I beg to move amendment No. 79, in clause 10, page 5, line 20, at end add

'except insofar as such directions conflict with the duty to act on behalf of the Crown as laid down by section 1(4)'.

We had a go at considering this issue via a couple of other amendments this morning and I shall now have another go at persuading the Minister that, as it stands, the Bill is not right. After what was said this morning, I am more worried than I was before. I was expecting some clarification that would assuage my concerns and go some way to address my future concerns, but I have not received it.

There are two basic issues in clause 10. With your permission, Mr. Hurst, rather than asking for a debate on clause stand part, I will cover all the points that I want to make about the clause in relation to the amendment. The first issue is: who controls Her Majesty's Revenue and Customs? The second is: who formulates tax policy?

The amendment addresses the question whether HMRC really is a non-ministerial department. It is worth exploring some basic principles about what we want the relationship between the two departments to be. We want the department to retain its independence and we want the tax collection process to be entirely disengaged from politicisation or putative politicisation. As I understand it, clause 1(4) is designed to do exactly that. It says that HMRC is a non-ministerial department and that it is technically responsible to the Crown.

However, clause 10 gives the Treasury a large slice of influence. Is it right that clause 10 should give the Treasury that amount of influence? On the basis of what the Minister said, I do not know what

''directions of a general nature'' are and how they contrast with directions of a specific nature, which are, by implication, ruled out. If ruling specific directions out was the intention, the clause could have said ''the commissioners need not follow directions of a specific nature given to them by the Treasury'' and added, ''in this clause, specific nature means'' and then had a definition. However, we do not have such a definition. We have a clause in which I fear that the Minister has muddied the waters.

I say in parentheses that I do not think that the Paymaster General or other Treasury Ministers have, in recent years, been engaged in nefarious activities or have tried to put pressure on the Inland Revenue to do   specific things. At any rate, I have no evidence to that effect; nobody has come to me to say that that is the case. What we are doing is putting in place legislation that may have an effect on some future Minister who may not act properly.

When thinking about the issue, I decided that the best way to illustrate my point was to take an example. Let us take corporation tax. A Minister decides to introduce a corporation tax and feels the need to direct the commissioners to introduce it. That seems to me to be clearly a direction of a general nature. The Minister then decides that they want collection of that tax to be a priority. More resources are to be put into the collection of that tax than into the collection of other taxes. That is still probably a direction of a general nature. However, I am already in an area about which, on the basis of what the Minister said, I am not sure. What if the Minister tells HMRC to collect every last penny due under the corporation tax, even if that means the non-settlement of cases and a huge increase in the number of disputes taking place about that tax—cases going to court and so on? Would that be an instruction of a general or a specific nature? We can use common sense but we have no way of knowing on the basis of what we have been provided with so far. I think that it would be a specific instruction with very far-reaching implications for the way in which tax is collected, and not what was intended and what I think any reasonable person would want to find capable of being directed under the clause. We have no way of knowing whether the clause would exclude such a direction on the basis of what the Minister said to me in Committee this morning.

I worry very much that there is a risk about powers. I think that the Paymaster General's words this morning, which I wrote down, were that ''they'' would need powers over the way in which the HMRC exercised its functions. I think that that is a very dangerous phrase and we need to know what it really means. What are the limits to those powers that the Treasury is taking on? So, I am not clear, after considering the clause, on the first question of who is really controlling HMRC.

Now I want to tackle something trickier. Under the clause, who will run tax policy? It is clear that the Treasury wants more of the cake. It has wanted more influence on tax policy on every occasion that I have been aware of, or have been involved in any way with, the Treasury. This is not quite the same thing and I acknowledge that, but page 10 of the excellent O'Donnell report by the Treasury states that

''the Treasury's capacity to advise on tax policy should be enhanced.''

There is a clear indication. However, I think that the Paymaster General said this morning that it was not the Government's intention to change the existing arrangements in any way. Whatever her intention might be, I am not too sure whether we will end up with exactly the same thing that we have had before.

I think that there are real dangers in this area and I am not alone in that. It is worth considering what the Institute of Chartered Accountants in England and Wales said about the new arrangements for policy   making, which was quoted in the Treasury Committee report. It said,

''there is a danger that this will widen the gulf which undoubtedly already exists between policy and operational issues.''

PricewaterhouseCoopers said:

''There is a risk that the policymaking of the combined body becomes more detached from the implementation and operation, and indeed from practical experience.''

Therefore, we are not talking about the Minister trying to do things that a reluctant commissioner or group of commissioners might not want to do. We are talking about whether the integration of tax policy with the operational side of tax collection is adequate and satisfactory in the light of the clause.

