Clause 82 - European travel expenses of MPs and other representatives

Finance Bill – in a Public Bill Committee at 10:15 am on 18th May 2004.

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Question proposed, That the clause stand part of the Bill.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

I think that I had better declare a blanket interest for all of us.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I welcome you to the Chair, Mr. McWilliam. If I understand it correctly, we cannot do anything about the clause, as we are simply implementing a resolution of the House.

The provision updates and modernises the existing arrangements giving tax exemption for EU travel expenses paid to MPs. It covers travel

''between the UK and a relevant European location'' and defines ''European location'' as an EU ''institution or agency''. It is effective from 6 April 2004.

I have great reservations about the arrangements. I think that they bring MPs into disrepute. There is no logical argument for paying expenses to potter across to Europe rather than paying expenses to go to see a politician in America. Both are equally important or non-important. I think that it is widely open to abuse and to swans. I am pleased to say that, as a deliberate matter of principle, I have never used it, although I

have visited European politicians on many occasions. It is the sort of arrangement that I think we would be better off without, but here we are with it.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

A resolution in the House is not a constraint on a Committee. We make law by legislation. We do it in Committee and on the Floor of the House, and we are not bound by a resolution of the House.

Photo of Michael Jack Michael Jack Conservative, Fylde

I rise to disagree fundamentally with my hon. Friend the Member for Arundel and South Downs (Mr. Flight). It is not often that I express publicly what I think privately, but it is important to put on the record the common sense of what is in the clause. My hon. Friend says that it is an open sesame to freebies and general ill use of public funds. I would remind him that MPs are exempt from taxation on expenses for travel within the United Kingdom, including travel to places such as Belfast. For some years, the House of Commons has increasingly and correctly attempted to gain greater control over the use of moneys for MPs' travel, just as it is getting greater and more detailed control over the use of MPs' expenses in general. There is always an interesting friction on such matters between the Revenue and MPs, but I am pleased to say that harmony usually results.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I am more in tune with the hon. Member for Arundel and South Downs. Can the right hon. Gentleman help me by telling me what is meant by the words ''and other representatives'', and what he believes travel expenses to be? For example, do they cover the cost of accommodation? If such expenses were met by an outside company that paid extortionate expenses, would they also be exempt?

Photo of Michael Jack Michael Jack Conservative, Fylde

If I were the Minister, I might answer those questions. Sadly, I am on this side of the Room and not the other. I am sure that the Treasury has heard, as was mentioned at the beginning of the debate on this clause, that this is a resolution of the House. I am surprised that the hon. Gentleman, coming from the party that purports to be in favour and strongly supportive of the European Union, should even have to ask such questions. I am sure that he is familiar with resolutions of the House about the way in which expenses are provided for travel to European institutions as defined by the clause. The expenses that we are allowed to claim for are closely defined, as is the number of journeys that we can claim for in any one year. It is not completely open to us to travel where and when we want or to see anyone we want. The terms of the travel allowance and expenses provision are closely defined by the House.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I would expect the right hon. Gentleman to know what he is talking about if he refers to something. I simply asked those questions for clarification. If I manage to catch your eye, Mr. McWilliam, I shall say a few words myself on the matter.

Photo of Michael Jack Michael Jack Conservative, Fylde

In the interests of time, because I do know what I am talking about, I did not want to detain the Committee unnecessarily by going through something about which I thought that other hon. Members, and in particular Front-Bench spokesmen, would have some knowledge.

I strongly support the measure. It is sensible that we regularise the tax position on moneys that are made available to MPs. Given the amount of European legislation that interacts with United Kingdom legislation, it is right and proper that we are able to go to Brussels to talk to the Commission and Members of the European Parliament, and to visit other European Union countries in order to foster important relationships that will be to the benefit of those who send us to this House.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

I should like to ask the Minister not just the two questions that I asked the right hon. Member for Fylde but one other question. First, is the clause limited to the two visits that MPs are allowed?

Hon. Members:

Three.

