(Except clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and schedules 1, 5 and 38) - Clause 132 - Mandatory e-filing

Finance Bill – in a Public Bill Committee at 4:30 pm on 25th June 2002.

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Amendment proposed [this day]: No. 227, in page 104, line 7, leave out 'requiring' and insert 'permitting'.—[Mr. Bercow.]

Question again proposed, That the amendment be made.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

I remind the Committee that with this we are taking the following amendments: No. 228, in page 104, line 38, leave out 'or requirement'.

No. 229, in page 104, line 41, leave out 'or requirement'.

No. 254, in page 105, line 9, leave out 'required' and insert 'permitted'.

No. 231, in page 105, line 20, leave out subsection (7).

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I was speaking to the group of amendments and I had started to make a detailed response to amendment No. 231. To recap, amendment No. 231 would mean that the regulations made under the clause could not provide for a penalty to be charged where an employer did not comply with the requirement to send their return electronically. The regulations made under these powers will require employers to send certain returns electronically and require those returns to meet the quality thresholds. Earlier, we discussed quality thresholds that are providing for the information that legislation, and the Inland Revenue, require to comply with the pay-as-you-earn regulations.

Regulations cannot be effective without some form of sanction for those who fail to comply. That is the experience of this Government and Treasury Ministers; the Conservative Government reached the same conclusion. Employers have the choice of sending their returns electronically themselves or using an intermediary, such as a payroll bureau, so no-one should have to pay a penalty. As I said this morning, we are paying a fee to encourage employers to make that transition.

Where a non-electronic or substandard return is submitted, the clause will allow the Inland Revenue to provide in the regulations either to treat the return as not made or to charge a fixed penalty. The amount of any fixed penalty will be linked to the employer's size, which is normal procedure. The clause sets an upper limit of £3,000 for penalties and, in line with normal practice, only the most serious failures would attract

the maximum penalty. The actual amounts of the penalty for each category of employer size will be specified in the regulations; the practice is well known.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

The Paymaster General is seeking to justify the regulations, but to many of us it seems that the regulations in their proposed form, if they are to reflect the terms of the clause, will represent a triumph of Sir Humphrey at his most zealous. Perhaps I am being a trifle cynical, but can the hon. Lady tell me, as an earnest of good intentions and of her understanding of what is likely to follow, how we are to interpret in subsection (3) the words

''provision for the application of conclusive or other presumptions''?

What does it all mean?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

It means the same as is already operational in the tax system and the same requirements that are applied now with regard to the obligations of employers to make PAYE returns. I understand that the hon. Gentleman may be a little cynical, but I cannot understand why it is something that the Committee should consider in a cynical vein when the Government provide for a direct payment to encourage employers in a matter that employers have identified as having high compliance costs, and are prepared to invest in payment to assist the employer to make those returns electronically.

The clause provides for the same provisions to apply for electronic transmission as for the current paper submissions that can be made by employers. That goes to the heart of the hon. Gentleman's points. He wants employers to be able to choose whether to file electronically for PAYE, whereas the Government wish all employers to do so, after a period of time and investment. To remove the penalties would render the clause useless—which is the hon. Gentleman's intention in moving the amendment. The Government reject it and ask the Committee to do so. Our objective is to move to electronic filing by 2010. It is staggering that in this day and age, with the speed of developments in e-commerce, members of a Committee of the House would declare that they do not wish to assist employers to move to electronic filing or provide the investment necessary to achieve that.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

In this day and age, when faster and better methods of communication exist, the Opposition wish to stick to paper—and presumably, if they could, to the pony express.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

In a moment.

I ask members of the Committee to reject the amendment.

Photo of Peter Luff Peter Luff Opposition Whip (Commons)

The hon. Lady does not understand that although legislation that assists employers to achieve honourable objectives that the Government wish them to embrace is welcome, legislation that compels them to do so is not. There is a world of difference between

those two concepts. Cannot the Minister understand that simple point?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The hon. Gentleman fails to understand that the Opposition parties wish us to maintain a system—simply because they do not want modern technology—that will not deliver the objectives that business says it wants: clean data, speedy service, accurate information from the Revenue, and the eradication of confusion and delay.

Photo of Michael Jack Michael Jack Conservative, Fylde

Will the hon. Lady tell us which member of the Opposition has opposed in principle the use of electronic filing?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The Opposition wish to prevent the crucial part of the equation that would enable the efficient working and delivery of electronic filing, and the reduction of compliant costs: the requirement to file electronically. They want the ends but do not want to provide for the means—that is typical of many Opposition speeches.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

Is it the hon. Lady's view that everyone, without exception, should have to file electronically?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

The vast majority of people should be required to file electronically for their PAYE returns. [Interruption.] The hon. Gentleman tempts me into discussing an amendment that has yet to be moved; I accept that it may be possible to vary that requirement in special circumstances for a very limited number of people. However, electronic filing of PAYE for the overwhelming majority of people by 2010 is not an unrealistic target. It would be unacceptable not to use the best technology in this modern age to improve delivery of service.