Let us consider other institutions that have been created, such as the Financial Services Authority. It is a body with a fine group of people at the top who, right from the start, have been thinking through very intelligent theoretical approaches to financial regulation. However, a great gulf has opened up between that and what is really occurring on the ground and what people have experienced as a consequence of regulation. What such voices—PWC and others—have been complaining about is that we might bring about a repetition of exactly that situation.

No doubt the Paymaster General will tell me—I think that she has already implied this—that she has not ever issued any of these directions. Of course, the relationship between a Minister and a Department is all about timing. Ministers do not turn up in the office and say, ''I want the following five things done and I want them by 3 o'clock; this is a direction under subsection (3) with something or other.'' Quite clearly, people ask for something to be done and nine times out of 10 it is done.

Occasionally, there is a row and when that happens the Chancellor will get involved and try to clear it up with a quiet word with the chairman of the Board of Inland Revenue, and when that fails there is a review meeting. Nearly 15 or 20 years ago I sat in on some of the meetings at which such interesting discussions took place. Such matters are resolved amicably—at least that was so in every case that I came across. This piece of legislation, however, might be entrenching the power to override the iterative process that I have just described. The Paymaster General will tell me that the process is exactly the same as we have had in the past and there is really no change at all, but we are not satisfied.

The danger is that this dispute will mean that the O'Donnell report turns out to provide a much weaker distinction than Gus O'Donnell alleged. In his own evidence, he made a distinction between strategy and policy development and policy maintenance and delivery. There is a problem of creating a Division 1 and Division 2 Inland Revenue, with one group of people who feel that they are top dogs, because they are involved in rarefied, terrifically exciting policy work and another group made up of the poor souls who are given instructions from the top table and told to run off and find a way to collect the money without   their views being taken fully into account as part of the policy-making process.

I am not happy with the clause. I would like a clear explanation of what ''a general nature'' means. I should also like clarification of the department's independence, which the Government say that they will retain. Perhaps the existing rules were always wrong—that is often so—but they were protected by precedent and how people did things. Perhaps the two changes—the creation of a new department plus the fact that there are existing policy-making arrangements whereby a group of people from the Inland Revenue are now sitting cheek by jowl with Treasury officials in the Treasury building—will create conditions in which understanding will be strained for the first time. That is one of the issues that has been perturbing me.

I am very grateful to the hon. Gentleman for giving way. I was not here this morning, for which I apologise, Mr. Hurst.

Do I understand the hon. Gentleman correctly? Does he believe that there are compelling reasons for greater co-ordination of tax policy and might that be done better by the Treasury? Nevertheless, there should be greater safeguards.

Yes, that is dead right. We do not want to find Ministers getting a bit closer to the business of collecting the money. However, we do not want the iterative process, with a distinction between those who have to collect it and those who are thinking up policy—which has historically made for a reasonably well-functioning tax system—to be fundamentally altered. The review makes it clear that the Government intend to alter that process; that is not denied. By altering the process—as is set out in the O'Donnell report and the Treasury Committee report—the Government may put pressure on what has previously been assumed to be a perfectly satisfactory level of protection on the point of ministerial direction. We could have lived with that, because we always have done so and have got used to it. However, that protection will not be so robust now in the defence of what we want to see defended.

I want to end by drawing the point a bit further. I said a moment ago that Treasury officials will find themselves sitting on the wrong side, although to Revenue officials down the corridor that may sound like a good idea. One group of them will have signed the oath and another group will not have done. To start with, there will have to be a Chinese wall between those two groups. One group will know about some cases coming up and that is why they will be concerned to get a particular clause in, and another group will not know about the cases as they discuss a particular measure. I think that that is perfectly possible but it would require a lot of attention. What worries me is that there could eventually be some leakage. It is absolutely crucial that taxpayer confidentiality is maintained. The moment that people think that there is not proper taxpayer confidentiality, the revenue base   will be at risk because people will get very nervous about what they tell the Revenue authority.

Worse still would be the appearance or allegation that pressure, coming ultimately from politicians, was being put on a business or a wealthy individual, although I strongly suspect that that would be untrue. That would be extremely unfortunate. I will not go on about the Vodafone case, but that was an illustration of the fact that, whatever the reality, just the appearance of the weapon of the public domain has partially eroded big companies' trust in what is being kept confidential.

We shall discuss the oath later, but I say in passing that I wonder whether, far from getting rid of it, we may be able to extend it to those officials working on policy alongside Revenue officials to enable them to hear some of the conflicts of information that may lead the Revenue to make proposals.

