Commissioners for Revenue and Customs Bill

– in the House of Lords at 7:15 pm on 5th April 2005.

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

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers) 7:29 pm, 5th April 2005

moved Amendment No. 1:

Page 6, line 26, leave out paragraph (d) and insert—

"(d) giving instructions for the disclosure of information under section 20(1)(a), except that an officer of Revenue and Customs may give an instruction under section 20(1)(a) authorising disclosure of specified information relating to—

(i) one or more specified persons,

(ii) one or more specified transactions, or

(iii) specified goods."

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, in moving government Amendment No. 1 and speaking to government Amendment No. 2, I wish, first, to set out the context as we move to the final stage of the Bill's scrutiny in this House. There have been some important debates and useful discussions, both on the Floor of the House and in other meetings, and I am grateful to all noble Lords who have participated. I am particularly grateful to the noble Baroness, Lady Noakes, and the noble Earl, Lord Northesk, speaking for the party opposite, and to the noble Lord, Lord Newby, on the Liberal Democrat Benches, all of whom I met the week before last. I put forward some proposals for meeting their concerns around certain issues, in particular taxpayer confidentiality and public interest disclosures. They responded very constructively, I am glad to say, so the Government have been able to bring forward appropriate amendments. They also asked a number of questions in addition to those concerning public interest disclosure, on the mechanisms for monitoring the effectiveness of integration and the governance and accountability arrangements for the new department. I want to cover those points in our debate on the other amendments that have been tabled.

I think, in truth, there has been little between any of us where the principles of these matters are concerned. But I recognise that there have been genuine and honestly held differences of opinion over the manner in which those principles should be delivered in the Bill. I look forward to a constructive and useful debate on these matters and support for what I hope will be accepted are the Government's genuine attempts to ensure that we reached consensus so that the Bill could leave this House in a form that is fully supported by all.

Collectively, government Amendments Nos. 1 and 2 address the issue of to whom, and to what extent, the commissioners may delegate the function of issuing instructions for disclosing in the public interest. The amendments provide for two things: first, they provide for the commissioners—or a single commissioner, by virtue of government Amendment No. 2—to delegate to officers the issuing of one-off, individual disclosures. Those are defined as disclosures which relate to one or more specified persons, transactions or goods. All such disclosures, I respectfully remind the House, must fall within the categories of public interest disclosure permitted by Clause 20. I shall be moving a later amendment to put those on the face of the Bill.

Individual disclosures are one of two types of disclosure that may be made. The other type of disclosure will be made under general instructions. These will provide for disclosure of similar information in comparable, narrowly defined circumstances. However, it will be for wider categories of circumstances, not one-off cases. Noble Lords have made very clear their preference that such instructions should be approved at not less than commissioner level.

The second purpose of my amendment is to give effect to the principle of the amendment moved by the noble Earl at Report, subject to the exception that I have described above. I accept that general instructions are a rather different matter from instructions relating to individual cases. Because, by their nature, they will apply to more established patterns of disclosure, the question of urgency does not arise. I touched on that point the previous time we debated the Bill.

I also accept that because of the greater breadth of their scope, the case for requiring a higher level of authorisation can be made. It is for those reasons that Amendment No. 1, while permitting authorisation of disclosure in individual cases to be delegated, prevents the delegation below commissioner level of the decision to authorise class disclosure instructions.

Amendment No. 2 does no more than tidy up Amendment No. 5, which was moved by the noble Earl at Report. It achieves exactly the same purpose of ensuring that the issuing of general instructions is delegated no further than to a single commissioner. That is the purpose of the two amendments which I hope meet the objectives of the noble Earl and of other noble Lords.

I should like to turn to a specific question that has been put to me in correspondence from the noble Baroness, Lady Noakes, and say a little more about the controls on those one-off disclosures that may be authorised by officers below commissioner level. There will be a variety of checks and balances in place to ensure that individual instructions to disclose are made by officers only when appropriate and an appropriate level of management scrutiny occurs in relation to disclosures that have been made. I understand that the noble Baroness particularly wanted me to say something about the latter, and that I will do.

Let me emphasise the first point. The circumstances in which an officer may consider giving a specific instruction to disclose information will be set out in detailed and comprehensive guidance. That guidance will have to be approved by the nominated commissioner. That will ensure that those officers who can authorise public interest disclosures will at all times be acting within guidance and limitations which have been agreed by the named commissioner.

A fundamental part of that guidance will set out the arrangements that will apply for ex-post assurance checks on disclosures. Let me spell out the key features of the regime. Officers will have to log details of all public interest disclosures that they make. Examples include the information disclosed, the identity of the recipient, the purpose of the disclosure and the outcome of the judgments made as to necessity and proportionality. Then senior managers will conduct assurance checks on these records to see that authorisations were given only where appropriate and that the disclosure was carried out only in accordance with the terms of the authorisation. These checks will be based upon a sample of the cases recorded within the records.

In all cases, the officer conducting the assurance check will be more senior than the officer who authorised the disclosure. In many cases, that will mean that checks will be carried out by someone who, in PACE terms, is equivalent to a police chief superintendent or above.

It would not be practical to expect the nominated commissioner to conduct these checks on what may be a high number of cases. But where the checks reveal problems with the guidance or with the way that the disclosure regime is operating in practice, the matter can and will be escalated for consideration of changes to the guidance that may be required. The commissioner will then consider any changes that are necessary.

In addition to this routine, ongoing quality assurance, the nominated commissioner will be consulted where significant issues arise in relation to public interest disclosures, for example on questions arising from operational experience. The guidance will require emerging patterns of individual disclosures to be reported for the nominated commissioner to consider giving a class disclosure instruction—we have discussed that before—and the nominated commissioner may at any time request information from officers relating to any aspect of the public interest disclosure regime, such as information regarding the implementation of procedures or concerning individual cases.

I have taken a little trouble to set out the arrangements in some detail so that noble Lords understand what we have in mind. I hope that they will agree that the arrangements offer substantial and robust mechanisms for auditing those public interest disclosures made by officers which are on an individual basis rather than in accordance with the general instructions.

In conclusion, the amendments represent a real attempt to meet the specific concerns that have been eloquently put by noble Lords on this important topic. I am very pleased to be able to offer these assurances and improvements to the Bill, together with a tightening up of administrative procedures.

I hope that noble Lords will agree that these amendments—and I am grateful for the thought that has gone into the issues that have been raised—strike the right balance between the operational requirements which are necessary and the stringent safeguards that we have all been keen to see in place to protect confidentiality. I hope that noble Lords will therefore be able to support this package. I beg to move.

