amendment is defective; and, thirdly, I want to come back to why this would defeat the object of the Bill. Indeed, I would go so far as to say that if it achieved what I believe the noble Lord wants to achieve, it would wreck what is proposed in the Bill. I hope your Lordships would not want to see that.

As far as the assumptions are concerned, it is wrong to characterise Revenue powers as soft and Customs powers as draconian. Customs and Excise has some powers to act rapidly, powers that are appropriate to it because of its duty to prevent smuggling and illegal importations, but which would not be appropriate for certain functions carried out by the Revenue. I have talked before about the ring-fencing of powers, and the powers used would be appropriate to the function being carried out.

Secondly, I do not think it is right to characterise the two departments as having contrasting cultures. Difference of approach can be found within the organisations. Those who have had dealings with them would probably agree that the approach of the Special Compliance Office of the Inland Revenue, which deals with serious tax fraud, is different from that of officers in the child benefit office or the tax credit office. That flows from the nature of the functions they are carrying out.

Surely the key point here is not the variations people perceive in the present departments, but the powers that are appropriate to the functions they are carrying out. Noble Lords who have participated in the passage of this Bill so far know that a review of those powers started last week. It has been referred to throughout the passage of the Bill here and in another place and will ensure ultimately that the powers that are available are appropriate to the functions.

Culture is very much in the eye of the beholder. I was struck by the fact that, at one stage in our debate, there seemed to be a difference of view between noble Lords as to which was the softer touch, Revenue or Customs. The noble Lord, Lord Newby, who had experience from having worked in Customs and Excise, took a different view on that from the noble Baroness, Lady Noakes, who had lots of experience of dealing with it professionally as the Inland Revenue across the table. I am told, however, that only last week my right honourable friend the Chancellor of the Exchequer received a representation pleading for the Inland Revenue to be more like Customs and Excise.

Thirdly, the management of the new department is there to ensure that the overarching culture of the department is built on the soundest traditions of public service of the predecessor departments. That is a serious point. We have previously agreed that what is most important in the culture of both departments, which they share, is honesty and integrity. Plainly, that will continue.

I have just been handed a note, which I had previously seen, saying that the review had started last week. Either I misread it or it is incorrect, but, in any event, I ask noble Lords to ignore what I said about the review having started last week. It has not.

Regarding the technical defects, with respect, I do not see how the words used by the noble Lord capture what he is trying to enact as the sense of current Inland Revenue practice. It is not possible to prescribe culture by words in legislation. There is no detail, if I may be permitted respectfully to say so, in the amendment on how the culture of the Revenue is to be preserved. The amendment just states:

"Provision shall be made to ensure that revenue independence and methods . . . are retained".

The only way this could be achieved in practice would be by retaining separate management chains for the functions that were inherited from each of the old departments. That would prevent the collaborative working and integration that this Bill is all about.

I suppose that what the noble Lord means by the word "independence" is exactly that. While there would be integration, the Revenue should remain independent. That is directly contrary to the whole thrust and purpose of the Bill, which has been widely supported, including by the noble Baroness, Lady Noakes, the noble Lord, Lord Newby, the noble Lord, Lord Thomas, and many others. To enact something effective—which, with respect, this amendment is not—to keep the Revenue separate would defeat the object of the Bill.

I hope that all noble Lords will agree that the integration or, if one prefers, the merger—we have debated which word is appropriate—should deliver among other things a better and more flexible use of resources, a more focused approach to compliance throughout the taxation system and improvements to customer service and compliance costs. None of that will be possible if the functions inherited from the Inland Revenue are to be kept in some sort of isolation tank.

Although I am grateful, as always, to the noble Lord for the thought and care with which he moved his amendment, I am afraid that I cannot accept it, and I urge your Lordships to reject it, should the noble Lord wish to press it.

My Lords, I rise briefly to point out one or two of the problems that we are going to see, as I understand it, as a result of the two bodies coming together—

My Lords, I apologise to my noble friend for intervening, but once a Minister has sat down on Report, there can be no speaker other than the mover of the amendment.

My Lords, before my noble and learned friend sits down, I have just one or two points to make. The coming together of the two departments will create some problems, and the safeguards that are going to be required are obvious.

Will my noble and learned friend take account of the fact that the Inland Revenue has a lighter touch because it deals with matters in the past and has time to consider them, whereas Customs and Excise is dealing with something that can disappear? Once goods have been smuggled in, it is difficult to get hold of them subsequently. The Inland Revenue has a lighter touch. Will my noble and learned friend take account of the fact that, when the two departments come together—I agree that they need to do so—there will be a danger in the speed with which they come together? Will my noble and learned friend take account also of the fact that we will need time to take those matters forward to preserve the honesty and integrity that he mentioned?

My Lords, I have been patient in listening because it may be that I stood up too quickly and the noble Lord intended to speak before I spoke. In any event, I can deal very briefly with his points.

On the first, as I have said, what matters is the function for which the power is exercised. The noble Lord is of course right that when you are dealing with a matter of importation or smuggling, you may have to act quickly, and acting quickly often needs a power that is forceful and robust, whereas if you are dealing with matters after the event, you may be able to take a more leisurely approach. That can apply just as much to a Revenue function as to a Customs function, where customs is dealing with something other than importation. We should not try to divide rigidly any of those approaches, but recognise that what matters is the functions and the powers that are appropriate to them.

On the noble Lord's second point, I have repeatedly said in this debate that we entirely recognise that care must be taken, and great thought be given, to the way in which the integration takes place. That is apparent in the workings of the report of Mr Gus O'Donnell that preceded the Bill and in all the other things that I have said about how we propose to go forward and effect the merger.

My Lords, I am grateful to the noble and learned Lord the Attorney-General. I shall take very little time. This is not really the occasion on which we should engage in any detailed discussion.

The noble and learned Lord the Attorney-General misunderstands the purport of the amendment, which is akin to that of a purpose clause to ordain in principle that subsequent provision shall be made. I do not criticise the noble and learned Lord for not seeing it in that way, because, apparently, my drafting was so defective that nobody could probably appreciate anything. However, that was, and will remain, the substance of the amendment. It is limited; it does not wreck the totality of the Bill. It concerns only investigation and enforcement. Of course, I will go away and consider everything that has been said. If so advised, I shall return at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 2:

Page 2, line 35, at end insert—

"( ) Provision shall be made to ensure that—

(a) regulations subject to the affirmative approval of each House of Parliament are introduced to afford adequate protection by way of safeguards for use and disclosure of confidential information given by a taxpayer;

(b) confidential information given by a taxpayer for one purpose shall not be used or disclosed for any other purpose, save in pursuance of an order of a court which shall have regard to whether there has been compliance with such safeguards."

My Lords, this amendment is a very different kettle of fish. It would establish a principle. I hope that the drafting is sufficiently clear in this case. Like Amendment No. 1, it is a probing amendment to establish a principle; namely, that once the Bill is enacted, provision shall be made to ensure that,

"regulations subject to the affirmative approval of each House of Parliament are introduced to afford adequate protection by way of safeguards for use and disclosure of confidential information given by a taxpayer" and that,

"confidential information given by a taxpayer for one purpose shall not be used or disclosed for any other purpose, save in pursuance of an order of a court which shall have regard to whether there has been compliance with such safeguards".

On this matter, which affects the structure of the Bill, the noble and learned Lord and I have already clashed on more than one occasion. On the substance of the amendment, there is a fundamental disagreement between the advice of the Joint Committee on Human Rights and the noble and learned Lord the Attorney-General. It may be resolved only by your Lordships, as confirmed by the second report of the Joint Committee on Human Rights, which was published only today. Put simply, the first question arising is whether some measures of safeguard for the taxpayer, as recognised by the ECHR, should be included in the Bill, in accordance of the advice of the Joint Committee on Human Rights.

The second question is whether confidential information given by a taxpayer should be assured, in accordance with Article 8.2 of the ECHR, by some form of legal control established by the Bill. The final question is whether the HMRC, as a public authority for the purposes of Article 8.2, should interfere with the taxpayer's exercise of this right, except in accordance with the law and, if necessary in a democratic society, in the interests of national security, public safety, the well-being of the country, the prevention of disorder or crime, the protection of health, morals and the rights and freedoms of others. Let us face it, none of these exceptions applies—or begins to apply—to the ordinary, run-of-the-mill case of assessing and collecting taxes, and making an arrangement for composition, or otherwise.

There is little to be said before one comes to some extracts, relevant to this amendment, which I propose to read from the two reports. The first report, as of 2 February, was sent to the Minister with a letter seeking a reasoned response to our reply and conclusions. That is at Appendix 1, on page 30 of our first report—House of Lords Paper 41. The reply, of 10 February, wholly failed to engage with the substance of any of our representations. That was observed in the second report, which maintained and reverted to the advice already given on the first report. In the second report, that letter is included as Appendix 1, on page 26. This is not some idea of mine, although I was admittedly a member of the committee and signed both reports. I do not always sign these reports, unless I agree with them.

In the first report, No. 41, there are about five or six extracts relevant to this amendment. Paragraph 1.18 states:

"We would remind the Government that the onus is on it to specify the precise aims which are relied upon in Article 8(2) as justifying the interference with Article 8 rights".

Paragraph 1.23 states:

"Our principal concern is with the uncertain scope of the 'public interest disclosure' exception . . . The kinds of purposes for which public interest disclosure is permitted are not . . . defined on the face of the Bill, but left to be specified in regulations made by the Treasury . . . the regulation-making power is extremely wide . . . there is nothing to restrict the Treasury's power to specify a public interest justifying disclosure of confidential information".

Paragraph 1.24 states:

"The definitions which have been left to regulations should be on the face of the Bill".

I think my noble friend Lord Kingsland said as much the other day.

Paragraph 1.27 states:

"The Government rely on the fact that when making disclosures of confidential information, HMRC will . . . be under a duty to comply with both the Human Rights Act 1998 and the Data Protection Act 1998. While this is legally correct, in practical terms it does not provide an answer to the lack of effective safeguards for the reasons pointed out"— in the Newton review—

"in the context of that Act's provision for public bodies to disclose information to assist criminal investigations".

What was said in the Newton report applies to this Bill:

"'The protection offered by the Human Rights Act 1998 and the Data Protection Act 1998 seems to us to be illusory since the burden will lie on the individual to complain about the disclosure of their confidential information in circumstances where, almost by definition, he or she will be unlikely to know that disclosure has occurred'".