Photo of Michael Jack Michael Jack Conservative, Fylde

You see, you should know what you are talking about.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Three. Secondly, what is meant by ''and other representatives''? Thirdly, if an outside company pays for MPs to visit, say, Paris, are the costs tax-free—not just the costs for accommodation but those for travel, subsistence, hotels, entertainment and so on? It is wrong for such clauses not to be debated in detail because we need to know exactly what we are talking about, in contrast with the vague assertions of the right hon. Gentleman.

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

I rise with some trepidation to bring some proportion back to the debate. The matter was fully discussed by the House and all right hon. and hon. Members were able to participate in that debate.

Perhaps I should start by explaining briefly what the clause does. It simply updates the present tax exemption for travel expenses incurred by Members of Parliament to mirror the changes to the House of Commons scheme for reimbursing those costs. I have never claimed for such trips, but they are made in connection with our work as Members of Parliament. The trips are made are outside our travel warrants to and from our constituencies, but they none the less concern our constituencies, or the business of the House. They are limited by the House to a specific number a year.

The clause deals with the fact that the House of Commons scheme has recently been widened to take in travel to all European Union institutions and agencies, to national Parliaments of countries in the European Free Trade Area, and to the national Parliaments of European applicant countries. Only Croatia comes into that category from the summer of 2004. The clause updates section 294 of the Income Tax (Earnings and Pensions) Act 2003.

Since 1992, the House of Commons has met the cost of a maximum of three visits a year by MPs to European institutions in EU member states and

candidate countries. The scheme originally covered trips to Brussels, Luxembourg and Strasbourg, visits to national Parliaments of any EU member states and visits to European candidate countries. During a recent debate, the House agreed to extend the existing rules to authorised payment of the cost of travel to all European Union institutions and agencies. Under the normal employment income tax rules, relief would be available to set against the payment if the MP's visit was on constituency business, but the scheme is administered by the Fees Office, which must be satisfied by the MP that the trip is directly connected with their work as a Member of Parliament in the House, or with their constituency.

Photo of Quentin Davies Quentin Davies Conservative, Grantham and Stamford

The Paymaster General is making a characteristically reasoned case. She said that she has never made such a claim for expenses. Can she confirm that that is because, as a member of the Government, the taxpayer pays for her to go to the Council of Ministers, where she has been a member of an important tax committee, and that, if it were not for that provision, members of the legislative branch of Government, as opposed to the Executive, would have no corresponding ability to have a multilateral perspective of such issues and to discuss matters with our counterparts in Europe? She is confirming that that is the difference, which is why we need the provision and she does not.

Will the Paymaster General help me with a problem of definition? Subsection (3) refers to

''a candidate or applicant country''.

I am mystified by the distinction that is made between ''candidate'' and ''applicant'' countries to the EU. Is an applicant country one that made a formal application, and does it become a candidate country when a treaty of accession has been signed but the ratification has not yet taken place? For example, is the Ukraine, which is sometimes loosely referred to as a possible future member, regarded as a candidate or applicant country?

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon 10:30 am, 18th May 2004

Order. Interventions should be just that; that was a bit long for an intervention. I also think that hon. Members will find that Ukrainian people would prefer to be described as from ''Ukraine'', not ''the Ukraine'', which is a Russianism.

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

I can see that this debate is fraught with minor difficulties that I did not appreciate.

I can confirm that hon. Gentleman is quite correct: when Ministers travel on Government business, the overnight accommodation costs and certainly their travel expenses are met by the Government. He also made a valid point that this House, Members of this House and the business of this House benefit extensively from the arrangements. The visits might be to forums such as the Interparliamentary Union with other parliamentary representatives in the European countries and are in order to encourage dialogue and understanding. That is precisely what I presume that all Members of the House of Commons wanted to recognise in ensuring that Members were able to travel

on business if it was relevant. My understanding is that the country concerned must be in the process of accession to the European Union. The answer to the point about Ukraine is that it is not a recognised destination.

The hon. Member for Arundel and South Downs tried to suggest that MPs would be swanning off for weekends in Europe that were not connected with their business. Frankly, trips that are made as a matter of personal choice will definitely not qualify and I am sure that, as guardians of the rules, the Fees Office will ensure that that is so.