Photo of The Earl of Northesk The Earl of Northesk Conservative

My Lords, I apologise for being a little late into the Chamber and not hearing the first few sentences of the noble and learned Lord the Attorney-General. That said, I express my thanks to him. I am particularly grateful for the consistently sympathetic hearing he has given to my concerns about the power to delegate. I am also particularly grateful for the distinction that is proposed to be drawn between class disclosures and those specific occasions when disclosure may be required and the presumption of a nominated commissioner for the disclosure regime.

For my part, I am content that the amendments deal with the concerns I have consistently expressed in an entirely admirable and satisfactory way. As I say, I am grateful.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, I would like to add to what my noble friend said. From these Benches, we have been very appreciative of the way in which the noble and learned Lord responded to the concerns that were expressed in the earlier stages of the Bill which resulted in amendments being passed at Report, the speedy way that he dealt with the issues after that and the constructive way in which he and his officials developed a solution that was satisfactory to all parties. It is a model that I hope will be repeated in the next Parliament when we come to such difficult issues.

I should emphasise that we were never trying to stop Customs officials on the borders dealing with terrorism and other immediate threats of illegality. Our concern was about taxpayer information sitting in offices up and down the land. These clauses have highlighted the difficulty in putting together the two different kinds of organisation that Customs and the Inland Revenue represent. One deals with a rather static information and the other deals with real-life situations. The amendments focus our minds on how to accommodate both situations. The result is an improvement to the Bill.

Photo of Lord Thomas of Gresford Lord Thomas of Gresford Shadow Attorney General, Law Officers (Constitutional Affairs), Advisory Team On Legal Matters, Non-Departmental & Cross-Departmental Responsibilities

My Lords, my particular concern with this Bill has been, as the noble and learned Lord knows, the setting up of the Revenue and Customs Prosecutions Office. From the very beginning, we have supported the Government on this initiative, so it remains for me to express the thanks of my noble friend Lord Newby, who cannot be here today, to the noble and learned Lord and his officials for all the great assistance that they have given in coming to a satisfactory settlement of these issues.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I am grateful for what the noble Earl said. Perhaps he missed the thanks that I expressed to him in my first few sentences. I repeat those now and also thank the noble Baroness and the noble Lord, Lord Thomas. I commend the amendment to the House.

On Question, amendment agreed to.

Clause 14 [Delegation]:

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

moved Amendment No. 2:

Page 7, line 1, leave out subsection (3) and insert—

"(3) The commissioners may not delegate the function under section 20(1)(a) except to a single Commissioner."

On Question, amendment agreed to.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform 7:45 pm, 5th April 2005

moved Amendment No. 3:

Page 7, line 11, at end insert—

"( ) Where the Commissioner or a number of commissioners delegate a function to a committee by virtue of subsection (1)(b), and that committee includes a majority of persons who are neither commissioners nor staff of the commissioners nor officers of Customs and Excise

(a) the Commissioner or those commissioners shall monitor the exercise of the function by that committee;

(b) in the exercise of the function, the members of the committee shall comply with any direction of the commissioners or those commissioners."

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, in moving this amendment I will also speak to Amendment No. 4 which deals in a different way with some of the loose ends around the delegations that are allowed by Clause 14.

Amendment No. 3 deals with the role of the commissioners once they have delegated their functions. We have no basic problem with the fact that the commissioners have to delegate their functions, but we do believe that having delegated those functions, they need to control what happens after they have delegated. That is what Amendment No. 3 is about. When the commissioners delegate under Clause 14(1)(b) to a committee, that committee can include commissioners and officers, but it can also include outsiders. It is the latter category that potentially causes the problem.

If there are outsiders on a committee to which functions are delegated and those outsiders are in the majority, we must ensure that the commissioners can control what happens in that committee. If the commissioners are delegated to a person rather than a committee under Clause 14(1)(c), other provisions kick in by virtue of subsection (4). First, the commissioners have to monitor the exercise of the delegated function and, secondly, the delegate has to comply with the directions of the commissioners. Therefore, Amendment No. 3 provides a mirror of subsection (4) and repeats these two provisions for committees controlled by non-HMRC people.

This concern is not entirely fanciful because it is clear that committees can be comprised wholly or mainly of outsiders. In Grand Committee we talked about an audit committee that would be comprised wholly of outsiders and I do not suggest for a moment that audit committees would be a problem. However, the Act does allow virtually all the functions apart from very limited restrictions that apply to old Inland Revenue functions which are laid out in the clause. Therefore, all of the existing Customs and Excise functions and the vast majority of the old Inland Revenue functions can be delegated to a committee and that committee can be wholly or mainly comprised of non-HMRC people. That is what concerns us.

The theme of confidentiality also drives Amendment No.4. We were pleased that the Government amended the Bill in another place to ensure that there was a declaration of confidentiality for commissioners and their staff, but because the way in which both the Inland Revenue and Customs and Excise now work has changed over time and more contractors are involved in the operations, there is a concern about how those involved in the private sector organisations are aware of the confidentiality requirement. I accept that the duty of confidentiality applies to people who deal with taxpayer information: the issue is how do we make sure that they are aware of their obligations?

Amendment No. 4 would ensure that people are aware of their obligations and it is designed in a way that does not force HMRC into a straitjacket. It can either use the declaration route or something similar. It would give the commissioners discretion. When we debated this matter in Grand Committee, the noble and learned Lord said that he would consider further what might be done about that category of person, so I am hoping that the noble and learned Lord will be able to respond positively to the thought behind the amendment. I beg to move.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I will first take Amendment No. 3 because that looks, as the noble Baroness explained, at the position of monitoring and control by the commissioners of committees on which neither commissioners nor their officers sit as a majority.

I can clarify the arrangements for her. She is right to note that the Bill makes a different provision between that where there is a delegation to another person and that to a committee that is established. However, as far as monitoring is concerned, which is the first of the noble Baroness's issues, the procedures will be the same. Those committees established by the commissioners will be under the direct supervision of the commissioners and monitoring will be part and parcel of that supervision. In particular, under Clause 12(1)(b), the commissioners are required to make specific arrangements for the conduct of the proceedings by their committees. Therefore, as far as monitoring is concerned I can assure the noble Baroness that the monitoring aspect will be dealt with.

