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Lord Higgins: I understand the case for a certificate. I am not clear why it should be issued by the person whose ownership might be in dispute rather than the person whose ownership of the asset is not in dispute and who is transferring it to someone else. It seems to be the wrong way round. If the asset is owned by the Department of Social Security and the certificate is saying that it has been transferred to someone else, surely the certificate should come from the Department of Social Security.

Baroness Hollis of Heigham: Again, it may be that I am missing some point. I understand what the noble Lord is saying. However, it seems to me that as some of those transfers could have been done a considerable time previously--not just five years, but perhaps 15 or 20 years earlier--it does not make sense to go back to a body or agency which no longer exists as opposed to the current body which now holds the land. I understand what the noble Lord is saying but I do not believe it to be a substantive point.

7 p.m.

Lord Higgins: I do not want further to delay the Committee, but I am interested in the fact that apparently the Department of Social Security is less likely than the Treasury to exist in 50 years' time.

Baroness Hollis of Heigham: Given the experience of the past 400 years, I fear that the noble Lord may well be right!

Lord Higgins: I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 agreed to.

Clause 21 [Special provision for certain contracts]:

On Question, Whether Clause 21 shall stand part of the Bill?

Baroness Hollis of Heigham: With the indulgence of the Committee, it may be helpful if I speak to Clause 21.

Clause 21 is the second clause dealing with the transfer of property, rights and liabilities. It recognises and provides for some of the complex contractual relationships involved.

As we have already discussed, Clause 20 transfers to the Inland Revenue any contracts under which the Contributions Agency receives goods or services. However, the Contributions Agency also receives goods and services under contracts which provide for the

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supply of goods or services to other parts of the Department of Social Security. So these contracts relate partly to functions transferred to the Inland Revenue and partly to functions retained by the DSS. For example, the Benefits Agency and Contributions Agency often share accommodation, and office services are supplied under the same contract to both agencies. Also, like the other DSS agencies, the Contributions Agency orders computer hardware and software through contracts managed by the Information Technology Services Agency on behalf of the department.

Clause 21 deals with these contracts. As with Clause 20, our underlying intention is to ensure that patterns of supply are maintained to enable the Contributions Agency--and the Benefits Agency and other DSS agencies--to continue to receive the goods and services they do now to enable them to carry out their work.

Clause 21 does this by providing two options for treating these contracts. Subsection (3) provides that in these cases the contract will continue to be with the Department of Social Security but that the Contributions Agency can continue to receive goods and services under that contract once it is part of the Inland Revenue. It does not allow the Inland Revenue to gain wholesale access to DSS contracts.

However, we accept that in some cases the contract may relate sufficiently largely to transferred functions, as opposed to retained functions, that it would be appropriate for the Inland Revenue to take over management of that contract. So subsections (4) and (5) provide an alternative option. Certain contracts, specified by order, can be treated as exceptions to the rule and transferred to the Inland Revenue, while allowing the Department of Social Security to continue to receive benefits under that contract.

There are two main contracts we intend to specify in such an order. The first is the contract for the new National Insurance Recording System--NIRS2. Noble Lords will be aware of the difficulties that there have been. The Contributions Agency has been managing the contract with Andersen Consulting to develop and run the NIRS2 system on behalf of the department. We have concluded that NIRS2 is so integral to the work of the Contributions Agency that, while it provides information to the other DSS agencies, it would be most appropriate to transfer the contract for its development and maintenance to the Inland Revenue with the Contributions Agency.

The other main contract is that with the Newcastle Estates Partnership for the redevelopment of the Longbenton estate in Newcastle. Although the other DSS agencies occupy parts of the Longbenton estate, the Contributions Agency is the principal occupier and has been managing the contract on behalf of the other agencies. So we intend that this contract will also transfer to the Inland Revenue.

I have gone into this is some detail, which I would not normally do, because I think that noble Lords are entitled to an explanation. The Contributions Agency is, of course, as part of good contract management, discussing with its suppliers the implications of the

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transfer. Given that both matters are sensitive, I thought that it was useful, at least in Committee, to put our thinking on the record of Hansard. I support Clause 21 standing part of the Bill.

Clause 21 agreed to.

Clause 22 [Power to transfer functions by Order in Council]:

Lord Higgins moved Amendment No. 55:

Page 10, leave out lines 43 to 45.

The noble Lord said: There are three amendments in this group. In the light of some of the earlier exchanges with the noble Lord, Lord Goodhart, it may be that they have more significance than I had realised. The power to transfer functions in both directions seems an extraordinarily wide power. That is why I tabled Amendment No. 55.