Having said all that, I feel that clause 10 will not do; it needs much greater clarity and we need to know what is meant by ''a general nature'' and ''a specific nature''. We need more reassurance from the Minister. We are not minded to support the clause.

Welcome to the Chair, Mr. Hurst. We had a useful debate on the clause during this morning's sitting, particularly when we discussed the amendments tabled by the hon. Member for Sevenoaks (Mr. Fallon). I had intended to leave all my comments on this part of the debate. However, we had a very interesting debate on amendment No. 3, which was pressed to a Division. It is a pity that the Government did not accept the thrust of that.

However, the debate is focused in particular on concerns about the ambiguity of the—relatively short—clause 10 and therefore about the supposedly arm's length nature of the relationship between Ministers and the Revenue and Customs. How will that work in practice? The hon. Member for Chichester (Mr. Tyrie) said that he was unclear about what ''of a general nature'' means in practice, and he is right to be so. I ask the Paymaster General how she would feel if she were told by a member of the Government that in the Treasury she was to remain liable and accountable to the Chancellor, but that she was expected to comply with any directions of a general nature given by the Prime Minister or some other member of the Government. It would be very unclear what ''of a general nature'' meant and how that would limit her normal powers of independence. What would that boil down to in practice?

I do not want to go back to our earlier discussion, but the hon. Member for Sevenoaks tabled an amendment whose effect would have been to take out the words ''of a general nature'', and he said that that was a probing amendment. If it had been accepted, I would have been, if anything, slightly more concerned about the final situation. We would have been left with a situation in which the commissioners were obliged to comply with any directions given by the Treasury. That would have   sounded even more worrying, and would be even more liable to result in interference by Ministers in commissioners' day-to-day operations.

The Paymaster General has given us a little insight—I hope that we shall get more from her on this—into the working relationship between herself and organisations such as the Inland Revenue and Customs and Excise, which are in theory at arm's length from her, but for which she is accountable in the House of Commons. Very often, for example for initiatives such as tax credits, Parliament will want the Minister to take a close interest in the effectiveness of a policy.

The hon. Member for Chichester mentioned the development of tax policy and how the clause would work in those circumstances. Can the Paymaster General enlighten us as to how the relationship would work in practice at present, in a situation where, for example, we have had concerns about the operation of the tax credit system? Where a relatively simple system of rules and regulations is applied by the tax credits department of the Inland Revenue to particular cases—for example, in the case of overpayments—but where the Minister has concerns about how the policy affects people on low incomes and how the rules and regulations are interpreted, how would the Minister relay her concerns? Would it be in the form of a direction, or through some sort of debate? The nature of that relationship is critical to the right drafting of the clause.

The Minister's earlier comments suggest that she fears that Opposition Members want her to publicise and be accountable for every element of her relationship with the Inland Revenue, Customs and Excise and the new body. We certainly do not expect that; we do not expect to see her popping into her diary her engagement with Mr. David Varney and others. But we are interested in cases when the Minister or her Department have given clear policy directions or advice to the Inland Revenue and Customs and Excise that may have an effect on how Government policy is implemented. Sometimes, directions could have a material impact on how Government policy is implemented, even though they might not change existing rules and regulations laid down in statute or elsewhere. The operation of the tax credit system is a good example of that. It would be interesting to hear more from the Minister about that.

I was disappointed that the Minister did not accept another amendment tabled by the hon. Member for Sevenoaks on the issue. The amendment moved by the hon. Member for Chichester is not perfect, in that it does not deal with some of the issues highlighted in the early discussions, but at least it focuses the Government on their responsibility to allow the two bodies day-to-day responsibility and independence, as far as possible, unless they want specifically to interfere and lay down clear instructions that might otherwise counteract what the departments concerned are doing.

These are quite important issues. They may seem somewhat esoteric, but one can certainly imagine circumstances in which they would lead to significant problems in the operation of Government policy, if   not under this Government, then under some successor Government.

I am grateful to you, Mr. Hurst, and you have been generous in allowing such a wide-ranging debate on the amendment. I am sure that you were right to do so, because this is an extremely important, although brief, clause. I hope that you will forgive me if I do not progress some of the arguments made about the nature of Treasury directions. As the debate has unfolded, both through the amendments that I moved this morning and the amendment moved by my hon. Friend the Member for Chichester, the Committee has become less clear about what we mean by a direction ''of a general nature''. I hope that the Paymaster General can give us a little more on that.

First, it is not clear to me at all what we mean by ''the Treasury''. That, presumably, is officials and senior officials as well as Ministers. This clause is not limited to ministerial direction. In fact, it means that a senior official involved in tax policy could give the commissioners a direction. I should be grateful if the Minister would comment on that.

