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Lord Williams of Mostyn: My Lords, there is a number of distinct points there. Sometimes over-crowding is a contributory factor; sometimes prisoners prefer to share a cell because they like human company during the day. I do not put that forward frivolously: it is a fact. Of course, we want to reduce the prison population. That should occur reasonably soon when we have the managed return from custody to the community, about which I spoke to your Lordships some months ago. That should reduce the demand for places to some extent next year. Ultimately we have to look at this problem across the whole spectrum and that is the whole rationale behind the Crime and Disorder

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Bill; namely, that we stop people going to prison by helping them not to offend in the first place and use non-custodial remedies before they get within the custodial system.

Lord Elton: My Lords, is the noble Lord aware of the welcome that his last utterance will have among those who wish to see a reduction in the suicide rate in prison and in the number of prisoners? Is it not too late to intervene by preventing re-offending or by trying to deter by punishment so many thousands of young people who could be saved from getting into crime at all by early intervention? Is the noble Lord aware how warmly that intervention on his part will be received?

Lord Williams of Mostyn: My Lords, I am most grateful for what the noble Lord has said. I believe that the general welcome that has been given to the Crime and Disorder Bill comes entirely from the factors which he has identified; namely, that one intervenes early, productively and helpfully to stop children getting into the continuous cycle of further offending, without effective intervention by the state, so that they end up in a dustbin, which is what prison is for many.

Tax Fraud

3.26 p.m.

Baroness Ludford asked Her Majesty's Government:

    Whether they intend to consult on proposals for tackling tax fraud, given that the Green Paper Beating Fraud is Everyone's Business covers only social security fraud.

Lord McIntosh of Haringey: My Lords, the tax authorities already have effective programmes in place to counter tax fraud and evasion. The Inland Revenue's work in countering tax evasion yields about £1.5 billion a year in extra tax, interest on that tax and civil penalties. The revenue also takes criminal proceedings in the most serious cases of all types of tax fraud. The Green Paper explains how the Department of Social Security itself is moving towards a similar approach; that is, civil sanctions backed up by prosecutions.

Baroness Ludford: My Lords, I am grateful to the Minister for his reply. In the light of that statement of commitment, can he explain why the title of the consultation paper Beating Fraud is Everyone's Business raised an expectation that it would be of general application, but only on opening it was it found to apply solely to social security fraud? Is it not the case that many of the aims and techniques in that paper, particularly as regards developing an anti-fraud culture in society, need to be applied to tax evasion? I note the figures that the noble Lord gave, but in the Inland Revenue's annual report for 1996 it is stated that compliance work brought in almost £5 billion. I understand that as a result of fraud work Customs and Excise recovered £1.5 billion in the same year. Therefore, is it not reasonable to assume that the sums involved in tax fraud may be even greater than in social security fraud? Can the Minister tell us how the

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Government will show that they appreciate the need for even-handedness? Do the Government have any specific plans for having a national tax fraud hotline to match the national benefits fraud hotline?

Lord McIntosh of Haringey: My Lords, I cannot answer all seven of the questions that the noble Baroness put to me. She referred to the Green Paper and said that she had to open it in order to see that it referred to social security fraud. She clearly did not observe that it was published by the Department of Social Security. That is made clear on the cover. I do not accept that there is any way in which tax fraud is being approached with less diligence than all other kinds of social security fraud. Nor do I accept that social security fraud is necessarily perpetrated particularly by poor people. On the contrary, a lot of social security fraud is carried out by systematic, organised criminals working on a very large scale. The analogies which the noble Baroness draws between social security fraud and tax fraud do not always hold up to examination in the way that she suggests.

Earl Russell: My Lords, does the Minister agree that, although fraud is always wrong, there is no more reason to suppose that there is fraud in the social security system than elsewhere, and that in taking measures against fraud, we must also take account of their cost-effectiveness? Is the noble Lord satisfied that the priority which tends to be given to social security fraud is cost-effective?

Lord McIntosh of Haringey: My Lords, one difference which ought to be pointed out between tax fraud and social security fraud is that it is possible to estimate the level of social security fraud by a systematic examination of a sample of paid claims. One cannot make the same assumption from an examination of tax returns. One cannot tell whether the person concerned has income which has not been declared for tax purposes. Although it is possible to estimate the level of social security fraud, that is not possible with tax fraud. I can only repeat that a very great deal of intensive effort both in this country and internationally is given to countering tax fraud.

Lord Hayhoe: My Lords, although they may not be very popular, does the noble Lord agree that the officers of the Inland Revenue and of the Customs and Excise service deserve approbation and praise for their dedicated work on behalf of the nation as a whole in trying to reduce fraud within the tax system as effectively as possible?

Lord McIntosh of Haringey: My Lords, I am grateful for the noble Lord's comments. A great deal of the investigative work into tax fraud is carried out routinely by local offices of the Inland Revenue. The Inland Revenue special compliance office deals with more complex and serious cases. That office alone brought in almost £0.5 billion last year. My understanding from the social security Green Paper is that the Department of Social Security recognises the need to develop a similarly highly skilled core of professionals to investigate benefit fraud. We can all learn from each other.