Photo of Mr Howard Flight Mr Howard Flight Conservative, Arundel and South Downs

I thank the Paymaster General for giving way. I hope that exchanges will not become acrimonious where she does not agree with me. My hon. Friend the Member for Buckingham (Mr. Bercow) and I referred to her letter, which clearly stated that the Government did not intend to force, require or oblige people to file electronically. What happened to that? There has been a sudden change. As most of us made clear, some 95 per cent. of businesses are likely to want to use electronic methods to file their returns. It is therefore balderdash that not making it compulsory will wreck the project. Will the Paymaster General say how she has reconciled stated Government policy some 18 months ago with today's volte-face?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

If there is no problem with everyone filing electronically, the hon. Gentleman has already answered his own question. Nor will he be worried about the requirement for it all to be completed by 2010 because, according to him, it will happen.

With regard to the letter to my right hon. Friend the Member for Leicester, West (Ms Hewitt) in 2000, I am comfortable with the proposition. People have two options. They can file their returns personally using the software on the Inland Revenue website that has been available for some time. If they do that, they will still

receive a payment from the Inland Revenue over the five-year period, which they will be able to use to invest further in their software to improve their business. If people do not want to do that, we now provide an intermediary for them to use, which many people already do. Again, there will be a direct payment to assist in the transfer to using the intermediary. The software can be very simple, and will speed up, not slow down, the processes that businesses must undertake on PAYE.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I will be happy to give way to the hon. Gentleman in a moment.

I cannot see why our target of 2010 is unrealistic, given the vast growth in the use of computers and the internet, and the clear business improvements that can be gained from them.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon

I am sure that the Paymaster General is as surprised as I am that so many Opposition Members seem to be ready to go to the stake over what they regard as the inviolable right of business people not to file their tax returns by e-mail. Will the Paymaster General confirm that just as the Inland Revenue has the right to require proper tax returns from business people, so it must have the right to say how it wants those returns presented? After all, people are compelled to use a paper form, and in future they will be required to use e-mail. What is wrong with that?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I gave way to my hon. Friend, so perhaps I should give way to the hon. Member for Buckingham.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I do not agree with the hon. Member for Wimbledon (Roger Casale), although in view of the stoical service that he gives on the Committee from the Back Bench, I say to him in a genuine spirit that it is time that he got his reward and was put on the Front Bench.

The way in which the Paymaster General dangles the carrot of the entitlement to use an intermediary is ultimately unpersuasive. The point has been made to me repeatedly that if someone opts to use an intermediary rather than to file personally, he or she will still be required to have an e-mail address. Does she not recognise that? Some of the people who object most strenuously to the clause do so to the idea that they should have to use e-mail, even if only indirectly, when they do not wish to do so.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury) 4:45 pm, 25th June 2002

The intermediary provisions, which allow returns to be made on an employer's behalf, are no different from the current arrangements. Intermediaries already file information electronically, and we want to move to a situation in which all the information arrives in that way. I accept that we do not yet have the provisions concerning the move to require electronic filing for all submissions by 2010.

It will be necessary, following on from the Carter review and the fact that the Government put the review out to further consultation—[Interruption.] The idea that there was a huge clamour of horror from all businesses saying that they did not want the change is

not correct. There was a request about the drafting of the regulations and agreement on the areas covered by them, and that will be subject to further discussions. In 2004–05, we shall start the process of paying over the five years the £420 million that we are prepared to invest to help small businesses to move to electronic filing.

All the amendments are designed to prevent the requirement for filing to occur electronically by 2010. I understand Opposition Members' objections, but I simply do not agree with them, and I ask my hon. Friends to reject the amendments if they are put to a vote. Following some of the points that have drifted into this debate, perhaps the debate on the next amendment will be a suitable forum in which to clarify the issue of exceptions, should any be needed, to the regulations.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

As you know, Mr. Gale, and the Committee can confirm, I am as open-minded as any hon. Member. I am always willing to be persuaded of an argument and, at the risk of embarrassing the Paymaster General, I do not mind disclosing that, since the difficult days when I fought the Bristol, South constituency and it fought back to such good effect, I have come increasingly to both like and respect her. The hon. Lady therefore knows where I am starting from: I like and respect her very much and I think that she is an extremely effective exponent of her case. However, the case is sometimes so poor that it just does not pass muster, and although I admire her professionalism, I cannot say that I was persuaded by her argument.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Flattery sometimes works, but on this occasion it will not. Despite the hon. Gentleman's eloquence, I am still not minded to accept the amendments. I just thought that I would save him from having to make his speech.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

That is a pity. I wondered whether charm would work on this occasion, rather than aggression, but I have been sadly disappointed at an early stage in my speech. That approach was worth a go, but I shall have to be careful about trying it too often.

In any event, I was not persuaded by the hon. Lady's argument. She argues on one hand that there will be a great beneficence from the state as it offers financial incentives—some might use the more unflattering, but perhaps more accurate, term ''bribes''—to businesses to comply with the Government's will. On the other hand, she talks about the crucial importance of ensuring 100 per cent. compliance if the savings that she wants and envisages are to be achieved. It seems a peculiar state of affairs that the Government, to secure 100 per cent. compliance and the savings that will result therefrom, judge it necessary in the first instance to lob sums of money at businesses to sweeten the pill of being coerced into doing something that they would otherwise not choose to do.

