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Lord Rees-Mogg: My Lords, is the noble Lord putting to this House that Mr Eric Forth and Mr John Redwood are now the best representatives of government policy?

Lord McIntosh of Haringey: My Lords, indeed I am not. I am pointing to the fact that the silence from the present Conservative Front Bench in the other place is deafening on this subject. I should be fascinated to see--and in some ways, of course, selfishly politically delighted to see--Mr Portillo coming out in favour of this measure. That is the point that I want to make. It is clear that there would be formidable opponents from the Opposition Benches in the House of Commons if this Bill were to reach the House of Commons.

I appreciate the position of the noble Lord, Lord Norton of Louth, who was the chairman of his party's commission on the constitution and who has given his support to the Bill this evening. But his report does not say anything which gives support to the Bill. What his report says--and he fairly quoted it--is that the House of Lords should have more say on macro-economic policy. Indeed, perhaps as a result of his report, I do not know, the House of Lords is setting up committees which have more say on macro-economic policy. But his report did not suggest amendments to the 1911 Parliament Act. Therefore, to that extent, I cannot be convinced that this Bill is official Conservative Opposition policy for the next election.

I turn now to the content of the Bill itself. It seems to me that there are three major fallacies which are inevitable in the Bill. The first is that the constitutional issues involved can be concentrated on the Parliament Act 1911. The second is the fallacy that in fiscal legislation it is possible to separate tax administration from the type and rate of tax and its incidence on persons, transactions or properties. The third is the fallacy that it is possible, using the procedures set down in this Bill, to have a reasonable and useful scrutiny within the inevitably restricted time period of the passage of a Finance Bill.

I start by dealing with the constitutional issues. I acknowledge, of course, that the Bill does not overturn the principal content of the Parliament Act 1911. It still leaves the one-month rule intact. But, of course, the Parliament Act 1911 is not the beginning of the story. The beginning of the story--and it may be even further back--certainly goes back to 1671 and 1678. In 1678, on 3rd July, the Commons resolved:


We are going a good deal further back even than 90 years. It is not as though that were the only part of the story. The noble Lord, Lord Kingsland, rightly said that the right to reject Bills still exists. But the right to reject Bills was only effectively used until 1860 when

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Finance Bills became the norm and when, I think it was, the Paper Duties Repeal Bill led the Commons--and I quote Erskine May from page 805,


    "to adopt the practice of including all the fiscal changes of each year in a general or composite Bill ... Since that time, although the Commons still acknowledge the right of the Lords to reject such a Bill, its composite nature renders the exercise of that right a practical impossibility".

Lord Kingsland: My Lords, I am grateful to the noble Lord for giving way. I think I have said all that.

Lord McIntosh of Haringey: My Lords, the noble Lord was claiming that there was still a right. I am saying that although there is still a right, it is a practical impossibility.

Lord Kingsland: My Lords, I am most grateful to the noble Lord for giving way again. I also accept that. Once the decision was made by another place to accumulate all the individual tax Bills into a compendium Finance Bill, it became practically impossible for your Lordships' House to reject it. I do not seek for that decision to be overturned.

Lord McIntosh of Haringey: My Lords, the Bill is seeking to provide for amendments to Finance Bills. That is what the Bill does. I will come onto the practicalities of the matter in a moment but the noble Lord, Lord Kingsland, has set out in detail the Select Committee procedure which he proposes would be adopted. I am grateful for having had an advance copy of that. But, of course, in the way he sets it out, it is a hybrid between the Select Committee procedure in this House and legislative consideration in this House. Some very serious issues are involved.

However, the point that I make is that what is at stake here is not simply Section 1(1) of the Parliament Act 1911 but over three centuries of relationships between this House and the House of Commons on financial matters. Those are not changed by the recent changes in the composition of the House, any more than they were by the much more significant introduction of life Peers in 1958 or, indeed, than they would be under the second phase of House of Lords reform.