However, there is a difference so far as the directions of the commissioners are concerned. That is an important distinction because there will be some committees—an audit committee is the best example—where it is important that the committee has independence in its actions. As I described in my letter to the noble Baroness of 2 March, senior committees of the HMRC will include as members,

"persons who are neither commissioners nor staff nor officers of HM Revenue and Customs", that is, non-executive directors.

HM Revenue and Customs is committed to establish an audit committee. In accordance with best corporate governance practice, membership would be restricted to only non-executive directors, so that the whole point is that this committee is independent of executive directors. Therefore, to provide in that situation that the committee should be subject to the directions of the commissioners would go against that necessary independence. That is the fundamental reason for the difference between the arrangements that are in place.

Having said that, I am sure that the noble Baroness will also see that, in relation to all the functions delegated to their committees, the commissioners will remain accountable for the work that is delegated. Therefore the proper performance by those committees of their activities can be assured.

I turn to Amendment No. 4. I said that even if I would not consider what further should be put into the Bill, I would at least consider what more I could say about the position on confidentiality, and I am happy to put that position on the record. It has been absolute common ground from when I made my opening speech on Second Reading that we agree about the paramount importance of taxpayer confidentiality, and the importance therefore of ensuring the awareness of confidentiality obligations. Let me therefore spell out the safeguards. I have already said what they are on several occasions, but lest there be any misunderstanding, I shall repeat them again.

The requirement in Clause 3 is for new officers and commissioners of the department, but the other obligations of confidentiality imposed by the Bill—the statutory duty of confidentiality backed by the criminal sanction—will apply to non-executive directors and those acting on behalf of the department, not just to regular staff. So those obligations are there. That message is made clear to anyone first gaining access to confidential information and is supported by further periodic messages from managers and others for so long as they are in contact with the information.

I shall take that a stage further. Non-executives will sign contracts with the departments which will contain acknowledgements of the duty of confidentiality. As for contractors, who could be IT support staff, consultant security staff and so on, there will be a number of safeguards appropriate to the circumstances. First, access to confidential information will be limited to business need. Access to information services will be available only when it is necessary and important to the job to be done. For example, security staff will not need or be given any access to taxpayer-confidential information, and in the main nor will those working in IT support, so there will be no need for those contractors to make any specific declaration of confidentiality.

Secondly, when the department judges it necessary, it can compel every person working for a contractor to sign an undertaking of confidentiality. That will be written into all the contracts of those working under contract. The department may not consider it necessary in all cases. One would not, for example, think that those contractors who were making travel bookings needed to make such specific declarations of confidentiality. But the ability will be exercised when it is needed.

Thirdly, a confidentiality clause will be written into all contracts at the company or service provider level.

I hope that that answers the substance of the noble Baroness's point. It is slightly churlish of me to draw attention to a technical error in the drafting of the amendment, but I had better do so, because it refers to,

"officers of Customs and Excise", when previous versions correctly referred to,

"officers of Revenue and Customs".

But I hope very much that we need not trouble about that, because I hope that we have reassured the noble Baroness about the substance of the two amendments to persuade her that we are entirely in agreement on what we are trying to achieve, that there is enough to achieve those objectives and that she need not press either of her amendments to a Division.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, as the noble and learned Lord knows, I had not intended to press the amendments, so he need not have pointed out the fatal flaw, but I know that Ministers like to do so.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, officials like to make sure that Ministers do so. Ministers would much rather not.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, I completely accept that point.

I was much encouraged by what the Minister had to say in particular about how confidentiality requirements would be drawn to the attention of those who come across taxpayer information as contractors. That was important.

As for committees, I do not want to rerun the debates that we had in Grand Committee about audit and other committees. I fully accept that audit committees are not at the heart of the problem and should not be burdened by controls by commissioners. My concern was with other kinds of committees. I am not sure that I am 100 per cent satisfied with the response, but we shall have to see whether it causes problems in practice. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

moved Amendment No. 5:

After Clause 18, insert the following new clause—

"PROTECTION OF CONFIDENTIAL INFORMATION

(1) Regulations shall make provision as to criteria for pre-disclosure assessment of the use of sensitive confidential information obtained from the taxpayer for a purpose other than that for which it is proposed to be made; and as to prior authorisation and external oversight.

(2) The criteria referred to in subsection (1) shall have regard to the nature of such information, and the purpose for which it is proposed to be used as being proportionate to the requirement for disclosure.

(3) Regulations under subsection (1) shall be made by statutory instrument and no such instrument may be made unless a draft has been laid before and approved by a resolution of each House of Parliament."

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, the amendment has a very limited application. It is limited to the use of confidential information and to Clause 17(1), which is the source of some problems. The subsection states:

"Information required by the Revenue and Customs in connection with a function may be used by them in connection with any other function".

The amendment is quite distinct and separate from amendments concerning disclosure of information, relating to Clause 18(2)(b), (c) and (d). In the view of the Joint Committee on Human Rights, those paragraphs are wholly satisfactory—but not Clause 17(1), with regard to the use in the circumstances.

The fundamental issue of contention between the noble and learned Lord the Attorney-General and myself is whether the safeguards proposed by the Bill, which reflect the advice of the Joint Committee on Human Rights, should have legal efficacy, according to law, under Article 8.2 of the convention, as proposed by the amendment, which in effect is a trigger clause for secondary legislation having legal efficacy. Is this not requisite to afford compatibility with the convention in this context, as to pre-assessment, prior authorisation and external oversight?

Before reading three or four extracts from the first progress report of the Joint Committee on Human Rights, which are strictly related to the matter, may it be said at once that all that that committee does is to advise both Houses on compatibility with the convention? That is objective advice, wholly devoid of any political motivation. Of course, it is but advice and it is open to either House to ignore it or reject it if they wish. The second progress report of the Joint Committee on Human Rights published on 2 February deals specifically with this at paragraph 1.17, which states that,

"there is nothing on the face of the Bill which sets out any criteria to guide decisions about the use for one purpose of information which has been acquired for another purpose, nor does it provide any procedural safeguards regulating the decision whether such use for a different purpose is necessary and appropriate in a particular case. The Explanatory Notes state that 'management controls ensure that the use of the information will be appropriate and proportionate'. Reliance on 'management controls' to guarantee the appropriateness and proportionality of using personal information does not satisfy the requirement that interferences with the right to respect for private life must be 'in accordance with the law'. In order to satisfy that requirement, the controls on the use of information must be legal controls, providing legally binding safeguards against improper use of information. We have therefore written to the Government asking for more detail about the 'management controls' designed to ensure that information is used appropriately and proportionately, and asking that better safeguards be set out on the face of the Bill".