Paragraph 1.28 states:

"The applicability of both the HRA 1998 and the DPA 1998 is therefore no substitute for strong safeguards in the statutory scheme to ensure that the power to disclose confidential information about an individual, of which that individual will generally be unaware, is only exercised in circumstances where it is proportionate to do so".

Paragraph 1.29 states:

"Three important safeguards which are desirable in relation to regimes for the disclosure of confidential information are pre- disclosure assessment, prior authorisation and external oversight".

Paragraph 1.31 states:

"A general instruction that confidential information can be disclosed in the public interest is not a very satisfactory safeguard for Article 8 rights. It falls far short of being a requirement that disclosure be authorised by a senior person after considering whether, in all the particular circumstances . . . disclosure is justified".

Finally, paragraph 1.32 states:

"The Newton report points out that prior authorisation safeguards have traditionally been considered particularly important when an individual is unlikely to know that such powers are being exercised against him. . . . In our view the same applies in relation to the present Bill".

The letter sent by the chairman neither addressed nor engaged with the argument. The report available today makes that plain, and has about five references relevant to this amendment.

"Our main concern . . . is to ensure that the legal framework, as set out in the primary legislation, does not confer overbroad discretions to interfere with private life, but limits such powers to interfere by including on the face of the legislation"— again, on the face of the legislation—

"criteria to help ensure that unjustified interferences do not take place . . . We are grateful for the Minister's clarification, but we remain of the view that the discretion conferred by Clause 17(1) is too broad, even when considered alongside the various safeguards contained in the statutory code of confidentiality. In our view, such powers to share information internally should contain on their face the criteria to guide decisions as to whether"—

I am sorry, I am interrupting a conversation. I should not do that. I thank the noble Lord.

Paragraph 1.11 states:

"We noted that the kinds of purposes for which public interest is permitted are left by the Bill to be defined in regulations".

The last passage is:

"We therefore welcome the Minister's clarification . . . but remain concerned at the breadth of power in this Bill to add new categories of circumstances when disclosure can be made to the public . . . For the reasons we gave in our earlier report, we have concerns about relying on internal guidance, which by definition is inaccessible to the public, as the source of more detailed guidance as to what disclosures are proportionate in the circumstances of any particular case".

It concludes on a rather sad note, but we all felt that it was fair enough:

"We are disappointed that the Minister in her response has not addressed the merits of any of these suggestions or the substance of our reasoning, but merely asserts that the Bill provides the correct balance and that Article 8 rights are fully respected in a way which enables HMRC to work effectively towards its legitimate aims. We remain of the view expressed in our earlier Report and repeat our call for the Government to give serious consideration to the stronger safeguards we have suggested, none of which, in our view, would unnecessarily impede HMRC in the pursuit of [its] . . . important legitimate aims".

I beg to move.

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.

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 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.

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.

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.

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.

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 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.

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".

The committee simply states:

"We are not in a position to scrutinise such administrative level safeguards".

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.

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 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?

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—

My Lords, I am not making any allegations: I am seeking information.

My Lords, the noble Lord is a very experienced advocate who has a way of seeking information that tends to cast aspersions, but it often works. However, I am glad that on this occasion I was wrong to deduce anything of the kind from what the noble Lord said.

I return to the fundamental point. This legislation is subject—and the department will be subject—to the full rigours both of the Data Protection Act and of the Human Rights Act. It will not be possible to make disclosures and to use confidential information unless that complies with Article 8 of the European Convention. I understand that is absolute common ground between everyone. Administrative safeguards are in place; statutory prohibitions exist to reinforce the confidentiality obligations. Like the noble Lord, Lord Newby, I take the view that this amendment, if passed, would greatly damage the work of the departments. It would put the clock back a long way. I hesitate to say that it would make us go backwards, not forwards, but it would certainly not allow us even to stay where we are.

My Lords, I shall answer the question that was put to me by the noble Lord, Lord Brooke. If the noble Lord reads paragraph (b) of my amendment carefully, he will see that what he suggested was not and is not the case. Paragraph (b) relates only to information given for one purpose which,

"shall not be used or disclosed for any other purpose".

It acts as a bar on those very rare occasions. It is of such importance that it attracted the attention of the Joint Committee on Human Rights, but it is strictly limited in the way I have described.

On the general trend of the speech of the noble and learned Lord the Attorney-General, I am afraid that we are not in an unusual position; we have to differ. This has happened on many occasions. However, the beginning of Report is not the occasion on which it is proper for me to seek to argue back line by line, point by point, and I do not propose to weary your Lordships in doing so. In view of some helpful concerns raised by the noble Lord, Lord Newby, and some of the points made by the noble and learned Lord the Attorney-General, I should like to have an opportunity to consider the substance of the argument against me and if necessary reform the form of the amendment. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 [Power to transfer functions]:

moved Amendment No. 3:

Page 4, line 29, at end insert—

"( ) After section 5(1) of the Ministers of the Crown Act 1975 insert—

"(1A) No Order in Council which—

(a) provides for the transfer to any Minister of the Crown of any functions previously exercisable by the Commissioner's for Her Majesty's Revenue and Customs or by the officers of Revenue and Customs, or

(b) directs that functions of the Commissioner's for Her Majesty's Revenue and Customs or of the officers of Revenue and Customs shall be exercisable concurrently with another Minister of the Crown, or shall cease to be so exercisable, shall be made under this Act unless, after copies of the draft thereof have been laid before Parliament, each House presents an Address to Her Majesty praying that the Order be made.""

My Lords, I rise to move Amendment No. 3 which would amend Clause 8 so that any transfer of functions from HMRC has to be approved by each House of Parliament. The effect of Clause 8 as it stands is to invoke only the negative procedure if any functions of HMRC are to be transferred.

We debated this issue in Grand Committee and since then the noble and learned Lord has written to me with a helpful list of the current functions of both the Inland Revenue and Customs and Excise which would be subject to transfer under Clause 8. I thank him for that. We acknowledge, of course, that Clause 8 does not permit the core collection and management functions to be transferred under Clause 8, but that leaves, on my counting, 29 current activities as set out in the noble and learned Lord's letter, which could be transferred.

The concern is that functions which involve confidential taxpayer information could be transferred by only the most minimal of parliamentary procedures. For example, child trust funds, which involve a means-tested element, are covered. So, too, is the enforcement of the national minimum wage.

There are also other important functions. For example, Customs and Excise has some interesting investigation functions, including in relation to weapons of mass destruction. These, too, could be transferred at will by the Government.

These activities have been placed under the care and control of the Inland Revenue or Customs and Excise by primary legislation. It has been suggested by some— notably the Public and Commercial Services Union—that the removal of the functions should similarly be done by primary legislation, but we do not go that far; we are simply asking for the affirmative procedure.

When we debated this in Committee, I said that my amendment did not take account of Scotland and Wales, and therefore I would return on Report with an amended amendment. I discovered that in fact that is not necessary, as I am advised that the effect of subsections (2) to (6) of Clause 8 is that the affirmative procedure would be required if functions were to be transferred under either the Scotland Act or the Government of Wales Act. I hope that the noble and learned Lord the Attorney-General will be able to explain why the affirmative procedure is good enough for Scotland and Wales but not for England.

In Committee, the noble and learned Lord cited as a disadvantage of my amendment that parliamentary time would be taken even if the transfers were not controversial. That misses the point; we are concerned that functions might be transferred where there is controversy. It is important that Parliament should be fully involved, as set out in my amendment. I beg to move.

My Lords, as at the earlier stage, and for the same reasons, I resist the amendment. I will summarise where we are. As I understand it, there are no concerns about the ability to transfer functions into HMRC by order in council under the Ministers of the Crown Act. I see the noble Baroness shaking her head, which I understand to mean that she agrees. I will comment therefore simply on the issue of transferring functions out, which is what I understand the amendment to be about. I emphasise, as I have done before, that there is no present intention or plan to transfer any particular function out. We are talking at the moment about the power to do so, rather than signalling any changes.

Secondly, I want to reiterate the point that I made at the earlier stages. There is an important restriction in Clause 8, which prevents the transfer out from HMRC under Clause 8 any of the tax, duty, national insurance contributions or tax credit functions inherited by HMRC from the predecessor departments. Those are all the functions which, put broadly, are the reason why HMRC is being created as a non-ministerial department rather than as a ministerial department—in order to maintain that arm's length approach that we discussed at earlier stages. But for that, but for the desire to keep those functions at arm's length, this could be perfectly easily an ordinary ministerial department, in which case the provisions of the Ministers of the Crown Act would simply apply. In those circumstances, the procedures for machinery of government changes would apply as they do between any other departments. As it is a non-ministerial department it has been necessary to make specific provision for the Ministers of the Crown Act to apply because otherwise it simply would not do on its terms.

All that Clause 8 does is take those other functions, not those functions that it is necessary to keep at arm's length, and to reverse the effect of making this a non-ministerial department. In other words, in relation to those other functions they should be capable, in principle, of being transferred out in just the same way and subject to just the same procedures as if they were in an ordinary ministerial department, which they could easily have been.

I will give a couple of examples. The valuation of property for council tax purposes will be conducted by HMRC. The Office of the Deputy Prime Minister has policy responsibility for council tax, and local authorities administer council tax. If the tax can be administered by a local authority, and if the policy can be set by a ministerial department, could it really be that the question of who performs the valuation of that property is so sensitive that it cannot be transferred out of HMRC into another department without some special procedure?

Statutory payments, such as maternity and sick pay, will be administered by HMRC on behalf of the Department of Trade and Industry and the Department for Work and Pensions. Those departments are responsible for the payments. Could it really be right to suggest that there is something so special and sensitive about the payment of those sums that the transfer of the function of making the payment has to be subject to some special procedure over and above the procedures that we already have in place, and which have worked extremely well for machinery of government changes?

The noble Baroness has been good enough to refer to the letter that I sent, in which I set out in an annex the functions that we could be talking about. One has functions such as the payment of student loans, the issue of bank notes, the investigation of dealing in tainted cultural objects, and the payment of rates to local authorities in lieu of rates on diplomatic premises. Those are all important, and one could perfectly easily envisage that it might be appropriate at some stage to transfer them to some other government department. Why should the procedure for transferring that sort of function to another department be any different from what it would have been had they been in an ordinary ministerial department in the first place? They easily could have been, given that it is only because of the special Revenue functions, which are exempted from the procedure altogether, that this is being created as a non-ministerial department. As a matter of principle, I do not see why it is necessary to have that special procedure.

