I beg to move amendment No. 2, in clause 10, page 5, line 20, leave out 'of a general nature'.

With this it will be convenient to discuss amendment No. 3, in clause 10, page 5, line 20, at end add

'and a copy of any such direction shall be placed in the Library of each House.'.

Amendment No. 2 is a probing amendment. Amendment No. 3, which has been grouped with it, is perhaps less so, but I would like to hear the Paymaster General's response.

I raised this point briefly on Second Reading, because I was concerned that the clause was too wide. It seemed to me that the distinction that the Paymaster General sought to make between directions of a strategic character and directions that might interfere or seek to micro-manage day-to-day or operational issues within the Department, which is a perfectly fair distinction, was not covered by the clause.

The clause does not refer to directions of a strategic nature, but simply to directions of a general nature. I am concerned about that. The Paymaster General said that the reason that she wanted the power to issue directions of a general nature was first that she may want to direct strategy at some stage, which is an issue in itself. Secondly, she said that she wanted to be able to use the direction to call the department to account for the overall effect of the actions that it had taken. I do not actually think that that has anything to do with issuing directions. I think that it is a function of ministerial or parliamentary accountability, which can be—and probably is—covered in other particular ways.

The difficulty is that when Ministers say that they will deal with strategy and that they will not interfere with day-to-day operations, in the end it is always up to Ministers to determine exactly where that dividing line should fall. The inclusion of the phrase ''of a general nature'' does not help us to draw the distinction that the Paymaster General wishes to draw between directions of a strategic nature and those that might seek to interfere with the day-to-day operation of the Department.

Amendment No. 3 will, I hope, commend itself to the Paymaster General and to both sides of the Committee. If such directions are to be given—whether they are to be ''general'', as in the Paymaster General's wording, or strategic, as I think she intends—it is important that Parliament is informed of   them. Amendment No. 3 simply requires, as is the case in other legislation, that a copy of each such direction should be placed in the Library of the House.

The debate about the amendments goes to the heart of the issue; the balance to be struck in the new Department, and its relationship with Treasury Ministers. The Department needs to be accountable, through Ministers, to the House and its Select Committees, and to the Public Accounts Committee and the Treasury Select Committee through their Chairmen. It is not unique in that respect. However, some Departments have other functions, whereas this is its core function. In the interests of taxpayers' confidentiality, it has to protect information even from Ministers, and it has to administer the law—legislation passed by this House—without interference from those Ministers, or anybody else, to give favours. It also has to ensure that Ministers develop policy in a proper way, without favour. The balance of accountabilities, within the Department and between it and Parliament, is complex.

Revenue and Customs is, first and foremost, a Government department. The clause is essential in setting the limits of ministerial control, because of the important sets of obligations that the Department needs to discharge to the taxpayer, to the law and to the Minister in assisting in the development of policy. Ministers are accountable to Parliament for that Department. Therefore, they require powers—I hesitate to use the word, but I cannot think of an appropriate substitute—over the way in which commissioners exercise their functions. Without such control, HMRC would be autonomous and the important link of accountability to this House, which the hon. Member for Sevenoaks and others are keen to see remaining strong and vibrant, would be broken. While ministerial control is essential, right and proper, and it is important to ensure that Ministers' control is at arm's length so that they cannot intervene in the affairs of individual taxpayers.

Some might argue that there is a bit of a blur between operation and policy. For example, tax credits is a policy, but the way in which it is delivered, which is operational, is none the less of great interest to the House and I, as Minister, was held to account for it. In those circumstances, I was most certainly under pressure—if I did not feel it already, which I did—from individual Members as well as from debates and the Select Committee. I was being encouraged to be involved in that area of operation. The definition of ''direction'' is somewhat difficult. Lots of things apart from the clause converge to comprise the Minister's responsibilities and duties. Those are separate from the accounting officer regulations and the civil service code on how the Department should perform.

The clause seeks to set out the relationship between the Treasury and the commissioners, and deals with the exercise of their statutory functions as transferred to them under clause 4. Clause 10 carries forward the existing nature of the Treasury's oversight of the   predecessor commissioners' exercise of their statutory functions. It introduces a consistency of expression when dealing with Treasury power. The phrase

''any directions of a general nature'' replaces different expressions of general Treasury control used in previous legislation covering Customs and Revenue, and applies to all the functions of the commissioners provided for under the Bill. Clause 10 will not change existing arrangements, and does not disturb other Treasury controls, such as those that apply to other Government Departments.