Leaving aside the hon. Lady's arguments so far, I shall not dilate on the additional point—you would be displeased if I did, Mr. Gale—of deadweight costs. If many companies are proposing to comply in any case,

it is not sensible for a Treasury Minister to lob money at them like confetti as a bribe. On this occasion, the Treasury brief was less compelling than it might have been.

In truth, though, the hon. Lady made the most sensible of her points when she said that she understood the Opposition arguments but simply did not agree with them. In other words, we agree to differ. Rather than rehearse all the arguments again, it would better to agree with her on that. We disagree. The subventions are unnecessary and coercion is undesirable. It would be better to allow a choice. I have listened with interest and respect to the Paymaster General, but I have not been converted. She will be astonished and mortified, but I am compelled to press for a vote.

Mr. Jack rose—

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

I am terribly sorry. I tried to encourage the right hon. Gentleman to intervene earlier on the hon. Member for Buckingham when he was winding up the debate. I shall now put the motion.

Question put, That the amendment be made:—

The Committee divided: Ayes 9, Noes 18.

Division number 8 Adults Abused in Childhood — (Except clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and schedules 1, 5 and 38) - Clause 132 - Mandatory e-filing

Aye: 9 MPs

No: 18 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I beg to move amendment No. 230, in page 105, line 5, at end insert—

'(e) exempt from the provisions of this section any person who is a practising member of a religious society or order the tenets or beliefs of which are incompatible with the use of such means of electronic communications as may be specified in the regulations.'.

I should now like to continue the argument by dwelling on the amendment, which, as members of the Committee will be aware, was suggested by the Brethren. I stress from the outset that the Brethren are not motivated by considerations of party politics, and are unfailingly courteous and extraordinarily efficient lobbyists. They make a point of putting their case to Members on both sides of the House. They are not partisan in their motivations, as they view their relationship as being with God. Members of the Brethren do not vote in general or other elections. Without lightening or devaluing the importance of our exchanges, I hope that I can be forgiven for arguing that my hon. Friends and I are not motivated by vote-grabbing instincts.

I should also stress that there is no requirement for me or, I suspect, any other Opposition Committee member, to declare a registrable interest, because I am not a member of the Brethren. [Laughter.] The Financial Secretary laughs, but it is worth making the point, and from the Brethren's vantage point, it is jolly fortunate that I am not a member. They are upstanding people of high moral fibre, and I do not think that I could reach the standards of behaviour to which they aspire and that they attain in their daily life. They are motivated by principle, and I agreed with and respected the language that the Paymaster General used in an earlier reference to this matter. She did not name the Brethren, but she talked about a minority of people with strong convictions that are different from those of many other people but are entitled to be respected. That is the starting point of the Conservative Opposition.

The Brethren suggested that a satisfactory amendment could be made to clause 132 by inserting a subsection (4)(e) that would

''exempt from the provisions of this section any person who is a practising member of a religious society or order the tenets or beliefs of which are incompatible with the use of such means of electronic communications as may be specified in the regulations.''

Consistent with my comments about the Brethren's non-partisan motivation, it is typical of them that they should be at pains to emphasise, as they did in a letter to the Paymaster General on 13 June 2002, that they

''would much prefer the amendment to be tabled as a Government amendment rather than as a cross-party one, even although we are certain that there would be cross-party support for it on account of the fact that it is not a political issue but one of religious conscience.''

Regrettably, the Government did not want to make such an amendment, and the Brethren have had to use another vehicle to get the issue debated. However, they wanted to anticipate and diffuse political controversy rather than to stoke it up. That is not an argument for their amendment, but it is a commentary on their motives and integrity.

The Conservatives can see merit in such a provision. Originating in 1828, the Brethren are a worldwide Christian fellowship and profound believers in Jesus Christ. There are more than 14,000 Brethren in the United Kingdom alone. They have a conscience before God based on the teachings and prophecies of the holy scripture and seek to live a separated life as governed by the Bible. They respect and honour Government as ordained of God, but are of no political persuasion themselves, as has been stressed before. They pray for the Government, Ministers and all who are in authority.

For the past 20 years, during the dramatic advancement, to which the Paymaster General properly referred, of IT in the worlds of business and communication, the Brethren have practised a way of life involving the consistent refusal of the use of computers in their businesses and homes. Some prophetic scriptural warnings concerning the present mighty scientific and commercial build-up depicted in great Babylon are given in a variety of references. The Brethren referred me and other Committee members

to those in Thessalonians and Revelations, which underpin their determination to resist being caught up in the whirlpool of electronic developments.

There are about 1,200 Brethren businesses in the UK. Without computers, they trade, employ staff and pay taxes, so they need to be able to continue to communicate with the Inland Revenue and other tax authorities on paper.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston 5:00 pm, 25th June 2002

Does the hon. Gentleman know whether the Brethren use telephones? All modern telephones are switched by computers. From my time as both an electronics engineer and a computer scientist, I recall a devout member of the Plymouth Brethren working as an engineer alongside me.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I will not comment on devout engineers or devout anything else who are not personally known to me. I have no reason to doubt the veracity of what the hon. Gentleman says, but I am not aware of the circumstances. He makes a point about the use of telephones. As I understand it, members of the Brethren use the telephone. A constituent of mine, Mr. Wells, has come to see me about various issues of concern to him as a member of the Brethren. Although I do not recall speaking to him on the telephone—[Interruption.] Yes, he does use the telephone. It is not for me or members of the Committee to make a judgment about the rationale behind or the purity of the practices of members of the Brethren. It is not for me to set myself up as the legitimate and proper umpire of the way that they conduct their affairs. They are much better informed about the reasons for conducting their affairs as they do.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I will give way to the hon. Gentleman once more because I am an indulgent fellow, but after that I want to develop the argument.