The noble Baroness asked me about the position in relation to Scotland and Wales. The procedure for orders involving HMRC mirrors that for all other departments. In the case of the Ministers of the Crown Act, that is a negative resolution, but both the equivalent Scottish and Welsh procedures are affirmative. That simply reflects the rather more complex issues that accompany the devolution settlement. The Bill simply brings HMRC on to the same footing as other departments in so far as concerns those non-protected functions, which is the reason why it is a non-ministerial department.

I conclude by emphasising this point. As with all other regulation-making powers, Clause 8 was scrutinised by the Delegated Powers and Regulatory Reform Committee, which reported on 21 February. Noble Lords will know, because it arises so frequently, that the views of that committee are rightly treated with great respect by this House, so much so that when that committee takes the view that the Government ought to have included some procedure over and above what they have, or if the committee has a problem with a power, that is always carefully considered by the Government and more often than not—that may be an understatement—accepted by the Government. On this occasion, having considered the question of the ring fence and the statutory model for transferring functions, the committee concluded that,

"this adaptation (with extra limitations) of the existing powers is appropriate".

I invite noble Lords to accept that judgment. The committee did not regard the procedure under the Bill as in any way deficient. It did not regard it as in any way lacking in parliamentary scrutiny. It was satisfied that the procedure was entirely suitable for those non-ring-fenced powers. Under those circumstances, I respectfully invite the noble Baroness not to press her amendment and not to seek to impose an unnecessary limitation, which would not have arisen if we had done this simply by leaving the powers in a ministerial department.

My Lords, I thank the noble and learned Lord for that reply. I understand what he is saying, but Parliament gave a non-ministerial government department the functions. That is why some degree of parliamentary scrutiny should be retained for transfers. He did not explain the difference between the procedures for Scotland and Wales compared with those for England; he simply said that they were different because they came from different Acts.

My Lords, with respect, I said that there were differences because of the more complex procedures relating to the devolution settlement. I think that all noble Lords understand what I mean by that, at least very broadly.

My Lords, I thank the noble and learned Lord for that additional explanation, but it does not change the fundamental point that we are transferring functions and that, for the same sort of functions, under some Acts we have affirmative procedures but under some we do not. I shall think again about what he said before Third Reading, but the issue continues to trouble me. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 13 [Exercise of Commissioners' functions by officers]:

moved Amendment No. 4:

Page 6, line 19, at end insert ", and

( ) issuing instructions under section 20(1)(a)"

My Lords, in speaking to Amendment No. 4, I shall speak also to Amendment No. 5. Their purpose is straightforward—to ensure that instructions about the circumstances under which confidential taxpayer information can be disclosed, as provided for in Clause 20(1), should not be delegated other than to the commissioners or a single commissioner.

It was clear from our Grand Committee debates that Clause 14(1)(c)—delegation "to any other person"—meant precisely what it said. My noble friend Lord Kingsland suggested that the drafting left it open for delegation to be made to an office cleaner. The noble and learned Lord the Attorney-General, although agreeing with my noble friend that such a prospect was "wholly unrealistic", did not deny that the current text would permit that. He went on to say that,

"the delegation that is in mind will extend only to more senior staff".—[Official Report, 24/2/05; col. GC 377.]

Clearly, the Government's intention is only "in mind" and is not reflected in the Bill. I do not in any way question the Attorney-General's sincerity, but surely it is not too much to ask that we have tighter and clearer provision than we have, and that the drafting of the Bill mirrors the intended practice.

I accept that the example of the office cleaner may be a little absurd, particularly in the context of the noble and learned Lord's assurance that delegation would extend only to more senior staff. A better example might be that of a senior IT manager under contract to HMRC to install computer systems. I can readily envisage circumstances in which, perhaps for a purpose arising from a software upgrade, temptation might exist to delegate the issuing of Clause 20 instructions to such an individual. Such a delegation could compromise the integrity and confidentiality of taxpayer information. In other words, a principal aim of the amendments is to close off a potential loophole through which information could inadvertently leak. Given his comments in Grand Committee, I hope that that might offer some comfort to the noble Lord, Lord Brooke of Alverthorpe.

I recognise that the noble and learned Lord may resist the amendments on the grounds that they will, in effect, tighten the disclosure regime as compared with existing practice. I acknowledge that the Government have been wholly consistent in arguing that the Bill is all about effecting the integration of the Inland Revenue and HM Customs and Excise with no change to their legacy powers. Both in person and when I have been so admirably represented by my noble friend Lord Kingsland, I have been equally consistent in my conviction that the confidentiality of taxpayer information lies at the heart of the integrity of the tax system.

Although the Government are content that the power to delegate should be granted to more senior staff, I favour confining it to the commissioner level. There is not too much wrong in making the disclosure regime a little more robust, nor in weighting it a little more in favour of the taxpayer rather than the Revenue authorities. In returning to the matter, I should briefly add that I have attempted to pick up the entirely valid observations of the noble Lord, Lord Newby, in Grand Committee. He rightly referred to forms of practice within the Revenue authorities whereby delegations were often made to a single commissioner. I hope that he is content that I have adequately drafted the amendments to reflect that. I beg to move.

My Lords, I support the amendments and the arguments that the noble Earl set out. I am grateful to him for amending his amendment to take account of concerns that I expressed at an earlier stage. The problem with which the noble and learned Lord the Attorney-General attempted to grapple in Committee was the "office cleaner conundrum", and assurances might be given that public interest disclosure would not be delegated to too junior a level or to people who were not officers of the merged department at all.

I heard what the noble and learned Lord said at that point, but the principle of making public interest disclosure a pretty stiff test is a good one. With one caveat, it seems entirely sensible to require individual commissioners to sign off such disclosure. My only caveat is that, if in any week there were 20,000 pieces of disclosure—or even 1,000—it would clearly be impracticable. One would then be looking for some assurance from the Minister on the level to which staff delegation might apply. However, if one is talking about a few tens of decisions a week, it seems perfectly practicable and reasonable to expect an individual commissioner to look at those and sign them off. Subject to that, my inclination is to support the amendment.

My Lords, we support my noble friend's amendments. The power to delegate in Clauses 12 to 14 is very broad, and the exclusions from that power set out in Clauses 13(3) and 14(2) are very narrow. Many things could be brought within the need to confine action to the commissioners, but the amendment is relatively modest, limiting itself to the disclosure of information on public interest grounds under Clause 20(1)(a).

Taxpayer confidentiality is crucial. The amendments tabled by my noble friend Lord Campbell of Alloway have already highlighted the importance of that. The issues should not be subsumed within administrative arrangements and confined to being executed by officers or involving committees or other delegations. They should be retained by the commissioners themselves. I fully accept the proviso of the noble Lord, Lord Newby—that if a massive number arose under Clause 20, practicality might well require a slightly different amendment. Subject to that, I hope that the noble and learned Lord the Attorney-General feels able to support the amendment.

My Lords, I am sorry to disappoint the noble Baroness; I do not. What the noble Earl proposes is not to prevent a delegation to the office cleaner; Amendment No. 4 would prevent something being delegated below two commissioners, and Amendment No. 5 refers to one commissioner. Each case would still have to be considered by at least one commissioner under even the more generous of the amendments—Amendment No. 5—or by two commissioners if only Amendment No. 4 had effect. As he says, that would go back from the present position.

I want to remind noble Lords what the purpose of the public interest disclosure regulations will be; we will debate them under a later amendment tabled by the noble Earl. As I indicated in Grand Committee, we were anxious to deal with the part of the human rights obligations that requires, in this particular case, that something that engages Article 8 is,

"in accordance with the law".

That phrase is met well by setting out detailed regulations which identify the legitimate purposes, unlike, as is the present position, disclosures which are made in the public interest under implied powers rather than under express statutory powers. This is a new provision to meet the desirability of being clear about what disclosures there can be, which will overtake the current implied statutory power.

I remind noble Lords that we have already exposed the public interest regulations that we have in mind in the draft. Indeed, the noble Earl has taken that as his text for a later amendment.

The noble Lord, Lord Newby, and the noble Baroness, Lady Noakes, asked about the degree and number of cases there might be. The disclosure with which we are concerned here—I shall be corrected from the Box if I am wrong—is not limited to disclosure of confidential taxpayer information. This goes back to the ability to use information in connection with any other function if it meets certain categories. One of those is Clause 20.

Let me give an example of when disclosure may be required. I also have some statistics. Disclosure in the public interest may need to be made at very short notice, when there is an imminent or urgent danger to the public. I have been given the example of an excise officer visiting a fuel depot for the purpose of conducting an assurance visit who comes across unsafe filling practices. He will want to pass on that information without delay to the appropriate authority, such as the local council or trading standards office.

Under the Bill's proposals he can take the information to a more senior officer who will authorise disclosure to the relevant authority, rather than having to find a commissioner or, under Amendment No. 4, two commissioners. Under the proposed amendment, unless the commissioners had given a blanket authorisation, having foreseen all the circumstances—I apprehend that the more general the authorisation, the more unhappy noble Lords would be—there would be a delay with potentially serious consequences.

Another example refers to disclosures that aid joint working between law enforcement agencies. It is common for a joint intelligence cell to be based at airports. They share information, for example, about a target flight or a target passenger, who may be arriving at a particular time or who meets a certain profile. Customs staff, immigration staff and the police may be involved. In a relatively short period there could be several instances of sharing information.

It would be difficult for the commissioners to predict all the circumstances that might arise. As such, that type of disclosure works best when a responsible individual in the team has the authority to issue instructions to make the disclosures, rather than escalating each and every one.

How many of those might there be? Work has been done for me for which I am grateful. In February this year at the Dover joint intelligence cell, there were 99 disclosures, suggesting a volume of a little over 1,000 disclosures. Dover is one of the busier joint intelligence cells. At the new Heathrow joint intelligence cell, there were 30 disclosures in January 2005, and the monthly volume is expected to increase. There are 21 joint intelligence cells operating nationwide. If one extrapolates from, say, 50 disclosures a month, that suggests, from just this source, 10,000 disclosures annually nationwide—a large proportion of which would require individual authorisation because it is not possible to predict the circumstances in which disclosure will arise.