I turn now to the second fallacy--the fallacy that there is such a thing as tax administration which can be distinguished from the type and rate of tax and its incidence on persons, transactions or properties. One only has to look at the Finance Act 2000 to realise that such a distinction cannot be made. I have looked at only a tiny part of it.

Lord Simon of Glaisdale: My Lords, surely it has already been made in 1970 by the Taxes Management Act which the most recent Finance Act itself amended.

Lord McIntosh of Haringey: My Lords, I shall come onto the Taxes Management Act 1970 and the point made by the noble and learned Lord, Lord Simon. But perhaps he will allow me to make the point about the bulk of the Bill rather than Schedule 39 at the moment.

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Sections 68 and 69 and Schedules 19, 20 and 21 are all concerned with research and development tax credits. If one looks at those sections, which take up 14 pages in all, there is not a single point which could be described as tax administration which does not involve those matters which the Bill acknowledges would have to remain the sole responsibility of the House of Commons.

I acknowledge that Schedule 39, which amends the Taxes Management Act 1970, did so without Lords scrutiny when the 1970 Act was subject to the scrutiny. But that is precisely why the Finance Act 2000 was not a money Bill; that is, because matters were introduced which did not merit the Speaker's certificate. It would not be appropriate for specific individual clauses alone to be scrutinised by the House of Lords. If the Commons object to the inclusion of a measure in a Finance Bill that prevents its certification as a money Bill--which is the answer to the point raised by the noble and learned Lord, Lord Simon--it can bring an amendment and attempt to have that measure removed. We do not do so because of the holistic nature of Finance Bills and the view which the Commons takes of such matters.

I listened to the suggestion made by the noble Lord, Lord Newby, of a separate taxes management Act. That was raised by a Commons Select Committee as recently as 1993. However, I have to say that that would not work. We simply cannot separate the headline parts of taxation, the rate, type and incidence as the Bill attempts to do, from the detail. If we tried to do that, what would we do with anti-avoidance measures, for example, which take up a large part of Finance Bills? They affect who pays tax; therefore, they would be excluded from the noble Lord's Bill. That cannot be done.

Lord Kingsland: My Lords, I am grateful to the Minister for giving way. If he thinks all these highly politically sensitive matters would be excluded from my noble friend's Bill, why is so concerned about them?

Lord McIntosh of Haringey: My Lords, I am concerned that we should not act. I not concerned about it; the House can do what it likes with it. That is not my personal concern. However, it would be absurd for the House to pass legislation under a misapprehension. That does not mean that there is not a sound point which has been made by a number of speakers tonight about tax simplification in particular and about consultation and scrutiny outside the Standing Committee in the House of Commons. Those are valid points. That is why we were considering the Capital Allowances Bill in February. As we all agreed, that is a valuable extension of improvement of tax legislation.

I am a great supporter of the tax manifesto of the Institute of Chartered Accountants. I have said so in this House, and have agreed with virtually all its points. Despite the comments of the noble Baroness,

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Lady Noakes, I do not think the institute states in its manifesto that there should be increased scrutiny by the House of Lords on taxation matters.

Baroness Noakes: My Lords, I thank the Minister for giving way. I believe that it states that tax matters should be considered by a Joint Committee of both Houses. It fully recognises that there is a role for the House of Lords in scrutiny.

Lord McIntosh of Haringey: My Lords, I believe that is a matter which could be put forward, but which is not put forward in the Bill. In addition to what is being done about tax simplification, perhaps I may suggest to the House that in the introduction of a Pre-Budget Report we have taken an enormous step forward in the possibility and, indeed, practice of scrutiny. The Pre-Budget Report is produced in the autumn. There is then a period of up to six months before the Budget. In that period, a huge amount of consultation takes place on those matters which are identified for consultation. Such consultation takes place with the Institute of Chartered Accountants; the Chartered Institute of Taxation, the CBI, the Institute of Directors and many others, who I do not think would be pleased to see themselves, pace the noble Lord, Lord Blackwell, as being replaced by business persons or ex-Treasury Ministers in this House. That is what they do. There is no reason why--it is not for me to say; it is for the House to say--the House of Lords should not set up a Select Committee to consider those matters which are out for consultation in the Pre-Budget Report and to report before the Budget. There is no reason why the House of Lords should not be involved in that way. To do that would not require legislation, and would not require the Bill.