The key issue is whether the Bill should limit the Treasury's power over the commissioners. Clause 10 recognises that a limit is required for one overpowering and overriding reason. It is a continuing commitment for the Government, and all hon. Members, to safeguard the collection and management of revenue and to keep taxpayers' confidentiality at arm's length from Ministers. Clause 10 limits the Treasury's power to requiring the commissioners to comply with

''directions of a general nature'', thus preserving the situation in which the Treasury does not have the power to direct the commissioners' actions—as a Minister, I do not have such a power—over specific taxpayers. I understand what the hon. Member for Sevenoaks seeks, and it is crucial to reassure not only the House but all those who read our proceedings. They need to know that there is no way in which present or future Ministers could ever demand information of the department; it is not appropriate they should have it and, frankly, it would be totally wrong for them to have access to it.

By removing limits to the Treasury's power over the commissioners' exercise of their statutory functions, amendment No. 2 would provide no safeguard on the level at which the Treasury might exercise direction. It would allow the Treasury, but not Ministers, to intervene in the affairs of individual taxpayers. I do not believe that that was the intention, but we simply cannot allow it. I am trying to explain why we used those words, and how we approached the problem.

I turn to amendment No. 3. Again, because HMRC will be a Government Department, albeit a non-ministerial one, it will operate by and large along the same lines as all Departments. In that context, a direction should not be considered as a single decision or document. Rather, directions arise from the entirety of the relationship between the Treasury and the department. If a ministerial decision raised issues of propriety or regularity, it would be subject to the normal arrangements; the accounting officers would raise the issue directly with the Minister, request an instruction if necessary, and report that instruction to the Comptroller and Auditor General. In practice, however, HMRC proposals are often made to   Ministers on the basis of routine submissions, and Ministers will sometimes make proposals to HMRC. I smile at that, because Ministers sometimes pass on proposals from Members of Parliament about what the department should be doing.

Clearly, on key issues there is likely to be a significant dialogue between Treasury Ministers, the commissioners and their offices. The outcome is a ministerial decision which may have the effect of a direction, even though, almost invariably, there will be an agreement on the way forward. Departments have always operated in that context.

Is it necessary or helpful for all such decisions to be copied to the Libraries of both Houses? I have some difficulty in seeing why, when routine directions of Government Departments by other Ministers are not subject to such treatment. Why should this department be subject to it, when it has not impeded or undermined our democracy or the function of this House?

That is not to say that these routine decisions will not be disclosed. Treasury Ministers are fully committed to meeting their requirements under the Freedom of Information Act 2000, just as they were to the previous code of practice, and will make information on ministerial decisions available, whether or not they take the form of a direction, in accordance with the Act. Therefore, I do not consider the hon. Gentleman's amendment, which would result in each and every one of these routine decisions by Ministers being lodged in the Libraries of both Houses, to be either necessary or helpful.

Returning to the incident where the accounting officer considers that a ministerial decision is in conflict with the standards by which we expect Ministers to perform, the existing arrangements adequately cover the reporting of such occurrences to Parliament. For example, the Comptroller and Auditor General, to whom the accounting officer must report any such incident, will draw occurrences to the attention of the Public Accounts Committee, and include coverage in his report on HMRC's annual accounts.

In summary, if the hon. Gentleman really feels he want to push amendment No. 2 to a vote—so that the qualification to Treasury authority over the commissioners' exercise of their statutory functions would be removed by the deletion of ''a general nature''—I will ask the Committee to reject it on the grounds that it removes all limits on Treasury powers over the commissioners. Those limits are important.

If the hon. Gentleman wishes to push Opposition amendment No. 3, which would require a direction from the Treasury to be placed in the libraries of both Houses, to a vote, I would ask my hon. Friends to oppose it on the basis that the routine exercise of a general Treasury direction—sometimes informally, sometimes in the nature of a direction—does not need   to be lodged in the Libraries of both Houses. It is unnecessary duplication of the arrangements now in place under the Freedom of Information Act 2000.