Assuming that considering those would require at least a few minutes of a commissioner's time, that suggests about 1,500 commissioner hours each year just for this purpose. Even if we accepted Amendment No. 5 so that only one commissioner was required, that would equate to one of the department's six commissioners doing nothing all year but authorising this sort of public interest disclosure.

My Lords, that is extremely interesting, but will the Minister explain why that cannot be covered by general instructions? In setting up a joint intelligence cell, it seems to me that there would be an element of commonality of disclosures. Therefore, we would be talking about one form of authoritisation, not thousands.

My Lords, as I indicated, the difficulty is whether one can foresee all the circumstances in which disclosures need to be made. If I were to say that there should be disclosure in any case where there is a joint intelligence cell, noble Lords would view that sort of blanket authorisation as too broad and insufficiently precise.

I am citing only one example. The proposition in support of the amendment, as suggested by the noble Lord and the noble Baroness, is that there cannot be that many disclosures in operation. I am told by those who know the position that a large number of disclosures are made. We are not talking about disclosure down to the level of the tea lady. It does not help a responsible department to argue for something that is even more restrictive than the present position, to take the tea lady example.

I made it perfectly clear in Committee that there is no question—it would be astonishing if anyone thought there were—of delegating to the tea lady decisions about disclosure of information on public interest grounds. We are talking about a serious, responsible, public department, which understands its obligations. It must give proper and due consideration to the disclosure of information because that is what the statute requires.

I can say on the record that class instructions on public interest disclosure will not be delegated below senior Civil Service level. I emphasise the term "class instructions" because there could be individual cases that go below senior Civil Service level—some of my examples indicate why it may be necessary to deal with matters urgently.

My Lords—

My Lords, I shall finish the point if I may. It would be the senior expert on that matter who would make the instruction.

My Lords, I am curious to know what the level of a senior civil servant will be in these cases. Is it deputy secretary, permanent secretary, or what?

My Lords, I never know the answer to that question. The answer has arrived. It is grade 5 assistant secretary.

I cannot accept an amendment that would tie us to allowing only commissioners to make disclosures. I ask noble Lords to accept that I shall not be putting forward an approach that is based on irresponsibility or a desire to allow disclosures to be made on an inadequate basis and with inadequate seniority of consideration.

My Lords, earlier the noble and learned Lord raised the issue of an officer who, in the course of his duty, came across a possible health and safety problem. Under the draft statutory instrument, one area covered in terms of disclosure relates to disclosure to a body exercising public functions in relation to the protection of public health and safety. Can the Minister help me with regard to the situation that applies?

The officer from Customs and Excise is examining a fuel storage depot to ensure that those responsible are paying the duty. He is worried that there is a leakage and that there may be a public safety problem. The statutory instrument has been passed, enabling disclosure to be made to a body exercising public functions in relation to the protection of public health and safety. Is it the case that, having come across a circumstance covered by one of the disclosure provisions, under the current rules the officer would still have to refer it upwards to a senior officer before he could ring up the Health and Safety Executive and say, "Look, I've found a leak. I really do think you ought to come and have a look at it"?

My Lords, the noble Lord asked me what the position is under the current rules. I cannot answer that at present, although perhaps in a moment I shall be able to do so. But I want to say to him that, again as I understand it, Clause 20 makes clear that there are two requirements for a disclosure to be made. The disclosure has to be for a purpose of a kind specified in regulations—the noble Lord referred to one of the purposes specified in the draft regulations—but it also has to be made on the commissioners' instructions, which can be either specific or general.

We have had a debate about "general". If the instruction was specific, it would be specific authorisation of that information on that occasion. "General" obviously allows a degree of class instruction to be given, but, so it seems to me from reading the Bill, it cannot just be a question of the instruction being of a type specified within the regulations.

The answer to the question is: yes. In the example given by the noble Lord, Lord Newby, the officer would have to refer the matter upwards unless it was already covered by a class instruction. It is not enough that it is just in the regulations because they specify the purpose. One has to look at the instruction.

I was about to say in summary, first, that the instructions will always be given by a senior and competent person who has the appropriate training—that I can clearly say. Secondly, they will be within the criteria set out clearly either in the Bill or in the regulations. Thirdly, I can also tell noble Lords that commissioners will monitor the instructions by ensuring that there are proper records and audit trails.

I invite noble Lords to accept that those assurances are adequate to meet the concerns, which I understand, and so that this responsible department can do its job in an effective and satisfactory way for the benefit of all the people of this country. Therefore, I invite the noble Earl to withdraw his amendment.

My Lords, I am grateful for the response of the noble and learned Lord the Attorney-General, except that in many respects he has added to my confusion rather than offered me any reassurance. As I read the Bill, there is a clear distinction between the grant of any individual authority for a disclosure and the issuance of instructions.

I heard what the noble and learned Lord said about the number of individual authorities for disclosure that may currently exist within the Revenue authorities and HM Customs and Excise. I also heard what he said about class instructions. If my reading of the Bill is correct, it seems to me that those are within the terms of the qualification over which my noble friend Lady Noakes and the noble Lord, Lord Newby, said they wanted satisfaction.

In addition, in respect of what the noble Lord, Lord Newby, referred to as the "office cleaner conundrum", I deliberately offered the noble and learned Lord another example—that of a senior IT manager—which he singularly failed to address. My concern remains that, as the Bill stands, delegation of these instructions under the terms of Clause 20 could be made to any other person. That is the text of the Bill, and I think that that drafting is far too loose. In those circumstances, I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 147; Not-Contents, 136.

Resolved in the affirmative, and amendment agreed to accordingly.

Clause 14 [Delegation]:

moved Amendment No. 5:

Page 6, line 35, at end insert—

"( ) The Commissioners or a number of Commissioners may delegate their function of giving instructions under section 20(1)(a) to a single Commissioner by virtue of subsection (1)(a), but may not delegate that function by virtue of subsection (1)(b) or (c)."

On Question, amendment agreed to.

[Amendment No. 6 not moved.]

[Amendments Nos. 7 and 8 not moved.]

Clause 20 [Public interest disclosure]:

moved Amendment No. 9:

Page 10, line 2, leave out subsection (1) and insert—

"(1) The Commissioners may instruct disclosure if they are satisfied that it is made in the public interest and falls within one of the following descriptions, namely disclosure—

(a) to public bodies in order to honour international and other agreements to which they and the United Kingdom or Her Majesty's Government are party, in relation to the movement of persons, goods and means of transport into and out of the United Kingdom, where the disclosure is necessary for the purposes of the prevention or detection of crime, fraud or evasion,

(b) to a body responsible for the regulation of any profession, for the purposes of reporting misconduct on the part of its members, where a member of a profession has provided services to a client of his which affect the client's proper compliance in relation to any matter which is subject to the exercise of any function of the Commissioners or officers of Revenue and Customs within the meaning of section 51(2),

(c) to a constable where the disclosure is necessary for the purposes of facilitating cooperation between, or the exercise of respective functions by, that person and the Commissioners, in relation to the movement of persons, goods and means of transport into and out of the United Kingdom,

(d) to the National Criminal Intelligence Service, for the purpose of enabling it to exercise its criminal intelligence functions under section 2(2) of the Police Act 1997 (c. 50) (general functions of the NCIS services authority and NCIS), in relation to the Commissioners as a law enforcement agency within the meaning of section 2(3)(a) of that Act,

(e) to a body exercising public functions in relation to the protection of public health and safety,

(f) to the Police Information Technology Organisation for the purpose of recording on the Police National Computer information about suspects, arrests and the disposition of criminal investigations and seizures, and to users with the right of access to that computer

(1A) Where a disclosure has been made by virtue of subsection (1), further disclosure shall not be made without the written consent of the Commissioners or a person authorised by them.

(1B) Disclosure is also in accordance with this section (as mentioned in section 18(2)(b)) if made—

(a) on the instructions of the Commissioners (which may be general or specific), and

(b) for a purpose of a kind specified in regulations made by the Treasury, and such regulations may vary the provisions of subsection (1)."

My Lords, by leave of the House I shall also speak to Amendments Nos. 10, 11 and 12. They all relate to the order-making powers provided for in Clause 20 and devolve into two sub-groupings, the second flowing logically from the first.

The first sub-group comprises Amendments Nos. 9 and 11. Here, I thank the noble and learned Lord the Attorney-General for making available the draft regulations. As is self-evident from Amendment No. 9, I have sought to transpose their terms into the Bill. The other amendment in this sub-grouping—Amendment No. 11—would delete subsections (7), (8) and (9).

I find myself in an unusual, even pleasurable, position. I can pray in aid the support of none other than the noble and learned Lord for the proposition embodied in the amendments. He will remember the debate on Amendment No. 31 in Grand Committee, moved on my behalf by my noble friend Lord Kingsland. Some of the observations of the noble and learned Lord the Attorney-General at that time have a special relevance here.

First, I have no doubt that the noble and learned Lord will recall saying:

"Let me be clear that HM Revenue and Customs will always use statutory gateways for disclosure where it is possible".—[Official Report, 24/2/05; col. GC 374.]

That is precisely what would be achieved by making the amendment, which guarantees that HMRC can use the statutory gateway of the Bill that the noble and learned Lord maintains is the Government's preference.

The noble and learned Lord was also keen to emphasise the narrowness with which the respective areas of public interest disclosure in the draft regulations had been defined. I do not dissent from that view, but there are also provisions of substance. For example, it is not uncommon to embody the text of paragraph (a) of the amendment, dealing with international treaty obligations, in primary statute.

Moreover, I accept that, as the noble and learned Lord put it in Grand Committee,

"they are all proper, laudable, public-interest reasons why disclosure should be permissible".—[Official Report, 24/2/05; col. GC 375.]

As such, I can see no objection to putting them in the Bill, a view shared by the Joint Committee on Human Rights. In its sixth progress report, addressing the Government's response to its original concerns, the Committee stated:

"We remain of the view that the broad categories of disclosure in the public interest, and the descriptions of the types of persons to whom such disclosure is to be permitted, should be contained on the face of the Bill itself, for the reasons of legal certainty which we have previously explained".

As the JCHR made plain, that has the desirable effect of enhancing the transparency, clarity and foreseeability of the disclosure regime, an outcome that I would have anticipated that the Government would welcome.