Photo of Mark Hendrick Mark Hendrick Labour/Co-operative, Preston

I would not wish to pass judgment or to act as an umpire. I merely wish to understand the principles on which the Brethren operate in order to take a fair and just decision.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

Well, I will give an example. The hon. Gentleman will have to make do with it. Members of the Brethren would argue that the use of the telephone is qualitatively different from the use of the internet. Using the telephone involves a decision made by an individual who wishes to communicate with another individual. It does not involve the person using the telephone receiving information, images, pictures or depictions that he or she does not wish to receive. It is at least arguable that the difference lies in the fact that the Brethren regard the internet as a source of uncontrollable evil. They are genuinely distressed by much of the traffic on the internet.

That is a respectable opinion. It may not be the hon. Gentleman's opinion and it might not be mine. Do I tolerate such an opinion? No, I respect it. I respect the sincerity of this minority. The hon. Gentleman has a laudable track record of standing up for minorities, as do most Labour Members. The

Paymaster General has a powerful record for doing so. We are talking about a minority who practise a particular way of life. They are law abiding, have always paid their taxes and want to continue to do so. They simply object to being compelled to pay in a particular way. They have a fair point.

Moreover, there is a precedent for an exemption. It is not specifically in this field. Although I referred earlier to the hon. Lady's correspondence with her right hon. Friend the Member for Leicester, West in September 2000, about which she is rather embarrassed, on this occasion I refer to the precedent in section 42 of the Criminal Justice and Public Order Act 1994 under which the Brethren sought and were granted an exemption from jury service because of their religious views. The idea is not new. The precedent for granting different treatment to a particular minority in deference to the strongly held convictions of members of that minority is well established. I personally think that it is reasonable.

I do not want to engage in a philosophical discussion, Mr. Gale, as you will get jumpy if I do, but I rather subscribe to the approach of John Stuart Mill on these matters. I would invoke the harm principle and say that members of this minority are not inflicting harm on anyone else if they are granted a derogation or an exemption from this rather burdensome requirement. The Brethren are concerned that the clause is a violation of their human rights. I believe that they refer to the principle of equal treatment of taxpayers, as set out in the taxpayers charter. They believe that the principles of the taxpayers charter in respect of equal treatment are not reflected in the clause if it differentially and adversely affects them because of their principles. When they are perfectly willing to pay their taxes and have always done so, the charter is in practice, if not by design, being breached.

The Brethren wish to stick to the position that they much admired, which was set out by the Paymaster General in her letter to her right hon. Friend the Member for Leicester, West in September 2000. They felt that there was much to commend that. I know that Mr. Ron Davis, Mr. Bruce Robertson, Mr. Tom Kendall and Mr. Colin Davies in their letter to the Paymaster General of 25 May went so far as to say to her:

''You wrote a very helpful reply on 21 September 2000 . . . Your assurance that it is not Government policy to force people to use the internet was very comforting as was the statement that those who prefer to use paper to communicate with the tax authorities will continue to be able to do so.''

I would point out to the Paymaster General that that meant a great deal to them. Being told that they can use an intermediary and, in a sense, safeguard their principles because they are not using the internet—I do appeal to the Paymaster General to at least consider this point—does not satisfy them because they feel that they are nominating someone to act on their behalf and engage in a practice of which they disapprove.

I hope that the Paymaster General will reconsider and I refer finally to her latest letter on the subject, of 20 June. I found the last paragraph a little odd, and possibly even—I regret to have to say this to her—

disingenuous. In that final paragraph, the hon. Lady told members of the Brethren:

''The amendment you propose would permit, but not require, the Government to make regulations including the exemption you seek. For the reasons set out above, I do not believe that the exemption will be necessary, but even if it were, the present drafting of the clause would permit it''

—that is to say, the Brethren's amendment—

''to be made in secondary legislation. For these reasons, the Government will not be able to support the amendment you propose.''

Dawn Primarolo indicated assent.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

The hon. Lady is nodding enthusiastically from a sedentary position; therefore my challenge to her is simple. Is she saying that the Government do not want to agree to the amendment now, but they will reflect it, preferably word for word, in the regulations? If that is what she is saying, I would be delighted. My hon. Friends and I would retire home, celebrate and dance around the mulberry bush together. If the Paymaster General is saying that the Government are not going to reflect the amendment in the regulations, what on earth is the point of that little sop in the final paragraph of the letter? It is all very disappointing.

Our position is that the Brethren are a law-abiding minority and feel very strongly about the matter. No harm will be done by practically accommodating them. I appeal to the Paymaster General to do just that.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

I shall not keep the Committee long, but I detect, and I hope that it is not presumptuous of me to say this, that we may get some satisfaction on the amendment. The Paymaster General gently and deftly trespassed on the amendment during the previous debate. In reply to an intervention that I made, she said that in special circumstances for a very few it is possible to vary the mandatory requirement to file information electronically to the Inland Revenue. The way in which the Minister will seek to accommodate us is something that, of course, we are all looking forward to hearing.

