Variation of Stamp Duties Regulations 2001

[back to previous text]

Mr. Gerald Howarth (Aldershot): My hon. Friend lets him off.

Mr. Gibb: I do—he relies on his advisers. Thanks to aggressive and unprincipled advice, a power conferred for a specific purpose—closing loopholes immediately—is being used for another: changing the charging regime for stamp duty. Whether this statutory instrument is indeed ultra vires, or whether I am wrong—I doubt it—and the power conferred is merely being used unexpectedly, members of the Committee can vote it through regardless. All that could then be done is to challenge the Minister by raising the ultra vires nature of the measure in the courts, which is a cumbersome and expensive process.

What is at stake, therefore, is not a technical point of law but a wider point of principle. Eighteen months ago, and after careful debate, Members of this House agreed to grant the Government a far-reaching power to amend primary legislation relating to stamp duty by means of affirmative resolution because they wanted to close stamp duty anti-avoidance scheme loopholes immediately. They granted the power because it related only to the description of documents, and because it specifically did not relate to rates of stamp duty or to the thresholds at which stamp duty was charged.

Although the schedule 33 power has enabled the Government to close those loopholes, even that power has a limit. Within 18 months, the Government must use primary legislation properly to build the new anti-avoidance measure into the tax code. Although a powerful tool has been created, there are built-in safeguards.

Column Number: 11

However, civil servants are advising Ministers to use the power to push through a change in the stamp duty regime not for anti-avoidance purposes, but for policy purposes: to fulfil the Minister's imperative of getting this measure through before the next Finance Act, in 2002. They want to introduce a £150,000 threshold, and they will do whatever they can to get such a measure through the House. Although the policy is perfectly acceptable, it should not be pursued through such an unprincipled procedure. It shows that those who gave such advice hold Parliament in contempt. They are contributors to one of the major problems facing our democracy today: deeply held cynicism about politicians, Parliament and all its works.

Such advice is not an isolated example, and nor is it confined to this Administration; it was offered during the previous Administration and probably before that. It constitutes a dishonest approach to the legislative process, and if I were a Minister in receipt of it, I would dispense with the adviser's services. The integrity of our parliamentary process is more important than any one particular policy, however significant. One of the civil service's constitutional roles is to prevent such abuse, not to facilitate or encourage it.

That is the easy stuff. I have raised such matters up front to give the Minister a chance to think about them.

Mr. Edward Davey: The hon. Gentleman has made a serious point extremely well. Does he think that the Stamp Office will be entitled to exercise power under regulations that he suspects are ultra vires? Would officials be legally empowered to exercise such relief?

Mr. Gibb: The hon. Gentleman raises a very good question. The problem in administrative terms is that those who are affected by and who wish to challenge the statutory instrument, which will undoubtedly be passed today, will have to go through the courts. Given that the provision will ultimately be enacted in the next Finance Act, making such a challenge is not worth people's while.

The point that I raise is one of principle. [Interruption.] I hear mutterings in Committee about my criticisms of the civil service, but we should note that cynicism about politics and the political process in this country is at an all-time high, and many players—politicians, journalists and civil servants—share the blame for the cynicism that permeates the political process. I make no apology for raising this issue today. My most recent speech on the Floor of the House dealt with it, and I shall continue to make such speeches.

I have no problem with the principle behind the regulations. As the Minister and my hon. Friend the Member for Arundel and South Downs have said, I represent a constituency that will benefit from the exemption. I welcome it—indeed, I appreciate any measure that will reduce the tax burden on my constituents. I also understand the reason for the cap, but I want to raise one or two further issues.

Column Number: 12

How far have the Minister's negotiations with the European Union on state aids progressed? When did the Government apply for clearance, and when do they expect to receive it? Press release Rev HMT2, which coincided with the pre-Budget report, states:

    ''The Government intends to raise the limit significantly or abolish stamp duty for all transfers of non-residential property within the qualifying areas as a second stage of reform.''