Paragraph 1.18 of the report 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 1.27 of the report states:

"The Government rely— incidentally, the Government still rely on this. A copy of a letter arrived on my desk this morning dated 4 April

"on the fact that when making disclosures of confidential information, HMRC will still 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 by . . . ('the Newton Report') in the context of that Act's provision for public bodies to disclose information to assist criminal investigations or proceedings, or to the intelligence and security agencies—

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 of the report 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 1.32 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".

Paragraph 1.33 states:

"The Bill also makes no provision for independent external oversight of the disclosure regime".

That is not relevant to the use regime with which I am concerned.

That advice was confirmed very shortly by four references to the second report. Paragraph 1.7 of the 13th report of the Joint Committee on Human Rights states:

"We remain concerned, however"— a letter dated 10 February had been received which still maintained the attitude which the noble and learned Lord the Attorney-General maintains to this day—

"at the breadth of the discretion to share information internally as it is currently drafted in this Bill. The Bill provides that 'information acquired by the Revenue and Customs in connection with a function may be used by them in connection with any other function' . . . There are no statutory criteria to guide decisions about when information obtained for [one] purpose can be used for another, merely a very broad enabling provision appearing to make such use lawful".

Paragraph 1.8 of the 13th report of the Joint Committee on Human Rights states:

"Our main concern in this respect is to ensure that the legal framework, as set out in primary legislation, does not confer overbroad discretions to interfere with private life . . . In our view, such powers to share information internally should contain on their face the criteria to guide decisions as to whether the use of information obtained for one purpose can be used for another".

Having read that, you can see that in fact the drafting of the amendment intends to reflect the advice of the Joint Committee on Human Rights. It is that advice on which I rely and not on any interpretation that I seek to put on it.

One final factor is relevant. Although the culture of Revenue matters is wholly disparate from that of the practices of the Customs and Excise, the HMRC to whom Revenue matters are to be preferred will now have a merged prosecution service. I see certain noble Lords here with experience of such affairs who have expressed certain anxieties about that during the passage of the Bill. What it comes to is quite simple. Is not the question whether protection of the taxpayer, advised to be a requisite by the Joint Committee on Human Rights and as reflected in the amendment, is fair and reasonable? I beg to move.

Photo of The Earl of Northesk The Earl of Northesk Conservative 8:00 pm, 5th April 2005

My Lords, I rise to support the amendment proposed by my noble friend. Throughout our scrutiny of the Bill, he has been consistent in arguing the case for the principles of prior authorisation for and pre-assessment of the criteria to be applied to disclosure of taxpayer information. In so doing, he has sought to put in the Bill the legitimate concerns expressed by the Joint Committee on Human Rights, of which he is such a distinguished member.

Indeed, it is salutary to reflect that notwithstanding the frequency of the correspondence between the Paymaster General and its chairman, the JCHR remains of the opinion that in the interests of transparency, certainty and "foreseeability" some element of provision in this respect should appear in the Bill.

It is to the credit of my noble friend that at this late stage of the Bill he has moderated the terms of his amendment even though, as I understand it, the JCHR continued to favour a provision that would afford a measure of judicial oversight. Despite that, my noble friend has drafted a more limited and modest amendment that only requires regulations that,

"make provision as to criteria for pre-disclosure . . . of . . . sensitive confidential information obtained from the taxpayer".

Equally, I am well aware that the actions and operations of HMRC in respect of the disclosure regime will have to be compliant with both the Human Rights Act and the Data Protection Act. That is not, and never has been, the point at issue. Like the JCHR, I believe that there are voluble justifications, not least—and I hope that the noble and learned Lord the Attorney-General would agree—the importance of confidentiality to the integrity of the tax base in affording taxpayers degrees of certainty about the disclosure regime by ensuring that appropriate protections of their interests appear in the Bill. I support the amendment.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, just before I address the substance of the comments made by the noble Lord, I want to clarify one aspect of the information-sharing provisions in the Bill, which it would be useful to put on the record. The noble Lord referred to the Revenue and Customs Prosecution Office. Information from that office may be disclosed to HM Revenue and Customs under Clause 41(2)(b) for the purposes of any of HMRC's functions.

I am grateful for the explanation of the substance of the amendment and of what the noble Lord seeks to achieve. I understand his intention, but in any event I have some technical problems with the amendment, even before one comes to the intention. The amendment does not require regulations to be made before information may be used by HMRC. It does not connect with the other provisions in the Bill, so it would appear that the provision could simply rest on the statute book while HMRC properly carried out its functions and used information for a variety of purposes in accordance with the law, as is done at the moment.

If Parliament were minded to make regulations, there would remain something of a conundrum in discerning what they ought to address. The issues that Parliament is charged with addressing in the regulations are not clear in the draft. I see that the noble Lord proposes that:

"Regulations shall make provision as to . . . prior authorisation", but I respectfully suggest that it is unsatisfactory to state that without being clear about the detail that Parliament wants to be provided. The amendment does not say who should provide that authorisation or whether it is intended to apply in relation to all cases, or give criteria to identify in which cases it should apply. Although I respect what the noble Lord has in mind, it does not seem a satisfactory way of leaving matters at this stage in a Bill.

I have the same problem with the proposal that:

"Regulations shall make provision as to . . . external oversight", because, in that, Parliament is not saying what sort of external oversight it has in mind, particularly given what has been said already on record about the external oversight that takes place. If we passed the amendment, we would be leaving it apparently entirely open either for the executive to make regulations that in some way touched on the requirements mentioned but without any detail, or—this worries me even more—to leave the debate on what Parliament had in mind for another day when the regulations came back. We would have the debate all over again.

I also have to say, again with great respect to the noble Lord, that he introduced the amendment on the basis that he was concerned with the use provision in Clause 17, not the disclosure of confidential information under Clause 18. However, the passages to which he particularly drew attention from the report of the Joint Committee on Human Rights were related to the provision on disclosure of confidential information rather than to the use provision.

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative 8:15 pm, 5th April 2005

My Lords, with great respect to the noble and learned Lord, the passages to which I referred are strictly related to Clause 17(1), not to Clause 18. I do not want to argue with him if he wants to take another view. If he reads the passages again, he will understand.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I do not say that in any sense to be disagreeable, but I noted the way that the noble Lord put it. I have an important point of substance that I hope that he will accept. Paragraph 1.22 in the most recent report states in terms:

"We asked the Minister to give consideration to three specific types of stronger safeguard"—

I understand those to be the safeguards in the amendment

"which in our view would make it more likely in practice that disclosures of confidential information under the Bill's provisions are compatible with Article 8 ECHR".