In Grand Committee the noble and learned Lord also said:

"The draft regulations demonstrate, as I understand it, the things currently envisaged for the regulation".—[Official Report, 24/2/05; col. GC 375.]

We can therefore infer that neither the Inland Revenue nor the Customs and Excise is at this time contemplating any other public interest types of disclosure as potential candidates for the Clause 20 order-making power. That being so, the requirement for the transitional procedure encapsulated in subsections (7), (8) and (9) becomes otiose.

I turn to the second sub-grouping, which contains Amendments Nos. 10 and 12. Taken together, these provide for a super-affirmative, rather than an affirmative, procedure for any subsequent regulations. To save the noble and learned Lord the Attorney-General articulating it in response, I acknowledge that the Delegated Powers and Regulatory Reform Committee has indicated that it considers the affirmative procedure to be appropriate in this instance. I acknowledge too that the use of the super-affirmative procedure could create tension between a potential requirement for HMRC to respond urgently to emerging circumstances and the length of time that the proposed form of scrutiny might take.

However, I am not persuaded that this is an especially powerful argument. As my noble friend Lord Kingsland observed in Committee:

"Public interest as a basis for disclosure would . . . be relatively rare".—[Official Report, 24/2/05; col. GC 379.]

Indeed, the noble and learned Lord the Attorney-General was content to confirm that. He said:

"I want to place on the record that the power to regulate for that type of disclosure will be used only sparingly to create new regulations".—[Official Report, 24/2/05; col. GC 374.]

To that extent, and taking into account what would be achieved by Amendment No. 9, it is not unreasonable to suppose that the need for future regulation in this area, in so far as it may be required at all, will be decidedly infrequent.

Quite apart from that, the engagement of the disclosure regime with Article 8 of the ECHR taken with the importance of taxpayer confidentiality in maintaining the integrity of the tax system imply that parliamentary scrutiny of any future regulations needs to be as robust and meaningful as possible.

I realise that, so far as the affirmative procedure is concerned, an appropriate declaration as to the compatibility of the relevant regulations with the Human Rights Act has to be made. But, as my noble friend Lord Campbell of Alloway knows only too well, such statements of conformity are not always universally accepted. I also recognise that the noble and learned Lord the Attorney-General is satisfied that the courts offer adequate recourse against any inadvertent incompatibilities with the Human Rights Act that may arise. But, inevitably, that would occur after the event. The damage to the individual taxpayers involved and, conceivably, to the integrity of the tax system, would already have been done.

The noble Lord, Lord Newby, has put his finger firmly on the pulse of what matters. As he rightly identifies, the key component of the new clause is the power to amend any regulations that may be presented in the future. Logically, this should have the desirable effect of minimising the likelihood of any future public interest disclosure regulations that offend against the Human Rights Act passing into law. All in all, resort to the super-affirmative procedure in this instance has a great deal going for it. I beg to move.

My Lords, this group of amendments deals with two linked matters. Amendment No. 9 relates to placing on the face of the Bill the initial descriptions of disclosure that would be covered. In doing so, the noble Earl is following the recommendation in the report of the Joint Committee on Human Rights, which was published today.

As an aside, there are a number of other proposals and recommendations in the Joint Committee report, which we have seen in the past hour or two, that we want to look at and, possibly, respond to at Third Reading. With the imminence of an election, we may be denied the opportunity, which is unfortunate. We have not had a chance to reflect all the views of the Joint Committee in the amendments before us today.

However, this amendment does reflect the Joint Committee's views and is completely costless. It is difficult to see how the Government could possibly object to it. They are going to legislate, by statutory instrument, to do what this amendment does. The Joint Committee said that it would be better for transparency, and for other reasons, if the provision were on the face of the Bill. All that is required is to take it from secondary legislation and put it on the face of the Bill. It has no substantial effect whatever but it helps the quality of the legislation.

As for the super-affirmative resolution procedure, the Minister and I disagreed in Committee about the extent to which it was two bites at the cherry. But the key aspect is whether Parliament has the power to amend an order. There are orders that Parliament should be debating properly and, possibly, amending. There are other orders that Parliament should take through the affirmative route, but that are not of such nature that they warrant the super-affirmative approach.

We had a classic example of this last week when on the same evening we debated the repeal of the Trading Stamps Act—which noble Lords would agree was desirable and therefore did not justify the super-affirmative approach—and the approval of the Operating and Financial Review Regulations, which were a major change to company law and which every body in the country with an interest, but Parliament, has had a chance to amend during the past year.

There is a class of statutory instruments that are of such a nature that Parliament should have the opportunity to amend them or, in rare cases, to recommend that they are not proceeded with, without using the nuclear weapon that we currently have when statutory instruments come before your Lordships' House. The question is whether, if one accepts this approach—I am not sure that the Minister does as a matter of principle—this area is one for which the super-affirmative approach is necessary.

On balance, I think that the issues are important enough for Parliament to have the chance to look at them properly and, if it is worried about them, to make recommendations about how they might be modified. It is an "on balance" view, but I fall on the side of adopting the approach set out in this amendment; that of using the super-affirmative approach in these cases. Therefore, we will be supporting this amendment.

My Lords, we support my noble friend's amendment. The noble Lord, Lord Newby, referred to the late receipt, for the purposes of this debate, of the latest report from the Joint Committee on Human Rights. It is interesting that, in the space of six weeks from the earlier report on the Bill, we have moved from its sixth report of this Session to its 13th report of this Session. The nature of the legislation that the Government are trying to ram through Parliament at the moment is raising so many fundamental issues relating to human rights that we must be very grateful for the work that the Joint Committee is doing on behalf of Parliament in bringing these items to our attention. The noble Lord, Lord Newby, is right that the report raises further issues that may need further amendments to the Bill. I shall say no more than that I fully support my noble friend.

My Lords, I start by noting with considerable pleasure that the Official Opposition take the view that the Human Rights Act is something that should be enforced in all ways and at all times.

In dealing with these amendments, I want to emphasise a point that is escaping attention in some of our debates. The provisions in Clause 20 are not concerned with taxpayer information only. Clause 20 is necessary because of the prohibition imposed by Clause 18(1) that:

"Revenue and Customs officials may not disclose information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs".

That is subject to exceptions. One of them, in Clause 18(2)(b), is that it is,

"made in accordance with Section 20 or 21".

I respectfully think that it would help, when considering what additional safeguards noble Lords are insisting on, to recognise that we are not just concerned with taxpayer confidentiality, which is subject to strict safeguards under the Bill. As I was trying to make clear during the debate on the previous amendment, we are also concerned with, for example, information discovered in the course of a law enforcement operation. Noble Lords have taken a view about who should have to give the authority in relation to that. The House has spoken. However, with regard to the present provisions, and the amendments that the noble Earl puts forward, I invite noble Lords to bear that point in mind.

I need to deal with several points. The first is that which is raised by Amendment No. 9: to put on to the face of the Bill those provisions which are in the draft regulations. I start with the proposition that there is no difference between us: that those are all appropriate circumstances in which the public interest disclosure should be permissible. There is no point of principle: that we are proposing under the draft regulations a disclosure which goes beyond that which noble Lords think is appropriate. It is a matter of principle; they accept that. That is what I understand lies behind the amendment.

Indeed, I understand that the amendment goes further. The amendment also accepts that it should be possible to add to that list not by primary legislation but by regulation. That is the effect of the noble Earl's amendment. There is no difference of principle between us about that either. In those circumstances, what is the justification for making this change to the Bill, putting something into it that we shall do in any event by regulation? The noble Earl says—and to some extent the noble Lord, Lord Newby, supports him—that there is no disadvantage. There are disadvantages. With respect, I do not think that the noble Earl has seen what they are.

First, by hard-wiring, if I may use that expression, into the Act itself those matters which were going to be in the regulation, the noble Earl is insisting on giving the Government a Henry VIII power for which they have not asked. He proposes that it should be possible to amend the primary legislation which sets out those public interest disclosures. The noble Earl shakes his head. But what then is the effect of subsection (1B)(b)? It states:

"Disclosure is also in accordance with this section . . . if made—

"(b) for a purpose of a kind specified in regulations made by the Treasury"— so he concedes that there should be a power to make regulations—

"and such regulations may vary the provisions of subsection (1)".

He is proposing that the Government should have the power to amend primary legislation by regulation. We have not asked for this power. It is somewhat ironic that the noble Earl, whose reason for putting forward the amendment is to increase parliamentary scrutiny, proposes one of the powers which always causes difficulties in this House, and rightly so: the power by regulation to change primary legislation. That is the first disadvantage.

Secondly, I draw attention again to what the Delegated Powers and Regulatory Reform Committee said on this clause. I note that it was clear that it did not consider the power to be inappropriately wide. It states that the affirmative procedure will provide an appropriate level of parliamentary scrutiny for any proposals to add to circumstances in which disclosures may be made. Its views might have differed had this included the Henry VIII power that the noble Earl would now insist we took.

Thirdly, we have placed a great deal of emphasis on the safeguards surrounding public interest disclosures, including criminal sanctions. But the noble Earl's amendment has managed to drop the criminal sanctions in relation to this set of disclosure provisions. The criminal sanction for unauthorised disclosure which exists in Clause 20(5) of the Bill is activated only by the making of regulations under Clause 20(4) and would not apply, therefore, to those things which are covered by what he now wishes to do.

Finally, grateful as I am to see the enthusiasm of noble Lords for the Human Rights Act, I draw the noble Earl's attention to this fact. By putting these categories into primary legislation he prevents the courts taking a view, if they did in the future—we do not think for a moment that they will, but it is a question of power—because if they are in regulations the courts are able to strike them down as going too far. If they are in primary legislation, they are not able to do so. Far from enhancing the human rights protection, he has succeeded in taking part of it away. That relates to the first of the amendments.

The effect of Amendments Nos. 10 and 12 is to return to the question of parliamentary procedure. With respect, I am disappointed to see that that issue has been returned to. Again, the regulation-making power has been examined by the Delegated Powers and Regulatory Reform Committee which was satisfied of it. The committee said:

"We do not consider the power to be inappropriately wide and we believe that the affirmative procedure provides an appropriate level of parliamentary scrutiny for proposals to add to circumstances in which disclosure may be made".

