Previous Section Back to Table of Contents Lords Hansard Home Page

Lord Morgan: My Lords, I am grateful to the Minister for his explanation. He has described very clearly the reduction in bureaucracy within individual reviews. Surely a greater reduction would come from fewer reviews. Another problem is that not only are there lots and lots of reviews but that the system is rather like ripping up a road for water, electricity and gas repairs at different times. Could the reviews not be synchronised.

21 Mar 2001 : Column 1496

Lord Davies of Oldham: My Lords, that is the purpose of the extended consultation between the bodies. There would be many merits in obtaining greater co-ordination in that respect. I take on board the point made by my noble friend.

My noble friend Lord Parekh asked whether departments which scored 24 out of 24 were displaying angelic qualities not likely to be found in higher education. I merely point out that the top mark is a product of six different elements of calculation. What we are really seeing is more the component concepts which lead up to an evaluation. It is similar to the situation of a student obtaining a degree. No one suggests that every "first" is of exactly the same quality, but it is a clear mark of excellence at a high level. In that sense, 24 out of 24 is not an indication of absolute perfection; it is more an indication of the excellence of the department concerned.

Comment has also been made today about the burden of the research assessment exercise. We are hoping to reduce the burden on institutions through a range of measures, including the enhanced use of IT for the making of returns, greater use of peer review panels, and greater consistency in the approach to assessment.

In conclusion, the Government believe strongly in ensuring that the quality of higher education, both in teaching and in research, is universally high. Of course we must always strive to get better; of course we all recognise the pressures upon the system from the wider population. The number of students coming forward into our universities is increasing and therefore we should expect increased pressure from outside. After all, universities play an increasingly significant role in relation to our economy and to the social life of our nation, and none of us should shy away from demands for proper accountability.

We want to see poor quality identified and addressed. We owe that to the students we seek to educate. That requires a robust system which focuses the greatest attention where there is the greatest need and the greatest failing. It also means removing unnecessary bureaucracy and burden which would distract hard-working academics and administrative staff from their main jobs.

However, I say to the noble Earl, Lord Russell, that we should not pray in aid those particular demands upon both academic and administrative staff at the point when the scrutiny is taking place. There is not a sector of our education system which cannot bear testimony to the inevitable strains placed upon already hard-working staff at the point when the inspection team is about to arrive. That is natural in the circumstances.

We have encouraged streamlined approaches which rely on sound internal quality assurance processes and a light touch wherever possible. The plans that we have announced this week will reduce further the burden of bureaucracy on universities while maintaining a robust and firm control over poor quality teaching and research. I may not have entirely convinced the noble

21 Mar 2001 : Column 1497

Lord of the degree of the light touch. I am sure that he will recognise, however, that it is a substantial step forward.

Lord Norton of Louth: My Lords, I am extremely grateful to those who have taken part in the debate. I am conscious that, technically, it could go on for another half hour but I shall confine my comments to a few brief points. A very clear message has come across in the debate. There has been agreement among speakers on all sides of the House and I am grateful for their contributions.

I am grateful to the Minister for responding to the debate. I heard what he said. He has outlined the way in which the burden will be reduced and has stressed the lighter touch. I welcome that. However, I would make two brief points in response. Saying that a burden will be smaller does not stop it being a burden. That is especially a problem when the burden itself derives from a system which may be inherently flawed. One should be looking at alternative systems rather than simply seeking to slim down an existing one. My second point relates to that. The Minister did not quite answer my final, fundamental question of what are the Government doing to look holistically at the problems facing our universities and at alternative ways of achieving the goals to which we subscribe.

Throughout the debate it was clear that there was agreement as to the nature of the problem. The existing regime is burdensome; it is not cost effective; it is counter-productive. The noble Lord, Lord Davies, is right. We have a great deal to be proud of in higher education in this country. My fear is that we are jeopardising that by imposing too much on our universities.

As I said in my opening comments, the busier one is with teaching and research, the greater the burden that is imposed by the present regime. I speak with feeling as someone who teaches several courses. I have taught for 25 years in higher education, and I like to think that during that time my teaching has improved. I am still looking at ways to improve it, including through e-technology, which was referred to by the noble Lord, Lord Davies. But if it has got better, it is despite, not because of, the present accountability regime. The regime is burdensome. Most importantly, it is dispiriting; and it is taking a serious toll in the university world. We need to look at the regime in a different way, not simply slim it down.

