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Lord McIntosh of Haringey: My Lords, I do not know how the noble Baroness can distinguish in that way between consumers and taxpayers. It is evident that the latter have done extremely badly out of privatisation, as is clear from the excess profits, some of which have been squeezed out by the windfall tax. Of course, there are continuing changes and improvements in the performance of all industries whether privatised or in the public sector.

Lord Mackay of Ardbrecknish: My Lords, is it not the case that before privatisation most nationalised industries were costing the taxpayers whereas now they actually contribute to the Exchequer? Furthermore, are not all taxpayers consumers? Also, as my noble friend Lady Seccombe said, is it not the case that all consumers gained hugely? Perhaps I may instance another example. Does the noble Lord recall trying to find a working telephone box in the days of nationalisation? Does he not acknowledge that now it is quite difficult to find one that does not work, thanks to privatisation?

Lord McIntosh of Haringey: My Lords, the noble Lord answers his noble friend just as I did; namely, that consumers are also taxpayers. That is exactly the point. I do not accept that one can make the distinction that the noble Baroness made. As I said in answer to her question, huge technological changes are taking place in all these industries, notably in telecommunications. These changes take place whether or not the industry is privatised, as evidenced by the experience of France Telecom and Deutsche Telecom.

Lord Ezra: My Lords, the noble Lord, Lord Mackay, over-simplified the position relating to the nationalised

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industries. In fact, a number were making a profit; namely, British Airways, as well as the tele- communications and electricity industries. If the noble Lord checks the record, he will see that all of these were profitable. Is it not a fact that those industries were subject to regular annual reviews at that time and that action was taken on them? Is it the Government's intention that their successors, the privatised utilities, shall also be subject to such reviews, the results of which will be published and acted upon?

Lord McIntosh of Haringey: My Lords, under the privatisation regime established by the previous government, the privatised utilities are not subject to any particular review, but the regulators are. That is why our Green Paper, published last week, proposes to extend the role and powers of the regulators to protect consumers. I hope that the noble Lord and his party will respond positively to the invitation to consultation issued with the Green Paper.

Lord Dixon-Smith: My Lords, can the noble Lord inform the House how many of the privatisations of the former utilities were opposed by the present Government when they were in opposition, and with what result?

Lord McIntosh of Haringey: My Lords, the result is obvious. When we were in opposition, we were in a minority and the privatisations went through against our reasoned and constructive opposition.

Lord Brabazon of Tara: My Lords, does the noble Lord agree that it would be far better to have more competition than more regulation? Is not that exactly what is happening in both the electricity and the gas industries right now?

Lord McIntosh of Haringey: My Lords, I simply do not accept that the two are in conflict. There are opportunities for competition under regulatory regimes just as there would be such opportunities without regulatory regimes. Indeed, that is the whole thrust of this Government's policy, as is evident from the Competition Bill which has just gone through your Lordships' House.

Inland Revenue: Self-assessment

3.1 p.m.

Lord Williams of Elvel asked Her Majesty's Government:

    Whether they believe that the Inland Revenue has adequate resources to administer an income tax system based on self-assessment.

Lord McIntosh of Haringey: Yes, my Lords, the implementation of self-assessment has been carefully

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planned to ensure that adequate numbers of trained people, supported by a good quality computer system, are in place.

Lord Williams of Elvel: My Lords, I am most grateful to my noble friend for that Answer. Has he had an opportunity to read an article in the Evening Standard for Monday 16th March, under the headline:

    "Tax dream scheme is 'red-tape nightmare'",
in which it is stated:

    "Tax experts are warning that the new system of self-assessment is turning into a bureaucratic nightmare ... now the Revenue has issued 670,000 fines. Tax experts believe more than 100,000 may be incorrect"?
If, as my noble friend says, the Inland Revenue is adequately resourced, are we then talking about a question of competence?

Lord McIntosh of Haringey: My Lords, I am interested that my noble friend refers to a press cutting on the subject. I have had a search made of press cuttings; I asked officials whether there was a slew of horror stories about the introduction of self-assessment. The search came up nearly blank, although it did include the reference that my noble friend has given from the Evening Standard--in other words, there are very few horror stories. There are very few examples such as that quoted. My noble friend is right in that 670,000 penalty notices--not fines--were sent out at the end of January. However, he may be relieved to discover that, by 22nd March, only 75,000 appeals had been made.

Lord Avebury: My Lords, can the noble Lord say why free software is issued to professional accountants and tax advisers but not to private individuals? Would it not help enormously if tax inspectors made the same software available to private taxpayers as they do to professionals?

Lord McIntosh of Haringey: My Lords, that is an interesting suggestion which, frankly, I had not thought of. I shall think about it and write to the noble Lord.

Lord Barnett: My Lords, does my noble friend accept that some innocent taxpayers--I am not declaring an interest, I hasten to add!--may well have been paying more tax than they should under the new system of self-assessment? In those circumstances, is the Inland Revenue recommending that innocent taxpayers use accountants to help them--perhaps I should declare a past interest now--in which case, does the Inland Revenue have a list of recommended accountants and, if so, when somebody chooses one, does the Inland Revenue get commission?

Lord McIntosh of Haringey: My Lords, the answers to my noble friend's last questions are, of course, no and no. In his earlier questions my noble friend seemed to suggest that the introduction of self-assessment will lead to an increasing number of overpayments. I rather doubt that. I am not sure that it can be correlated with the use of professional advisers. As I told the House on

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the previous occasion when this matter arose, my own self-assessment, which I did myself, was a penny out, while my wife, who has an adviser, overpaid by £800.

Lord Mackay of Ardbrecknish: My Lords, would it not have been wise to allow self-assessment to settle down before the Chancellor, in his Budget, made significant changes to the tax system, bringing inside the tax system some of the payments that were once in the social security system?

Lord McIntosh of Haringey: My Lords, I thought that the Opposition Front Bench in another place rather pooh-poohed the suggestion that there were significant changes to the tax system. They seemed to think that the changes were not as significant as the Chancellor claimed. Changes and improvements to the Inland Revenue system of tax collection have to be made in some years, and in any year there will always be changes to the tax system.

Lord Peston: My Lords, am I right in saying that the purpose of introducing self-assessment was to raise the efficiency of the system, either by getting more revenue in for the same effort, or by getting the same revenue in for less effort? Are the Government monitoring that process? If they are to monitor the process, as part of their investigation will they carry out a sample survey to calculate the cost to taxpayers of their efforts to administer the new system?

Lord McIntosh of Haringey: My Lords, speaking as a former survey researcher, I am sure that a sample survey would be welcome. We have always recognised that in the first year of the introduction of self-assessment there will be some additional burdens on taxpayers. On the other hand, in the longer term, as we shall be getting away from the confrontational process of claims, appeals and counter-appeals, the burden on taxpayers ought to be reduced.

Lord Newby: My Lords, how many self-assessment tax returns remain unpaid? What steps is the Inland Revenue contemplating to reduce the number of late payments in the current tax year?

Lord McIntosh of Haringey: My Lords, as I said in response to an earlier question, 670,000 penalty notices were sent out at the end of January, the date by which all returns should have been received. The process of dealing with those penalty notices will not be completed until the end of March. Therefore, we do not have a final figure relating to the number of returns unpaid. The experience over the past nine months has been that the percentage of returns is greater than in previous years.

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