United Kingdom Corporate and Individual Tax and Financial Transparency Bill

Debate between Charlie Elphicke and David Nuttall

Friday 6th September 2013 Commons Chamber

[Mr David Nuttall (Bury North) (Con)]

It is, as always, a great pleasure to follow my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). I entirely concur with his remarks and rise to oppose the Bill. I entirely accept that the right hon. Member for Oldham West and Royton (Mr Meacher) has introduced this Bill with the very best of intentions. I am sure he wants to achieve for the people of our country the same as I want to achieve for them: improved conditions and high-quality public services. However, I am by no means convinced that the way to do that is by introducing measures such as those contained in the snappily titled United Kingdom Corporate and Individual Tax and Financial Transparency Bill.

When I first read this Bill, I did not know where to begin in expressing my thoughts as to just how bad a piece of proposed legislation it was. I do not criticise the manner in which it has been prepared and written, I hasten to say. I am sure that Richard Murphy, who prepared it, has done an excellent job, and I have read the article he wrote about it. I am sure that he, too, had only the best intentions when he put this Bill together. However, it does absolutely nothing to increase the wealth of this nation. It does nothing to help generate new industry and new services, or to promote economic growth. I am prepared to accept that the Bill is born out of intentions that were good, but I fear that it will have nothing but the opposite effect.

I was surprised and disappointed, perhaps in equal measure, that no explanatory notes accompanied the Bill—there were none in the Vote Office when I asked for them—and no assessment had been provided of its possible impact on British companies and individuals. Without an impact assessment, I can only imagine what the impact would be. I shall discuss my conclusions and imaginings in due course, but I assure the House that they were not that the Bill augured well for this country’s prosperity.

[Charlie Elphicke (Dover) (Con)]

My hon. Friend is making a detailed and thoughtful argument. Does he believe the Bill would be likely to lead to further administration for companies in this country and would increase the regulatory burdens on them?

[Mr Nuttall]

I am grateful to my hon. Friend for that intervention, which I can answer in one word—yes. I absolutely believe the Bill would increase the regulatory burden on companies. We must draw a distinction here, as my hon. Friend the Member for North East Somerset did. Large, well-resourced public companies may have the capability and capacity to deal with yet another piece of legislation, and, as has been mentioned, there may well be good grounds, particularly for financial analysts, for this information to be in the public domain. However, the Bill goes far, far wider than just the top 100 public companies—the FTSE 100 companies.

My reading of clause 2, on which I am prepared to be corrected if I am wrong, is that the next 150 companies are not necessarily public companies. Subsection (1)(b) refers to

“those 50 large companies, not being members of the FTSE 100, that have, when arithmetically combined with their UK resident related undertakings, the largest by value UK taxable profits before the offset of all tax allowances and reliefs of any sort whatsoever in a year ended 31 March”.

That does not restrict the provision’s scope to public companies, so one must conclude that private companies will be included. The same applies in respect of paragraph (c), which deals with the next 50 largest companies by their

“value of supplies in the United Kingdom, whether chargeable or exempt, for the purposes of value added tax”

and paragraph (d), which deals with

“those 50 large companies”

that have

“the largest liability to make payment of income tax and national insurance contributions”.

In other words, the greatest employers in our land are being attacked by this Bill. I cannot believe that the Bill will encourage those companies, so the answer to the question asked by my hon. Friend the Member for Dover (Charlie Elphicke) is yes, it will undoubtedly add to the burden, particularly for the banks.

[Charlie Elphicke]

I praise the right hon. Member for Oldham West and Royton (Mr Meacher) for bringing the Bill to the House as he is a sincere campaigner against tax avoidance—a concern I share. Does my hon. Friend agree, however, that a better way to tackle tax avoidance is to get rid of the loopholes by simplifying our tax system and making it easier for people to understand?