The best judges of teaching quality are those who are being taught. The best judges of research are those who choose to read the books and the articles, not those who are told that they must do so. There are far more efficient ways of ensuring quality. We need to bring a fresh and novel approach to the subject. The present situation is not sustainable.

My Motion--of necessity--calls for Papers. It will be clear from what I have said that the last thing I want is more papers. This is not the first debate I have initiated in which I have said that. I was conscious when I tabled the Motion that I was calling for papers when the whole thrust of my intention was to get rid of

21 Mar 2001 : Column 1498

a whole raft of them. I was also hoping that the Minister might throw away his papers and say what he actually thinks. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

House of Lords Financial Powers Bill [H.L.]

7.32 p.m.

Lord Saatchi: My Lords, I beg to move that this Bill be now read a second time.

First, I should like to say what a privilege it is to have the opportunity to introduce this Bill into your Lordships' House. I express my gratitude to noble Lords for attending the debate. I should also like to thank the usual channels for giving time for this Second Reading debate.

I thank also many noble Lords on all sides of the House who have given my noble friend Lord Kingsland and I the benefit of their experience and wise counsel during our deliberations on the Bill. Although it is presented from the Opposition Front Bench, my noble friend and I have sought above all a cross-party approach, not a party political one.

The Bill's objective is simple. It seeks to improve the quality of financial legislation by applying greater parliamentary scrutiny to it, so that tax is simpler and more transparent. It seeks to do this by bringing about a redefinition of a money Bill for the purposes of the 1911 Parliament Act so that the present blanket disqualification on House of Lords involvement in public finance is partly lifted.

It may be helpful if I begin by explaining the need for the Bill and then describe the cure that it might provide. The Treasury Select Committee in another place explains in its latest report, published in January, that the passage of Finance Bills through Parliament affords insufficient opportunities for scrutiny of complex measures. The noble Lord, Lord Barnett, a former Chief Secretary to the Treasury, told the Commons committee:

    "The Finance Bill and the way it is examined by Parliament is totally inadequate, so you get very bad legislation on the statute book and there is no opportunity for the House of Lords or any Select Committee to look at it from a purely technical point of view".

The Select Committee concluded:

    "We are dissatisfied with procedure on the Finance Bill, which lets badly drafted and insufficiently tested tax legislation onto the statute book every year".

The difficulty of giving a detailed Finance Bill proper scrutiny in Parliament is reflected in widespread concern about the complexity of the resulting tax system. The Institute of Chartered Accountants states:

    "The Finance Act 2000 ran to a staggering 624 pages. Much of this legislation was barely debated in its progress through Parliament. Many of the provisions became law without either a thorough review or the time for second thoughts or worthwhile amendments".

21 Mar 2001 : Column 1499

The ICA summed up with the statement:

    "The tax system has spun out of democratic control".

No citizen, however intelligent, can match the massed ranks of No. 10, No. 11 and the Treasury: one man against the legions of Rome.

That is the need, but what is the cure? Someone needs to carry the torch for transparency, simplicity and openness in the tax system--but who? It should, of course, be Parliament, but one part of Parliament is disabled in this area; namely, your Lordships' House. As a result, the Bill that should receive the greatest parliamentary scrutiny actually receives the least. Let us consider the Finance Bill 2000, which has the official status of being the longest-ever Finance Bill. The length of debate in the House of Commons was 101 hours and 39 minutes over 93 days. Now let us consider the Finance Bill 2000 in this House. The length of debate was two hours and 29 minutes, on a Friday morning in July on the last day of the parliamentary Session.

Why is that the case? It stems from a decision by this House from which much of our political history takes its origin. If noble Lords will forgive me, perhaps I may briefly revisit the events of November 1909 when this House rejected Lloyd George's "People's Budget". The Government then secured the passage of the Parliament Act, the terms of which enabled the House of Commons to enact a money Bill within a month of its passage, notwithstanding any objections raised in this House.

Notable aspects of this history were recently addressed in this House in a splendid duet of speeches by two of the country's most distinguished Law Lords, the former Solicitor-General, the noble and learned Lord, Lord Simon of Glaisdale--whom I am delighted to see in his place--and the former Master of the Rolls, the noble and learned Lord, Lord Donaldson. They reminded us, first, that examination of the recitals to the 1911 Act show that it was intended only as an interim step. The Preamble states:

    "Whereas it is intended to substitute for the House of Lords, as it at present exists, a second chamber constituted on a popular instead of a hereditary basis, but such substitution cannot be immediately brought into operation ... It is expedient to make such provision as in this Act appears for restricting the existing powers of the House of Lords".

