European Union (Withdrawal) Bill - Report (3rd Day)

Part of the debate – in the House of Lords at 8:15 pm on 25th April 2018.

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Photo of Baroness Goldie Baroness Goldie Lord in Waiting (HM Household) (Whip), Baroness in Waiting (HM Household) (Whip) 8:15 pm, 25th April 2018

I am reluctant to disappoint my noble friend, but that is all germane to the negotiations and I have no more information I can add at this point. I want to make progress with the rest of the amendments in this group, which cover a range of aspects on the important issues of imposing or increasing taxation. With regard to the second half of the group, I note that the position of the Government and that of the noble Lords who proposed them are much closer to each other than they were, and I hope that we may have reached a point at which we could agree to disagree.

In responding to Amendment 73, tabled by the noble Lords, Lord Hannay and Lord Cormack, and the noble Baronesses, Lady Kramer and Lady Hayter, I wish first to point to the Government’s amendments that we shall consider later on Report. I shall not pre-empt that debate, but I wish to make clear that the Government and noble Lords are not so very far apart. The Government have heard the concerns raised in Parliament and recognise the significance of the question of how Parliament approves fees and charges on the public. Indeed, this has been a question of great historic importance in the development of this institution and of the relationship between this House and the other place.

The Government agree that delegated powers, particularly in this sensitive area, should be subject to close scrutiny by Parliament. The Bill as introduced provided that any statutory instruments made under the powers in Schedule 4 which established a new fee or charge regime, or which sub-delegated this power, had to be subject to the affirmative procedure. In other cases, Ministers held discretion to choose between the affirmative and negative procedures as appropriate. I understand, however, that noble Lords considered that was not a satisfactory position, so the Government have reflected further.

The balance we have sought to ensure is that there is a level of scrutiny of the exercise of the powers in this Bill which satisfies the needs of Parliament without unduly expending limited parliamentary time on a great morass of minor instruments better suited to the negative procedure. We are therefore proposing amendments that require all SIs under Schedule 4 to be subject to the affirmative procedure unless they are adjusting fees or charges to account for inflation. This will ensure that where the Government wish to lower a charge, restructure a fee from daily to hourly, or increase a fee to reflect a change in how it is provided, that must be debated and voted upon by both Houses. Despite this, the Government believe that allowing inflation-related adjustments to be subject to the negative procedure is proportionate. Such a measure reflects no change in policy, or in how a service is provided, but simply reflects developments outside this place and changes in what we have termed “the value of money”. Even this, if appropriate, could be brought before your Lordships’ House for a debate and a vote. I hope noble Lords will accept this as addressing their concerns and will not press these amendments.

On Amendment 104, tabled by the same noble Lords, we are, I fear, slightly further apart, but let me take this opportunity to seek to reassure noble Lords that Schedule 4 is assuredly not a power to raise general taxation. It is a power to provide for fees and charges. I am afraid I must disagree with some noble Lords—including, unusually, even the Delegated Powers and Regulatory Reform Committee—about some previous provisions on this matter, such as Section 56 of the Finance Act 1973. That provision allows for the raising of “charges” for functions relating to the EU.

The committee said in its latest report:

“there is a big difference between charging for a service and taxing people for the use of a service”,

and that Section 56 of the Finance Act 1973,

“does not allow for taxation, and was never intended to do so, lest it rendered nugatory the prohibition against taxation by statutory instrument contained in the European Communities Act 1972”.

But I am afraid that although Section 2 of the European Communities Act expressly forbids taxation, Section 56 of the Finance Act 1973, which permits the creation of fees “and other charges” does allow for taxation. An element of taxation is the distinguishing feature of a “charge” that differentiates it from a fee. Indeed it is precisely for that reason that the ability to make charges sits in the Finance Act 1973 and not in the European Communities Act.

As your Lordships will be aware—the noble Lord, Lord Kerr of Kinlochard, referred to this—Finance Acts are how the House of Commons regularly provides for taxation, and in the case of Section 56 of the Finance Act 1973, that included any elements of taxation contained in charging regimes made under that power. These elements are, in many cases, outside the everyday sense of “tax”, and are often very minor. For example, a charge requiring people to pay for a body’s enforcement costs or to pay levies for participating in a regulated market is, under the long-established definition set out in Managing Public Money, at least in part a tax.

Without an element of taxation in some of the charging regimes planned under this Bill the charging regime could not be established, and the costs of specialist services described previously would fall on the public purse. Nor could we continue to adjust under the Bill the charging regimes created under Section 56 of the Finance Act 1973 after exit. However, it is important to say that any new fees or charges established under the Bill cannot extend beyond charging or raising fees in relation to a function that a public authority has been granted under the Bill. They therefore cannot be general taxes on the public, or even on a subset of the public. In the light of these observations, I hope that noble Lords will feel able not to press their amendments, and that my noble friend Lady McIntosh will feel able not to press her Amendment 47.