[Mr Nuttall]

My hon. Friend is absolutely right. My view—I suspect it might well be that of my hon. Friend, too—is that if the Government wish to increase the tax yield on behalf of the nation and to make it easier for individuals and companies to abide by their obligations, the way forward is to pass simpler tax legislation that we can all understand. I am sure that my hon. Friend has greater expertise in these matters than I do, but I have always found tax legislation particularly difficult to follow. I do not know the latest figures for Tolley’s tax guides, but when I was in practice in the legal profession they were substantial volumes and I suspect that they can only have grown in the past few years. Each one, on one tax alone, is a substantial doorstop.

It is no surprise that loopholes are discovered by accountants and tax advisers because the law is so complex and convoluted. There are so many different taxes, some of which overlap, that there is scope for tax loopholes to arise by accident. Governments do not set out to create tax loopholes other than those that are set out in legislation by design, they are precisely what they are called—tax loopholes.

As has been mentioned, it is often the Government’s desire to create what might be called loopholes, such as ISAs. I have been waiting to get to this point, as it gives me my second opportunity this morning to refer to ISA. This time, I do not mean the International Seabed Authority but the individual savings account. Before I looked into deep-sea mining, that was the only form of ISA I had heard of. ISAs are a form of tax avoidance set up to replace personal equity plans and were established as a means of encouraging people to save. They were set up to encourage private individuals to save in a tax-efficient manner in that they would not have to pay income tax on the income their account had earned. That could be called a tax loophole, but it is a legal tax loophole set up by the Government.

Let me return to the Bill. We must draw a distinction between tax evasion and tax avoidance. Let us be clear: tax evasion is already illegal, but almost weekly in this House I hear the two terms being confused. People say that someone has been a tax avoider, suggesting that they have acted illegally. Well, if they have, they are not a tax avoider; they are a tax evader, and they should be brought to book and prosecuted. I have no sympathy with them whatsoever. If someone has deliberately under-declared their income, I entirely agree that they should be brought to book by the Revenue and Customs, that they should be prosecuted and, in certain cases, sent to prison. Let us not beat about the bush. I am sure I am in agreement with my hon. Friend the Minister on that. I do not want to go easy on people who have deliberately avoided their obligations to society by breaching our tax legislation in such a way as to avoid paying their dues and demands under the law. That increases the burden on everyone else.

Of course, we already have measures in place to provide the mechanism for the Revenue to ferret out these people. It can open up inquiries into their tax affairs, and it frequently does. A whole industry exists around dealing with inquiries into people’s tax affairs. My accountant sent me details of an insurance policy that I could take out for that very occasion. I could pay a premium, and then if my tax affairs were investigated by the Revenue, the policy would cover my accountancy costs while the inquiry was dealt with.

However, returning to the Bill, our Government have already taken a great deal of action on tax avoidance and tax evasion. Since 2010, the Government have collected over £23 billion in extra tax by challenging the tax arrangements of large businesses. I am informed that, by tackling transfer pricing alone, the Government have collected £2 billion since 2010. It may well be that the right hon. Member for Oldham West and Royton is introducing the Bill because he thinks that those figures are not high enough. If the measures in the Bill are such a good idea, why, in the 13 years of the previous Labour Government, under Tony Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was none of these measures introduced? If it is such a good idea now, why was it not such a good idea then? I do not know whether my hon. Friend the Minister ever went to the Treasury team at the time with this Bill and said, “Look, here is the answer to our problems.”

Human Rights Act 1998 (Repeal and Substitution) Bill

Debate between Charlie Elphicke and David Nuttall

Friday 1st March 2013 Commons Chamber

[Charlie Elphicke]

I could not agree more, and that is precisely why I am presenting the Bill.

The February 2011 YouGov poll also found that 55% thought that Britain should leave the ECHR altogether, and that we should have our own Bill of Rights instead, with the British Supreme Court as the final court of appeal. Just 24% thought that we should remain part of the ECHR.

[Mr David Nuttall (Bury North) (Con)]

Does my hon. Friend agree with that opinion poll finding? If so, why does the Bill not reflect the opinion that we should withdraw from the European convention on human rights?