The noble and learned Lord, Lord Donaldson, said that these recitals showed that the Parliament Act was,

    "an interim measure ... pending a constitutional change".

The 1911 Act, he says, contained,

    "the agreed terms of an armistice".

The second relevant aspect of the history of the Parliament Act 1911 was the motivation behind it. The record seems to show that its raison d'etre was the hereditary nature of the upper House. Commending the Parliament Bill to the House of Commons on its Second Reading, the then Liberal Prime Minister, Mr Asquith, said of the hereditary principle,

    "Let it not be our master. So say we. It is because it has been our master ... because it enslaves and fetters the free action of this House, that we have put these proposals before the House and we mean to carry them into law".

21 Mar 2001 : Column 1500

Winston Churchill, campaigning for the Parliament Bill around the country, asked:

    "Why should their children govern our children? Why should the sons and the grandsons and the great grandsons have legislative functions?".

He hoped that the Bill would be,

    "fatal to the hereditary House of Lords".

But let us consider how much has changed since then. The House of Lords Act 1999 removed the hereditary Peers. The noble Baroness, Lady Jay, the Leader of the House, said that this reformed House is now,

    "more democratic, more legitimate, more authoritative".

Speaking during the passage of the House of Lords Bill, the noble and learned Lord, Lord Williams of Mostyn, the Attorney-General, said that the reformed House of Lords would be,

    "more democratic, more legitimate...and better equipped to do its proper job of scrutinising legislation and holding the executive to account".--[Official Report, 20/4/99; col. 1078.]

Membership of your Lordships' House now includes seven former Chancellors of the Exchequer, seven former Paymasters General and nine former Chief Secretaries to the Treasury, as well as many professors of economics, academics and men of business. Soon they may be joined by a number of elected Peers under the Royal Commission's recent proposals.

In its report Strengthening Parliament the Norton commission, headed by my noble friend Lord Norton of Louth, said:

    "We see no reason why the House of Lords, given the expertise of some of its Members, should not monitor the impact of Bills falling in the economic sector".

The Bill before the House this evening provides a simple mechanism to enable that to happen. It does so by making a distinction between the principles of taxation--properly the preserve of the House of Commons alone--and the mechanics of administration, on which the House of Lords would be allowed to express a view, subject always to the veto of the House of Commons. That is described in a memorandum on proposed parliamentary procedure, which I hope all speakers in tonight's debate have received from both my noble friend Lord Kingsland and myself.

It is important to say that the distinction described in the clauses of this short Bill is one that has been recommended by the Institute of Chartered Accountants, by two Select Committees of the House of Commons, and by my noble and learned friend Lord Howe of Aberavon. Therefore, nothing in the Bill challenges the supremacy of the House of Commons. Nothing in it denies, as the noble and learned Lord, Lord Simon of Glaisdale, says,

    "that the vouchsafing of fiscal authority to the other place is a necessary conclusion".

Nothing in the Bill will delay by one day the process of revenue raising by the government of the day. However, it would allow Parliament--all of

21 Mar 2001 : Column 1501

Parliament--to provide a much needed disincentive to tax complexity, and act as a spur to a simpler and more transparent tax system.

Your Lordships' House has often shown that it is a good, technical revising Chamber, sometimes asking the Government to think again and often getting better legislation as a result. Your Lordships' House has the expertise and the authority to help the House of Commons in the awesome task of holding governments to account on the public finances. What it lacks is the power--the power to help--which is what this Bill would provide.

Times have changed. So it is time to say, as the noble and learned Lord, Lord Simon of Glaisdale, said in the l950s, "Change is our ally". I hope that the Minister will follow tonight the injunction expressed last week by the noble and learned Lord the Attorney-General:

    "You are put in this life to question aren't you? You have to wonder why things should remain the same. Often there's no reason why they should".

I commend the Bill to the House.

Moved, That the Bill be now read a second time.--(Lord Saatchi.)

7.43 p.m.

Baroness Noakes: My Lords, I rise to support the Bill introduced by my noble friend Lord Saatchi. I should say, first, that I am no expert on the constitution and can offer no insights there. I speak as a chartered accountant and, indeed, declare an interest as a member of the council of the Institute of Chartered Accountants.

Chartered accountants have had major concerns about the quality of tax legislation for some time. As we heard from my noble friend Lord Saatchi, the Institute of Chartered Accountants issued a Tax Manifesto last year which claimed that our tax system had spun out of democratic control. That may seem fanciful language, but it reflected a genuine belief that the existing parliamentary scrutiny processes are simply not effective enough in the face of the increasing volume and complexity of tax legislation.