That is concerned with the disclosure of confidential information. It is under the section of the report that deals with disclosure. The section of the report that deals with use—the noble Lord read it out, but it is not the part that picks up the three safeguards to which he drew attention—states at paragraph 1.6 that the committee,

"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".

It is absolutely right to point out that the committee goes on to say two things. The first is that it remains concerned at the breadth of the discretion in Clause 17(1)—the noble Lord drew attention to that. Secondly, it states in paragraph 1.8 that:

"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 which includes consideration of its necessity".

I read that out simply for these purposes and I noted the way that the noble Lord phrased the amendment. Particularly at this stage, in the Third Reading of the Bill, which we hope will soon become law—and we all support that—there should be no misunderstanding of the amendment. I remain in some doubt. It is not a doubt of principle, it is a doubt as to whether or not the noble Lord has, in saying that he is only concerned with use, picked up what the Joint Human Rights Committee says.

The point of substance, to which I draw warmly and respectfully his attention, is that amendments have been made as a result of the debate which has taken place, including the discussions that we have had in Grand Committee and on Report, which have put further safeguards in the Bill. The disclosure in the public interest, which, importantly, takes the matter outside the functions of Revenue and Customs, will now describe, if the House approves the amendment which I plan to move in a few moments, the types of disclosure that may be made. Importantly, it will include statements of the criteria—for example, in Amendment No. 13, if,

"the disclosure is made for the purposes of the prevention or detection of crime", or the disclosure is made,

"to a person exercising public functions in relation to public safety or public health".

The reason for drawing attention to the fact that, in the view of the Joint Committee, this matter is concerned with the disclosure of confidential information is that I have been trying to assure the noble Lord that the amendments that we are making regarding confidentiality touch on his concerns.

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I shall not take the advantage, because the noble and learned Lord has, yet again—not wilfully—totally misinterpreted and misunderstood the principle behind this matter and the comments of the committee. I shall say no more.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I was not pressing the noble Lord to intervene if he had not wished to. I emphasise that I have listened carefully to noble Lords' concerns, as I have throughout the passage of the Bill. We have gone a long way to meet the concerns that have been expressed in relation to confidentiality in a number of ways.

I wish to make a final and important point of substance. We do not differ in principle about the importance of imposing safeguards by law as to the way that information may be used. The difference between us, which I have some difficulty in understanding, is that we say on the on the face of the Bill that the Data Protection Act applies. That carries with it important statutory obligations. It carries with it the obligation that the principle of fairness shall apply in the use of information under the Data Protection Act. It carries with it the obligation to comply with the obligations of necessity. We do not say on the on the face of the Bill that the Human Rights Act applies, because, of course, it does. That is common ground between us. Actually, in a sense, we do say in the Bill that the Act applies, because I have signed a certificate saying that the Act, in my opinion, is compatible.

We do not have any disagreement that the Human Rights Act imports a requirement by law that the type of sensitive and confidential information with which the noble Lord is concerned may be an intrusion on privacy only if it is justified in accordance with Article 8(2). That means that it must be proportionate and for one of the limited purposes.

My real point is that, given that the law requires the Data Protection Act principles of necessity and fairness and the Human Rights Act principle of proportionality for limited purposes, and given that we have gone even further on the face of the Bill with public interest disclosure, are we not doing enough to say on the face of the Bill how information may be used? Perhaps I may respectfully suggest that the noble Lord has more than fulfilled the task that he set himself of drawing to the attention of this House the observations of the Joint Human Rights Committee.

We believe that we are achieving what is needed in order to safeguard taxpayer confidentiality in the use of the information. We believe that that is done in the way that the Bill presently provides and that there are—this is why I drew attention to it—difficulties with the noble Lord's amendment. I entirely take the point made by the noble Earl, Lord Northesk, that the noble Lord, Lord Campbell of Alloway, sought to deal with other difficulties in the way that he put the amendment forward, but it still does not meet the objective.

Therefore, in what I hope is a spirit of acceptance of the noble Lord's intentions, reassurance to the noble Lord about what we have been seeking to do and, in particular, reassurance that we agree with him, as I have agreed with all noble Lords from the very start, about the importance of the use of this information by HMRC, I hope that he will not feel it necessary to press his amendment.

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I do not want to take too much time over technical problems. This amendment is put forward for acceptance in principle. The principle is that, according to the requirements of the convention, a trigger clause is needed to introduce secondary legislation. I know that the noble and learned Lord does not agree with that for one moment and that he never has and never will, but that is the advice of the Joint Committee on Human Rights.

Therefore, there is not much object in picking at the form of the amendment, which in fact reflects the advice of the Joint Committee on Human Rights. It is not supposed to predicate or pre-empt the precise form of the regulation because that is a matter for the affirmation of Parliament. So, inevitably, if you look for a trigger clause, you do not find the detail, and there is none.

As for the principle, which is the main matter of contention between us, the point is simply that it is as plain as a pikestaff from the reports of the Joint Committee on Human Rights that the approach of the noble and learned Lord the Attorney-General to having these safeguards in the Bill is an issue and that this amendment resolves that issue in accordance with the recommendations of the committee. In those circumstances, I have no alternative but to test the opinion of the House.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 43; Not-Contents, 90.

Division number 1 Private Parking: Ports and Trading Estates — Commissioners for Revenue and Customs Bill

Aye: 41 Members of the House of Lords

No: 88 Members of the House of Lords

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I believe that government Amendments Nos. 6, 7, 9 to 13 and 20 achieve what the noble Earl, Lord Northesk, and the noble Baroness, Lady Noakes, seek. They also improve on their amendments in a number of ways. For those reasons I shall resist Amendments Nos. 8 and 14 to 19.

The group of amendments, Amendments Nos. 8 and 14 to 19, put forward by the noble Earl and the noble Baroness propose to freeze the draft regulations in their first exposed form and to write them into the Bill as the first description of public interest disclosures for HMRC.

Throughout the passage of the Bill, both here and in the other place, there has been a great deal of debate on the safeguards surrounding public interest disclosures in terms of how they are made, in what circumstances and under which controls.