Baroness Williams of Crosby: My Lords, the noble Lord will recall that several months ago the Government

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promised to look into the issue of overseas tax havens. Can the noble Lord give us any idea of when the report of that study is likely to come before Parliament?

Lord McIntosh of Haringey: Yes, my Lords, and I am grateful for that question. With other member states of the Community, we have been taking steps to curb large international tax frauds. In May, the Chancellor announced UK-inspired G7 initiatives for the better exchange of information in action against tax crimes. We have appointed a member of the Inland Revenue staff to the National Criminal Intelligence Service to feed back laundering reports to the Revenue for use in tackling tax evasion.

Tamar Bridge Bill

3.32 p.m.

Baroness Fookes: My Lords, I beg to move that this Bill be now read a third time.

I shall be as brief as possible. An Instruction was attached to the Bill asking whether the Bill was necessary and whether its purpose could be achieved at a lower cost by strengthening the existing bridge without widening it. The Select Committee met for three days, deliberated and decided that the Bill should proceed. In those circumstances, I commend it to the House.

Moved, That the Bill be now read a third time.-(Baroness Fookes.)

On Question, Bill read a third time, and passed, and returned to the Commons with amendments.

Scotland Bill

3.34 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.--(Lord Sewel.)

On Question, Motion agreed to.

House in Committee accordingly.


Schedule 5 [Reserved matters]:

Lord Mackay of Ardbrecknish moved Amendment No. 181:

Page 66, line 9, leave out ("and non-domestic rates)") and insert ("but not locally raised business or non-domestic rates or any local sales or local tourist industry tax).").

The noble Lord said: Before speaking to this amendment, perhaps I should congratulate the Government on managing to start the Scotland Bill on this fifth Committee day at about the right time--

Noble Lords: Hear, hear!

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Lord Mackay of Ardbrecknish: Indeed, it is only fair that I should congratulate the Government on that, given that I criticised them on our previous three Committee days when we did not start this business until six or seven o'clock in the evening. The Government have excelled themselves today. There is not even to be an interruption for a Statement. I hope that we shall therefore be able to catch up with where we ought to have been on Tuesday evening and that we shall manage to complete our consideration of all the amendments on the groupings list before the end of today. However, if we do so, I repeat that we shall only have caught up with where we should have been by the end of Tuesday evening.

This amendment relates to the taxation powers of the Scottish parliament. When the Government produce their White Paper to which my fellow Scots gave such a resounding vote, they made it clear that the tax would relate to only income tax. This amendment seeks to ensure that that promise to the Scottish people is written on the face of the Bill.

I have two worries on this subject, both of which the amendment seeks to address. I refer first to the uniform business rate. For many years, businesses in Scotland had a serious problem with the rates. Businesses in Scotland faced had much higher rateable values than equivalent businesses on equivalent sites in England. On top of that, they had higher rate poundages. The net result was that many businesses in Scotland, competing with businesses south of the Border, were paying significantly more--many times more--in rates to the local authority than were their competitors south of the Border.

When we were in government, we introduced the concept of the uniform business rate in order, over time, to equalise rates not only throughout Scotland--there was a distortion throughout Scotland--but throughout the United Kingdom as a whole. For businesses, that control of business rates was one of the most important tax-cutting measures introduced by the previous Conservative Government.

Since April 1995, the UBR poundage has applied to Scotland at the same level as in England. When in government, we pledged that that linkage should be permanent. Indeed, on Budget day in November 1996, we announced that the 1997-98 Scottish national non-domestic rate at 45.8p in the pound would be the same level as in England. As a result of that policy, businesses in Scotland have paid £1.4 billion less in rates over the five-year period since 1990 than would have been the case if we had not introduced the UBR. If the rate poundage had risen in line with inflation since 1990, businessmen would be facing a poundage rate of £1.10 in the pound and not the 45.8p that I mentioned earlier.

Given that the introduction of the UBR also involved a rates revaluation, we introduced a transitional relief scheme to avoid some businesses facing unduly large rises. In 1995-96, that support amounted to £72 million, with a further £65 million in 1996-97. The fact of the matter is that Scottish businesses value the UBR above

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almost anything else that any government have done or can do. That is because of its importance in terms of creating what we all like to call "a level playing field".

That level playing field between Scotland and the rest of the kingdom could potentially be upset if responsibility for the UBR is to be devolved to the Scottish parliament, which is what we understand. The Scottish parliament--the Scottish executive--would then have the right to change the UBR, to increase it above the level for England and thus to make business and commerce in Scotland less competitive than their counterparts south of the Border. In addition to that danger the Scottish parliament has the option to abandon UBR for ever and return the business rate to each and every local authority in Scotland; in other words, to put the clock back to the damaging situation that business faced before the Conservative government embarked on the introduction of UBR.

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