Chartered accountants fully support the involvement of the House of Lords in tax legislation because they see this as a way of getting better tax law. Some cynics may claim that accountants have an interest in complex tax legislation in order to increase their usefulness, and hence their fees. However, I can assure noble Lords that chartered accountants have no interest whatever in badly drafted legislation, ineffective legislation, or legislation that has perverse consequences. Good, workable and effective legislation is at the heart of what this Bill is seeking to achieve. If we can also achieve a simpler tax system, that would be an added bonus. I believe that the involvement of your Lordships' House would help to turn the tide of complexity that successive Finance Bills have introduced.

In the year that I qualified as a chartered accountant, 1973, the Finance Act ran to 59 sections, 22 schedules, and took up 116 pages. I thought then that that was pretty onerous, so I opted for the easy life

21 Mar 2001 : Column 1502

and chose not to specialise in taxation. Subsequent volumes of tax legislation vindicated that decision; for example, 10 years ago, the relatively modest Finance Act 1990 had 133 sections, 19 schedules and ran to 191 pages. As we heard, last year's monster effort ran to 624 pages, encompassing 157 sections and 40 schedules.

I do not believe that the time available for scrutiny in another place has kept pace with that volume, if it has increased at all. Indeed, I understand that the poor quality of draft tax legislation has contributed to the problem of scrutiny, with an increasing volume of technical amendments needed to make sense of the Bill taking up the time of the Committee stage in another place.

Bodies such as the Institute of Chartered Accountants spend a lot of time commenting on tax proposals, including the provisions of Finance Bills. The vast majority of those comments are designed to improve the effectiveness of the legislation and to reflect the practical concerns of taxpayers. Other professional bodies, and many trade associations, do the same. It is a source of increasing frustration to those bodies that their voices are not heard. The Government can, and do, ignore representations. They do not even need to reply to them. With little available time in the other place, these carefully thought out contributions often seem to vanish into the ether.

Perhaps I may illustrate the frustrations of the current process and the benefits that would follow from this Bill. Schedule 12 to the Finance Act 2000 contains eight pages entitled, "Provision of Services Through an Intermediary". Noble Lords may be more familiar with this as the infamous IR35 proposals--the attack on self-employed contractors sneaked in at the bottom of a huge pile of Inland Revenue press releases issued with the 1999 Budget. It was clear to many from the language of the press release that this was not a subject on which a lot of listening would happen. The Inland Revenue issued a Summary of Issues paper after the Budget. Although this was not billed as a consultation document, it did, nevertheless, result in a large volume of submissions from the Institute of Chartered Accountants and many other professional bodies, including the lead trade body on the issue, the Professional Contractors Group. There were indeed some changes made when revised proposals were issued later in 1999, reflecting some, but far from all, of those submissions. Further representations were then made.

Then the Finance Bill was published last year, containing what is now Schedule 12. There were still many problems perceived by those commenting on the provisions, but very little change was made during the Bill's passage. Some of those concerns related to the consistency of the proposed provisions with European legislation, but those points were not taken into consideration. As noble Lords may be aware, the Professional Contractors Group has been forced to take the very extreme step of seeking a judicial review

21 Mar 2001 : Column 1503

of this legislation in order to get its views heard. As I understand it, that case is before the High Court this week.

If this Bill becomes law, your Lordships' House will have a great opportunity to make a positive contribution; for example, a Select Committee of this House could take evidence from many sources, including the Government. At the very least, that would give a proper forum for the views of professional bodies and trade bodies--the taxpayers' concerns would be heard. I have every confidence that such a committee could handle the complex tax issues, as well as those relating to European law. Such a committee could have helped to ensure that the intent behind IR35 resulted in effective legislation.

IR35 is a relatively simple example of how controversial tax legislation is pushed through. There are many much more complex examples, such as the ongoing saga of the Government's attempts to change the way in which double tax relief is applied, but I shall not weary noble Lords this evening with a detailed explanation of that. Suffice to say that the skills of dispassionate scrutiny in your Lordships' House that are much admired could be deployed to great effect in such cases in the interests of simple and effective tax legislation.

I am sure that all who deal with tax legislation outside the Government will heartily support the Bill. I hope that the Government may also reflect that it is in their interests also to harness the undoubted skills of this House in the cause of better and simpler tax legislation.

7.51 p.m.