I hope that I have not only covered the hon. Gentleman's amendments, but given an indication of the complexity of the balance that it is important to strike in the department between the relationship of Ministers of the Treasury and the operations of the functions of the departments. I hope that, on reflection, the hon. Gentleman will decide not to pursue his amendments.

I am grateful to the Paymaster General. I think I made it clear that amendment No. 2 was a probing amendment. I can assure her and the Committee that I shall not seek to press it; partly because it was a probing amendment, but also because what she said was extremely helpful and has gone a long way to assuaging some of my concerns.

Having said that, I am bound to say that I found her response to amendment No. 3 far less encouraging and rather puzzling. She spoke about these directions possibly not being a single direction, or that there may be several directions, or a generic direction. At one stage she referred to them as proposals that might go from the Minister to the department. At another stage, she referred to them as decisions by Ministers. Finally, just before she wound up, she referred to them as informal or routine, almost announcements. That is not, of course, the power that has been taken under clause 10. The clause 10 duty is that the commissioners must comply with a direction of a general nature given to them by the Treasury. As it is now clear from the Paymaster General that these are only general directions, not involving the day-to-day operation of the Treasury, it is all the more important that we know exactly what they are.

The Paymaster General has suggested that the directions will be revealed on application under the Freedom of Information Act 2000, but that is not satisfactory. When a direction is issued and the commissioners are forced to comply with it—such as a direction that the Revenue should take a slightly different approach to certain classes of company paying corporation tax, or that certain classes of individual, such as those non-resident for tax purposes, should be treated more leniently than others—it is extremely important that those people who follow such affairs, such as tax practitioners, know about it. Inviting people to make an application under the 2000 Act to find out whether such a direction might have been made is not helpful.

The Paymaster General also said that if the decision—she kept using that word—was unusual, out of the ordinary or out of line, it would have to be disclosed through the accounting officer. That is perfectly true, but where the Treasury issues a general   and strategic direction, I do not see that it should be kept secret. She has not fully dealt with this case. A copy of a direction of a general nature should at least be placed in the Library. Before I decide what to do with the amendment, I invite her to address some of those concerns.

In the working relationship between a Minister and a department—any department, but particularly those under discussion—given the overriding importance of taxpayer confidentiality, there is not always an outcome every time a Minister speaks to officials. If there is, it does not have to be logged in the Library. I fail to see what the hon. Gentleman thinks Ministers may or may not be doing that requires disclosure to the Library. I remind him that the new department has its public service agreement targets. His own Committee calls Ministers regularly to account on the issues that it considers important, issues that this Committee is settling today by discussing clauses that it considers important and not pressing those on which there is general agreement. He knows that PSA targets are directions in the broadest sense. They are targets and they must be reported. I have been before his Committee to explain that when he has been in the Chair.

The hon. Member for Sevenoaks will know also that the new department will receive an annual remit from the Chancellor that will set its strategic direction. That will be published. The hon. Gentleman has the checks and balances; there is the annual report, the comments and the report of the Comptroller and Auditor General, all the accounting officer powers and the PSA targets, and there will be a published annual remit. Members of the House will be fully aware of the strategic direction. What they will not have—I cannot see the point in them having it—is the Minister's diary logged in the House of Commons Library, with the time of meetings with officials and the subject discussed.

Unless the hon. Gentleman can be more specific about what he thinks is happening without his knowledge, but which he should know about, I continue to be of the view that the checks and balances are in place. Many of those did not exist before 1997. The general direction from Treasury Ministers to the departments was not then considered a problem. The Bill merely carries that state of affairs forward with the additional safeguards that the Government have established.

I was hoping to save my comments on clause 10 until we reached amendment No. 79, but I was a little disappointed with the Paymaster General's response to amendment No. 3. The amendment seems to touch on the heart of the relationship between the Treasury and those parts of it that are, in theory, run   separately; the Paymaster General spoke of arm's length ministerial accountability.

The description that she gave us was of a Revenue department that would be able to run its own affairs from day to day without interference from the Minister, as part of a situation in which the Minister would clearly take an interest in strategic direction and in any major issues that might arise for discussion in Parliament. She would of course engage in continuing discussion and debate. She might be having meetings with the commissioners in the new department. She might have a block booking in her diary for discussion of relevant issues with them.