Nothing in Clause 20 will override the requirements of the ECHR. There is also a need to strike the right balance between the effective operation of public interest disclosure provisions for HMRC with the ability for full and proper parliamentary scrutiny of that process. I recognise the clear preference of noble Lords for a solution that places what would have been contained in the initial set of regulations in the Bill and I advise noble Lords that I am now prepared to move a considerable way towards accommodating that clear wish.

The most important question that I have faced is whether placing the provisions in the Bill would compromise operational imperatives. I am satisfied that it would not. I have also taken on board the view of the Joint Committee on Human Rights that there should be greater transparency by including the regulations in the Bill—a point pressed by the noble Earl both, if I may put it this way, as litigant in person and, earlier, when he had counsel in Grand Committee.

However, the noble Earl's amendments tabled on Report threw up some technical problems. In some cases, they would freeze in the Bill the text of the regulations as they were at a draft stage. So I have tabled a similar amendment faithful to the principle of what the noble Earl, Lord Northesk, and the noble Baroness, Lady Noakes, want to achieve, but which addresses the technical points and makes the legislation workable.

Perhaps I may put on record a point of clarification regarding terminology used in the text of Amendment No. 13:

"an international or other agreement of the United Kingdom or Her Majesty's Government", covers both formal international treaties and memoranda of understanding entered into by or on behalf of Her Majesty's Commissioners for Revenue and Customs with public authorities abroad for the purposes of securing the due administration of their respective customs laws.

Amendments Nos. 6 and 7, 9 to 13 and 20 improve on the amendments of the noble Earl and noble Baroness, in that they provide for the regulations to be placed in the Bill while also providing for the most appropriate regulation-making power. So the text of the public interest disclosure regulations will be put on the face of the Bill; a regulation-making power will be introduced which does not confer a Henry VIII power on the Treasury. We debated that last time. Any future regulations will be tightly drawn in terms of the description of public interest being narrowed to specific circumstances—crime, national security, health and safety. In that way, I believe that we have made it all the clearer that there is no case for the super-affirmative procedure.

In the circumstances, I invite agreement with the Select Committee on Delegated Powers and Regulatory Reform that the normal affirmative procedure is the right way to proceed here. The government amendments mean that we can dispense with the accelerated affirmative procedure for the first set of regulations. That conforms with the noble Earl's amendment on Report. We have corrected the issue of the offence of wrongful disclosure by making that apply where there is onward disclosure without the commissioner's consent.

I hope that that sufficiently meets the concerns raised. I am grateful for our discussions on the matter. Now that I have tabled these amendments and said what I have on the record, I hope that we can reach a consensus on the government amendments without need for other amendments to be pressed.

Photo of The Earl of Northesk The Earl of Northesk Conservative

My Lords, once again, I express my thanks to the noble and learned Lord the Attorney-General. I am entirely satisfied that my amendments in this group are an inferior version of the Government's intention to place the draft regulations in the Bill, so I do not intend to move them. That being so, I have no hesitation in supporting and commending the amendment so eloquently moved by the noble and learned Lord. I should have preferred it if he could have added a little more information about some of the administrative procedures that the Government have in mind for HMRC, but I shall not pursue that issue too vigorously, bearing in mind the lateness of our proceedings. I merely repeat that I am extremely grateful to the noble and learned Lord.

On Question, amendment agreed to.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

moved Amendment No. 7:

Page 10, line 9, after "18(1)" insert "or 20(9)"

On Question, amendment agreed to.

Clause 20 [Public interest disclosure]:

[Amendment No. 8 not moved.]

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

moved Amendments Nos. 9 to 13:

Page 10, line 13, leave out "made"

Page 10, line 14, at beginning insert "it is made"

Page 10, line 15, leave out "and"

Page 10, line 16, leave out paragraph (b) and insert—

"(b) it is of a kind—

(i) to which any of subsections (2) to (7) applies, or

(ii) specified in regulations made by the Treasury, and

(c) the Commissioners are satisfied that it is in the public interest."

Page 10, line 17, leave out subsections (2) to (8) and insert—

"(2) This subsection applies to a disclosure made—

(a) to a person exercising public functions (whether or not within the United Kingdom),

(b) for the purposes of the prevention or detection of crime, and

(c) in order to comply with an obligation of the United Kingdom, or Her Majesty's Government, under an international or other agreement relating to the movement of persons, goods or services.

(3) This subsection applies to a disclosure if—

(a) it is made to a body which has responsibility for the regulation of a profession,

(b) it relates to misconduct on the part of a member of the profession, and

(c) the misconduct relates to a function of the Revenue and Customs.

(4) This subsection applies to a disclosure if—

(a) it is made to a constable, and

(b) either—

(i) the constable is exercising functions which relate to the movement of persons or goods into or out of the United Kingdom, or

(ii) the disclosure is made for the purposes of the prevention or detection of crime.

(5) This subsection applies to a disclosure if it is made—

(a) to the National Criminal Intelligence Service, and

(b) for a purpose connected with its functions under section 2(2) of the Police Act 1997 (c. 50) (criminal intelligence).

(6) This subsection applies to a disclosure if it is made—

(a) to a person exercising public functions in relation to public safety or public health, and

(b) for the purposes of those functions.

(7) This subsection applies to a disclosure if it—

(a) is made to the Police Information Technology Organisation for the purpose of enabling information to be entered in a computerised database, and

(b) relates to—

(i) a person suspected of an offence,

(ii) a person arrested for an offence,

(iii) the results of an investigation, or

(iv) anything seized.

(8) Regulations under subsection (1)(b)(ii)—

(a) may specify a kind of disclosure only if the Treasury are satisfied that it relates to—

(i) national security,

(ii) public safety,

(iii) public health, or

(iv) the prevention or detection of crime;

(b) may make provision limiting or restricting the disclosures that may be made in reliance on the regulations; and that provision may, in particular, operate by reference to—

(i) the nature of information,

(ii) the person or class of person to whom the disclosure is made,

(iii) the person or class of person by whom the disclosure is made,

(iv) any other factor, or

(v) a combination of factors;

(c) shall be made by statutory instrument;

(d) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(9) Information disclosed in reliance on this section may not be further disclosed without the consent of the Commissioners (which may be general or specific); (but the Commissioners shall be taken to have consented to further disclosure by use of the computerised database of information disclosed by virtue of subsection (7))."

On Question, amendments agreed to.

[Amendments Nos. 14 to 19 not moved.]