[Charlie Elphicke]

That is a telling question. I tabled the Bill as a Member of Parliament and a law-maker, in relation to the laws of the land. Whether we remain signatories to the convention is a matter of royal prerogative, and a matter for the Privy Council and the Executive of the day. I drafted the Bill in such a way as to leave it open to the Executive to decide whether they wished to remain party to the convention or to withdraw from it altogether. I have sought to establish the cornerstones and foundation blocks of a uniquely British settlement, and to provide optionality in regard to whether we remain a signatory to the convention. I myself have grave doubts about the convention, but I nevertheless wanted to keep that optionality, just in case the Government of the day were not prepared to go as far as that.

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[Charlie Elphicke]

I do, because I believe that we need to deal with the margin of appreciation and proportionality. The European Court in Strasbourg has taken a disproportionately narrow view of the idea of the margin of appreciation, and so this is a key change that we should make. We should not be shy in doing this if we are to get the right settlement for the UK.

Since its entry into force, section 3 of the Human Rights Act has had a far-reaching effect on how British judges apply legislation in the UK. Before that provision, the British judiciary’s interpretation of an Act of Parliament centred on the ordinary meaning of the Act’s words when viewed in their context, taken together with the intention of Parliament when enacting the words. However, in his opinion in the leading case on the application of section 3—Ghaidan v. Godin-Mendoza—Lord Nicholls stated that

“the interpretative obligation decreed by section 3 is of an unusual and far-reaching character. Section 3 may require a court to depart from the unambiguous meaning the legislation would otherwise bear. In the ordinary course the interpretation of legislation involves seeking the intention reasonably to be attributed to Parliament in using the language in question. Section 3 may require the court to depart from this legislative intention, that is, depart from the intention of the Parliament which enacted the legislation.”

That is a crucial point in terms of how Acts of Parliament are interpreted. I think they should be interpreted in line with what Parliament intended, not with what a group of judges from overseas might seek to rule.

Another impact of section 3 is that the courts are empowered to strike down what the HRA classifies as “subordinate legislation”—what we call secondary legislation or statutory instruments—if it is not possible to read this legislation as being compatible with ECHR rights, and the primary legislation under which it is made does not prevent the subordinate legislation’s incompatibility from being removed. Under the HRA, subordinate legislation includes most legislation that is not in itself an Act of Parliament but is made under the authority of an Act, including much legislation approved by resolution of each House of Parliament. That position is a concern and we should change it.

Section 6 of the HRA obliges all public authorities in the UK to act in compliance with European convention rights in the HRA, except where an authority cannot act compatibly because of a provision of primary legislation or where the authority is giving effect to a provision of and made under primary legislation that cannot be interpreted in a way that is compatible with convention rights. In other words, this reaches into not only our legal system, but our public authorities, as an obligation that they need to follow. We can see that the HRA has been incredibly far-reaching.

On that note, I want to deal with the key changes that I am seeking to make in this Bill to address the mischief that I have described. We need to restore balance in this entire area, so the Bill would repeal the HRA and replace it with a new settlement, which would draw on the framework of the HRA but vary it in relation to the key concerns that have arisen. There are 10 pillars to the reform I am proposing. First, the UK Supreme Court should be the final court of law for human rights matters.

[Mr Nuttall]

This follows on from my earlier intervention. Clause 7 specifically states that a “public authority” is defined as including “a court or tribunal”. However, although clause 17, which deals with the application of the convention, includes “any public authority” in its provision, it does not explain that a “public authority” in that clause includes a court. I just wonder whether what my hon. Friend has just said is borne out by what is in the Bill.

[Charlie Elphicke]

My hon. Friend makes a powerful point, and I hope that he, too, will consider joining the Committee to scrutinise the Bill to ensure that we get the right balance. I hope that he will table amendments to take forward the debate, even perhaps on whether we should remain part of the treaty. He might join forces with my hon. Friend the Member for North East Somerset on that issue. Such issues are important and they need to be explored. This is a Second Reading debate, so it is a sighting shot as to what a British Bill of Rights would look like. I have no doubt that the Bill could be dramatically improved in Committee and that the new settlement could be made even more ideal.