Lord Simon of Glaisdale: My Lords, it is a privilege to follow the noble Baroness. I have only intermittently been concerned with the complexities and difficulties of our fiscal code and, intensively, only over a short time, whereas the noble Baroness has had to deal with it day in and day out.

I am glad to support the Bill which has been explained so clearly by the noble Lord, Lord Saatchi. Your Lordships will remember a famous inscription on the tomb of Sir Christopher Wren in St Paul's Cathedral. It is written in Latin but I know that your Lordships despise the way that lawyers pronounce Latin. Therefore, I shall translate it freely. It states, "If you seek my monument, look at what surrounds you".

Therefore, if we seek a reason for the Bill, we need not look far. Recently there have been two measures which throw great light on that. The first is the Capital Allowances Bill. That was the first measure of the rewrite of the fiscal code. It is massive and concerns only a small part of the income tax code. Indeed, the Explanatory Notes are barely susceptible of being lifted by someone of my age. We would not need the fiscal rewrite, which we owe primarily to the noble and learned Lord, Lord Howe of Aberavon, if there had been proper scrutiny of the measures that are now rewritten.

21 Mar 2001 : Column 1504

The second monument, which is almost as massive--in fact, it is more massive--is the most recent Finance Act, the Finance Act 2000. It has 613 pages and 157 sections. One might note that capital allowances occupy only 11 of those 157 sections. It has 40 schedules. If your Lordships think that that is a bit meagre, I hasten to add that many of the schedules contain a number of parts. Schedule 6, for example, contains no fewer than 14 parts. Schedule 14 contains no fewer than nine parts. I say in passing, as I shall come back to it, that that was a money Bill, as most of the recent Finance Acts have been.

As I say, we would not need a rewrite if the measures had been properly scrutinised in the first place. That is not only the job of the House of Commons, which in fact performs it quite indifferently, but also of your Lordships' House which has no fewer than five former Chancellors--if I have counted correctly, but I rather think that the noble Lord calculated that there were more so I probably have not thought of them all--three former Chief Secretaries to the Treasury and a former Permanent Secretary. Above all, your Lordships' House, as is generally agreed, has at least this primary duty; namely, to scrutinise legislation. If ever there was a case for scrutiny, it concerns the fiscal code. The noble Lord's Bill has done that skilfully. He has distinguished between, on the one hand, the type and incidence of the taxation, which is entirely a matter for the other place, and, on the other hand, what may be loosely called tax management and the minutiae of the fiscal code.

The fact that those were amalgamated goes back to the "People's Budget" of 1909 which contained so much more than purely fiscal measures. In particular, it was designed to pave the way for the taxation of land values and, ultimately, the nationalisation of land. I am afraid that I am old enough to remember the Liberal land song, "God gave the land to the people". It was that that prompted the skilful manoeuvring and tactical adroitness of Lloyd George who carried out what was more than a fiscal measure and dared the House of Lords to reject it, which, very stupidly, it did.

So much for tax management. But even there the Bill ultimately surrenders the last word to the other place--I think quite rightly. Nowhere does the Bill do more than entitle your Lordships to scrutinise. Any amendment is subject to the discretion of the other place. We must ask why there is that distinction between the incidence of tax and the type of tax which is a matter for the House of elected representatives and not primarily--not except by way of scrutiny and suggestion--a matter for the House of elite representatives. The reason is that through their representatives the people can influence the way that the Government's proposals for taxation shall be implemented; in other words, how much of their own money shall be taken in providing services to themselves. The elected representatives being closer to the electorate, although not very close in the latter part of a Parliament, they are the people to be influenced. One should not exaggerate that because of the

21 Mar 2001 : Column 1505

executive dominance in another place and the many restrictions on the fiscal initiatives of private Members of another place.

I said that I would return to the Finance Act 2000. I wish to draw attention to Schedule 39. That schedule amends the Taxes Management Act 1970. That Act was not a money Bill. It was given a Second Reading in your Lordships' House and then went to the Joint Select Committee on Consolidation Bills. But the amendment was to the Finance Act 2000; it was a money Bill. I ask the Minister who will reply to the debate this question: why should not amendment of the 1970 Act be scrutinised in the way that the 1970 Act was itself scrutinised by your Lordships' House and the Joint Select Committee? That provision is now hidden away towards the end of a money Bill.

I hope that the Minister will respond to the debate and will not show himself to be one of the forces of conservatism.

8.3 p.m.

Lord Blackwell: My Lords, it gives me great pleasure to support my noble friend Lord Saatchi on this Second Reading, as on so many issues. I go further than my noble friend. The House would still have restricted powers with respect to some aspects of money Bills, rates and incidence of taxation on individuals. I see no reason to have any distinction or limitation.