Clause 21 [Procedure for orders under Section 20]:

Photo of The Earl of Northesk The Earl of Northesk Conservative

moved Amendment No. 21:

After Clause 23, insert the following new clause—

"INFORMATION COMMISSIONER

(1) The Information Commissioner shall keep under review the exercise and performance of the powers and duties conferred or imposed by or under sections 17 to 24 by the persons on whom they are conferred or imposed.

(2) It shall be the duty of those persons on whom powers and duties are conferred or imposed by or under sections 17 to 24 to provide the Information Commissioner with all such information as he may require for carrying out of his duties as mentioned in subsection (1).

(3) The Treasury, after consultation with the Information Commissioner, shall provide the Commissioner with such resources as are necessary for the discharge of his duties under this section.

(4) After the first full year of operation of Her Majesty's Revenue and Customs, and as he feels necessary thereafter, the Information Commissioner must lay before Parliament a report about the carrying out of his duties under subsection (1)."

Photo of The Earl of Northesk The Earl of Northesk Conservative

My Lords, your Lordships will have noted that I have softened my original stance on this issue. Whereas previously I sought an obligation on the Information Commissioner to make an annual report on the operation of HMRC's disclosure regime, I have re-drafted the new clause to confine it to a report on the first full year of operation.

As I have already made clear, I am only too well aware that the Data Protection Act grants an appropriate power to the Information Commissioner to conduct a review should he deem it necessary. Indeed, as revealed by the letter from the Paymaster General to the chairman of the JCHR, that continues to form the substance of the justification given by the noble and learned Lord the Attorney-General for resisting the amendment. Like the JCHR, I hold to the view that, given the importance of taxpayer confidentiality to the integrity of the tax base, it is appropriate that a report on the first full year of HMRC's operation should be obligatory rather than discretionary.

A further motivation for the new clause is the way in which the role and functions of the Information Commissioner have expanded in recent years. Inevitably, exercise of the discretionary power under the DPA to report on HMRC will be subject to any resource and budgetary constraints that that increased—and increasing—workload places on the Information Commissioner. Accordingly, reliance on that route to proper oversight has about it the character of willing the ends but not the means. That being so the new clause addresses that at proposed new subsection (3) by requiring that adequate resources be made available. I beg to move.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, we have discussed these issues in Grand Committee. As the noble Earl knows, I remain unconvinced of the need to add further to the Bill in this area, but I will say something more on the record, which I hope will give him comfort.

External scrutiny of the department and its processes already exists. As the noble Earl knows, I believe that the scrutiny is robust and adequate to the task. The department will be subject to investigation by the Adjudicator, the Parliamentary Ombudsman, the National Audit Office, the Public Accounts Committee, the Treasury Committee in another place, the courts and, of course, the Information Commissioner, who has extensive investigative and reporting powers.

There will also be external scrutiny of the conduct of HMRC officers by the Independent Police Complaints Commission and Her Majesty's Inspectorate of Constabulary. Although some of those bodies scrutinise only complaints from members of the public, the National Audit Office, the Public Accounts Committee, the Treasury Committee and the Information Commissioner can investigate simply because they choose to do so, even where no particular complaint has been made.

The Information Commissioner already has a good relationship with the departments; I drew attention to that previously. I re-emphasise just one point: he has never reported that either department has misused the information that it holds.

Those are the reasons for not wanting to go further in the Bill, but I can go a step further in meeting the concerns raised by the noble Earl. The arrangements for delegation that will apply to HMRC will enable a single commissioner to take on the important role of co-ordinating, checking and ensuring compliance with the Data Protection Act. That will provide, as I have indicated in correspondence, a clear nominated contact who will be responsible for dealing with the Information Commissioner on relevant matters. It will ensure that the Information Commissioner, in turn, has a direct route through to HMRC at the highest level, should he need to raise matters with it. So, they should be able in that way to discuss any developments or concerns with a knowledgeable individual with the ability to make quick decisions and act with authority.

I am sure also that the debate that has taken place here will not escape the attention of the Information Commissioner, who has the power to take such steps as he thinks appropriate, having regard to the circumstances. Although I cannot, on this occasion, go as far as the noble Earl would like, I hope that the identification of a nominated commissioner will reassure him that the new department will continue to take its obligations seriously, every bit as seriously as its predecessor departments have done. I hope that the noble Earl will accept that, together with the scrutiny in the legal and administrative safeguards that will apply to HMRC which I have identified, that is an appropriate framework and will not, as, I think, he indicated, press his amendment.

Photo of The Earl of Northesk The Earl of Northesk Conservative

My Lords, I thank the noble and learned Lord the Attorney-General for his response and, in particular, for the reassurances that he offered.

There was one point in particular that I had hoped he would address from the Dispatch Box: recognition by the Government that it would be beyond credibility for the Information Commissioner not to seek an early review of the operation of HMRC. The noble and learned Lord gave us that suspicion, which was extraordinarily helpful. I also drew great comfort from what was said about the principle of having a nominated commissioner to deal with compliance with the HRA and the DPA.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I do not want the noble Earl to get a false impression in any way. It will be for the Information Commissioner to decide whether he needs to undertake some particular form of review. I have indicated that the procedures are in place for him to talk to a nominated commissioner, so that he can form that view for himself. I would not like to be taken as having offered any assurance that that is what he will do. The Information Commissioner is—rightly—his own man.

Photo of The Earl of Northesk The Earl of Northesk Conservative

My Lords, I take that point absolutely. The point that I was cack-handedly trying to convey was that it is the expectation of all of us that the Information Commissioner in his independent capacity will do so. It would be beyond credibility for him not to want to take a look at the first year or two of the operation of HMRC. I may have expressed it rather cack-handedly, but I did not infer that in any sense the noble and learned Lord was giving a cast-iron guarantee that he spoke on behalf of the Information Commissioner. I understand that point.

I hope that I am not repeating myself if I say that I was also grateful to hear the noble and learned Lord espouse the principle that there should be a nominated commissioner for HRA and DPA compliance. That is extremely useful and offers me great comfort.

I thank the noble and learned Lord for the reassurances that he has given. In the circumstances, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

moved Amendment No. 22:

After Clause 50, 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 (referred to in this section as "the assessor") to report on the matters set out in subsection (2).

(2) A report under subsection (1) shall deal with the creation of Her Majesty's Revenue and Customs from the Commissioners of Inland Revenue and the Commissioners of Customs and Excise (referred to in this section as "the integration") and shall include any matters considered by the assessor to be relevant to an assessment of the integration in terms of its costs, its benefits and its impact on taxpayers.