Secondly, as my hon. Friend the Member for Chichester argued, it is all the more important to be clear about what a direction ''of a general nature'' is, because we now have a unified department that is virtually inside the Treasury building itself. That is precisely why we need the relationship between Ministers and officials, commissioners and their staff to be as clear as possible when they are sharing the same cafeteria, when they are walking the same corridors, when they may be promoted or moving along different career paths within the same building, and when a number of them are moving from tax policy on one side of the House to tax policy on the other. We must get this relationship right.

Mr. Hurst, in your absence this morning we heard a blurred definition of what ''directions'' might mean from the Minister. She referred to her discussions. She referred to decisions, matters she might perhaps have discussed with the commissioners that they may have wanted a steer on. She would give a decision and commissioners would then go and act on it. She referred at one stage to diaries. We are not talking about decisions, discussions or diaries. We are talking about formal directions that the Treasury decides to issue to the commissioners.

I can well envisage the circumstances in which such directions are issued. For example, there may be a discussion about the use of resources. Halfway through a financial year, it may become clear that Ministers want far more priority accorded to one particular area of work than another, which is not covered by the annual remit that the Paymaster General referred to this morning, but is a creature of time and changing circumstances. The commissioner may say, ''That is fine; I am happy to do that'', but they should have a direction to do it. If that is not the kind of direction ''of a general nature'' that this clause is intended to cover, I should be grateful if the Paymaster General would perhaps give us some examples of directions ''of a general nature'' without going into detail, perhaps describing one or two that   have been given under previous legislation, or the sort of direction that she has in mind.

The other suggestion that I would make to the right hon. Lady and the Committee is that if we are still unclear as to what a direction ''of a general nature'' is, perhaps we ought to include a definition of it in the Bill. The easiest way to do that would be to include a definition of ''direction'' in clause 46, the interpretation clause. After all, I see that in subsection (2) of that clause we define ''function''. If we define ''function'', I see no reason at all why we could not be clearer and define in the statute itself what we mean by a direction ''of a general nature''. Until we do this, the uncertainty surrounding this clause, the lack of clarity as to what a direction is, this hinterland between the annual remit given to the commissioners and their daily operational activity, this grey area between the two, will remain grey. Both sides of the House will be unclear as to exactly what kind of direction the Treasury is giving the commissioners and their staffs.

We need more clarity in this area, and I think the Committee now realises that the Paymaster General ought to provide it.

Welcome to the Chair, Mr. Hurst. We are rehearsing most of the discussion we had this morning on a very important issue. As I was listening to the contribution of the hon. Member for Chichester, I reflected that there was something I should recommend as reading for the Committee: Jim Cousins's excellent book—he is also an hon. Gentleman—

Order. Hon. Members should be referred to by their official titles.

Thank you, Mr. Hurst. I apologise. Many hon. Members, including Opposition Members, have commented on the relationship between Ministers and Departments. That would have put into a helpful context what is a complex relationship. The idea that our excellent civil servants would allow a Minister from any Department to direct matters in something that was inappropriate, in breach of a Minister's code of conduct or an accounting officer's duty or value for money is truly repugnant.

Mr. Tyrie rose—

Do not get up now, please. I listened carefully to the hon. Gentleman and I now wish to elaborate on my argument. I understand clearly the idea that Ministers do not cherish and uphold the high principles of the civil service and its relationship to elected Ministers and the House. The debate is revolving around the general direction as it has always been used in relation to the Revenue department, the Revenue and Customs and Excise, the Ministers and the Treasury.

We must bear in mind the word ''direction''. I want to ensure that there is no question that a Minister would have the power to intervene in a way that would contravene taxpayers' confidentiality. Direction does not imply an instruction or order that overrides the   rules or views of the commissioner. To say that that would be exceptional is an understatement.

I shall refer to why we settled on a general direction. The hon. Member for Chichester wanted to explore the definition of policy as opposed to operation. On the one hand, he argued for a clear separation but on the other he realised that the two aspects merge with each other and that there needs to be a clear understanding about that. The phrase ''general direction'' provides that Ministers can exercise control over the activities of the department in a sensible and fairly broad way as, indeed, the Secretary of State can in any Government Department. As I have made clear, during the course of exercising that control Ministers would expect to be engaged in discussions with departments in several ways. They would communicate their intentions and seek advice.

In the process of developing policy, a Minister is working closely and directly with departments to inform them whether the policy is do-able, reasonable, value for money, whether it would require more resources or whether there should be a diversion of resources, to which the hon. Member for Chichester referred. That would leave the Minister accountable to Parliament and have an effect on the public service agreement target. The Minister would have to explain his action to the Treasury Committee, as I did. I said that I took a priority view because I knew that Parliament wanted such matters to be delivered and, as a consequence, I was informed that I was responsible. I did not point a finger at my civil servants; they told me what would happen and that it was reasonable value for money, but that I would be accountable for such action and not to blame my civil servants. Of course, that is absolutely what we are not going to do.