My arguments come under two headings: practicalities; and constitutional issues. On the practicalities, the arguments have been expressed well by my noble friend Lord Saatchi and the noble and learned Lord, Lord Simon. This House contains a wealth of talent. I shall not compete with them in counting the number of former Chancellors and Permanent Secretaries in this House. My noble friend mentioned academics; and there are many noble Lords, such as my noble friend Lady Noakes, with experience in accountancy and financial services. Many noble Lords have practical experience in business. I shall return to that point. So much of the tax legislation falls on the business community rather than on individuals. It is where the complexities and the need for scrutiny are most intense.

The point has also been made that another place has insufficient time to undertake adequate scrutiny. If this House were to be so engaged the time available for such scrutiny would be increased. It would also add to the quality of the scrutiny not only because of the experience of noble Lords but also because it would be possible for this House to do what it does so well: to bring in points of view from experts; and to consider amendments in a less party political atmosphere than in another place. Therefore there is opportunity for considered views from the accounting professions, the business community and others to be debated in a rational way in this Chamber in a manner that might not occur in another place.

21 Mar 2001 : Column 1506

I have had the privilege of serving recently on the Joint Committee on tax simplification. The Joint Committee of both Houses worked well, albeit in a limited way. It provides one option for further involvement of this House although it is clearly not the only way. This House has opportunities for debates and has its own Committee stages of Bills.

One of the practical issues is the need to avoid delay. On other occasions, my noble friend Lord Saatchi has argued that there are many ways to avoid delay: for example, by having Sessions in parallel. Given the need to ensure that legislation is passed quickly, if this House has in all other respects full powers over financial legislation, I see no reason why we should not be prepared to concede that legislation in this area should not ping-pong backwards and forwards or be delayed from one Session to another. It would be reasonable to concede that amendments passed by this House might be overturned by another place without recourse to this House. The benefit of having such amendments tabled and considered would make it a worthwhile process even if we had no power, for obvious reasons, to delay Budget matters. The practical arguments come down clearly in favour of the benefits of engaging the expertise and the time of this House in that process.

I turn to the constitutional arguments. Many of those arguments--they relate to the 1911 Act--go back to the popular cry around the time of the American revolution of, "No tax without representation": that it was solely the people, through their representatives, who should levy taxes on themselves. But matters have moved on since those days. In recent years, the House of Lords has demonstrated that it can be the Chamber which defends minorities and minority interests against what some may say at times has become an elective dictatorship in another place. It is true that a government in another place has a mandate and its business must get through. However, one of the dangers of a large majority in another place is that the interests of minorities do not always receive proper attention. If they so choose, an autocratic government can use their majority to act in an autocratic fashion.

The notion of popular scrutiny by the representatives of the people which underlies the notion of no taxation without representation can no longer be applied to the way in which legislation often passes through the other place. The House of Lords can make the Government think again. In that sense, it can be a defender of minority interests, in particular with regard to financial matters--for example, when a government seek to impose taxes which appear to have no victims but which damage many individuals who are unaware of the impact of the laws and taxation. The legislation that imposed taxation on pensions is a good example of that and it has been cited many times in the House. Taxes have been imposed on many other occasions on groups that have not necessarily had a voice. As in so many other areas, this Chamber could act as a guardian to ensure that those minority interests were heard.

21 Mar 2001 : Column 1507

I come back to the business community. Where is the representation for the business community, on which so much taxation falls? This House has more active representatives of the business community than the other place. They are aware of the implications of certain tax changes and can draw them to the attention of the House, the Government and the people at large. It is a valuable aspect of this House that, because it has more representatives of the business community, it can more properly hold the Government to account for the implications of some of the taxation levied on that community.

At the time that the slogan, "No taxation without representation" was coined, the idea of public companies or joint stock companies was still fairly vague and dim. Two hundred years ago, taxation on companies effectively meant taxation on individuals, because they were the holders of the shares. Now that the ownership of companies is dispersed, taxation on business does not fall so much on individuals, except indirectly on those who ultimately benefit through pensions. It is difficult to argue that the representatives of the people are the best qualified to understand the implications for wealth creation and employment of taxation on business. Even though the elected representatives must have the final say on tax policy, there is an increasing argument for allowing people who can bring to bear expertise from other areas to play a role in scrutiny and proposing amendments.

