European Union (Withdrawal) Bill

Debate between Baroness Ludford and Lord Kerr of Kinlochard

Report: 3rd sitting (Hansard): House of Lords
Wednesday 25th April 2018 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

Amendment 43 is in my name and those of the noble Baronesses, Lady Hayter and Lady Kramer, and the noble Lord, Lord Cormack. It would add to the prohibitions in Clause 8(3) a prohibition on increasing or imposing taxation by regulation. There are already similar prohibitions in Clauses 7 and 9 that you cannot impose or increase taxation by regulation made under these clauses.

Noble Lords might have noticed that my fox is ever so slightly shot by the admirable Amendment 47A from the noble Lord, Lord Callanan, which proposes the dropping of Clause 8. I welcome it and many of the government amendments in the group. It is clear that the noble Lord has been listening hard and I am very grateful for the changes he proposes. However, I want to say a word about Amendment 104, which is lurking in this thicket of government amendments and is also in my name and those of the noble Baronesses, Lady Hayter and Lady Kramer, and the noble Lord, Lord Cormack. It would insert the same prohibition against making new taxes or increasing taxes by regulation in paragraph 1(3) of Schedule 4. Schedule 4 is about fees and charges, not taxation. The idea of the amendment is to add a prohibition on eliding from fees and charges into taxes.

When I was young, irresponsible and committing multiple misdemeanours I was sentenced to five years in Her Majesty’s Treasury—a sort of borstal or juvenile detention centre. Now that I am old, irresponsible and committing multiple misdemeanours I have very few memories of the Treasury, but one that stands out clearly is of being in the Box behind the Chancellor of the Exchequer—I was a private secretary—at the time of the Budget speech. At the end of the Budget speech there is an interesting ritual that takes place in silence in the House of Commons, where the Chancellor of the Exchequer and the leader of the Opposition stand up and sit down three times. They are passing the Motions that permit the instant changes of taxes that might be pre-empted. The Chancellor can say something like, “So the price of petrol at the pumps will go up by 5p at 5 pm”. When you go home and look, by God, they did go up. It is an astonishing thing. That is because since 1913, I think, it has been clear that it is not possible to increase taxes or to create a new tax other than by legislation in the House of Commons. That is what happens in that ritual immediately after the Budget: they are passing new taxes for a limited period of three to five months maximum while the Finance Bill goes through the House. The Finance Bill contains these changes and in due course becomes law.

I worry about Schedule 4, which creates the power for Ministers to create public authorities and confer on them the power to impose or create taxes. It seems a fairly fundamental breach of the principle that only Parliament may create or change tax. I am reinforced in this view by the excellent reports from our Delegated Powers Committee, which takes serious exception to the powers in Schedule 4. It points out in its 12th report of this Session, published on 31 January, that the powers are “very wide” and notes that the delegated powers memorandum submitted by the Government spells out that they would enable,

“the creation of tax-like charges, which go beyond recovering the direct cost of the provision of a service … including to allow for potential cross-subsidisation or to cover the wider functions and running costs of a public body”.

The committee comments:

“A ‘tax-like charge’ means a tax. Although regulations under clauses 7 and 9 cannot impose or increase taxation, regulations under Schedule 4 may do so. Not only can Ministers tax, Ministers can confer powers on public authorities to tax. Indeed, they can do so in tertiary legislation that has no parliamentary scrutiny whatsoever”.


The committee concludes:

“Taxation, including ‘tax-like charges’, should not be possible in fees and charges regulations made under Schedule 4. Fees and charges for services or functions should operate on no more than a full cost-recovery basis. Taxation should be a matter for Parliament, a principle enshrined in Article 4 of the Bill of Rights 1688”—


a powerful case, which persuades me.

The Delegated Powers Committee has reported again this week, in its 23rd report, having looked at the government amendments, which I have just welcomed. It remains of the view that,

“taxation, including ‘tax-like’ charges, should not be possible in regulations made under Schedule 4”,

and spells out three or four reasons for that, including the fact that it would offer,

“little consolation to be told that one is being taxed under Schedule 4 rather than under clause 7 or clause 9”.

The prohibitions are clear in the Bill in Clauses 7 and 9, although there was a prohibition that we would have added in Clause 8, had Clause 8 been there, by way of Amendment 43.

However, Amendment 104 seems to make a very valid point which I think the House should hear more about, so I look forward to hearing the Minister’s answer on it. Why do the Government feel it is right to confer on themselves and whatever public authority they wish the power to levy taxes or increase taxes, against what is usually thought to be a fairly fundamental principle of parliamentary control? I beg to move Amendment 43.

[Baroness Ludford]

My Lords, we on these Benches support the points made by the noble Lord, Lord Kerr, who is arguing for consistency throughout the Bill that taxation or “tax-like charges” should be imposed only by primary legislation. That is all I need to say at this stage.