Ministers can set the strategic, high-level protection for the department on policy and issues around it in dialogue and engagement with the department, and the clause seeks to ensure that that does not extend to taxpayers' information. The words ''general direction'' were carefully chosen to ensure that the day-to-day business of the Government continues through HMRC as it is created—[Interruption.] I wonder whether the hon. Member for Yeovil (Mr. Laws) will allow me to elaborate, because this is a complex argument. I am trying to explain how the relationship between a Minister and a department works and why ''general direction'' is not a problem.

This morning and this afternoon the hon. Members for Sevenoaks and for Chichester raised specific issues regarding some rare and unusual circumstances, if they were ever to occur—I have been a Treasury Minister since 1997 and in my experience such things have never occurred, and I have checked with my officials for all other Ministers—where a Minister might direct the department, although the department had given advice against that decision, perhaps because it contravened value for money. In fact, I think I would refer to that as a special direction. In such circumstances the accounting officer would have to issue an accounting officer letter, because if value for money were   breached, or if there were issues around the poor use of resources or a breach of another area, that would be notifiable immediately to the Comptroller and Auditor General, who would then notify the Public Accounts Committee.

The hon. Member for Chichester is trying to focus on whether the department can be instructed against all its knowledge, experience, expertise and understanding to do something that contravenes everything else that it has tried to do as a Government department under the rules of accounting, PSA targets or what is right and proper.

The commissioners do not have to decide what is ''general'', or what that means. They have to decide whether a decision is appropriate and whether what the Minister has asked, requested, ordered, directed, or otherwise given as a ministerial decision, is inappropriate within organisation rules. If it is inappropriate, the Minister will receive an accounting letter that will be in the public domain and will be known, which is what the hon. Member for Sevenoaks wanted to know this morning.

The hon. Member for Chichester asked about a specific matter, so I will deal with his example. If the Minister directed the department to collect every single penny of money that was due, regardless of circumstances or anything else, would that be a ''general direction''? That is an interesting example, because it raises all the issues. The first half of the answer is that that is a general direction, because it is an instruction to collect the money and not specifically about a taxpayer. However, it would immediately bring into play all the other requirements on the commissioners in deciding whether they would proceed with the ministerial request. For example, would it be value for money, or fair and equitable given the complex circumstances when we do not sometimes collect all the money back? Even though it is of a general nature, the decision would be subject immediately to the accounting officer arrangements, before we have got anywhere near the taxpayer's confidentiality—which we cannot do.

That example is hypothetical and the hon. Gentleman acknowledged that. If it were to occur, the working relationship between the Minister and the department would have broken down to such an extent that I find it impossible to think how the department might function. All sorts of other issues would arise. I understand that the hon. Gentlemen see ''general'' and ''direction'' as an instruction on the way down and therefore that a direction is an order from a Minister. What does ''general'' mean? Perhaps in reality it is the other way round. ''General'' means that it cannot be specific. For example, a Minister cannot instruct the department or ask for information on taxpayers, or seek to design a tax policy with a particular taxpayer in mind to give an advantage. All that would be prevented, even though it is in the general policy area.

The interesting thing about the two groups of amendments—

Will the Minister give way?  

I will, but I will just return to the amendments that we considered this morning and the amendment before us.

Amendment No. 2 sought to remove all the—

Order. Unless the Paymaster General is doing this by way of analogy, we cannot return to those amendments.

I am indeed, Mr. Hurst. For this morning's debate and this debate I shall run either side of the same principle; should the Treasury Ministers have ultimately specific control or should they have no control? This morning's amendments sought to make specific controls and amendment No. 79 goes in the opposite direction—to the opposite extreme.

I take it that the amendments were tabled in order to have a decent debate about what was meant by ''general direction''. However, the amendment seeks to provide the commissioners with an independence across the whole function that they exercise. That would mean that the Minister would have a remaining function to express an interest and to give possible guidance on how they should perform, but would be completely unable to be accountable, because the Minister would have no control.

Will the Minister give way on that point?

I will, but let me finish the point. The question is where we set the balance. First, we must protect taxpayer confidentiality at all costs, which is why ''general'' is used. The provision cannot be specific; there cannot be direct intervention. Why was ''direction'' used? I was looking for consistency and such things have always been called that. They are called that in all Departments and it did not cross my mind that the two words together would create some loss of control or a way of asserting a Minister's control.