The House of Lords does not need to wait for a change in status before carrying out that role. Some may say that the proposals are all very well, but we should wait until we have a reconstituted House of Lords. As I have made clear in the past, I do not believe that the democratic legitimacy of a second Chamber depends on it being elected. Many of the benefits that this House brings stem from having the kind of representatives that we have now. The mix of skills brought in through the current system can be of most value on issues such as tax policy.

Finally, I do not understand why tax and money Bills should be distinguished from any other legislation on which this House plays a valuable role in scrutinising and proposing amendments. Why should a Bill to impose taxes be any more vital to the rights of individuals than legislation on many other issues: human rights, on which this House has an important role; criminal law; the large amount of legislation on benefits, which affects the pecuniary interests of individuals just as much as tax; or education, which is rightly a priority and a key element of the rights of individuals to access opportunities in society? Why is it right for this House to opine on those issues, but not on tax law, on which in many ways it has particular expertise? I do not see any practical or constitutional reasons why this House should have different powers or rights on tax or money legislation than on other legislation, except on the specific issue of ensuring that the timetable for the consideration of amendments is kept to a minimum so that legislation can be passed through both Houses in an appropriately short period.

21 Mar 2001 : Column 1508

8.15 p.m.

Lord Norton of Louth: My Lords, it is a pleasure to follow my noble friend Lord Blackwell. Picking up on what he said, the underlying principle of the debate should be, "No taxation without proper scrutiny".

I welcome the Bill. In my brief comments I intend to focus on the intended consequences, as outlined by my noble friend Lord Saatchi. I have argued before that your Lordships' House should complement the first Chamber rather than compete with it. A complementary role ensures that the accountability of our present system, with the party in government being answerable to the electors, remains intact.

By virtue of its membership and its activity, this House fulfils a particularly valuable role in scrutinising legislation, policy proposals and the actions of the Government. The juxtaposition of membership and activity is important. This House enjoys legitimacy as a scrutinising Chamber, complementary to the first Chamber, but that legitimacy has to be earned. We cannot take it for granted. We have to work to prove our worth.

I believe that we have done so. Indeed, I believe that we presently do so more effectively than the other place. However, that fact constitutes no basis for complacency. As well as working hard to prove our worth, we have to find ways of reinforcing and extending the good work that we do. We need to build on what we have and what we do.

As my noble friend Lord Saatchi said, I had the honour to chair the Commission to Strengthen Parliament, set up by my party leader in 1999. The commission reported in July last year. In our report, entitled Strengthening Parliament, we emphasised the valuable work done by this House and argued that it should play to its strengths. My noble friend has already touched on that. We stressed the committee work of your Lordships' House. We wanted more sessional committees. We noted that the House was especially well placed to address cross-cutting issues such as macro-economic policy. We also made the case for Bills to be referred for Select Committee scrutiny before their Committee stage on the Floor of the House.

I very much welcome the creation of the Joint Committee on Human Rights, the Economic Affairs Committee and the Constitution Committee, which I chair. I welcome the appointment of ad hoc committees on stem cell research and scientific experimentation on animals. I would like the House to build on those developments. The Bill is a means of achieving that. It moves in the direction signalled in Strengthening Parliament. It plays to the strengths of this House without challenging the supremacy of the first Chamber. Far from challenging the first Chamber, my noble friend's proposals should be of considerable benefit to the other place.

The Bill creates the conditions for subjecting a Bill--in this case the Finance Bill--to Select Committee scrutiny. I would like that to be a precedent for how we deal with other Bills. In this case, the scrutiny by Select Committee would be advisory and confined to the

21 Mar 2001 : Column 1509

technical issues of tax administration. Any amendment made to the Finance Bill could be struck out by the Commons.

As various noble Lords have said, your Lordships' House has the expertise to make a Select Committee on the Finance Bill highly authoritative. Like the other place, your Lordships' House has some former Chancellors and Treasury Ministers among its members, as well as a number of economists. Unlike the other place, this House also has former governors and directors of the Bank of England, former Treasury mandarins and those who have served in positions in the International Monetary Fund and World Bank. The noble Lord, Lord Roll of Ipsden, has combined virtually all those positions.

This House has a wealth of talent--detached talent that is independent of party and talent that can be deployed to effect. One has only to look at the membership of the Economic Affairs Committee to see the expertise that is available. That committee by no means exhausts the expertise and experience available in this House.

The appointment of the Economic Affairs Committee and, earlier, that on the monetary policy of the Bank of England, also confirms that this House is qualified to undertake reviews of such matters. The principle underpinning committee scrutiny by this House in this sector has, in effect, been conceded. Therefore, we are discussing not so much a matter of principle but rather how to give effect to it.