The Minister confirmed as much when he introduced this statutory instrument. In other words, there will be no £150,000 cap for commercial property in disadvantaged areas. What is the reason for that policy change? Will it enable the Government to comply with state aids rules? Does it mark a new policy direction in stamp duty taxation, involving a distinction between residential and commercial property? Such a distinction is unheard of in the stamp duty regime in this country, although it does exist in Ireland and other countries where a lower rate of duty applies to commercial property. If that is the Government's intention, does it herald an era of ever-rising rates of stamp duty for residential property?

Finally, last year's pre-Budget report of November 2000 announced the setting up of a technical advisory group to look at modernisation of stamp duty. How is that work progressing, when did the group last meet and when will it report?

5.8 pm

Mr. Boateng: In welcoming you to the Chair, Mr. Cummings, before formal proceedings of this Committee commenced, I expressed the hope that we would not detain you long. I am afraid, however, that that hope has been dashed by subsequent events, and the pleasure that we all experience in serving under you is likely to be protracted if I am to do justice to the points raised.

Before dealing with the contributions of other hon. Members, I want at the outset to dispose of that of the hon. Member for Bognor Regis and Littlehampton. I say ''dispose of'', but in responding to his argument I want to make clear my respect for the care and erudition that he displays in mounting it. I always appreciate a carefully prepared case, and he is to be commended on that, but I must reject absolutely his criticism of civil servants. There is a long-established tradition in this place, upheld under successive Administrations of all parties, that whatever one says about legislation or policy, one does not criticise those responsible for giving advice to Ministers.

One does not do that for the very good reason that it would undermine a fundamental principle of our constitution: that the civil service should be exempt from party political controversy, for once the civil service is dragged in, there is no going back. Several Opposition Front-Benchers who have ministerial experience gleaned from various positions know that to be the case; they could not possibly be in accord with the views expressed by the hon. Gentleman, which are a non-starter. The Government and I take full responsibility for the measure. Any criticism to be made must be made against me and my fellow members of the Government, not against civil

Column Number: 13

servants. Let us now deal with the points of substance, moving back—I hope that, on reflection, the hon. Gentleman will want to move back—from criticism of those who give advice in such matters.

It is nonsense to suggest that the regulations are a flagrant misuse of a regulatory power intended to counter avoidance. The power enables us to put into effect what we want to do. To fulfil our responsibility to implement the policies upon which we were elected, we are properly utilising a provision—schedule 33 to the Finance Act 2000—whose introduction provoked a debate focusing on whether it might allow anti-avoidance measures to be circumvented to undermine the legislation's purpose. That should have been a debate on the anti-avoidance quality of the measure was quite proper, but that is no reason why it would be improper to use the same regulatory powers for purposes other than preventing the abuse of the legislation for the purpose of avoidance.

The measure is not the variation of a threshold. All transactions benefiting from the provisions have to be stamped ''Nil paid'', whereas transactions below the £60,000 threshold do not have to be stamped at all. We are not varying the threshold contained in paragraph 4 of schedule 13 to the Finance Act 1999. We are limiting the relief by reference to a threshold that works in the same way as that in paragraph 4. That is how the Government justify the measure.

The provision has been through the processes of the House, as the hon. Member for Bognor Regis and Littlehampton concedes. His view is different from ours, and he is perfectly entitled to apply his intellect and training to lead him to a different view, but it is not the Government's view or that of the House authorities, nor is it in line with the procedure established by Parliament to ensure that the actions of the Committee are vires. His view is not ours, and I can commend the measure to the Committee firmly confident that it is within the powers of the House and the Committee.

Mr. Gerald Howarth: My hon. Friend the Member for Bognor Regis and Littlehampton asked the Minister whether he had specifically taken advice on the questions of whether the measure is ultra vires. I acknowledge the Minister's point that the Government have taken one view and another Committee has taken another view, but my hon. Friend has found a potential loophole in the legislation. It is important that the Committee knows whether the Government, having now had that drawn to their attention, have focused on the possibility that my hon. Friend is right.

 
Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index


©Parliamentary copyright 2001
Prepared 11 December 2001