Clause 22 - Functions to which sections 19 and 20 apply

Legislative and Regulatory Reform Bill – in a Public Bill Committee at on 9 March 2006.

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Question proposed [this day], That the clause stand part of the Bill.

Question again proposed.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

The Minister advises me that just prior to the adjournment at 10.25 am, he was in the process of sitting down at the end of his remarks.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

On a point of order, Sir Nicholas.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

On what you have reported, Sir Nicholas. The Minister had not sat down, and I had asked him in an intervention to return this afternoon with details on why the provisions of part 2 of the Bill did not apply to Her Majesty’s Revenue and Customs. I understood that he had given an undertaking that he would come back and respond to that question.

Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

I am not sure that that is entirely a point of order, but it is certainly a point. The Minister will no doubt have heard it, and if wishes to rise to his feet to respond, I shall most certainly call him. He is not rising, but the debate can continue, so if the hon. Gentleman is now seeking to catch my eye to contribute to it, I am more than happy to call him.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I had thought that it would not be necessary for me to contribute further. This is an important debate about the scope of part 2 of the Bill. It is accepted that the work of Her Majesty’s Revenue and Customs has a major impact on small business and businesses generally in this country and falls squarely within the definition of regulatory function in clause 23. However the Minister has told us that, for some reason that I am trying to get to the bottom of, HMRC will not be subject to the important provisions of part 2. I have asked why on several occasions, and I ask again in the hope that it will encourage him to get to his feet rather than play for the 4 o’clock end. I hope that he will also be able to respond to points that were made about other bodies that could be covered by these provisions, but perhaps will not be.

Photo of Andrew Love Andrew Love Labour, Edmonton

I clearly heard from the Minister that this part of the Bill was based on the recommendations of the Hampton review, and that annexe B of that review did not   include the organisations that the hon. Gentleman has mentioned. That might not be acceptable to him, but it has been explained on two occasions in Committee.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

The hon. Gentleman tries to come to the Minister’s defence, but unfortunately if he looks at the long title of the Bill and at its scope, he will see that there is no reference to the Hampton review. The Bill will facilitate deregulation and reduce burdens on business—that is to take it at its face value and is how the Government have been promoting it.

The Hampton review refers to HMRC, and I am pointing out that that body has a major impact on businesses through its regulatory function and that it should surely be subject to the same regime, set out in part 2, as other regulators and bodies exercising regulatory functions within the meaning set out in clause 23. HMRC is clearly within the scope of the Bill; part 2 does not say “some regulators.”

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

Does my hon. Friend agree that small business organisations such as the Forum of Private Business are particularly concerned about the administrative burdens that are the result of tax? It would be a pity if the tax authorities did not have to comply with such obvious points as acting in

“a way which is transparent, accountable, proportionate and consistent” and targeting

“cases in which action is needed”.

That is what we would like them to do.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend is absolutely right. Does he share my frustration that the Minister’s stonewalling threatens to thwart what was quite a constructive discussion on part 2? We thought that we had got some common ground with the Government, on the basis that we are all in favour of deregulation and reducing the administrative and regulatory burden on business.

Photo of Andrew Love Andrew Love Labour, Edmonton

As the chairman of the all-party small business group, I am not aware that the Forum of Private Business has the policy proposal that the hon. Member for Christchurch (Mr. Chope) suggests. Is he speaking on behalf of those on the Conservative Front Bench? Is it their position that we should include Her Majesty’s Customs and Revenue in the Bill?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I certainly hope that it will be, but I do not speak from the Front Bench. That is why I am as far back as I can get without going through the wall.

I have every confidence in my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), and I am sure that when we come to Government, he will want to ensure a level playing field for all regulators, including Her Majesty’s Revenue and Customs. We might make it one of the most important elements of our manifesto to seek fair play with regard to HMRC, whereas the present Government do not seem to want to. I hope that we will provoke a response from the Minister, and an explanation and justification for the exclusion of HMRC from the proposals. It was not included in detail in the   Hampton review, because the Chancellor of the Exchequer, who set up the Hampton review, did not want to include it—surprise, surprise.

That does not address the substantive point, however. The Government are saying with the Bill, “The burden on business is too great. We are on the side of business and we want to help business.” A letter from the deputy director-general of the CBI appeared in one of the newspapers recently in which he says that the Bill is a great Bill but would be much better if it extended part 2 to organisations such as HMRC.

While the Minister prepares to respond to that point, I also ask him whether it is proposed that clause 22 should apply to the Standards Board for England. He might have seen during our break today, as I did, a report on page 6 of today’s Evening Standard that said that a watchdog, namely the Standards Board for England, caused the leader of an Islington local authority and four of his colleagues to be

“subjected to the longest-ever probe”.