My noble friend outlined how the provisions of the Bill would enable such scrutiny to be undertaken. I have no quarrels with how he described it. I believe that the measure before us is excellent. As I said, it plays to the strengths of this House, and I see no reason why it cannot be considered on its merits--that is, as a free-standing measure, independent of any wider debate about your Lordships' House.

At this stage I was intending to anticipate, as I have done on previous occasions, what the response of the Minister might be. However, on this occasion I shall leave him to develop his speech and shall see whether he makes the point that I had in mind. If he does, I shall intervene then.

I conclude by saying that I consider this to be a constructive and highly desirable measure. It fits squarely with the proposals advanced by the Commission to Strengthen Parliament. During the debate at Second Reading of the Finance Bill last July, the commission report not only attracted praise from my noble friend Lord Saatchi and the noble Lord, Lord Barnett; it was also described as excellent by the noble Lord, Lord McIntosh of Haringey. I hope that he will see this Bill in the same light.

8.21 p.m.

Lord Newby: My Lords, together with all other noble Lords who have spoken, we are extremely grateful to the noble Lord, Lord Saatchi, for bringing forward the Bill at this stage and also for the cross-party approach that he has adopted. We agree with him that transparency, simplicity and openness should

21 Mar 2001 : Column 1510

be hallmarks of the tax system and of the way in which it is amended. We agree that those are not hallmarks either of the current tax system or the current system for changing it.

However, I disagree with a number of noble Lords in relation to the degree of democracy and legitimacy of this House. I do not believe that we on these Benches are proposing to move away from the principle of no taxation without representation. We are not even suggesting that when, in the fullness of time, the House of Lords is a wholly elected body, it should necessarily have parity with the House of Commons in terms of taxation measures. I say that not least for the purely practical reason that, were anyone to make such a suggestion, it would guarantee that such a reform would never take place. No House of Commons would ever agree to it. If we are to make any change in this respect, I believe that we must accept that as a raw reality of politics.

However, as the Bill proposes, it should be possible to separate from the type and levels of taxation discussion on the detailed rules relating to its implementation. I am sure that the Treasury would argue that, finally, everything contained in a Finance Bill relates to the level and burden of taxation. However, frankly, I do not consider that argument to be sustainable. I believe that in what currently forms the Finance Bill it is possible to separate the clauses which deal essentially with levels of taxation from the detailed clauses which deal with its implementation.

If there are problems at the margin in that respect, one should remember that the House of Commons can vote against any amendments passed in your Lordships' House and, thus, they retain the last word. Therefore, I hope that we shall not be invited to accept an argument that such a proposal is too intellectually complicated to achieve.

Obviously, we agree that expertise in this House could and should be brought to bear on taxation matters. I also believe that there is a willingness among at least some of those who have that expertise to spend time and effort examining the tax system. The two remaining questions are: how best can we do it and how can we move from the current situation to one in which Parliament has agreed that we can do it.

Two basic approaches can be adopted in relation to how we might carry out such a change. One option is to have a Finance Bill in which some parts but not others are debated by your Lordships' House. The other approach is to introduce separate taxes management Bills. I believe that, of the two, marginally I prefer the second, not least because it would allow the core of the Finance Bill to go through its Commons stages more quickly than it does at present.

I believe that it should be possible to introduce a Finance Bill in the Commons more quickly because one would not be worried about its drafting. Indeed, much of the drafting cycle could continue almost without reference to the Budget date. The point at which a taxes management Bill is introduced may vary somewhat from year to year. Therefore, on balance, I would prefer to see us follow that route.

21 Mar 2001 : Column 1511

I believe that the key question which concerns the noble Lord, Lord Saatchi, and those of us who are keen to see change is how we persuade Parliament that such a change should take place. Even if this Bill were to pass all its stages in this House before an election were called, I find it difficult to believe that our colleagues in another place would agree to it. Therefore, I suggest that the only realistic way in which we shall succeed in getting the change implemented is in the context of a broader discussion of the powers of the House of Lords. We were promised such a discussion early in the next Parliament under the remit of the Joint Committee of both Houses. It has been promised that that committee will consider the powers of your Lordships' House.

I believe that that would give us a legitimate basis and a legitimate forum in which to raise these issues and in which to obtain agreement. If we were successful, it would be much more difficult for the Government or our colleagues in another place, if they were so minded, to push this matter to one side.

Next Section Back to Table of Contents Lords Hansard Home Page