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Lord Higgins: Perhaps the noble and learned Lord will allow me to intervene for a moment. I have some difficulty in understanding why the medical officer should be the person with the expertise in selecting doctors. He is clearly a doctor like any other but not, one should have thought, one who has particular expertise in saying that this or that other doctor happens to be the right person for the job.

Lord Hardie: I was going to come on to the position of the Chief Medical Officer. In doing so, I fear that

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Amendment No. 20 could have an adverse effect on the quality of medical practitioners appointed to the panel. Decisions depend on expert medical knowledge and skills and it is essential that the quality assurance process begins with the recruitment and appointment of doctors. The Chief Medical Officer will be able to consult the medical Royal Colleges and other bodies as appropriate and will play a valuable role in advising the Lord Chancellor on the suitability and availability of all types of medical practitioner from all medical disciplines.

To answer directly the point put by the noble Lord, Lord Higgins, if I were looking for an individual on whom one could focus as someone with access to all aspects of the medical profession and with the ability to consult appropriate bodies, it seems to us that the Chief Medical Officer would be the appropriate individual. It may be that the noble Lord has another office-holder in mind. If that point were to be raised at a later date, we would obviously consider it, but it seemed to us that the Chief Medical Officer was the obvious candidate for the consultation process.

My noble and learned friend the Lord Chancellor is content with the arrangements in Clause 6. In the light of this explanation, I hope that my noble and learned friend Lord Archer will feel able to withdraw his amendment.

9.30 p.m.

Lord Archer of Sandwell: I am grateful to my noble and learned friend for that clear exposition. I sought after truth and I think that I have been partly successful. Perhaps I may begin by making it clear that on one principle my noble and learned friend and I are totally at one. I wholly agree that the appropriate authority to appoint members is my noble and learned friend the Lord Chancellor, coupled with my noble and learned friend the Lord Advocate. I apologise for my earlier oversight in that regard. Of course it is much better that they should make the appointments rather than some other Minister. My council has been saying that for quite a long time.

However, my noble and learned friend said, "In practice, we do consult the president. It would be extraordinary not to consult him". That raises the question which more than one of us in this debate has ventured to pose, "Why not say so on the face of the Bill?" I understand that the answer to that is to say, "Why single out one person to be consulted? Why not include everybody you want to consult if you are going to do that?". I should have thought that the president was in a peculiar position. He is probably in a better position to carry out precisely the function which my noble and learned friend assigned a moment ago to the Chief Medical Officer--that is, to know who else to consult and to be at the hub of the wheel of consultation.

My noble and learned friend said two things which have set me thinking. First, I accept my noble and learned friend's correction that the Chief Medical Officer is employed by the Department of Health, not the Department of Social Security. I was clearly wrong about that and my noble and learned friend's answer has given me a degree of reassurance.

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Secondly, I accept, I think, that the medical profession is wider and less compact, and that information about it is less readily available than is the case with some other professions, such as accountancy. In the light of that, I should like to reflect further on this.

However, I share the curiosity of the noble Lord, Lord Higgins, about why the Chief Medical Officer should be the person selected to conduct the consultation process. If he is to be at the hub of the wheel of consultation, one wonders why the president of the Royal College of Surgeons could not be at least an equally suitable candidate.

It may be that there is not very much between us and that we shall be able to consider whether there is an alternative candidate. For the moment, however, I am content to reflect on these matters and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 20 not moved.]

Lord Goodhart moved Amendment No. 21:


Page 3, line 29, at end insert ("and, in the case of persons holding office as Commissioners for the special purposes of the Income Tax Acts, with the presiding Special Commissioner designated under section 4 of the Taxes Management Act 1970").