The Government's intentions are clear. The provision is not just about what is meant by general direction, which means not specific and not affecting taxpayers' confidentiality. It is one of the requirements on Ministers, civil servants and accounting officers that combine in a complex model to protect taxpayer confidentiality on the one hand and appropriate behaviour by Ministers on the other. It will ensure sensible advice from the departments both on operation and policy delivery, and a clear line of accountability to Parliament. Finally, it will develop the policy ability to give greater co-ordination and understanding in order to improve the tax system and make it fairer, more direct and accessible, in a sensible way, for taxpayers; and, dare I say it, to make it occasionally simple.

I am grateful to the Paymaster General for giving way and for her clarification, which takes matters a little further. To be clear about this particular clause, is the Paymaster General saying that she would not expect the commissioners to comply with a direction of a specific nature if it were given to them by a Minister?

It would be for the accounting officer to decide whether the decision from the   Minister was inappropriate. I cannot think of an example to illustrate that. The department would advise me. A Minister does not just suddenly say, ''I want the department to do this''. There would have been a discussion of the issues and advice would have been given. If Ministers ignored good advice and still insisted on issuing the decision, the accounting officer would, as I said, decide whether that was inappropriate. If they decided that, the other rules would come into play.

Does the hon. Gentleman want to pursue that point?

I am very grateful to the Paymaster General for giving way. I appreciate that she is trying to be helpful. Let us take one example of a direction that the Minister might want to give to part of the Inland Revenue in certain circumstances, for instance. If the Minster decided that she wanted to give a direction to the tax credits department to treat overpayments in a particular way when they appear not to be the fault of the individual who received the overpayment—because of computer error, for example—it is quite possible that legislation would take either the very strict approach that the department itself was taking, or would allow greater latitude. Would not the Paymaster General be prepared to give a specific direction, and would not it be acceptable to most people under those circumstances that she should do so?

I may give a specific direction but, on that basis, the Department would advise me as to whether or not there was a breach of value for money, equity or finance to all other taxpayers, whether the Government would be open to a legal challenge for unequal treatment and whether or not the National Audit Office would consider writing off an appropriate amount. The Department would advise me on procedure to deal with that.

I can only speak for myself in this example. If a Department tells me that a decision breaches value for money, accountability and fairness, and does not comply with the rules required of a department of civil servants within a Government Department, I can think of no circumstances in which, having been told that, I would then say to the Department, ''I have heard what you say, but go ahead''. The dialogue and advice that Ministers get is complex. We trust that the advice we receive from our civil servants is accurate, and we act on that basis; the hon. Gentleman has chastised me a number of times when he has not considered that the advice has been accurate.

The Paymaster General continues to present this clause almost as a dialogue concerning some debate between her and the commissioners. She has been helpful in getting over to the Committee the fact that she sees this clause as restrictive, and I fully accept that. But she describes the directions as ''of a general nature''; that is restrictive. That is a safeguard and is welcome, and it is why I did not press amendment No. 2 this morning. The difficulty the Committee has had this afternoon is simply the definition of the word ''direction''. It is not a decision that resolves an argument. We are seeking to establish what kind of direction that would be.  

The Paymaster General would help us if she gave an example of a direction of a general nature that she has given in the past three or four months, or three or four years—she has been in her position for a while—or an example of the kind of direction of a general nature that she might give in future. If she could describe one such direction, perhaps we could wrap the issue up and move on.

I have never directed the department. With the exception of PSA targets, which are published and set for all Government Departments, which strive to comply with them, I can find no examples—my officials have checked back to before the election of this Government in 1997—of the Minister of the day directing the department to do something. The words ''general direction'' have existed for a very long time; they are well understood and built into the training qualifications and the operation of all Government Departments of the civil service. For them, the words are clear.

Having been a Minister in a previous Government, the hon. Member for Sevenoaks will know that there are sometimes robust discussions between Ministers and officials when the Minister would like to develop a policy area but the officials say that it cannot be done; there is probing until the Minister is satisfied that it cannot be done. However, there have been no examples of officials being directed. The hon. Member for Chichester described very well the working and day-to-day relationships between the department, the Treasury and the Minister.

Mr. Burnett rose—

Mr. Tyrie rose—

I am going to give way to the hon. Member for Chichester.

I am quite worried by what I have just heard. Am I making an intervention or is the Minister giving way?

I am giving way.

I shall say something at the end of the Paymaster General's remarks.

The Minister responded to the point about tax credits by giving a hypothetical example of her receiving advice, overruling it in a particular manner and giving a direction contrary to that advice. Earlier, she said that such a direction would come to light and eventually arrive before the Public Accounts Committee. Would that invariably be the case? How long would a case of a Minister overruling officials' advice take to get to that Committee?