As I said, my first principle is that the UK Supreme Court should be the final court in UK law for human rights matters. Secondly, serious foreign criminals and persons in the UK illegally should not be able to avoid deportation by using human rights claims, as has happened in the past. Thirdly, the right to family life should not be available as a tool to avoid justice and escape answering criminal charges. Fourthly, suspected foreign terrorists should not be able to subvert national security or our personal security, or avoid deportation, by using human rights claims.

Fifthly, freedom of thought, freedom of conscience and freedom of religion should be protected to a greater extent than they are today. We have seen too many attacks on people’s thoughts, feelings and beliefs. There has been too much aggressive secularism, which has sought to attack the Church and people who have deeply held religious beliefs. We have seen that in the case of the Plymouth Brethren and the Charity Commission, and in the constant attacks on the Church and on religion both in Parliament and outside it. We must ensure that there is a space for people to have religion and religious beliefs in this country, and that people should be able to set out and preach what they think. Their right to free speech should be better protected.

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[Charlie Elphicke]

The answer is that if we are a member of the treaty, of course they could go to the European Court of Human Rights. That is why the question of whether we should remain part of the treaty is important. Nevertheless, the decision would not take place in the UK legal system so they would not be able to stand on those European rights before UK courts or seek relief before the UK courts unless they had British rights under the British settlement. That is the key part of what we might call the dualist approach and obviously the Strasbourg machinery clanks more slowly and does not take every single case going, as the British courts are required to do. We would see a massive reduction in the level of cases but also in the level of public concern.

On the detailed provisions on UK rights and UK responsibilities, the Bill does not simply copy the text of the convention rights; it is a UK Bill of Rights and the rights it contains are referred to as British rights. The convention text is varied where needed.

Let me take the House through a few of the major headline changes. The main qualification is that the right to life is brought more into line with domestic law on the ability to use force in self-defence and to prevent crime. The prohibition of forced labour is clarified so that it explicitly does not prevent people from being required to undertake work or training as a condition of receiving welfare benefits. The right to respect a private and family life will no longer be available as a tool to avoid trial and punishment for criminal acts. The scope for limiting the right to manifest one’s religion or belief is reduced, and the right is limited only to stop the causing or incitement of physical harm to others so far as is necessary to protect public order. It is made clear that the right of free elections does not confer a vote on convicted prisoners or those who are not British citizens. I hasten to add that we have constitutional settlements that allow European, Irish and Commonwealth citizens to vote in certain cases, which are matters for Parliament to extend as it sees fit. The basic right should be that British citizens who are not prisoners should be able to vote.

The rights should not be used by those who are not British citizens to delay or avoid their deportation or extradition from the UK. They could not be used to prevent public authorities from taking action in relation to a person to uphold national security or public safety when the authorities reasonably believed that a clear and present danger to national security or public safety was presented by that person, although such action would not include the killing of that person, because we do not believe that Governments should go around killing people, unless it was already allowed under the right-to-life provision. Such action would also not include the use of torture or inhuman and degrading treatment or punishment. By getting the settlement right, we can put national security at the heart of our constitution and our constitutional rights, ensuring that the Government can protect our national and personal security. To my mind, that is the first call on Government.

In addition, the Bill includes rights not set out in the text of the European convention. They are: in England and Wales, the right to use force against intruders in a home, so long as that force is not grossly disproportionate; the right of a parent or guardian to challenge in court without undue delay the lawfulness of any removal of a child from their custody when the child is placed in custody by a public authority; and the right for a British citizen to challenge extradition to another country on the basis that they should have the right to trial in the UK if the alleged crime is committed while the person in question is in the UK. It does not displace basic rights in the UK legal order, so all our other constitutional documents from Magna Carta onwards remain, but provides an additional baseline of rights that apply in our nation.