(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 integration;

(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 not be required to deal with any matter which the assessor believes has been adequately dealt with in any document which has been issued by Her Majesty's Revenue and Customs and which is publicly available.

(5) 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.

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

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, I am sure that the House will be glad that we have reached the last amendment at Third Reading. We debated different versions of the amendment in Grand Committee and on Report. On Report, the noble and learned Lord made some important statements in response to the issues raised by the amendment, which seeks a report on the integration of HMRC. In particular, we welcomed what the noble and learned Lord said on Report about the reports that would be made by HMRC in the first year or so of its operation.

The amendment before us today is different in two important respects from the one that we debated earlier. First, we have eliminated the reference to the Revenue and Customs Prosecutions Office that upset the noble and learned Lord on Report. I did not wish to upset him, so I removed the reference from this amendment. I am sure that the performance of the RCPO should be kept under review, but I am equally sure that another mechanism should be found.

The second respect in which the amendment differs is that it is drafted now to sweep up those matters that are not dealt with in other public documents. We believe that what the Minister said on Report about the content of the early reports by HMRC will go a long way towards meeting our concerns. But those reports may not adequately deal with all of the issues that are relevant to an assessment of the integration in terms of its costs, its benefits and its impact on taxpayers.

I have been particularly concerned that the reports will run out after about 18 months. Some of the issues that are relevant to how well the integration has worked will not become clear very early. In particular, the impact on tax yield would not be clear for some time, nor, almost certainly, would the impact on taxpayers, given the rather incremental approach to the way in which the operations of HMRC will change.

The noble and learned Lord may say, as he said on Report, that as time goes on the impact of the integration will be mixed up in some ways with other measures. I accept that, but it seems to me that it is a basic principle of good management that procedures should be put in place to differentiate the impact of different policies. If they are all to be muddled together, after a year or so no policy could ever be evaluated on an ex post basis. It is a principle of good government that policies are capable of being evaluated on an ex post basis.

That is particularly the case with the creation of HMRC. We have argued throughout the Bill that the policy was not well justified at the outset. We did not oppose the policy, but we made the point that the costs of integration were not well explained, the risks were not well identified and, in particular, the benefits in terms of increased yield were barely mentioned, let alone quantified.

So our concerns are that proper information is put routinely into the public domain, in particular after the first year, which is where the real test of the impact of integration can be determined. The amendment—because it focuses only on information that is not otherwise publicly available—could result in absolutely no additional information being put in the public domain. That would be splendid because it would mean that HMRC was doing a splendid job in being open and transparent about the effect of the integration. But just in case it does not do so, I beg to move.

Photo of Lord Newby Lord Newby Spokesperson in the Lords, Treasury

My Lords, first, I apologise to the House for being unavoidably detained elsewhere at the start of this debate. I should like to begin by echoing the comments made by my noble friend Lord Thomas of Gresford. We thank the noble and learned Lord and the Bill team for responding in such a positive manner to the amendments that were carried at an earlier stage. As a result, it is a better Bill.

As regards this amendment, we support the attempts made by the noble Baroness to obtain a satisfactory review of the progress of the merger, given its importance and the importance attached to it by the Government and external observers. We support the efforts that the noble Baroness has made to achieve that.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I thank the noble Lord, Lord Newby, for his contribution to the debate. We entirely understand that he was unable to be present earlier; I understand that it was nothing to do with the events of this morning.

I want briefly to respond to the noble Baroness, who I think knows my principal objection to what has been described at one stage as a risk of "reportitis". I want to put on record a further elaboration of what I said on Report about the commitment to cover aspects of the performance of the new department in the annual and spring reports. I am happy to confirm that there will be continuing reports on HMRC's performance on the key areas of yield, on reducing the compliance gap and the impact on taxpayers. These are the very items which are covered in HMRC's public service agreement targets.

In addition, a special chapter in the annual and spring reports will report on specific post-implementation issues. I said previously that this would cover 2005–06. I can commit to it being carried forward at least into 2007 as well, which is an increase on what was first said. However, I emphasise again the words, "and, where appropriate, subsequently". This will provide for progress made in the medium term as well as more immediate early progress following the creation of the new department.

I remain in a different place from the noble Baroness when it comes to considering at what point it will no longer be productive to try to separate out particular aspects of performance from the overall performance of the department, but we do not need to determine that debate now. It will be for the Commissioners as they go forward, bearing in mind what has been said in this debate, and what will be said no doubt in this House, in another place or in Select Committees as they look at the early reports, to consider the need for continuing reports to be brought forward. The Commissioners will decide how best to organise and set out their annual and spring reports, and I believe that a point will come when the concept of special chapters is no longer relevant. But perhaps we cannot predict precisely when that will be.

I conclude by congratulating the noble Baroness and the noble Lord, Lord Newby, on the determination with which they have pursued this point, which resulted in a very careful consideration by the department of an appropriate reporting mechanism and the development of ideas for the reports. They will improve on the overall structure for what we have in mind. I think that we can all be satisfied that this now represents a full scheme of reporting to Parliament over the next few years, and perhaps beyond, of this extremely important department on its very important work for the British economy and the British public.

On that basis, I hope that this final amendment will not be pressed.

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, I am grateful to the noble and learned Lord for what he has said in response to the amendment. Of course, noble Lords on these Benches always want the whole loaf, but I think that this time we have been offered a little more than half a loaf, so I consider myself more than satisfied. He can rest assured that I shall be an eager reader of the annual, spring and autumn reports of HMRC. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Goldsmith Lord Goldsmith Attorney General, Law Officers' Department, Attorney General (Law Officers)

My Lords, I beg to move that this Bill do now pass. In doing so, given the hour, I want to say simply that I repeat my thanks to all noble Lords who have taken part in the consideration of this Bill. I have enjoyed my limited excursion into these matters, although it was not what I had anticipated when I first set out to take on the Bill. However, I believe that we send it back to another place with a number of improvements. I thank all those who have enabled that to take place, including the Bill team which, as the noble Baroness and others have said, has worked extremely hard to meet the concerns in a way that satisfies operational requirements.

Moved, That the Bill do now pass.—(Lord Goldsmith.)

Photo of Baroness Noakes Baroness Noakes Spokespersons In the Lords, Work & Pensions and Welfare Reform

My Lords, I rise only to echo what the Minister has said. We welcome him to address Treasury matters on any future occasion.

On Question, Bill passed, and returned to the Commons with amendments.