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Lord Higgins: I shall want to read carefully in Hansard what the Minister has just said and to consider whether we should return to this point. I was not entirely clear about the point that she made; namely, that the alignment would have to be achieved by primary legislation, but that the level could then be altered once the two had been aligned. I was not clear whether without primary legislation the rate of one could be altered to achieve the alignment. Perhaps I may consider that point. Subject to that, I beg leave to withdraw the amendment--

Lord Renton: Before my noble friend does so, I wonder whether the Minister will be so good as to answer my point about the desirability of Ministers being responsible for secondary legislation. That is important. If the Inland Revenue or the Treasury performs that function--that is provided for later in the schedule--that means that officials are doing it. It could be said, I suppose, that Ministers are responsible for officials, but if the Ministers are ultimately responsible, surely it is better for it to be written into Acts of Parliament that they have the responsibility for making the regulations.

Lord Skelmersdale: Before the Minister answers that point, I wonder whether she can help us further. She said--I paraphrase--that the statute book has many examples of a Secretary of State being allowed to do something, with the consent of the Treasury. Here, surely, my noble friend Lord Renton is quite right: the

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boot is on the other foot. We are looking for a precedent where the Treasury is allowed to do something, with the consent of a Secretary of State.

Lord Higgins: Perhaps I may intervene. My noble friend Lord Renton echoes the point I made earlier, to which, in the light of the Minister's remarks, I thought that we might return on Report; namely, the curiosity throughout this Bill that matters which have previously been the responsibility of a Minister are transferred to officials. I am not clear about why the provisions do not simply state that the responsibility is transferred from the Secretary of State for Social Security to the Chancellor of the Exchequer.

Baroness Hollis of Heigham: We are simply mirroring existing provisions. It was not my understanding--and certainly not in my briefing--that this provision raises any constitutional issues whatsoever. I do not believe that there is any such dilution of parliamentary accountability. However, it is clear that the noble Lord, Lord Renton, supported by other Members of the Committee, fears that without this being more explicit, there could be some misunderstanding. I shall take back this point to the department to consider whether we need to clarify the drafting to allay the fears expressed by the noble Lord.

Lord Higgins: On that basis, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 16 and 17 not moved.]

On Question, Whether Schedule 3 shall be agreed to?

Lord Higgins: I thought it probably more convenient to raise this matter on Schedule 3 rather than earlier, on Clause 2, which is linked with it. I believe that the proposal that the determination of the level and scope of NICs should shift across from the Department of Social Security to the Treasury gives cause for concern. That is another example of the move away from contributions, which give an entitlement to benefits, to a tax pure and simple.

I understand all the points made earlier by the noble Lord, Lord Goodhart. National insurance contributions are already commonly understood to be a tax. Nevertheless, now that the Chancellor rather than the Secretary of State is to determine the level--yet another example of the "salami-slicing" movement--this is becoming less and less a contributory matter and moving more and more towards being a straight tax. We are therefore concerned that responsibility for this matter is introduced in this clause and that the Chancellor of the Exchequer or perhaps, very oddly, the Inland Revenue will be dealing with it.

There are other aspects which concern us. In the course of extensive correspondence, the comprehensive nature of which has astonished me, the noble Baroness spelt out over some three pages the workings of the National Insurance Fund. On an earlier occasion the noble Lord, Lord Goodhart, described the National

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Insurance Fund as a pipeline. I think it is not so much a pipeline as a tank, with the level going up and down depending on how it is adjusted. There are some strange arbitrary rules, such as that at the end of the financial year it should cover at least a sixth of the expenditure of the fund, and so on. We are not clear why that rule should apply. More particularly, we are concerned that responsibility for the matter is being transferred more towards the Treasury and that there is less concern with the policy aspects of, for example, pensions. In that context, is it envisaged that the proposals which the Government have put forward for reform of pensions into three tiers will be operated in the case of the first two tiers through the National Insurance Fund?

5 p.m.

Lord Goodhart: I do not agree with the noble Lord, Lord Higgins, on this issue. It seems to me inevitable that there will be consultation between the Chancellor of the Exchequer and the Secretary of State in deciding at what level national insurance contributions should be fixed. As is well known, national insurance contributions have an important fiscal role and it would be impossible to fix the annual budget without an agreement between the Chancellor of the Exchequer and the Secretary of State as to the level of national insurance contributions.

On occasions in the past we have seen specific increases in national insurance contributions for fiscal purposes. At certain times we have also seen regular subsidies to the National Insurance Fund from the Treasury. It seems to me that national insurance contributions and the direct taxes are so closely related that it makes obvious common sense that the level should be fixed by the Chancellor of the Exchequer.

Lord Renton: I wish to make some general comments about the third schedule. It consists of nine pages of amendments, which is very unusual. On each of those pages there are never fewer than six and sometimes as many as 10 amendments. We can therefore be sure that in this schedule there are 60 or 70 amendments proposed to fairly recent legislation of the previous government.

I do not object to the involvement of the Treasury; it has always had to be involved. I hesitate to repeat myself, but, if amendments of this kind have to be made, it must be made clear that it is individual Ministers who are being made responsible as a result. That is the point I made before, on which the noble Baroness raised my hopes in her previous reply. With that in mind, I hope that at Report stage we shall find that the Government have reconsidered the way in which in the schedule they are making amendments to the previous legislation.

Baroness Hollis of Heigham: The comments of the noble Lord on Schedule 3 invite us to reopen the Second Reading debate, which would not be sensible. We could have achieved the results of Schedule 3 through a negative resolution Order in Council under the Ministers of the Crown Act 1975, but that procedure is not available for transfers to the Inland Revenue, which is why it is being done this way.

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I am grateful for the support of the noble Lord, Lord Goodhart, on this matter. Achieving the policy transfer by order would have left this primary legislation concerned only with operational functions and with changes such as the new appeals system. Secondary legislation, considered separately, would be needed to complete the picture. We thought it better and more transparent to put both parts of the proposals simultaneously before Parliament. Secondly, including in the Bill material on the policy transfer allows the opportunity for debate on specific functions we propose to transfer, and the noble Lord has quite properly taken advantage of both Second Reading and the debate today.

The particular point which the noble Lord raised beyond the mutual responsibilities of the Chancellor of the Exchequer and the Secretary of State for these broader policy issues was the responsibility for the National Insurance Fund. The Bill transfers functions, for the reasons I explained in my speech on Amendment No. 17. It makes no changes in the level and scope of NICs, nor to the existence of the National Insurance Fund. The Chancellor, as always, is responsible for determining the adequacy of the level of the National Insurance Fund. He usually seeks the involvement of other government officials. But the DSS will continue to handle legislation on broader policy.

In response to the noble Lord, Lord Renton, the Inland Revenue already has powers in relation to tax. This provision makes the position consistent.

I emphasise that the powers that will go to officials are, for the most part, low-level, mechanical powers that are currently exercised by officials within the DSS. There is no dilution of the responsibility of the Treasury or specific Ministers within the Treasury. I repeat my assurance that, if we need to make this clear, we shall be happy to look at the drafting of the Bill.

Schedule 3 agreed to.

Clause 3 [General functions of Board]:

Lord Higgins moved Amendment No. 18:

Page 2, line 8, leave out subsection (2).

The noble Lord said: I shall not detain the Committee long on this amendment to delete subsection (2), which provides that, with some exceptions which are listed in the latter part of the clause, in future "inland revenue" will be taken to include contributions. That merely underlines the point I have been making throughout. I do not ask the Minister to respond since we clearly disagree on the matter. I beg to move.

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