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United Kingdom Tax Burden

3 p.m.

Lord Northbrook asked Her Majesty's Government:

Lord McIntosh of Haringey: My Lords, the estimated costs for measures announced in the Pre-Budget Report are set out in Table B4 of the report. Tax measures subject to consultation are not included in the Pre-Budget Report projections. If they were implemented, they would reduce taxes and social security contributions as a proportion of GDP from 2001-02 onwards by about 0.2 per cent per year.

Lord Northbrook: My Lords, I thank the Minister for his reply. In response to my noble friend Lord Saatchi in the Pre-Budget Report debate of 8th November, the Minister stated that the reason for the growth in taxes forecast for the year was the increase in income tax receivable from those put back to work. In Table B12 of the Pre-Budget Report, the figure of increased income tax only amounts to one-third of the extra £20 billion revenue forecast for the Government this year. Does the Minister agree that the balance of £14 billion is stealth taxes, particularly the raising of the upper limit on national insurance contributions, which was not even mentioned by the Chancellor in his speech?

Lord McIntosh of Haringey: My Lords, the Question I was asked and to which I responded concerned direct taxes. I gave a proper Answer to that Question. As to what the noble Lord, Lord Northbrook, calls an increase, let me make it clear that if the proposals--even if it were only the transport proposals--are implemented, there will be no increase next year in taxes and social security contributions as a proportion of GDP. The supposition on which the noble Lord makes his final comment is therefore not justified.

Lord Tomlinson: My Lords, can my noble friend, who is normally very good at these things, give us a broad brush estimate of the impact of the Pre-Budget Statement on things like sustained economic growth, employment, debt reduction, the reduction in the cost of debt servicing and the consequential use of those financial benefits for deserving good causes from pensions to petrol prices?

Lord McIntosh of Haringey: My Lords, as the Pre-Budget Report made clear, the proposals put forward for changes in the tax and social security contributions system would not result in a net increase in

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government borrowing. Because the estimate of tax receipts and social security contribution payments has been raised since the 2000 Budget, there is no impact on the security of the economic growth and stability which has been a feature of this Government's policies.

Lord Saatchi: My Lords, in the light of the Pre-Budget Report, does the Minister recall his statement in col. 758 of Hansard on 28th July when he said,

    "the tax burden is falling"?

Can he repeat that statement today?

Lord McIntosh of Haringey: My Lords, I have already said that, under the plans and if there is implementation of the proposals for consultation, there will be no increase in what the noble Lord calls the "tax burden", which I prefer to call properly "taxes and social security contributions" as a proportion of GDP next year.

Baroness Oppenheim-Barnes: My Lords, can the Minister tell the House, based on the current family expenditure survey, what proportion of the tax burden is now coming from lower and lower middle income families?

Lord McIntosh of Haringey: My Lords, not without notice. However, it is a prime concern of the Chancellor of the Exchequer that we should be moving to eliminate poverty, particularly child poverty, in this country. That implies that there should be not only substantial increases in public contributions to those families, but also, for those of them that pay taxes, a reduction in their taxes. I believe that is what the noble Baroness, Lady Oppenheim-Barnes, will find is the case.

Lord Brougham and Vaux: My Lords, can the Minister explain why today in Westminster Gardens, the block of flats in which I live, we received a letter from the London Electricity stating that it reckons our electricity will go up by 15 per cent due to announcements made by the Chancellor of the Exchequer?

Lord McIntosh of Haringey: My Lords, I am astonished at what the noble Lord, Lord Brougham, says. I cannot believe it is justified. I particularly cannot think it is justified in light of the fact that we are moving towards the new electricity tariff agreement which is expected to reduce electricity prices by approximately 10 per cent.

Police (Northern Ireland) Bill

3 5 p.m.

Read a third time.

Clause 12 [Accounts and audit]:

The Minister of State, Cabinet Office (Lord Falconer of Thoroton) moved Amendment No. 1:

    Page 7, line 8, leave out ("Chief Constable") and insert ("Board").

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The noble and learned Lord said: My Lords, in moving Amendment No. 1, I shall speak also to Amendments Nos. 2 to 4.

We listened carefully to the concerns expressed about Clause 12 on accounts and audit. We are extremely grateful for the assistance given to us by the noble Baroness, Lady Harris, in working through these arrangements and for the detailed correspondence we exchanged. In response, government Amendments Nos. 1 to 4 make changes to subsection (1) of Clause 12, which requires the board, rather than the Chief Constable as Clause 12 is presently drafted, to keep accounts in respect of funds to put at the Chief Constable's disposal by the board. Subsection (2) of Clause 12 is amended to require the board's duty to keep accounts in respect of police funds to be exercised by the Chief Constable. The Chief Constable will still be required to submit his accounts to the board under subsection (4) of Clause 12.

The Chief Constable will be the accounting officer for the police grant as he remains responsible for the day-to-day police expenditure as recommended by Patten. As the report said that,

    "the Board should be responsible for negotiating the annual policing budget with the NIO ... It should then allocate ... [it] to the Chief Constable".

Recommendation 43 of the Patten report specifically recommended that the Chief Constable be the accounting officer for the police grant.

But these amendments recognise that Patten also said that the Chief Constable should remain financially accountable to the board and that the board should have a strong audit department to enable it to exercise its responsibilities in this area. We would not want the changes we are making to meet Patten's recommendation to be taken as implying that the Chief Constable is other than accountable to the board.

The Government's view is that the amendments help to make it clear that the Chief Constable is exercising a delegated function and that the money and accounts "belong" to the board. The amendment shows that the Chief Constable's financial accountability lies to the board and that its oversight of the accounts is unconstrained.

I hope noble Lords will accept the efforts we have made to address concerns about the board's financial accountability role. I beg to move.

Baroness Harris of Richmond: My Lords, I believe we can all agree that this Bill represents one of the most significant pieces of legislation we have had before us in this busy Session. It seeks a new beginning for policing in Northern Ireland, as Patten envisaged.

We fully supported the Government in their aim to implement the Patten report. Our concern throughout has been to ensure that, in giving policing that fresh start, we take the best of what worked, whether in Northern Ireland or elsewhere, and adapt it to meet local needs. What is crucially important is that we get the delicate balance of police governance right.

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The new police service must be and must be seen to be the impartial servant of all the community. That is fundamental to our system of policing by consent. That means getting the right level of checks and balances in the roles of the Secretary of State, the new policing board and the Chief Constable for securing that transparency. The Government have gone a considerable way towards achieving that. I welcome the government amendments. They may not have gone quite as far as we would have liked. But I am reassured by the statements made by the Government that the board will be able to exercise close and expert scrutiny of the Chief Constable's use of resources; that there will be a code of financial management as robust as the present one; and that the board will need a strong internal audit department. The practical workings of this part and the relationship between the three parties will need to be clarified. I do not intend to press the matter further.

Lord Molyneaux of Killead: My Lords, perhaps I may go further and congratulate the noble and learned Lord the Minister on responding to the concerns expressed by many of us about what seemed to be a most untidy arrangement. I am sure that the manner in which the problem has been resolved will meet with the approval of the board and theChief Constable.

Lord Cope of Berkeley: My Lords, we discussed these matters in Committee and on Report. At the Report stage the Minister, politely but firmly, rejected amendments tabled by the noble Baroness, Lady Harris, which were not dissimilar to these. Therefore, one wonders what has happened to change his mind.

Yesterday, in respect of the Freedom of Information Bill, we saw a remarkable Lab/Lib deal and one wonders whether we are seeing another today. However, the important point is that the relationships will be clearer as a result of the amendments. For that reason, we do not object to them.

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