They were left with a legal bill for £350,000, and the total costs of the proceedings topped £1.1 million. The Standards Board has apologised now, but it does not have any proposals for compensating those individuals who were on the wrong end of maladministration and abuse of regulatory power. I should like the Minister to assure us that the Government intend to include the Standards Board in the provisions and ensure that it must comply with the regulatory regime like other regulatory bodies.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

I do not want to repeat the arguments already made by the hon. Member for Christchurch, but the more I think about it, the more I think that we need some sort of list of regulators that the Government intend to include. I agree with him about the Standards Board, which some of us feel should be abolished in any case. Setting that aside, however, his is a well made point. The direct application of regulatory functions by Ministers happens in various Committees, and it is instructive that the Treasury is most resistant to any overview from outside of its functions. The question arises, for instance, of whether the new equalities commission will be a regulator under this Bill. I do not know what the answer to that is, but perhaps the Minister can tell us.

My conclusion is that although the Minister has been at pains to suggest that having considered the difficulty of providing a schedule of inclusion, he has effectively gone for a schedule of exclusion either specifically under clause 22 or by implication under earlier parts of the Bill. Nevertheless, we will have to have some sort of idea of which bodies, set up under statute or otherwise, are considered to have regulatory functions that are relevant to the Bill.

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

I accept your kind invitation, Sir Nicholas, and welcome you again to your position as co-Chairman for our deliberations in our final sitting of this Committee.

I was under the impression that we had brought our deliberations on this clause to a conclusion, but I am happy to respond to some of the specific points that have been raised. The hon. Member for Christchurch referred to a report in the Evening Standard. I am more of a Glasgow Evening Times man myself. I do not regularly read the Evening Standard, so I cannot comment on the specifics of the report. I am sure that it is of high quality. I have no idea whether the hon. Gentleman quoted from the story; he did not share that fact with us. We do not envisage that the regulatory function would apply to the Standards Board.

There will be an opportunity for Ministers to extend the sense of “regulatory functions” after consultation under clause 22(2). Although the Government have no intention to do so, the enabling power would be there. The hon. Gentleman also asked about the list in clause 22(5). I know that that was not his main point, but I think he mentioned a list. I can do no more—I do not think he would wish me to—than repeat verbatim the answer I gave earlier. Those bodies were outside the scope of the Hampton review, and their operation is an area of market security and sensitivity. It would not be appropriate for the clause to apply to them. As for the question of whether we should have a list of regulators, and whether it is better to have a list of regulators or regulatory functions, we will come to that discussion in our debate on clause 23, which is about regulatory functions.

I remind the Committee, as I said earlier, that there has been an attempt to define “regulator” rather than “regulatory function”. It has proven extraordinarily difficult to do that in any legal sense. We spoke about that this morning. An attempt to define “regulator” and to draw in all sorts of people would not be appropriate. The British Medical Association and MI5 were mentioned—MI5 cannot in any sense be considered a regulator—but it was difficult to draw a definition of a regulator.

Photo of David Heath David Heath Shadow Leader of the House of Commons, Shadow Spokesperson (Cabinet Office)

That was a difficulty that we also encountered when we were dealing with the Freedom of Information Act 2000, when discussing what constituted a public body. It was extremely difficult to identify what constituted a public body and, in the end, there was a capacity to list public bodies, or organisations and individuals who were to be treated as public bodies, and the capacity to amend that list by subsequent order. There is an analogy in this case.

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

I accept the hon. Gentleman’s argument because of his previous experience. As I say, we will discuss that in clause 23 and he will have the opportunity to tease out that point a little more.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

The Minister still has not addressed the issue about Her Majesty’s Revenue and Customs, and I hope that he will before he finally sits down.

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

I was going to turn to hon. Gentleman’s point, which is a reasonable one, in my next sentence. He is right to say that, this morning, we had quite a productive debate, and the tone of the debate has been very constructive.

In relation to the Bill, Her Majesty’s Revenue and Customs is considered to be a tax authority, rather than a regulator. That is the explanation, even if it is not one that people like. The hon. Gentleman is also right that the Hampton report referred to HMRC, but as far as I am aware it referred to the HMRC only as being outside of its scope, rather than within its responsibility or aegis.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

The Minister says that he is defining HMRC as a tax authority, but does he accept that it carries out regulatory functions within the definition in clause 23, and that therefore it could and should be covered by the Bill?

Photo of Jim Murphy Jim Murphy Parliamentary Under-Secretary (Cabinet Office)

The hon. Gentleman makes a bid for the Bill to be extended to HMRC, and he is entitled to do so. To reassure both him and the Chancellor, I am not seeking to redefine, as part of our discussions on clause 22, the purpose or the aim of HMRC. We view the Customs as a tax authority rather than a regulator. That does not deal with one of his specific points, but that is the definition that we are using for the Bill, including for regulatory functions under clause 23.

We shall discuss the point further when we reach clause 23. I do not know, Sir Nicholas, whether you are encouraging us to have a stand part debate on clauses 22 and 23 but I shall be happy to address this further during the debate on clause 23, if the hon. Gentleman so wishes.

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.