I do not know. I have no experience or knowledge of Ministers' overruling direct, specific advice from within any of the Treasury departments or any others. That is a very hypothetical question. If the hon. Gentleman really wants me to pursue it, I shall ask my officials what the process would be if I had been that foolhardy.  

I shall ask my hon. Friends to reject this amendment if it is pressed to a Division, although I think that the hon. Member for Chichester said that it was a probing amendment. However, I seem to have made him more unhappy rather than less.

I am afraid so.

Maybe the moral of the story is that Ministers should not try to be helpful, but should just speak very narrowly to the point.

When the Paymaster General was being helpful this morning, I regretted that we moved on speedily, so she should not feel that. She seemed to imply that my amendment might lead to Ministers being virtually written out of the piece. That is an astonishing interpretation of what is a relatively straightforward clause. The overriding duty of a Department of the Crown is protected.

Perhaps inadvertently, the Paymaster General said something else that was astonishing. She said that she had not only looked to see whether any directions had been issued since 1997, but that she had asked officials to look prior to 1997 to see if there had been directions under a previous Administration. If she directed officials to do that, she was in breach of all sorts of rules, regulations and codes, which I shall not begin to enumerate because it would take too long. However, that is a very serious breach, and the officials concerned should have immediately come back and said that they were not prepared to do that.

Will the hon. Gentleman give way?

I will in a moment. I hope that, in fact, there was a slight slip of the tongue and that all that someone was tasked to do was refer to a few memoirs—''The View from No. 11'' for example—and to look up the word ''direction,'' and when they found nil return to report back to that effect.

First, I said I asked about other Ministers. Secondly, the issue of whether there was a direction is about whether or not an accounting officer letter was left, and that would be in the public domain. The hon. Gentleman is right; there is no way that I would ask that investigation to go back prior to May 1997. He knows that, but it was a good point to make; he has, as ever, been helpful, and I am grateful to him for allowing me to correct the record.

Good; I am grateful for that. I am left bereft of any understanding of why we will have this clause if the Paymaster General has concluded that she cannot conceive of any circumstances in which such a direction would be required. She said that there had never been any such direction, and that she could not think of any circumstances in which one would need to be made.

The Paymaster General also said that if a direction had been made, relations would have broken down so badly that it is inconceivable that the normal work of the department could have continued. That suggests that the clause has been written for a set of circumstances that are inconceivable, in which case what is the point of putting it in the statute book? However, I do not think that that is correct; the clause   has far more substance than that. That is why I am nervous.

One specific reason why I am nervous is that the Paymaster General said that we cannot work out what the clause means by defining the word general. What we have to do is define a word that is not in the Bill; that word is ''specific.'' When pressed on what that word means, she said that she thought that we are partly talking about codes and inappropriate behaviour that Ministers might get up to, and other statutory limitations and conventions. However, officials will alert Ministers to them even without this clause, to make sure that things are fair. Finally, she referred to only one word, which is confidentiality; confidentiality of individual tax cases. What this clause really means—what it only means, as far as I can tell—is that a Minister may make any direction to the Treasury except where that direction will lead either to the creation of a tax that targets a specific individual or company or a demand for information about a specific taxpayer. That is a very narrow definition of what the clause means. I now find the clause deeply satisfactory.

One reason why we ask for fetters on the clause is that occasionally the taxpayer base is very small. Sometimes, there can be a taxpayer base of just one company and one major transaction. I am thinking particularly of stamp duty reserve tax. We were told in proceedings on the 1998 Finance Bill that all loopholes had been closed; I think that that related to the fact that stamp duty had changed so much. Contrary to those assertions, when British Petroleum merged with the non-US assets of, I think, Mobil—I might have the names wrong—something like £1 billion or £1.5 billion in stamp duty reserve tax was lost because the companies used a perfectly legitimate avoidance method.

The loopholes have not been blocked satisfactorily, and that gives a specific taxpayer's case relevance to Ministers. That is why we really need to know whether the duty that we are talking about is a duty to the Crown and a duty always to act in good faith. That is not to impugn the integrity of the Paymaster General here today. We want legislation that inures all Ministers, whatever the party in government. We want statute that ensures integrity, whoever has conduct of our affairs.

I shall intervene briefly. I could not be here this morning—I apologise for that—so I shall just emphasise two points that were made. I do so from the perspective of having been a Minister in the Treasury, and having had charge of Customs and Excise. I do not know whether that is an interest that I should declare. I am totally proud to have been in charge of the department for a year or two. On the basis of that experience, I am rather alarmed by the clause.