Despite the comments of the noble and learned Lord, Lord Simon, I am certainly not part of the forces of conservatism. My mind is open to all sorts of ways in which we could make changes. However, the Bill does not do that because of the third fallacy, which I shall refer to briefly; the fallacy of process and timing.

The Finance Bill is published in the Commons after the Budget. The noble Lord, Lord Kingsland, set out the procedures he proposes. I refer to the proposed cross-party Select Committee. Presumably that would have to include all seven ex-Chancellors, seven ex-Chief Secretaries and six ex-Paymaster Generals, otherwise there is no point in making that argument. The committee would have to report to the House of Lords by July. But what would it report on? The Finance Bill is in Committee during that period. Amendments are being proposed by the Opposition; considered by the Government; and being made. By the time the committee came to report to this House it would be reporting on a different Bill from that which comes to this House. The differences between the Bill which is first introduced and the Bill that comes to this House are always great. That would be like shooting at a moving target and does not make sense.

Noble Lords have been good at keeping their remarks to a minimum; I have not. Frankly, the Bill does not work in any sense. It does not work because

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it does not respect the constitution of this country; it does not understand the nature of the legislative process on taxation, and does not understand the timescale and process in which tax legislation has to be considered. I wish it a happy process through this House and no further.

8.57 p.m.

Lord Saatchi: My Lords, I am extremely grateful to all noble Lords who have taken part in the debate at this inconvenient hour, and to the Minister for his winding-up remarks. This debate follows a series of excellent debates in your Lordships' House about the changed nature of our constitutional arrangements, which were led by the noble and learned Lords, Lord Donaldson and Lord Simon of Glaisdale, and my noble friend Lord Norton of Louth, all of which I valued enormously and drew on greatly when working with my noble friend Lord Kingsland on the Bill.

Perhaps I may say how grateful I am to my noble friends Lady Noakes, Lord Norton and Lord Blackwell, for bringing their experience to bear on the Bill. I cannot think of three Members of your Lordships' House who know more about the theory and practice of government, the formulation of government policy, or finance and accounting.

I also give special thanks to the noble and learned Lord, Lord Simon of Glaisdale, for his support. As stated by the Leader of the Opposition, my noble friend Lord Strathclyde, he is a unique constitutional voice. I am grateful to him for his support. I also thank, in particular, the noble Lord, Lord Newby, for putting forward the Liberal Democrat support for the principles of the Bill and for the ideas he put forward this evening on how those principles could be achieved through Parliament.

Before sitting down, perhaps I may say that the only reason my name appears on the Bill and not that of my noble friend Lord Kingsland is because if he had a personal logo it would be, "A light under a bushel". I am grateful to him for creating this short Bill.

We have heard two views this evening. We have had the views of those I have just named, whose opinion can be summed up as "Something has changed; therefore it is time for a change". On the other hand, we had one different view which came from the Government. They take the view that we must deal with financial matters the way we always have because we have been doing it that way for centuries. The Minister went back to 1678 and was proud of the fact that the traditions of all those centuries were being upheld by his Government.

Is it not one of the ultimate ironies that this Government, who have so despised what the noble and learned Lord called the "forces of conservatism" should here tonight be enthralled to events of 100 years ago--or 300 years ago--to uphold history and tradition as the basis of their future policy?

I hope only that the debate has given the Government fresh food for thought. I also hope that I shall have the opportunity to respond to the views of

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your Lordships' House in Committee both on the definitions contained in the Bill and the procedure by which it might be put into practice. I am grateful for the time given and I commend the Bill to your Lordships' House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.


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