On the question of accommodation, which was raised by the hon. Member for Torridge and West Devon (Mr. Burnett), I understand that such costs are included. He asked what happens if a third party were to pay them. As I understand it, that would be declarable—for instance, it would be declarable under the Register of Members' Interests. I am not in a position to say whether it would then become taxable, as I am not a tax adviser. I think that it would depend on the circumstances. The House of Commons has set the provision very narrow. Therefore, although the number of member states and institutions that could be visited has been expanded, the budget has not and the same strict rules apply as before.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

Does the clause give exemption only to cash that is paid out by the Fees Office to Members of Parliament? My second simple point was: what do the words ''and other representatives'' mean?

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

The answer to the hon. Gentleman's first question is yes. I was coming to the question of other representatives. The provision is concerned not with the level of payments or the allowance but with ensuring that the same underlying tax rules apply to Westminster MPs and Ministers, and to their counterparts in the devolved Administrations—the ''other'' to which he referred.

We need to maintain some perspective. In most circumstances, Members of Parliament are treated for tax in the same way as other employees. The clause does not change that and nor should it. However, specific provisions exist to deal with one or two minor areas where the particular position of Members does not fit easily into the general tax framework. As I have said, there is no more money involved, because the budget for Members' visits to European institutions will remain the same. I presume that that is a matter for the House, Mr. McWilliam, as the budgets and arrangements are set by all Members through a vote on the Floor of the House.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. I can rule on that. It is a matter for the House of Commons Commission to compose resolutions for the House to decide on.

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

If some hon. Members are not convinced of the efficacy of the system, I assume that they will not approach the Fees Office for reimbursement of expenses for travel connected with parliamentary duties. I am always exceedingly careful, as is the House of Commons as a whole, to ensure that any arrangements for Members of Parliament are

properly controlled, transparent and connected clearly, specifically and only with their duties as Members of Parliament.

I have noted the opposition and antagonism to the clause of the hon. Members for Arundel and South Downs and for Torridge and West Devon. Although I may be unable to persuade them that it is reasonable, I hope that the rest of the Committee will feel reassured that the House has thoroughly investigated the issue and that the Inland Revenue has confirmed the tax treatment as it currently operates. There are still only three trips. They are still tightly controlled and they must be to the European Union, to its institutions or agencies, or to accession or applicant countries.

Photo of Mr John Burnett Mr John Burnett Shadow Minister, Home Affairs, Shadow Solicitor General, Law Officers (Constitutional Affairs)

The hon. Member for Arundel and South Downs can speak for himself, but I am sure that he shares my view that clauses such as this should not go through on the nod. Of course it is important that Members of Parliament should be able to travel on business to visit other Parliaments and to meet parliamentarians. Nevertheless, the clause needed probing, and I believe that we did that.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary To the Treasury, Economic Affairs, Shadow Chief Secretary to the Treasury

I thank you for your comments on the constitutional position, Mr. McWilliam. As I mentioned, the issue seemed to be greatly discussed on the Floor of the House, and a majority of our colleagues took a decision.

I congratulate the Paymaster General on presenting the case with great tact. It would be only honest to say that the system is open to abuse, but let us hope that our colleagues resist that temptation. I was prompted to say what I said by a Member from another party, who suggested to me that we could have a nice weekend in Prague by finding a good excuse to see a politician. It is obvious that the system is open to such abuse, although I am sure that the House officials will do their best to query such items duly. It is not my wish to oppose the clause further.

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

The hon. Gentleman's final points are a matter for the Fees Office and the House. The clause provides only for the tax position to be maintained with the current scheme. I am sure that the House authorities will pay close attention to his points about reasons for travel. However, they do not relate to the clause, so it would be inappropriate for me to respond to them.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

I thank the hon. Member for Arundel and South Downs for his kind words, and hope that hon. Members understand that my comments were merely in response to the Minister's point about how the specific budget is obtained, not its tax treatment.

Question put and agreed to.

Clause 82 ordered to stand part of the Bill.