Alongside the rights, the Bill includes a list of basic individual responsibilities. A person’s basic responsibilities include obedience to the law; rendering civil or military service when this country requires his support or defence; supporting, nurturing and protecting minor children to the best of his ability; respecting and upholding basic public order without placing himself in significant danger; seeking to support himself without recourse to a public authority to the best of his ability, including but not limited to seeking work or gainful employment where he can; and rendering help and assistance to other persons where reasonable and to the best of his ability, including but not limited to help for elderly and disabled persons. Those responsibilities are not direct obligations on individuals, nor would they automatically confer new powers on public authorities. Instead, they will be taken into account when a court considers a UK right.

[Mr Nuttall]

I appreciate that my hon. Friend is being very generous with his time in giving way. Article 23 in schedule 1 sets out the responsibilities that he has just listed. How does he think it would be enforced if an individual was thought not to have followed those basic responsibilities? We already have courts that people appear before if they break the law. What is the purpose of this provision and what more will be achieved by its inclusion in the Bill?

[Charlie Elphicke]

That intervention takes us to the key issue of determining whether a person should be able to stand on their UK rights. British courts must take into account all the facts and circumstances of the case, including the conduct of the person seeking to assert the UK right and his adherence to the responsibilities set out in article 23, in considering whether it is fair, equitable and in the interests of justice for such a UK right to be applied to the question at hand. It is effectively the heart of the subjective test to which my hon. Friend the Member for Christchurch referred earlier as coming to equity with clean hands.

An important point that goes to the heart of the Bill is that rights must be matched by responsibilities. If someone has not discharged their responsibilities, that is taken into account when they seek to stand on a right. In other words, if they have broken their half of the social contract, that will go against them when they seek to assert the part of the social contract or rights on which they want to rely. It is right that judges and the courts should be able to consider the case in the round to determine whether a person can avail themselves of those rights. As I have said, someone should not be able to use the right to family life to stay on the run. That is a basic part of the subjective test.

The Bill is intended to help rebalance the approach to human rights towards a more subjective application to particular cases with the aim of ensuring that justice and fairness are not trumped by the rigid objective view that has characterised the jurisprudence of the European Court of Human Rights. Those broader considerations should include whether a person seeking a basic right has kept his part of the social bargain and the social contract. That is incredibly important. If we talk to a person in the street about the social contract, they will say, “Well, there are two halves, aren’t there? There are rights, but there are also obligations”—or responsibilities, as I have called them. That recognises the duality of the social contract that lies at the heart of our society.

When it comes to interpreting UK rights, the Bill removes the provision of the Human Rights Act that requires British courts, when interpreting and applying the rights in the Bill, to take into account rulings of the European Court of Human Rights. Instead, the Bill makes it clear that UK courts may take account of judgments from a wide range of sources, including but not limited to the Strasbourg Court, with courts of common law jurisdictions getting top billing, and rightly so, because we are a common law country, and there is a common law world out there that we helped to establish in the days of our empire, which now proceeds with common law jurisprudence. Australia, New Zealand, the United States and Canada are all countries that have common law foundations and have given much thought to many of the issues that often come before our courts. Why would we not look to them first, before we looked at the civil law jurisdictions of Europe? I think that is the right balance for us to have.

The Bill removes the provision of section 3 of the HRA, which requires UK courts to interpret and apply legislation in compliance with human rights so far as is possible. Instead, the courts are directed to give legislation its ordinary and natural meaning. Where the meaning is ambiguous, the courts would typically presume that a possible meaning that complies with UK rights is intended. In that way, we would give primacy back to Parliament and restore the confidence of the British people that Parliament decides. We would have a uniquely British code of rights that is right for this country.

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[Mr Nuttall]

I am grateful to my hon. Friend for that intervention and I might be able to address that point in the course of my remarks. This is a matter of great concern to our constituents, and there is, perhaps, less of a philosophical disagreement among our constituents than that which we witnessed in the passionate and erudite speeches of my hon. Friends the Members for Penrith and The Border and for North East Somerset.

I warmly congratulate my hon. Friend the Member for Dover (Charlie Elphicke), who I am pleased to see back in his place. I understand that he quite reasonably took the chance to nip out for some sustenance, having made such a wonderful opening speech. It is entirely thanks to my hon. Friend that we are here this morning and I know that he has put in an enormous amount of hard work over many months to put the Bill together. I know that he had the help of others, but I shall leave it to him to decide whether he wishes to name them.