I, too, want to advert to the conscientious and principled objections that the Brethren have to the clause. Like the hon. Member for Buckingham, I have had a brief from them—I believe that they have briefed everyone. It is a sign of the catholic nature of this debate that we shall all, including Government Members, have had an opportunity to consider carefully the matters that the Brethren have drawn to our attention.

The Brethren base their creed on their view and interpretation of the teachings and prophecy in the scriptures. This is no new principle: it has been constant, throughout the 20 years that have seen the dramatic advance of information technology. During that period, the Brethren have practised a way of life involving a refusal to use computers in their homes and businesses. They believe that the internet is uncontrollable and a source of evil. Obviously, we do not all share that view—very few in this Committee probably do—but we are all here to protect minorities, including conscientious minorities such as the Brethren.

There are approximately 1,200 Brethren businesses in the United Kingdom. They trade, employ staff and pay taxes without computers. They need to be able to continue to communicate with the Inland Revenue and other tax authorities using paper. Unless a conscience provision is included in the clause, there is clearly no framework to allow for the protection of those with principled objections to it. A conscience clause, as is proposed, is not unprecedented. I believe that the proposal is modelled on the jury exemption clause in the Criminal Justice and Public Order Act 1994. There are other conscience exemptions in statute law. I refer the Committee to regulations that allow Sikhs exemption from the use of protective helmets on motor cycles and building sites. I also refer Members to the Oaths Act 1978, which allows alternative provision for affirmation.

We should have, and should promote in this Committee, a tolerant society that respects minorities. We should not ride roughshod over the principled and constant views of a substantial group of our fellow citizens. I very much hope that the Minister will accept the amendment.

Photo of Tom Harris Tom Harris Labour, Glasgow Cathcart

I have some sympathy with the spirit of the amendment. I hope that this will be the first and last time that I say this, but I agree with a great deal of what the hon. Member for Buckingham said in his earlier remarks, although I am not quite ready to dance round a mulberry bush with him.

For the record, although the Brethren have been described in the press in the past week as a sect, they are absolutely not to be described in that way. They are a completely legitimate branch of the Protestant Christian Church. I spent some time in my earlier life as an evangelical Christian. The phrase ''misspent youth'' can be fully understood and appreciated only by someone who has spent 10 years of their life, from the age of 16, as an evangelical Christian. However, one of the legacies that that left me with is a somewhat improved knowledge and understanding of holy scripture. I was intrigued to see some of the references with which the Brethren provided us.

It is a Christian prerogative to use the Bible and scripture to justify various social and even political opinions. The Jehovah's Witnesses, for example, believe that they should not take part in any kind of political activity, including voting. It is something of an un-Christian joy for me, during general elections, to canvass the doors of Jehovah's Witnesses, as revenge for the number of times that they have chapped me up on Saturday mornings, just to ask them whether they intend to vote, and their answer is the same as the one that I always give them: no.

I was sceptical when I was contacted by the Brethren, so I did my research into the passages that they presented to me: Thessalonians chapter 2, and five references to Revelations. I admit that I looked in my Bible with some trepidation. I was quite excited at the thought that the Lord had decided that the

Microsoft empire was not to his liking. I was dying to find out some justification for any suspicion of Bill Gates. I was disappointed that Apple Macintosh was not the preferred platform of the apostles.

Photo of Kevin Brennan Kevin Brennan Labour, Cardiff West 5:15 pm, 25th June 2002

Is my hon. Friend aware that to justify their actions the Rebecca rioters in Wales used the quotation from scriptures that people should tear down the gates of the oppressors? Perhaps that is the reference that he has been searching for.

Photo of Tom Harris Tom Harris Labour, Glasgow Cathcart

I am grateful, in a way, to my hon. Friend and I am sure that in his own world that is quite relevant.

The Government must be careful. I have some reservations about the specific wording of the amendment. Although the amendment and its wording were specifically used to excuse members of the Brethren from jury duty, I have some concerns that if the wording is used in a Finance Bill—although intended as an exception—it could turn into a loophole that may be exploited by some who are more cynical and less principled than the Brethren.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

I think that the Paymaster General has said that some 94 per cent. of people already communicate with the Revenue through the internet.

Photo of Tom Harris Tom Harris Labour, Glasgow Cathcart

I think that the hon. Gentleman is correct, but I do not want to go over old arguments that have been made by previous speakers in the debate. Whether we agree with the principles or not, I would hope that the Government show some sort of understanding of and sensitivity to the fact that members of the Brethren are completely principled and have genuine beliefs. They do not intend to avoid their commitment to the Government in terms of paying taxes or filing returns. I hope that the Government recognise that any reservations that they have about the way in which they do that should be dealt with in the Bill, and perhaps in the Committee today.

Personal religious conviction must be respected, even when there is disagreement on such matters. The evidence, as the hon. Member for Buckingham has said, is that members of the Brethren are exemplary in the running of their business affairs, not least because they understand that they and their faith would be judged by others if anything else were the case. They are diligent in paying their taxes. When the Paymaster General replies, I should like to hear an explanation to address the fears that the Brethren have that not only will their PAYE returns have to be carried out over the internet, but any further communication might have to take place by e-mail instead of the usual methods of telephone or mail. I hope that the Government will address that concern.

