The power given to the Treasury under subsections (5) and (6)(b) is, we feel, inappropriate. Any amendments to the legislation in this territory should be dealt with in primary legislation, or at least through the positive resolution procedure. The disclosure of information raises issues of human rights, confidentiality and information covered by legal professional privilege. We suggest that those are too important to be left to secondary legislation.
Amendment No. 207 addresses that. It is obviously practical to give the Treasury power to amend the definition of the mutual assistance directive in subsection (4) in case additional or replacement directives are brought in, but it is much less clear that it is appropriate for the Treasury to be able to alter the safeguards in subsections (2) and (3).
It may help the Committee if, before turning to amendment No. 207, I first briefly explain the purpose of the clause. As Committee members will recall, the EC mutual assistance directive originally introduced in 1977 is the main European legislative instrument enabling the exchange of information between member states on the administration of taxes. That includes VAT and excise duties.
The mutual assistance directive is set to change in January 2004, most notably to extend its scope to include the exchange of information on taxes on insurance premiums. Also, from the start of 2004 a new VAT administrative co-operation regulation will be introduced, replacing all existing provisions relating to VAT and providing the sole legal base for the exchange of information relating to VAT administration. Those legislative changes reflect unanimous agreement reached between member states earlier this year on measures to improve the speed and flow of information exchange as part of a joint effort to help to counter indirect tax fraud and evasion. Those changes and any similar future changes will require consequential amendments to the legislative references and definitions in current UK legislation. The clause provides powers to make those and similar future amendments simply and speedily by means of a statutory instrument.
The clause replicates and consolidates the existing UK legislation relating to mutual assistance, which was first introduced in 1978 and amended in 1980 and 1992, authorising the UK tax authorities to provide information when it is required under the mutual assistance directive. It also updates UK legislative references and allows for the new consolidated section and the amended section 48(lB) of the Value Added Tax Act 1994 to be varied by Treasury order. Amendment No. 207 would impose unnecessary limits on the scope of the planned power to amend that section by Treasury order. The power to change subsections (1) to (3) by order is desirable, because it will enable the House to make changes without recourse to primary legislation outside the Finance Bill timetable. Any changes would be in a limited area and would already have been exposed to the House as part of the normal European negotiating process.
Having brought together the current mutual assistance provisions, it is important that they can be readily updated and kept internally consistent as and when developments occur. In recognising that it is reasonable and sensible to retain order-making powers in respect of subsection (4), we acknowledge that such powers provide for flexible and responsible use of parliamentary time. The amendment draws a distinction between elements of that consolidated package and is unhelpful in that it would impose unnecessary and unreasonable limits on the Government's ability to make minor legislative changes. Nevertheless, I recognise that the Opposition are genuinely concerned about the use of the order-making power as originally envisaged. The Government would prefer the flexibility offered by the clause as originally drafted, but in the interests of not
delaying progress of the Bill I am prepared to give way on that point and accept the amendment.
I do not know what to say. I am heartened to note that the Paymaster General appreciates the human rights issue and I thank her.
Amendment agreed to.
Amendment made: No. 304, in
clause 194, page 126, line 19, at end insert—
Clause 194, as amended, ordered to stand part of the Bill.