With regard to Amendment No. 56, Clause 22(1)(b) provides that functions can be transferred in one direction only, with the concurrence of the board, but that transfers in the other direction do not require the concurrence of the department.

Amendment No. 57 seeks to leave out subparagraph (ii).

My first amendment relates to three lines which seem to cover every possible contingency. As I said, as this point was referred to earlier, it may be more significant than I had realised. I beg to move.

Baroness Hollis of Heigham: The three amendments before us now seek an explanation of how we intend to use Clause 22. This clause is not an essential part of the Bill but I think it is a valuable provision. I therefore want to spend a few moments explaining what it does and why we have included it in the Bill. Indeed, given the noble Lord's amendments, I think that I am required to give that explanation.

As I hoped that I had explained at Second Reading, the normal process for machinery of government transfers is an Order in Council under the Ministers of the Crown Act 1975. The Inland Revenue is not, however, a ministerial department for the purposes of that Act, so transferring functions to or from it requires a Bill. Hence, we need a Bill to transfer the Contributions Agency to the Inland Revenue.

As I hope I made clear in our earlier discussions, identifying and stripping out the NICs functions of the Secretary of State for Social Security is no easy task. Although in some cases the function is clearly related to NICs and therefore should be transferred, in other cases, particularly around the periphery of NICs, the distinction is much more difficult to draw. Further, whether a particular job is done in the Contributions Agency rather than the Benefits Agency is sometimes as much a matter of history as of current preferences. We have had to make a judgment about whether the function should stay with DSS or be transferred to the Inland Revenue.

I hope that we have made the right judgment on these issues. But there is no right and wrong answer and, weighing the probabilities, it is possible that, in the light

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of operational experience, we may conclude that we have drawn the boundary in a slightly awkward place and that further adjustments are desirable to ensure the better operation of the legislation and delivery of services by the Government.

As the noble Lord, Lord Higgins, rightly identified, one example, which the noble Lord, Lord Goodhart, has already raised, is the appropriate tribunal for hearing appeals on contracted-out matters. We have made a judgment on that. If the fears of the noble Lord, Lord Goodhart, are realised, this provision allows us to rectify the position.

Clause 22 provides a mechanism for making these adjustments. It does so by providing a power similar to that in the Ministers of the Crown Act 1975, but tightly limited to the subject of this Bill. As with the Ministers of the Crown Act 1975, this power is to be exercised by way of an Order in Council. That will mean that the adjustments can be made without needing to return to Parliament with a whole Bill.

An order under this clause can transfer functions between the Secretary of State and the Inland Revenue and vice versa. It can set up new requirements for concurrence in the exercise of those functions; it can transfer responsibility for making decisions on various matters between the Secretary of State and the board and vice versa, and switch the route for appealing against such decisions between the unified appeal tribunals under the Social Security Act 1998 and the tax appeal commissioners. The three amendments remove in turn the first three of these powers.

I should point out that Clause 22 does not allow orders to transfer functions between the Secretary of State and the Treasury--only the Secretary of State, or the DHSS(NI), and the Inland Revenue. As I explained earlier, functions can already be transferred between the Secretary of State for Social Security and the Treasury by order under the Ministers of the Crown Act 1975. Only the Inland Revenue does not have such a power. So we need no separate provision here to permit that.

I can well understand that noble Lords would seek constraints on what can be achieved by an order under this clause. These are set out in subsection (2) as functions relating to contributions and the National Insurance Fund, other than core activities such as the receipt of contributions and the control and management of the National Insurance Fund, together with functions relating to statutory sick pay, statutory maternity pay and contracting-out. So I hope noble Lords will recognise that Clause 22 does not provide a general power to transfer functions between the Secretary of State and the Inland Revenue. Indeed, we would anticipate that any exercise of this power would be very much at the edges of those functions. I am therefore pleased that the Select Committee on Delegated Powers and Deregulation was content that the negative resolution procedure provided by the Bill is appropriate.

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We cannot be sure that we have the detail right at the boundaries and there may need to be some fine-tuning. I can well understand that Members of the Committee are anxious to ensure that powers in Clause 22 have appropriate safeguards. The amendments as drafted go too far, but, if the noble Lord continues to have concerns and wishes to write to me, we shall consider the matter to see whether there is any further issue which we should address. I hope that the noble Lord will be content with the answer that I have given him tonight.

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