House of Lords: Working Practices

Lord Elton Excerpts

Monday 12th July 2010 Lords Chamber

[Lord Howe of Aberavon]

My Lords, it is for me personally a real pleasure to follow the noble Lord, Lord Luce, in this debate. We have been in partnership together more than once; he was for a long time my parliamentary private secretary and a ministerial colleague. His own career has been so diverse and distinguished that he is in himself one of the best advertisements for this House. He served in the colonial service for some years and resigned from that on a point of principle. He also had the privilege of serving alongside my noble friend Lord Carrington and, for different reasons, resigned from that, too. He then came back to a second career as a Foreign Office Minister and then, when that came to an end, became a Minister for arts. When that came to an end—I think that I have this sequence correctly—he became vice-chancellor of Buckingham University, governor of Gibraltar and Lord Chamberlain. There are not many legislators in many legislatures in the world who can match that kind of career, and we welcome him most warmly. I agree with almost everything that he had to say in his speech.

I have only a very modest point to make in this debate, not addressing a number of the issues already raised but addressing the simple question of whether we will make the best of the resources in this House that can serve us in so many different ways. I set the context with a rather unusual quote from the San Diego Law Review, from tax law professor, Alice Abreu:

“If taxes had existed in the Garden of Eden, the Serpent wouldn't have needed an apple; the promise of a simpler tax system alone would have seduced Eve”.

That could be said again and again. We are always looking for a simpler tax system or a way of delivering such a thing. A lot depends on the perceived scale and nature of the taxes themselves, the objectives and the philosophy. A great deal depends on the mechanism for making, scrutinising and enacting the law, changing monetary objectives into intelligible legislation.

This is clearly an area where Parliament as a whole has a very important part to play. Every professional and business institution has offered some prescriptions as to how we might improve it. Two basic prescriptions have emerged—first, that there should some kind of agency at least semi-detached from government to keep in mind the objective of tax simplification, to prevent Chancellors letting their imagination run away with them or inspectors of taxation achieving the same effect and producing great complexity. That is one need on which there is agreement. Secondly, we should have the right parliamentary institutions for tackling the enactment of legislation. There have been a number of recent commissions and bodies that have made recommendations about those things. My noble friend Lord Forsyth presided not long ago over a Tax Reform Commission, whose report was entitled Tax Matters. I was invited to undertake a much humbler organisation, a working party to study the methods for making tax simpler. We both agreed with the prescription that has generally commended itself to many other people. The Government have now announced that we need something like an office for tax simplification, an independent body to focus on that all the time.

The second conclusion reached by all these bodies is the necessity for a Joint Committee of Parliament on tax legislation. I emphasise the word “joint”. That is almost universally supported by all the organisations outside the Government that have considered this: the CBI wants such a Joint Committee, as do the Chartered Institute of Taxation and the Institute for Financial Studies. The reason for that, I am sad to say, was set out some years ago by Sir Alan Budd in one of the earlier studies as long ago as 2003. He and his colleagues had this to say:

“The truth of the matter is that the House of Commons has neither the time nor the expertise nor, apparently, the inclination to undertake any systematic or effective examination of whatever tax rules the government of the day places before it for its approval. The irony of the Commons’ failure is that, because current constitutional arrangements allow the House of Lords no participatory role in the scrutiny of tax legislation, taxation legislation receives less Parliamentary scrutiny than other legislation. The criticism of Parliament implicit in this statement is not new. Parliament has rarely attracted praise for its role in enacting tax legislation. The longevity of this problem, however, is no reason for the continuing failure to address it”.

As I say, there has been very little dissent and disagreement about the general nature of what needs to be done. A few weeks ago we had a response to that set of specifications from Her Majesty’s Government in the document produced by the Chancellor of the Exchequer, Tax Policy Making, where the Government propose, among other things, two things. The first is, in order to promote simplicity, to create an independent office for tax simplification, with further details to be announced shortly. I say hurrah to that. The second proposal, in order to provide for greater scrutiny, is for the Government to publish more tax legislation in draft to allow for pre-legislative scrutiny. That is all right. Then, hesitatingly:

“The Government will welcome any consideration by the Treasury Committee”—

that is, the Treasury Committee of the other place—to review how to strengthen the role of Parliament in scrutinising tax legislation. The point that I make today so clearly is that that consideration by the policy committee in the other place must, if it is to be effective, be to the conclusion that all others have reached. We need a Joint Committee of both Houses because thereby we shall be able to mobilise alongside what is, alas, a relatively slender body of people with qualifications in the other place. Professional politicians have increasingly dominated it, and it is a far less well informed place on tax policy than it was 20 or 30 years ago in the days when it was almost fun to join the Finance Bill Standing Committee, with a range of experts doing combat against, for example, the capital transfer tax.

[Lord Elton]

My Lords—

[Lord Howe of Aberavon]

If my noble friend will forgive me, I am just making a point. I may find a slot where I can make way for him.

The point that I am making is that it is important to have both Houses represented in this joint parliamentary body if we are to make the Lords’ talent as available as it should be, and if we are to encourage the Commons’ talent to work together.

I have one last point but I am curious to know what provokes my noble friend.

[Lord Elton]

My Lords, for those of us who are less expert in these matters than my noble and learned friend, will he tell us whether the legislation he is speaking of would have no financial content? I assume that tax legislation always has numbers in it. If that is the case, would it not always be subject to a Speaker’s certificate as being a finance Bill? In that case, how does my noble friend see the other place reacting to his proposals?

[Lord Howe of Aberavon]

I am not quite sure that I follow the nature of my noble friend’s question, to be honest. It must be either so penetrating that I am overwhelmed or so obscure that I am completely innocent.

Let me come to my final point. The anxiety of the other place at seeing us becoming involved in the joint study of this question is that that would in some way encroach on its legitimate and important financial privileges. That is fundamental; indeed, it may be the point about which my noble friend was asking me.

[Lord Elton]

Yes.

[Lord Howe of Aberavon]

I am delighted that I have inadvertently answered my noble friend’s question as well as asserted my principles.

Great care has been taken to prevent such fear of encroachment. Some years ago, this House established a Finance Bill Sub-Committee of its Economic Affairs Committee. There was anxiety in the other place then that the fact that this House was studying finance at all, even with an attached condition, would risk encroachment. When this House decided to establish that sub-committee, there was an accompanying prohibition. The House decided,

“to prohibit the sub-committee from investigating the incidence or rates of tax and to allow it only to address technical issues of tax administration, clarification or simplification”.

That was designed to address the concern on the part of the other place. The Cunningham committee—the Joint Committee on Conventions of the UK Parliament —concluded:

“The Lords committee should continue to respect the boundary between tax administration and tax policy, to refrain from investigating the incidence or rates of tax and to address only technical issues of tax administration, clarification and simplification. Provided it does so, we believe there is no infringement of Commons financial privilege”.

Since then, our Finance Bill Sub-Committee has gained a good track record of scrutinising separate and important aspects of the past five or six Finance Bills. It has published its reports in time for consideration at Report stage in the Commons. Both in and out of Parliament, the reaction to its participation has been distinctly positive.

The case that I am making, lest it be at all obscure to my noble friend the Leader of the House and, indeed, to the House as a whole, is that here is an opportunity for the House to enlarge its role and to take part in the Joint Committee of Parliament that the Forsyth commission recommended and which everyone else would like. It is another opportunity for us to exploit our ability in an effective way. I hope that this idea will be accepted with good will in the other place as well as here. That ends my, I hope, tolerably clear presentation of what I was trying to say.