First, on the phrase ''general nature'', I understand that the Paymaster General believes the phrase to be a helpful restriction, but it is still fairly vague. In my view, it might not catch directions of a fairly specific but broad character, such as a direction to the new Revenue department not to pursue certain   investigations involving other Government Departments or agencies, or even public servants or Ministers. Such a direction might be interpreted, or at least varnished, as being a direction of a general nature. Such an act might not be specific to an individual, but nevertheless it would make considerable mischief. I am not sure that the restriction ''general nature'' gives an adequate safeguard.

My other point is about the nature of the direction. I know that I missed this point being made, but has it been illustrated and confirmed that the new direction would have to be in writing? One assumes so. Quite apart from everything else, if it were not, the Minister would not know whether any direction had been given by previous Governments or Ministers. I would also like to probe the Paymaster General further on what she told the Committee about going through what had been done by previous Ministers in the Department to see whether they had issued directions. I do not know how she can be so sure whether those directions had been given orally. I have met the head of Customs and Excise regularly and nothing that I have said to him could possibly be interpreted as a direction. However, under the clause, the Minister of the day might have a new power to issue oral instructions. The instructions must be in writing and must be made public. When defending her remarks, the right hon. Lady said that matters were not known about previously because they had not been published and were not on the public record. Presumably, that means that instructions will be in writing and publicly available. Will she reassure the Committee about that?

I am happy to do so. I am surprised by what the right hon. Gentleman said. I refer him to the customs legislation. I shall provide the Committee with Inland Revenue evidence, too. Section 6(2) of the Customs and Excise Management Act 1979 states:

''the Commissioners shall, subject to the general control of the Treasury''.

Section 1(2) of the Inland Revenue Regulation Act 1890 states:

''subject to the authority, control and direction of the Treasury''.

There is no statutory requirement to signify that such action be carried out by convention.

The general direction requirement was used in 1890 in respect of the Inland Revenue and, under the more recent Act, for Customs and Excise. Ministers, including the right hon. Gentleman, operated within the definitions of general direction, using PSA targets, spending settlements, advice from Departments, and the priorities and policies pursued on behalf of the Government of the day. There is a saying, ''If something works, why fix it?'' Such a policy has worked. Everyone understands how it works.

I say to the hon. Member for Sevenoaks that, when bringing together the two departments, it is important that in no way should there be any diminution of taxpayers' confidentiality. Even though such a requirement is set out in the Act to which I referred, it should be contained in the Bill. Our discussions today have been extremely helpful, but I am puzzled   by the response of the hon. Member for Chichester, who has knowledge of the Treasury, and of the right hon. Member for Wells (Mr. Heathcoat-Amory), who has been a Treasury Minister and operated within such general control and authority.

Could the Paymaster General now answer my question? I know how I operated under such legislation, but will she tell the Committee how she will operate under future legislation and say, in particular, whether the directions under the clause are to be in writing and are to be published?

The departments will ask me to make a decision when I have sought information from them. There will be a copy of that in writing. I then make a decision that is transmitted to the departments in writing. There will be a lot of dialogue and exchange of information. There will be meetings and an audit trail.

Will the Paymaster General give way on that point?

No. I want to finish my point before giving way. If I am being asked whether I have ever given an instruction to override specific advice given to me by either Department—I have been a Minister in both—the answer is no, I have never issued such an instruction.

We want to know what a direction is. In answer to my right hon. Friend the Member for Wells, the Paymaster General said, ''I send letters out all the time.'' Are those directions, or not? As I understand what she has said until now, they are not. She has now used the word ''instructions'', but this is the first time that we have heard it. They seem to be some higher layer, above directions.

We are thoroughly confused about what the clause means, and I do not think that the Government are too sure about it. Practice that has been rolling along for the best part of a century is going to be disturbed by the creation of the new department and the need to codify legislation. The provisions have not been thought through, so we shall press our amendment.

Although I gave way to the hon. Gentleman, I said a very long time ago what the provision means. It means that Ministers can set strategic, high-level direction. I really regret what hon. Members are saying about their difficulty with the word ''directions''. They have asked whether it means instruct, enforce or require. In responding, I have tried to probe what it means. It means that Ministers can set the strategic, high-level direction on policy, expenditure, the use of resources, PSA targets, spending settlements and—the Bill provides for this for the first time—the annual remit, which will be published. That is what it means.  

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

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:—

The Committee divided: Ayes 8, Noes 6.

Question accordingly agreed to

Clause 10 ordered to stand part of the Bill.

Clauses 11 to 15 ordered to stand part of the Bill.