Clause 4 - Commissioners' initial functions

Commissioners for Revenue and Customs Bill – in a Public Bill Committee at 9:25 am on 11th January 2005.

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

Photo of Andrew Tyrie Andrew Tyrie Shadow Paymaster General

I resisted the temptation to ask the Minister to read out clause 1(2) or clause 3(2) to the Committee—I certainly could not have managed to do so myself.

The one general point that I want to make at the beginning of this group of clauses is that because this is, to a large degree, a consolidating Bill—I am talking not only of this group of clauses, but more widely—or a tax law rewrite, it would be immensely helpful if we could have a derivations table for the legislation. We have had a clear briefing that the legislation is minimalist, that there is nothing of substance, that there is no fundamental change in powers and that it is purely mechanistic. The Minister has reiterated that today.

There was a meeting on 6 December between officials and interested parties—30 or 40 people who follow these things closely. The Government have listened to a number of their concerns in the Bill. That is important. However, at that meeting, officials were asked to relay to Ministers a request for a derivations table. As far as I am aware, we have not yet received that table. Is the Minister prepared to commit to producing one? I think that interested parties and those following the Bill carefully would find that table extremely valuable. It is the best test of the extent to which the Bill is minimalist.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury 9:45 am, 11th January 2005

Clause 4(1) clearly sets out the areas in which the commissioners will have responsibility. It is divided into paragraphs (a), (b) and (c), which relate to existing areas of Inland Revenue responsibility, Customs and Excise responsibility and the management of tax credits. We accept that the Bill is minimalist and, to some extent, we welcome both that and the fact that there will be an opportunity to put together the two departments without dealing at this stage with some of the bigger issues about powers.

However, when we are setting out what the powers of the commissioners should be, there is a real issue about whether tax credits should be included in the new department. This is an opportunity to consider whether they should be included. I want to probe whether the area of tax credits, which many people feel is, in reality, more of a social security benefit, belongs in the new, merged department, which will have considerable responsibilities and a large number of staff and, as I understand it, will focus for its primary responsibility on closing the tax gap. That is different from much of the work that is involved in the administration of tax credits.

Without going beyond the bounds of the Bill, I think that there is a great deal of feeling in and beyond Parliament that tax credits may be in the wrong area. They should not be controlled by the Treasury, but are naturally part of the Department for Work and Pensions. Perhaps this moment, when we are thinking about what the new, merged department should   consist of, is a good opportunity for us to think about whether we want clause 4(1)(c), which would give commissioners the responsibility for tax credits as well.

The Paymaster General may well say that it is premature to consider the organisation of the new, merged department. However, Sir John, you will no doubt have seen some of the speculation in the last couple of weeks about Government plans to restructure the Treasury after the general election—the so-called Birt plans, as referred to in a recent article. The article said that there are plans to strip down the Treasury after the election, take away its powers of public expenditure and transfer Treasury Ministers and others to the Cabinet Office under the existing Chancellor of the Duchy of Lancaster. So there is a real issue about whether the Government have plans for the future structure of the Treasury and whether those might, as the recent article in The Sunday Telegraph suggested—

Photo of John Butterfill John Butterfill Conservative, Bournemouth West

Order. I am perfectly happy for the hon. Gentleman to refer to this issue briefly but I hope that we will not be drawn into a debate on speculation about the future of the Treasury.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

I certainly would not want to get drawn into that debate and I am grateful for your guidance, Sir John. Obviously you appreciate that the issue is extremely relevant because if the Government plan to restructure the Treasury, possibly in a few months, while we are passing new legislation that would cut across those longer-term plans of the Government, and that would be damaging in terms of Government organisation. It would also be a waste of Parliament's time. I hope that the Paymaster General will be able to comment on that issue and shed some light on the stories about the longer-term intentions of the Government for the powers of the Treasury and the merged department.

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

Two issues were raised. First, the hon. Member for Chichester asked about the derivations table. It is not appropriate for it to be part of the Bill. [Interruption.] I did not think that the hon. Gentleman meant that. I am glad to see him agreeing with that because it is not a matter for consideration. However, I can see no reason why we should not produce that table. We can produce it for the Committee. It could be part of the explanatory notes. That has been done before. Tax law rewrites established that process. I think that during the proceedings dealing with one Finance Bill I agreed that we would produce a table in the explanatory notes as an explanation for some clauses. I shall try and get that completed as quickly as possible so that Committee members have it for their reference, as will those outside the House, but it will not be part of the Bill. I do not think that the hon. Gentleman was actually asking for that.

Photo of Andrew Tyrie Andrew Tyrie Shadow Paymaster General

I thank the Paymaster General for her co-operation on that point. I know that there are many people outside this Room who will be delighted to see that document.  

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

I am glad to hear that. I am sorry that I did not provide it before so that the hon. Gentleman did not have to ask.

On the question raised by the hon. Member for Yeovil, I want to make it clear that the O'Donnell review considered the issue of tax credits and their importance within the Revenue department, and thus the new merged department as an integral part of the tax system. It is a matter of Government policy that tax credits are dealt with by the Revenue department.

The hon. Gentleman has expressed his agreement with the idea that the Government should use a minimalist Bill to begin the merger. In considering the new department, it was clear that tax credits should be clearly included in its responsibilities. If at some later stage, in decades to come, another Government decide that they do not want tax credits to be dealt with by the new merged department, primary legislation will be required to move it, which is right and proper, as I have stressed on Second Reading and at the beginning of today's proceedings.

We have taken the two departments and brought them together in a machinery of Government Bill to ensure that they can continue their functions and that we can begin the process of considering the duplications and ensuring efficiency. I say to the hon. Gentleman that if changing that is the policy of his party, primary legislation would be required. That is absolutely crucial in order to give security and clarity to our staff and the commissioners concerning what the new department is expected to do.

Photo of David Laws David Laws Shadow Chief Secretary to the Treasury

I am grateful to the Paymaster General for giving way. We are dealing with a serious point, and to put it on the record, would she explain what the reasons are for keeping the administration of tax credits in the department for the foreseeable future rather than allowing them to be dealt with by the Department for Work and Pensions?

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

I shall look up the references in the O'Donnell review and give them to the hon. Gentleman during the next sitting so that he can re-read the published review of why tax credits are dealt with by the Revenue and why it is Government policy that they should remain there.

I do not think that it is appropriate—you may possibly stop me, Sir John—to rehearse the policy and political reasons for the existence of tax credits: the importance of their being within the tax system, the removal of the stigma, the encouragement to work and the contributions to child care and to children as part of an anti-poverty strategy, which is central to the functions that the Treasury has outlined and that the new department will continue to administer. I know that the hon. Gentleman has a different policy review in mind but that is not a subject with which I feel I should engage more directly today. I would just say to him that one should be careful about what one reads in newspapers.

Question put and agreed to.

Clause 4 ordered to stand part of the Bill.