I hope that the Government will show their customary flexibility on the matter and recognise that such reservations are held in sincerity. Any changes to the clause are being sought by the Brethren for no other reason than a desire to worship God with a clear conscience, and at the same time to pay to Caesar what is Caesar's.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I support the amendment, but I must say that I do not share the convictions of the Brethren. I would go as far as to say that I do not understand their convictions. I understand that the Pope uses a computer and that makes it rather difficult for me to see it as the instrument of the devil. It may not make it quite so difficult for the Brethren to see it in that context.

I do not really understand how people can have a principle against a specific piece of machinery, but I understand that they do. Quakers have real difficulties with pieces of military machinery, and certain orthodox Jews object to cameras. I think that we have to accept that there is an element of diversity that none of us can explain or find a rationale for. However, this is a case of coercing people to act against their convictions. Were their religious convictions such that they refused to pay tax at all—a sect set up on that basis would be very popular—the Government would have to overrule them. The hon. Member for Buckingham presents a very strong argument: who essentially loses if we make an exception? The people who I think are the losers—the hon. Gentleman has already identified them—are the bureaucrats, who seem to be the winners in the legislation as a whole. There exists a satisfactory alternative technology to computers called pen and paper. It is more secure, more reliable and has withstood the test of time.

However, the Government are in a dilemma. They can go down one route and accept the amendment, which is not perfectly worded and which may create problems. They can accept specific nominated groups but, as has been mentioned, other people may abuse any loopholes that are allowed. Rather than deal with that, the Government can take a simpler route, which has been telegraphed all day. They can abandon compulsion and rely on incentives—there is no point in using incentives if there is compulsion—and simply move away from mandatory e-filing. Such a course would not generate insoluble problems for the Government.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I can be very brief. I do not intend to go over the debate on amendments on which we have voted, and the importance of e-filing. I am sure that hon. Members will want to return to that. I also do not want to comment specifically on the Christian Brethren but accept the points that have been made this afternoon about them. I am a little saddened that my word as a Minister before the Committee and in writing has not been taken with the same charity as views that are slightly different. Hon. Members who have contributed to the debate have rightly stressed the need for tolerance, which one would expect in any democratic Parliament.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South

I understand the difficulties with the amendment for reasons of precedent, but I have had some correspondence with the Paymaster General regarding the plight in which the Brethren find themselves. I know that she does not wish to name the Brethren, but can she give us at least a hint that she will consider their situation?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Yes, I can give my hon. Friend that undertaking, as I have in correspondence with the Brethren, much of which was quoted today. I find it sad that some people seek to read other meanings in the paragraphs that I wrote. I can say absolutely clearly that we entirely understand the few individuals—it is only a few, compared with the millions of taxpayers—who have expressed their genuinely held religious objections to using electronic communication, even if we do not personally take that view.

I stress again that the requirement is on employers. It is perfectly possible to arrange to have all the records passed in paper form from the employer to the intermediary; the intermediary would then make the return. As I understand the points that have been made, there are intermediaries who would have religious objections to undertaking e-filing, and that is the point at issue.

I would say to the hon. Member for Buckingham, who read out the paragraph, that his amendment is unnecessary. It would give the Government the opportunity—it does not force the Government to do it—to draft regulations that would exclude from electronic filing in circumstances such as those of the Brethren. The Bill already provides for those regulations to be made. The Government are therefore adding nothing, whereas the Committee is putting it slightly more strongly by pressing the Government to consider the option. I ask my hon. Friends to reject the amendment. The officials concerned at the Inland Revenue will have discussions with the Brethren to ensure that the regulations, when drafted, cover the point that they have been making. That was my point in my letter to my right hon. Friend the Member for Leicester, West in the year 2000, and in all the letters that I have since written. I place it on the record today that that is what will happen.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I am sorry if the Paymaster General believes that her integrity has been impugned, because it has not. My point was that the relevant paragraph to which I referred did not reflect what the Government plan to do. For the avoidance of doubt, and given that the hon. Lady implies that she always intended to take account of, and satisfy, the concerns of the Brethren, could subsection (7)(c) be used for that purpose where it refers to making

''different provision for different cases?''

Is that partly, at least, what the hon. Lady has in mind?

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Yes, I confirm that that would be a sensible hook. It covers a wide area. For example, any change to the construction industry scheme to assist contractors would need specification.

I do not wish to prolong the proceedings. The Revenue will consider the principle and ensure that these points are covered. The amendment is unnecessary. We already have the relevant power, and will conduct the necessary discussions. The irony is that the negative procedure allows us to do that speedily, which is why PAYE is done in this way. The thing that the hon. Gentleman did not like this

morning about the clause provides the flexibility to respond to a group of people, albeit a small one, and to respect their deeply held views. I hope that the hon. Member for Buckingham will withdraw the amendment, and accept that his point will be covered in regulations.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

I appreciate what the Paymaster General has just said. I am reluctant to dwell on the point of difference, but I refer to it as there is a difference between us. I do not accept that the negative procedure alone allows for the meeting of grievances, or that the affirmative procedure, which Opposition Members generally prefer as it allows debate, somehow does not allow a person to address them. However, I respect the fact that the Government have chosen to proceed in this way. The result is what matters, not the technique used.