When the Delegated Powers and Regulatory Reform Committee has reached that view, I respectfully suggest that your Lordships should be slow to insist upon something which it has not proposed. It is the expert in this field and that is the conclusion that it has reached.

Why is it right? It is right because there are strong safeguards in the act for taxpayer confidentiality. By imposing the affirmative procedure, Clause 20 makes sure that regulations which are passed should be subject to that degree of scrutiny. What more does the noble Earl want? He has picked up the reference in an entirely different Bill—the Identity Cards Bill—for a super-affirmative procedure. I remind noble Lords that the enhanced arrangements in the Identity Cards Bill apply to regulations that may be introduced to make registration for identity card purposes compulsory. In such a case, where practice subsequently develops beyond that applying when the primary legislation is introduced, it is quite right and proper that Parliament should have the chance for a more detailed study of the plans. But that is quite different in the case of the regulations. The policy behind these is absolutely clear and we all agree with it. The policy is that where there is a need for public interest disclosure that should be permitted so long as one defines with reasonable specificity what that public interest disclosure should be.

The regulations made under Clause 20 cannot change that fundamental policy. It is an entirely different position from that in relation to the Identity Cards Bill. The position is inadequate and dangerous. First, it would require Parliament to consider new grounds twice. So if someone takes the view that there is a further real need for a public interest disclosure, Parliament is required to consider that twice. It is a relatively narrow thing that would be added and yet we have to consider it twice. I suggest that that is not a good use of parliamentary time. More than that, it would prevent HMRC reacting rapidly to emerging situations requiring a disclosure in the public interest.

The noble Earl says to me, "But the Attorney-General said it would happen only sparingly". Yes, we do think that it will happen only sparingly but it may still happen in circumstances which need a quick reaction. I am afraid that events over recent years have all too plainly demonstrated that. It is no answer to say that although this may happen only sparingly we require a super-affirmative resolution; we require it to come twice to the House before we can make a sensible disclosure in the public interest—which is all that this clause can deal with. That could prevent any new regulations coming into force for 60 days and that could be a dramatic inhibition on doing something which is necessary to help or protect people in the public interest. It is only about the public interest. That is what this is all directed towards. So we would have the effectiveness of HMRC limited.

Thirdly, and I know where the noble Lord, Newby, is coming from, the real point he makes is not so much that it happens twice but that it provides an opportunity for amendment. Amendment of what? If HMRC puts forward that there should be a further public interest disclosure category, what is the amendment going to be? It is not like the Identity Cards Bill where there will be much debate about the policy of making them compulsory.

This is not the approach the House takes to resolutions which come before it. I recognise the argument that there is a case for saying that in future the power of this House to amend resolutions should be greater than it is at the moment. But that is not where we are. I really suggest to noble Lords that this is neither the Bill in which to make a change nor the place to debate the general policy.

So, what is this matter ultimately about? It is about the ability of Revenue and Customs to make a disclosure in accordance with regulations where the Treasury is satisfied that it is in the public interest. We know the kind of thing that that is concerned with—preventing crime and disorder, on public health and preventing disasters, that sort of thing. I invite the noble Earl to recognise that to delay the ability to pass regulations is really not appropriate for this Bill.

I know that the noble Earl is concerned about taxpayer confidentiality. I have been from the beginning of the passage of the Bill, as I am sure the noble Earl will recognise. The Bill contains some very strong safeguards. We have statutory prohibitions, criminal sanctions, prohibitions, and a requirement that you cannot just say, as you can at the moment, "It is in the public interest, therefore let it be disclosed". We want to have those specified. But to insist on going further in these circumstances is going too far. That is not because I disagree with the importance of confidentiality. I do not, although I remind noble Lords that this issue is much wider than taxpayer confidentiality. It is because the provision puts an unnecessary inhibition on the operation of the department by insisting that it takes place in this way. So I resist both sets of amendments.

The noble Earl says that the Amendment No. 11 to leave out the provisions in subsections (7) to (9) would not be necessary if his other amendment were accepted. He is right to say that I am not aware of any specific regulations that would need to be brought in, if his amendment were accepted. But I need to have further thought on that.

As the noble Earl knows, subsections (7) to (9) are absolutely essential in preventing the work of the department coming to a halt the moment the Act is passed. We are in entirely different territory from some of the debates that have taken place in this House. This is a Bill which already sets out very strong safeguards for the things about which noble Lords are concerned. It limits certain disclosures to those in the public interest; and it requires new categories to be added only if there is an affirmative resolution of the House. Surely that is enough. I urge the noble Earl not to press his amendment.

My Lords, again, I am extremely grateful to the noble and learned Lord for his reply and for the support of the noble Lord, Lord Newby, and my noble friend Lady Noakes.

I shall offer immediately one small crumb of comfort to the noble and learned Lord the Attorney-General. There is no greater admirer of his advocacy than myself and his skill has been successful in that particular endeavour. I am no draftsman but I can accept the argument he advances that in Amendment No. 9 certain infelicities exist in the drafting, not least the potential for a Henry VIII provision. So, I am quite happy to withdraw that amendment.

Nevertheless, I should advise the noble and learned Lord that my concerns about the issue remain. Justifications remain for having the text of the draft regulations in the Bill. So I merely withdraw the amendment on the basis that I shall have to reflect on how to deal with the flaws perceived by the noble and learned Lord and myself.

On his arguments in respect of the super affirmative provisions, I said in my introduction that I thought it was possible to overplay those.

I fully understand and appreciate the point that the noble and learned Lord makes about delay. However, my noble friend Lady Wilcox on the Front Bench has had recent experience of a specific order, albeit a negative one. It was laid on one day and two days later it came into force. I do not believe that it is beyond the wit of the usual channels, because it happens frequently in the House, to negotiate their way past the 60-day rule within the amendment. After all, the 40-day rule, which exists as a result of the Statutory Instruments Act, is frequently breached. So I do not think that that argument, per se—

My Lords, I am grateful to the noble Earl for letting me intervene. He proposes to put in primary legislation that you cannot make provisions unless the previous stage happened 60 days—or whatever it is—before. I do not see how the usual channels could overcome that. If it is 60 days in the statute, it is 60 days.

My Lords, I hear what the noble and learned Lord says. As my noble friend Lord Campbell of Alloway said in earlier proceedings on the Bill, I fear we will just have to beg to differ. For me there is an important principle here. These issues are far too important for the rather tenuous scrutiny that even affirmative procedure affords. So when we reach those amendments I shall divide on them. In respect of Amendment No. 9, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 10:

Page 10, line 28, leave out subsection (6).

My Lords, I have already spoken to this amendment. I beg to move.

On Question, Whether the said amendment (No. 10) shall be agreed to?

Their Lordships divided: Contents, 134; Not-Contents, 126.

Resolved in the affirmative, and amendment agreed to accordingly.

[Amendment No. 11 not moved.]

moved Amendment No. 12:

After Clause 20, insert the following new clause—

"PROCEDURE FOR ORDERS UNDER SECTION 20

(1) The Commissioners must not make regulations under section 20(1)(b) unless—

(a) a draft of the regulations has been laid before Parliament and approved by a resolution of each House, and

(b) each of the resolutions for approving the draft was agreed more than 60 days after the day on which the draft was laid before the House in question.

(2) No draft regulations under subsection (1)(b) are to be laid before Parliament unless—

(a) the Commissioners have prepared and published a report containing proposals for the making of such provisions,

(b) the report sets out the Commissioners' reasons for making the proposals,

(c) the report has been laid before Parliament and each House has approved the proposals contained in the report, either with or without modifications, and

(d) they give effect to the proposals so far as approved by both Houses.

(3) An approval given in either House satisfies the requirements of subsection (2)(c) only if it was given in that House on the first occasion on which a motion for the approval of the proposal was made in that House by a Minister of the Crown after—

(a) the laying of the report, or

(b) if more than one report containing those proposals has been laid before that House, the laying of the most recent one.

(4) The Commissioners must not make an order which contains any provisions that they are authorised to make under subsection (1)(b) unless a draft of the order has been laid before Parliament and approved by a resolution of each House.

(5) In determining a period of 60 days for the purposes of subsection (1), no account shall be taken of a day for which—

(a) Parliament is dissolved or prorogued, or

(b) the House in question is adjourned for more than four days."

On Question, amendment agreed to.

[Amendment No. 13 not moved.]

Clause 26 [Rewards]:

moved Amendment No. 14:

Page 14, line 8, at end insert—

"( ) Substantial rewards may be paid in confidence to practising accountants and legal advisers."

My Lords, perhaps I should declare a past interest. Somebody suggested to me that I was moving the amendment standing in my name and that of my noble friend Lord Sheldon only to reward my old friends. This is, of course, totally untrue. I would not dream of such a thing—not through the public purse, anyway.

The amendment relates to the current rewards apparently paid by both the Inland Revenue and Customs and Excise. The figures previously given to us indicated that Customs and Excise rewards were in excess of £900,000, whereas the Inland Revenue gave rewards of only about £100. There is therefore some discrepancy. I am not seeking to help noble friends in the accountancy profession, or even in the legal profession where I still have friends—perhaps even including my noble and learned friend the Attorney-General. My friends in the legal profession whom I have used have never been quite as distinguished as my noble and learned friend, but I would not dream of suggesting that they should get rewards for their own sake.

I seek to ensure that those with direct knowledge of legitimate tax avoidance and, in particular, illegitimate tax evasion should be more helpful in ensuring that the public purse is less burdened. In my experience, most accountants and lawyers have nothing to do with tax evasion, as I am sure is still the case, but they will have knowledge on the border. I am sure that the noble Baroness, Lady Noakes, will have no knowledge of tax evasion, at least not in her direct experience, I hope and believe.

Legitimate avoidance is often not disclosed. I have in mind the recruitment of retired professional people with direct knowledge of major tax avoidance schemes, about which it takes the Inland Revenue a long time to learn. It might get to know about them earlier with the help of rewards in the appropriate direction. Nobody could have rewarded me in those circumstances to provide that information, but I am sure that the noble Baroness, Lady Noakes, would be only too happy to oblige, now that she has retired from the senior professional position that she held.

It often takes the Inland Revenue a long time to learn about major schemes in general of tax avoidance. So somebody with direct experience in those fields could be very helpful. They may find a few pounds even more helpful once they have retired. I am not referring to the noble Baroness because I know that she will have had both a huge salary and a huge pension in her retirement—or semi-retirement now—but others might find it useful.