The noble Lord said: I beg to move Amendment No. 21. This is the first of a group of amendments which is intended to ensure that national insurance contribution appeals are dealt with by the Special Commissioners of Income Tax and not social security appeals tribunals. This amendment stands on a somewhat different footing from other amendments which my noble friend Lord Russell and I have moved or will move this evening. In this case the impetus has come not from my party but from a body known as the Tax Law Review Committee. That is a body of which the noble Baroness, Lady Wilcox, and I are members. It is a powerful body on which all three parties are represented. Its president is the noble and learned Lord, Lord Howe of Aberavon and its members include judges, former senior staff members of the Inland Revenue, tax experts, businessmen and accountants.

The Government have recognised that the present way of dealing with contribution questions is unsatisfactory. Currently, the Secretary of State has the sole power to decide contribution questions under Section 17 of the Social Security Administration Act 1992. She has delegated that power to a body known as the Office for Determination of Contribution Questions. From the decision of that body there is a right of appeal to the High Court, but not beyond it, only on questions of law. There have been very few appeals, and the absence of an appeal beyond the High Court means that the higher courts have been unable to develop the law.

This Bill introduces for the first time a proper appeals system for contribution questions, and to that extent it is extremely welcome. It does so by means of Clause 13 and Part II of Schedule 3. Those provisions refer contribution questions to the social security appeal tribunal set up under Part I of the Bill. The Tax Law Review Committee believes, as do I, that this is the

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wrong forum and that these matters should be dealt with by a tax tribunal. Undoubtedly, as the appeal system for tax questions now stands the appropriate tribunal is the Special Commissioners of Income Tax.

It has become increasingly clear that national insurance contributions are not in fact insurance contributions but a tax. Employers' national insurance contributions are a form of payroll tax; employees' national insurance contributions are a form of hypothecated income tax. The integration of national insurance contributions and income tax has been going on for years. It is many years since national insurance contributions ceased to be collected by means of the weekly stamp and started to be collected through the PAYE system. In this year's Budget three further stages of integration were introduced. First, it was announced that the starting point for national insurance contributions would be raised to the same point as the single personal allowance for income tax. Secondly, various national insurance contribution avoidance schemes through payment of employees in hay, bismuth or other tradeable commodities were to be eliminated by application of a stricter income tax definition of what constituted earnings. Thirdly, the Contributions Agency is to be transferred from the Department of Social Security to the Inland Revenue. The Inland Revenue statement published on Budget day said that the advantages of the transfer of the Contributions Agency included making it easier to align the tax and national insurance contribution rules.

The same issues often arise in relation to contributions as to income tax, in particular the question whether someone is employed or self-employed. This is a crucial question for income tax because it decides whether the earner of this income is taxable under Schedule D or Schedule E and whether the earnings are subject to PAYE. It is also crucial for national insurance contributions because this question decides whether there is an employer who pays employers' national insurance contributions and what kind of NICs the earner pays. It makes no sense whatever for these very similar questions to be decided by different tribunals. NIC avoidance schemes are very similar to tax avoidance schemes, and it makes obvious sense for NIC schemes to be dealt with by tribunals with experience of tax schemes. The process of alignment of income tax and NICs has now plainly reached the point where it is clear that contribution issues should be dealt with by the same tribunal as tax issues.

In this group of five amendments, there are two sub-groups which offer alternative solutions. Amendments Nos. 42 and 52 transfer contribution appeals straight into the tax appeal system. I believe that to be the simplest and best of the two solutions.

The other sub-group (Amendments Nos. 21, 22 and 30) provides that on contributions appeals the chairman of the Social Security Appeal Tribunal, or its sole member if there is only one member, is to be a special commissioner. That is less satisfactory, if only because it leads to an appeal lying from a special commissioner, who is an expert, to a social security commissioner, who is not.

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We have had an earlier statement from the noble Lord, Lord Haskel, and I have received a letter from the noble Baroness, Lady Hollis, a copy of which she has placed in the Library. I find the statement and the letter helpful in undertaking that the Government have this matter in hand. I understand why they think that it is appropriate to deal with legislation at a later stage rather than in the Bill.

However, I have still thought it desirable to move the amendment in order to place the matter on record and to obtain the Government's formal answer on this matter. I beg to move.


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