I am bound to say that I am pleasantly surprised and considerably encouraged by the Paymaster General's remarks, as I hope that members of the Brethren will be. We will keenly attend to the discussions that the hon. Lady and her officials will have with members of the Brethren. She has put it on the record in unmistakable terms that she wants to meet their concern, and I am prepared to take her at her word. She knows that I will probably bestir myself to raise the matter again in future, perhaps at length and with some vigour if I feel that the pledge has been broken. I know that she would not entertain that scenario with any enthusiasm. I shall take her at her word and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury 5:30 pm, 25th June 2002

I beg to move amendment No. 232, in page 105, line 44, leave out subsection (9) and insert—

'(9) Regulations under this section shall be made by statutory instrument subject to an affirmative resolution of the House of Commons.'.

I shall be brief as we have debated these issues at length and I have been a modest participant in that length. The amendment enjoys the support of the Law Society as well as of Opposition Members and would make the regulations subject to an affirmative resolution. When I mix with people who are not involved in politics, I am often conscious that the language of our exchanges is almost entirely impenetrable to those outside the political system. That makes it necessary to explain the difference between negative and affirmative procedures for dealing with statutory instruments.

The negative procedure effectively denies debate. It just happens when the House has already taken a view about a Bill. Matters of great detail and potential controversy can end up being covered in regulations that the House has never debated, although the negative procedure can be taken more quickly. The affirmative procedure allows the House to debate the issues and reach a view on them.

My hon. Friends and I believe that both the controversy about this part of the Bill and the scope

of the regulations make the affirmative procedure appropriate. These matters should be subject to proper debate and parliamentary scrutiny. That is the Opposition view that underpins the amendment. If necessary, I shall invite my right hon. and hon. Friends to support it in a Division.

Photo of Mr John Burnett Mr John Burnett Liberal Democrat, Torridge and West Devon

We support this amendment. It is important to have an opportunity to debate these matters so that any errors can be corrected. After all, Governments are not infallible. We can see that in our proceedings almost every day. The amendment is worth while. Let us have matters in the open and properly debated.

Photo of Michael Jack Michael Jack Conservative, Fylde

I rise to explain my views and put on record the fact that the amendment has been proposed to make the provision work properly in practical terms. The Paymaster General suggested that her word as a Minister was not taken with the seriousness that she would like. When she winds up debate on the clause, I hope that she will acknowledge the good intentions of Opposition Members who favour modern technology and want the Government to benefit from improved and efficient ways to operate. We want to make the provision work properly.

As explained in Committee earlier, many serious practical questions surround what the regulations cover. If Parliament is to pass a mandatory requirement into law, we do not want it subjected to further debate and questions because we never had the chance to discuss it properly in the first place. The Government's willingness to consult in greater detail would be helpful. Will the Paymaster General assure us that discussions about the workings of the regulations will take place, particularly with the industry? The regulations say little about what would happen to the system if the current provider of IT services to Inland Revenue were to suffer a major financial failure and a successor company were employed to replace Electronic Data Systems and provide the specialist services necessary to drive the system. We know nothing about that. We need reassurance about consultation. How robust do the Government believe are the systems underpinning what we are asked to accept? They should put that on the record.

What we propose is important, because the affirmative resolution would, if necessary, enable a motion of amendment to the motion to agree those regulations to be tabled in such a way that any practical objections could be stated in public, on the record. The negative process would not allow the House of Commons to do that. If we are to make something an absolute requirement on the majority of our citizens, they will want to know that we have debated it properly.

I want the Government to conduct a proper consultation exercise on the matter and give the House of Commons the opportunity to review, for one last time, whether the proposal would work in practice.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I think that we have seen enough to know that this little clause is creating quite a problem. Issues of conscience have been aired in the debate this

afternoon, and issues of commercial security were aired this morning. Issues of competence, concerning some people's ability actually to use the system, have been aired, and I raised the issue of competition. We cannot simply give the measure a fair wind and say, ''Get on with it. We will draw it in only if a problem arises,'' because it needs constant scrutiny. A close eye must be kept on it.

I want to touch briefly on the issue of competition, which I raised this morning. It is not as though things never go wrong—

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

Order. We cannot go over debates that were held this morning. What the hon. Gentleman says must relate directly to the amendment.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

It relates specifically to the need for scrutiny. If I may do so, I will illustrate why there is a reason for scrutiny.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

The hon. Gentleman may make the case relating to the amendment that we are debating now. He may not re-rehearse arguments that have already been rehearsed.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I am not presenting the same argument, Mr. Gale. I want to point out that in e-filing in the past, or the use of e-government, the Government's record is not one of undifferentiated success. The e-government portal that they set up, which was designed by Microsoft, excluded non-Windows browsers. More importantly, as far as taxation is concerned, there was a serious problem with digital certification which ruled out lots of equipment that was not the appropriate brand designed by the firm concerned. In this case, it happened to be Microsoft, coincidentally.