The amendment is not an attempt to obtain from the Minister all sorts of information about her diary engagements and discussions with the commissioners. It is designed to get the Treasury specifically to put into the public domain those occasions when it gives the commissioners explicit directions—even if they are general in nature—to guide them in their activities. Surely the point is that, if the Paymaster General is correct in her description of the relationship between the Treasury and the commissioners, such directions will be quite few and relatively specific about what they relate to. If the relationship between the Treasury and the Revenue department is really as we have heard, surely it will be possible—and sensible, and in the public interest—for the directions to be put into the public domain.

I am sure that the hon. Member for Sevenoaks is right to say that it is not realistic to think that freedom of information legislation will result in people constantly trawling for information in general to discover what directions the Paymaster General or the Treasury have given to a department such as the Revenue department about ongoing matters. The tax credit issue, which was mentioned earlier, is one on which we might well want the Minister to be very active.

If we are really to understand clause 10 and what the relationship between the Treasury and the Revenue department will be in practice—something that we shall debate further on amendment No. 79—the Paymaster General should be willing to go further on amendment No. 3. The only reason for not accepting amendment No. 3 would be that the relationship between the Treasury, the departments and the commissioners was rather different from the one described by the Paymaster General, with more being dictated, and more attempts to micro-manage the departments. That would mean a ream of directions having to be put in the public domain. That might be uncomfortable and embarrassing for the Government, as it would appear that there was less of an arm's length relationship than the Paymaster General has suggested. It is a great pity that the Paymaster General   has not been willing to go any further in underlining her view of the right relationship between the Treasury and the new Revenue department by accepting the amendment.

I shall be brief. I agree with almost everything that the hon. Member for Yeovil and my hon. Friend the Member for Sevenoaks have said. Having listened to the argument, I am more concerned than I was before the sitting. I understood the clause to refer to directions that would need to be made only in the most exceptional circumstances. The relationship between a Revenue department and the Treasury involves constant dialogue. It does not involve someone sending out countersigned instructions with dates at the bottom by which everything must be complied with. At that point, the relationship between the Treasury and the Revenue department would clearly have broken down or would be close to breaking down, or an issue of great sensitivity would have led to a clash between the commissioners and Ministers that Ministers believed they needed to resolve by exercising this power. That is what I had assumed the clause to mean. When the Paymaster General defended her position, she seemed to be saying that the amendment would mean that she would have to put her diary and other miscellaneous details into the Library. As I understood it, that is not what it is about, and it worried me that she seemed to believe that it might be. The amendment relates to rare and exceptional circumstances.

We all know that Revenue powers are often one of the methods used in countries with less effective and less highly developed democratic checks to bring pressure to bear on institutions, businesses or individuals. We see that in an extreme form in Russia at the moment with respect to Yukos. Such an infringement of what people consider to be their rights in this area lies at the far end of the spectrum. It is of concern that the Paymaster General is not prepared at least to consider some means by which these rare instructions—I would be grateful for her confirmation that they are rare—could be put into the public domain.

My hon. Friend the Member for Sevenoaks insisted on them being put into the Library, which seems to be a successful approach. By giving the Opposition that assurance, she will reassure us at a stroke that the clause does not mean what I took it to mean when we started debating it about 25 minutes ago.

The Paymaster General has rather disappointed me. We are not talking about diaries, informal working or any meetings that she may have with the chairman or others; we are talking about what the clause means. It refers to Treasury directions, so somewhere between the annual remit, which I fully accept is published with the PSA targets, and the day-to-day operational area, there is provision for   directions to be given. The clause imposes a duty on the commissioners to abide by those directions. If those directions are issued, I can see no reason why they should be secret. I beg to ask leave to withdraw the amendment, but I shall seek to press amendment No. 3 to a vote.

Amendment, by leave, withdrawn.

Amendment proposed: No. 3 in clause 10, page 5, line 20, at end add

''and a copy of any such direction shall be placed in the Library of each House.''—[Mr. Fallon.]

Question put, That the amendment be made:—

The Committee divided: Ayes 3, Noes 9.

Question accordingly negatived.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.