I do not seek to use public money to help the professions. In net terms it would be a great help to the public purse if disclosure were made at an early stage to the Inland Revenue in particular. Given that I have been so helpful to my noble and learned friend during these debates and in the past, I hope that he will agree to the amendment. I beg to move.

My Lords, I thought that the proposed provision was very attractive and that perhaps on this occasion I might renew my practising certificate. But it is entirely different from how the noble Lord describes it. It refers to practising accountants, not retired ones. I find it surprising that we want to give "substantial rewards" to practising accountants and legal advisers, even though they may be hard up.

In my time in practice, there were some clients on the wrong side, and the Inland Revenue often pointed the finger at them. One then had to have meetings with them and say, "This is what you have told me. I am afraid that I have to tell that to the Inland Revenue"; or, "I can no longer act for you". If you said that you could no longer act for a client, he then found another accountant, who would write to ask whether there was any professional reason why he could not act for that person. I would then respond, "Yes, there is. These are the circumstances". The client would therefore get stranded. I would therefore be very surprised if substantial rewards were needed.

My Lords, when I first saw the amendment I thought that it contained the "Barnett-Noakes benefit clause". I had read it too quickly and thought that it referred only to accountants—the noble Lord, Lord Barnett, and I are both qualified accountants. But it refers to practising accountants—neither of us is that at present—therefore we do not benefit from it.

The noble Lord referred to the need to induce accountants to report tax evasion. I do not think that any accountant bound by proper ethical rules needs such an inducement. Furthermore, I believe that the Chancellor has done quite a lot to ensure disclosure of things amounting not even to tax evasion but to tax-avoidance schemes. I wonder whether the purpose that the noble Lord had in mind for substantial rewards exists. It was a nice try but I do not think that it benefits us quite enough.

My Lords, my noble friend made the very important point that we are bringing together two completely disparate bodies with enormous powers, which deal with large sums of money, so we must have a way of finding out the errors that may occur as a result. There will be new arrangements and requirements, so we want somebody with direct experience. The eventual outcome of merging the Inland Revenue with Customs and Excise will be good in the long run. But it will be quite a number of years before it settles down and we can be assured that the standards that we have enjoyed for so many years can be maintained.

Speed here will be dangerous. It is very hard to overstate the dangers with the different traditions, so we need some new safeguards. They need to be fairly unusual, and they may not be entirely welcome, but we need people who know what is going on. There must be provision for assisting those with that knowledge to come forward. We need some help to deal with the uncertainty that will arise. My noble friend's amendment is very suitable and apt.

My Lords, perhaps I may speak briefly for the legal profession. This amendment is entirely anathema to the ethical position of the lawyer, who is bound by legal professional privilege up until the point where it is disclosed to him that his client has committed a criminal offence. For him to receive money to disclose matters to the Revenue or to Customs and Excise in those circumstances, or even to another lawyer to whom the case has been passed, would be contrary to the code of practice. I would resist the amendment.

My Lords, in one sense this is the most animated debate that we have had so far today. I am very pleased that the noble Lord, Lord Barnett, has managed to return to the aspect of the Bill that has caused him a great deal of interest, perhaps the most, since we started the debate. Now we have the punch-line of the interest.

I can be very brief. I agree absolutely with the remarks of my noble friends Lord Barnett and Lord Sheldon on the importance of professionals acting in such a way that illegality and tax evasion are brought to the attention of the authorities. My understanding of the profession's own ethical standards demonstrates that there is an understanding of the need for that disclosure. The Institute of Chartered Accountants in England and Wales states that:

"A member should behave with integrity in all professional and business relationships".

It goes on to say:

"In certain circumstances information which would otherwise be confidential, will cease to be so if the information is such that disclosure is justified in the 'public interest', for example, where the employer has committed or proposes to commit a crime, fraud or misdeed".

I trust that lawyers and tax professionals, practising and retired, will always act with the highest regard for the public interest. Whether they need the inducement of rewards to do so is an entirely different matter. As it happens, the Bill would permit such payments to be made. The merit of my not agreeing to the amendment is that that would not limit the possibility of rewards to those who are still practising. With the assurance that I would not want to discourage the commissioners from paying rewards where they thought it appropriate, even to practising or non-practising tax or legal advisers, I invite the noble Lord to withdraw the amendment.

My Lords, I am grateful to my noble and learned friend. I make it quite clear that when I talked about "retired" professional people like the noble Lord, I meant people who have only recently retired, not someone who has retired as long ago as the noble Lord. I appreciate the strength of the debate we have had.

My Lords, I have never thought of myself as retired at all. It has not ever come into my thinking. I did, however, lay down my practising certificate.

My Lords, I am not sure what the noble Lord was saying.

The Opposition, particularly those on the Liberal Democrat Benches, seem to want to vote. I do not wish to deprive them of that opportunity. However, on this occasion, I will. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

My Lords, before I call Amendment No. 15, I should point out that in subsection (3)(a) of the amendment, the word "merger" should read "integration".

moved Amendment No. 15:

After Clause 49, insert the following new clause—

"REPORT ON HER MAJESTY'S COMMISSIONERS OF REVENUE AND CUSTOMS

(1) On or before the second anniversary of the coming into force of this Act, in accordance with section 53(1) the Chancellor of the Exchequer shall appoint a person or persons to report on the operation of Her Majesty's Revenue and Customs.

(2) A report under subsection (1) shall include an assessment of—

(a) the overall success or otherwise of Her Majesty's Revenue and Customs since its establishment including, but not limited to, a cost-benefit analysis;

(b) the direct costs of effecting the integration;

(c) the direct cost savings achieved by the integration;

(d) whether efficiency gains have been achieved as a result of the establishment of Her Majesty's Revenue and Customs including, but not limited to, the effects of the integration on the tax yield and the incidence of fraud;

(e) the overall compliance burden, including the impact on day-to-day customer service and the experience of taxpayers in dealing with Her Majesty's Revenue and Customs;

(f) the performance of Her Majesty's Revenue and Customs in the development and application of information technology and data systems;

(g) the working relationship between Her Majesty's Revenue and Customs and the Treasury including, but not limited to, the adequacy of arrangements for accountability;

(h) the performance of the Revenue and Customs Prosecutions Office including, but not limited to, a cost-benefit analysis;

(i) the work undertaken preparatory to the integration; and

(j) any other area that the person or persons appointed under subsection (1) considers relevant to an understanding of the creation or operation of Her Majesty's Revenue and Customs.

(3) A report under subsection (1) shall not include any assessment of—

(a) the annual performance of the Commissioners for Revenue and Customs in discharging their responsibilities as tax administrators and collectors, except in so far as these have been affected by the merger; or

(b) any matter (whether relating to value for money or otherwise) that has been reported on by the Comptroller and Auditor General.

(4) A report under subsection (1) shall be prepared annually for five years from the date referred to in that subsection and shall be laid before both Houses of Parliament and published.

(5) The first report under subsection (1) shall be completed within 12 months of the date referred to in that subsection.

(6) In this section "the integration" means the creation of Her Majesty's Revenue and Customs from the Commissioners of Inland Revenue and the Commissioners of Customs and Excise."

My Lords, we come to the last of our amendments on Report, although it is not the least of them.

Amendment No. 15 introduces a requirement for a report to be made on the integration of the Inland Revenue and Customs and Excise into HRMC. The noble and learned Lord will note that even the Public Bill Office found it difficult to tell the difference between a merger and an integration.

We debated a similar amendment in Grand Committee, but we make no apology for returning to the issue now. The issue is how proper scrutiny of the integration of these bodies can be achieved. We do not believe that a proper case was made for that integration, in the sense that all the costs and benefits were fully laid out; we do not believe that the risks of implementation were properly explained; and we do not believe that the impact on taxpayers was properly identified.

The noble and learned Lord will, I hope, acknowledge that we have not opposed the Bill, but our support has been on the basis that proper post-examination will be made of the integration, which is what the amendment proposes.

I will not go through the individual items set out in subsection (2) of the new clause. They are there to indicate the many complex issues that we believe need to be scrutinised. In Grand Committee, the noble and learned Lord said that the Comptroller and Auditor General could examine all these things. Indeed he could, and I am sure that he will examine some of them, but the issue is when, and how often. Our amendment proposes a report after the first two years of the integration, and then annually for five years.

The noble and learned Lord also said that the Public Accounts Committee and the Treasury Select Committee in another place could examine the integration. Of course they can, and probably will, but this amendment ensures that there is regular information to allow those committees to determine whether and to what extent they do so.

Following our Grand Committee debate, I have modified the amendment so that the person selected to produce the reports is not required to be independent. Some, including the noble and learned Lord, and the noble Lord, Lord Barnett, did not like that. I am sure that any Chancellor would appoint an appropriate person, so the amendment does not seek to fetter his choice in any way.

It is often easy for grand schemes to be introduced with a fanfare, and then to degenerate. It is genuinely hard for parliamentary scrutiny to be kept up to date on past events, given the raft of current issues that exist. I shall give the noble and learned Lord just one example of a grand scheme gone wrong: the Dome. The Comptroller and Auditor General produced a damning report after the event, but there was no requirement for regular reports, so the true cost to public funds, now nearly £1 billion, has managed to escape largely unnoticed.

The amendment seeks to ensure only that there will be proper scrutiny of the integration. I sincerely hope that the integration does not go wrong. We have already had more than enough waste of public money over the past eight years. The chances remain high, however, that there will be unforeseen problems, whether of cost, efficiency, of tax yield, of continuity of service or of impact on the taxpayer. Parliament deserves proper oversight of the integration. I beg to move.

My Lords, as noble Lords will know, we have supported this measure but have expressed doubts about the ease with which it will be possible to achieve all the claims the Government have made for it. Some of the sweeping claims about the quality of taxpayer service the new department will be able to offer were repeated last week in the Red Book.

A number of noble Lords have serious questions about those claims, not least because, to be successful, the integration will require a significant degree of additional training and improvement in computer systems, both of which are costly. In the case of IT systems, we are looking at an area where the track record, in virtually every department of government, has been poor.