There are important issues regarding e-filing that I want to press home, at the pain of being tedious—[Hon. Members: ''Yes.''] I will be tedious, if necessary. If we commit ourselves to a system that runs the risk of a particular brand of software and a particular brand of computers having pre-eminence in every business enterprise in the country, that has enormous significance for the software accountancy industry and so on. I am simply pleading with the Minister: there will be concerns that this will be an anti-enterprise measure and a drift to technological conformity.

This morning, the general line of the Minister suggested that good practice was in place. I agree with that; there is good practice in place, but there is nothing in the Bill to ensure that it stays in place and nothing in what has been said compromises the need for strenuous monitoring. I point to a specific item: if people check the Inland Revenue site at present, and simply look for details of their tax return, they find other things, too, for example, a little notice with ''spin of the day'' from the Government and completely unnecessary details of what is the Government's flavour-of-the-month policy. Why should that be there? It is an issue for us later on; it is the kind of thing that will intrude if things are not constantly monitored. What we ask for is serious and constant monitoring.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Let us place it on the record and make it absolutely clear that the Inland Revenue's website carries only information for taxpayers on their obligations, and gateways into that information. It does not carry any information that the hon. Gentleman referred to, such as ''spin of the day'' from the Government.

Dr. Pugh rose—

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

Just one moment, please. The Inland Revenue operates, under care and management of the tax system, a very strict division and its websites provide precise information to the taxpayer. I have never heard such a misinformed understanding or description of the Inland Revenue's website or of the services offered to taxpayers through that website. It has absolutely nothing to do with affirmative resolutions. If the hon. Gentleman knew anything about the procedure of the House, he would know that affirmative resolutions cannot be amended. They are only accepted or rejected. Regulations under negative resolution are placed before the House for 21 days so that Members and lobbyists can see them.

The hon. Gentleman also fails to understand that the PAYE system operates on the updating of regulations and has done so under not only this Government but the previous Government. It is an effective way of ensuring that responses are taken on board, regulations are properly drafted and changes can be made to the tax system. Anyone who understood the tax system, the vastness of the work undertaken by the Inland Revenue and the detail of its everyday communication with taxpayers would never make such incorrect statements about its professionalism.

Photo of John Pugh John Pugh Shadow Spokesperson (Education)

I defer to the Paymaster General on matters of procedure. On matters of brute fact, she can go to the Inland Revenue portal site today—Members can check this later—and she will see a sign about the benefits of skilled migrant workers coming into this country. That has nothing to do with the taxation system, but it is there. Committee members can inspect it for themselves.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

There is nothing on the Inland Revenue website that does not concern tax information, and the hon. Gentleman should apologise for such assertions. The website carries only taxpayer information, as it is required to do.

On the amendment, I have made the point that the affirmative procedure would not take the hon. Member for Buckingham any further forward. The heart of the assurances that he sought concerned the consultation and discussion. The negative resolution procedure is perfectly reasonable, has always been used and works well, but I accept that it will be necessary for the Inland Revenue to consult representative bodies and software developers about the necessary developments. It is not about an Inland Revenue software system, but about all the providers and designers in the market being able to develop software packages. The discussions with the Inland Revenue will only concern ensuring that the relevant information is supplied in the packages and that they

are compliant. It is not as if the Inland Revenue is putting in a huge system.

For the Committee's information, the first set of draft regulations will be published in March 2003, and a period of consultation will follow before they are finally tabled. Any Member who is keen to discuss them will be welcome to receive a copy of the draft regulations and comment accordingly on it. In that way, the hon. Member for Buckingham gets consultation and a longer period, which is much better than an affirmative resolution procedure that does not provide for that. Although it is not everything that he wanted, I hope that he will feel that I have met him halfway and that he can withdraw his amendment.

Photo of John Bercow John Bercow Shadow Chief Secretary to the Treasury

The Paymaster General has offered me half a slice of cake, and it would churlish of me to throw it, crumbs and all, back in her face. I do not agree with her view on the negative procedure, but I agree that the regulations' content, enforceability and acceptability are what really matter.

I have another reason for not only enthusiasm but perhaps even joy. The Paymaster General referred to the draft regulations that are to be published in March next year, followed by a thorough consultation. The reason why that makes me enthusiastic and perhaps even joyful is that I am sure that the Paymaster General proposes to act in that way because she has taken heed of the title and contents—''Regulations on Small Businesses (Reduction)''—of the ten-minute Bill that I had the great privilege to present on 27 April 1999. As she has followed my lead and been so generous this afternoon, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Peter Luff Peter Luff Opposition Whip (Commons) 5:45 pm, 25th June 2002

On a point of order, Mr. Gale. In the interests of making progress, I will not move new clause 15. However, I hope that the Paymaster General, who would have responded to that debate, will be prepared to engage in correspondence on the issues that I wanted to raise.

Photo of Dawn Primarolo Dawn Primarolo Paymaster General (HM Treasury)

I am happy to write to the hon. Gentleman to give him chapter and verse on why his new clause is unnecessary.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

Happily, that is not a point of order for the Chair, but the Committee has heard it. I have listened to the debate carefully and am satisfied that the matters arising from clause 132 have been fully discussed.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 132 ordered to stand part of the Bill.

Clauses 133 and 135 to 140 ordered to stand part of the Bill.