The question is whether the existing mechanisms for reviewing the operation of the merger will work effectively. I have my doubts as to whether they will, and whether the focus will remain on them five years down the track. As the noble Baroness has said, Parliament has many qualities, but one of the things that intrudes upon looking back at the success of previous decisions and legislation is current events, which crowd out the work of Select Committees in another place to a considerable extent. Whether, in five years' time, the Treasury Select Committee would wish to have another look at the efficiency and effectiveness of the merger, given everything else that was happening, is open to doubt. Therefore we support the amendment.

My Lords, I wish to speak against the proposition. As there is the possibility of the Comptroller and Auditor General periodically reviewing what is happening in the Revenue, as the Public Accounts Committee carries out reviews, as the Treasury and Civil Service Committee reviews the Revenue regularly, and as from time to time the NAO carries out reviews, to add a fifth review on top is over-egging the pudding. There is ample opportunity, if parliamentarians want it, to ensure that we can sustain and maintain full scrutiny of what happens in the Inland Revenue.

I hope that the mover of the amendment, and others, will reflect on where they stand on this issue. An additional review is not needed. It will be costly, too. Given how much we hear about the desire to get public expenditure down in the coming years, particularly from the party opposite, it would be a waste of money, adding to already fairly costly exercises that are being undertaken.

When I reflect on where we started some weeks ago in scrutinising this legislation—all the parties being generally in favour of it and wanting to see it go through without too much difficulty, or so I thought—and then on what happened earlier this afternoon, and on what might happen now if we have another vote, I start to question whether in fact people want to see the legislation go through. I certainly do. I believe it is needed by the country. To risk the legislation falling if a general election is called, because of the difficulties with clearing all the business left over after Easter, would be irresponsible on all our parts.

I hope that some reflection will be given to those points, and that we do not proceed to a vote, but live with the existing mechanisms available to us to scrutinise the new department's operations.

My Lords, I am grateful to my noble friend for the way he has spoken. I endorse his last remarks. I, too, hope that this matter is not pressed to a vote.

I hope to be able to tell noble Lords what will happen in a way that will give them all the reassurance they need that there will be proper reporting on the key matters to which the noble Baroness referred.

I want to raise one matter at the outset, which is a fatal objection, as far as I am concerned, to the amendment. Subsection (2)(h) of the proposed new clause states that the Chancellor of the Exchequer should appoint a person to report on, among other things,

"the performance of the Revenue and Customs Prosecutions Office including, but not limited to, a cost-benefit analysis".

As the noble Baroness, Lady Noakes, will recall, and other noble Lords may note, one of the key objectives of the Bill is the separation of the Revenue and Customs Prosecution Office from Customs and Revenue. That is one of the key recommendations of Mr Justice Butterfield, who inquired into customs-related cases that had been through the courts. Of all the provisions in the Bill, this one has been so free of any controversy that not a single amendment dealing with that aspect has been proposed. It is key to what Mr Justice Butterfield said; it is key to what we are seeking to do, which is to create a new, independent prosecuting authority—separate from Revenue; separate from Customs; and reporting not to the Chancellor of the Exchequer but to me.

It would be wrong for a report to be made to the Chancellor of the Exchequer on a department that is my department, on a prosecuting authority that is intended to be separate and independent from Customs, in accordance with a strong judicial recommendation, so that the interests of justice may be maintained. Even if I thought, which I do not, that the rest of the amendment made sense, I would oppose it on that ground. There is no way of separating that aspect of the amendment out, because it is part and parcel of what the noble Baroness has proposed. So I resist it on that ground.

I turn in what I hope the noble Baroness will think is a more conciliatory way to the issues with which she is concerned; that is, whether HMRC will be a success and whether we will have the opportunity of looking at whether it will be. I have previously indicated, and I want to enumerate them again, the number of different ways in which full and proper parliamentary scrutiny by existing bodies can, and no doubt will, take place, to judge the success of the new department. Some of those ways have already been referred to in the debate. What is necessary, therefore, is perhaps not any new mechanism for reviewing, because the scrutiny exists, but making sure that information of the sort that the noble Baroness wants is available.

In a spirit of meeting the concerns of the noble Baroness, I shall offer two firm commitments which I hope noble Lords will welcome. First, the spring report that HMRC will publish early this summer will specifically cover work undertaken preparatory to the integration, as envisaged by subsection (2)(i) of the proposed new clause. That will be an early test of the Government's wider commitment to ensuring that full and proper reporting on HMRC takes place. Noble Lords will be able to see the first instalment in just a few months.

Secondly, the reports that HMRC will make to Parliament in autumn 2005 and spring 2006, as well as autumn 2006—that will be the annual report that looks back over the first full financial year of operation of the new department—will each include a specific and additional chapter on the progress of HMRC since its creation. I can assure the House that the new chapter will draw together information that becomes available as progress is made following the integration during the next 12 months or so.

My Lords, I am pleased to hear what my noble and learned friend says about the reporting of the changes that will be made, but what impact will that have on the Bill which we understand is going to come next year to take us to the second stage of the integration of the two departments?

My Lords, perhaps the noble Lord will permit me to finish what I was saying about what will take place. I will then give him a clear answer to that question.

The new chapter that will appear in the reports will draw together information that becomes available as progress is made following integration. That will ensure, to the extent that other published information may not quite meet noble Lords' concerns, that noble Lords will be able to see, in a single document, an up-to-date report on progress. In those early reports, HMRC will seek to provide, in particular, information on the direct costs, where it is possible to identify them, of bringing the two departments together, updating estimates already made and providing the information required by subsection (2)(b) of the proposed new clause. That covers another subsection.

The spring and annual reports will also cover the benefits that result from integration in terms of greater efficiency and reduced costs, such as staff costs and overheads, thereby providing the information required by subsection (2)(c) of the proposed new clause. In addition, the annual and spring reports will, as a matter of course, cover the outcomes of the department's PSA and efficiency targets, which together will give a clear picture of how the new department is delivering success. The PSA targets cover in specific terms the department's commitment to improve compliance across the taxes by 2007–08 and to improve the extent to which individuals and businesses pay the amount of tax due and receive the credits and payments to which they are entitled. That is the information that subsection (2)(d) of the proposed new clause would require.

HMRC has undertaken to strengthen border protection against threats to the security, social and economic integrity and environment of the United Kingdom in a way that takes into account the need to maintain the UK as a competitive location in which to do business. HMRC's objective is to improve customer experience, support business and reduce the compliance burden. Reference to the latter is made in subsection (2)(e) of the proposed new clause.

In addition to those PSA targets, further commitments were made in this year's Budget. Mr David Varney, chairman designate of HMRC, has already committed publicly to a range of measures that will deliver real reductions in compliance cost. I will not weary noble Lords this evening with those, but I am happy to provide them in writing to the noble Baroness if she would like them. The annual and spring reports will also cover progress on those specific compliance cost measures as they develop.

So a great deal of information will be either covered in the spring or annual reports of HMRC or otherwise be publicly reported to enable Parliament, the Treasury Select Committee, PAC, the Comptroller and Auditor General and all the people about whom we have spoken previously to form a view on whether HMRC is meeting its desired objective of improving efficiency and customer experience and closing the tax gap.

I hope that noble Lords and the noble Baroness in particular will recognise that we, having listened carefully to the concerns that were expressed in Grand Committee in particular, have come forward with a substantial commitment to meet her desire to have information on such matters brought together in a single report. It will keep the pressure up on HM Revenue and Customs, which was a point that noble Lord, Lord Newby, made in Grand Committee. He wanted to see that as well.

I want to draw noble Lords' attention to another factor, mentioned by my right honourable friend in another place. The Chancellor will shortly issue an annual remit for the chairman designate of HMRC. That will include the general direction and priorities of the department; the monitoring arrangements for delivery against the remit; specific targets for the department; and the high-level policy delivery agenda. Where do we go from there? As we move forward in time, it will become increasingly unrealistic and theoretical to distinguish costs and savings that are attributable to the integration from the aggregate costs of running the department. It will emerge over time, but surely we would all agree that a stage will come when trying to separate them would become artificial, and potentially misleading. The content of the spring and annual reports that I referred to will be kept under review, so that a view can be taken on the continuing need for the special additional chapter that I have identified.

I have taken a few moments to put the detail on the record so that there is no doubt. I hope that the noble Baroness will receive that in the spirit in which it is intended; that is, to meet her concerns without the need to put formal requirements in the Bill for a specific report over a period of time. As the noble Lord, Lord Newby, indicated, that could give rise to artificiality—an additional and unnecessary burden. I hope that noble Lords, including the noble Lord, Lord Newby, who has been sympathetic to the amendment, will accept that that meets the concern. Nothing needs to be put in the Bill, as we have come forward, listened carefully to what was said in Grand Committee, and given an important assurance and commitment.

My Lords—

My Lords, I am sorry, I have not answered the question put to me by my noble friend Lord Sheldon. We have not confirmed a new Bill at the second stage. The review of powers, which I talked of before, may result in legislation, as may other business developments. There is nothing definite. However, to the extent that there is a need for new legislation, I am sure that everybody in the House—and, indeed, in another place—will look carefully at the reports I have identified to evaluate the proposals that are then put forward. In that respect, they will be helpful should such legislation be brought forward.

My Lords, I thank the noble Lord, Lord Newby, for his support of the concept lying behind the amendment. I also thank the Minister for the comprehensive way in which he responded to the amendment. In fact, he has moved on since we debated it in Grand Committee. The Minister first raised a fatal objection, which seemed to be that one bit of the Government did not like another bit appointing somebody to look at their own office—

My Lords, I am sorry, but that really underestimates the point. The whole purpose of separating the Revenue prosecuting office from Customs and Excise is to separate it. Lord Justice Butterfield said that it was essential that there should not be that connection. To treat them as still part of the same department, and thus reporting to the wrong Minister, undermines the constitutional importance of the independence of prosecutors. It is nothing to do with not liking one bit of the Government; I like my right honourable friend the Chancellor very much indeed.

My Lords, I did not want to upset the Minister so much; I apologise if I have. It was only intended as a report to be laid before Parliament, not as a report to be made to the Chancellor to upset the Minister. Clearly, I must look at that aspect again carefully. I also want to read carefully what the Minister has said regarding placing on the record the report which he suggests will cover the concerns set out in subsection (2) of my amendment—apart from paragraph (h). I would like to look again to see the extent to which he has actually met the concerns. There was so much detail that it was difficult to do so. On that basis, I beg leave to withdraw the amendment today, but reserve the right to return to it at Third Reading.

Amendment, by leave, withdrawn.