[Charlie Elphicke]

I thank my hon. Friend for giving way and for his typically generous comments. I should place on record my thanks to Robert Broadhurst, who helped me to put the Bill together and make the case for it. He has done a fantastic job. I also thank the members of the official Commission on a Bill of Rights, particularly Anthony Speaight and Martin Howe, whose learned input has helped, I hope, to improve the Bill.

[Mr Nuttall]

I am grateful to my hon. Friend for that intervention and I associate myself with his comments. The whole House is indebted to them for their work and diligence in putting together this Bill. I might not agree with every particular of it, as my hon. Friend the Member for North East Somerset has just said, but that is not the point. The point is that the House has been given an opportunity to debate a matter that is of great consequence and concern to our constituents.

We must not forget the manner in which my hon. Friend the Member for Dover managed to obtain the slot for the Bill in the first place. As Members might be aware, I am a member of the Procedure Committee, along with my hon. Friend the Member for North East Somerset. We had the pleasure of listening to my hon. Friend the Member for Dover when he came before us to give evidence as part of our inquiry into the private Members’ Bills procedure. My hon. Friend regaled the Committee with the manner in which he obtained the slot to introduce the Bill as a presentation Bill—I think that is right, and he is nodding in assent. He slept overnight outside the Committee Room—in the corridor, I understand—with little by way of sustenance. I think he mentioned that he might have slipped out for the odd beer, which is quite understandable. He stayed in the corridor overnight to ensure that he was first in the queue the next morning to secure a slot and have first pick of the dates for Second Reading. It is as a result of his hard work and diligence on that occasion that we are here today. The whole House should be grateful to my hon. Friend for that. He has done us all and the country a great service.

Looking at the Bill, one can see that it is no ordinary private Member’s Bill. Such Bills often run to just one or two pages, but this is a substantial Bill, which runs to no fewer than 21 clauses and has a schedule of several pages annexed to it. That gives some measure of the work that has gone into preparing it and bringing it before the House this morning. It should have been introduced as a Government Bill. Had a majority Conservative Government been formed after the last general election, perhaps it would have been. On page 79 of the Conservative manifesto at the last general election the following commitment was made:

“To protect our freedoms from state encroachment and encourage greater social responsibility, we will replace the Human Rights Act with a UK Bill of Rights.”

We all accept, of course, that the Conservatives did not win that general election and it is therefore understandable that the Government, being a coalition Government, have not introduced a Bill that was foreshadowed only by the Conservative manifesto. The coalition agreement provides for a commission, about which we heard this morning, to be established to look into the appropriateness of replacing the Human Rights Act with our own UK Bill of Rights.

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[Mr Nuttall]

I can only speculate that it is perhaps as a result of yesterday’s by-election in the parliamentary constituency of Eastleigh, which I am sad to say was won not by the party to which both my hon. Friend and I belong, nor by the party of Her Majesty’s loyal Opposition, but by our coalition partners in government, the Liberal Democrats. It may be that, inexplicably, they found it necessary to celebrate long into the wee, small hours of the night their success in holding what was a Liberal Democrat seat in the first place, and that as a result of that celebration not one of them has managed to make it on to their Benches this morning.

[Charlie Elphicke]

I thank my hon. Friend for his extremely generous comments. Would he care to comment on the absence of Labour Members? Considering that they made this massive change to the British constitution, putting us under the hegemony of a foreign court and undermining our justice system so wholeheartedly, is it not amazing that they have not turned up to defend it?

[Mr Nuttall]

It is indeed disappointing that we have not yet had the pleasure of hearing Opposition Members’ thoughts and observations on the Bill. I hope that we will hear from them later in proceedings. Perhaps, just as I am disappointed not to have heard from them, they are disappointed about their by-election performance and are commiserating with each other.

Let me say at the outset that I would have preferred the Bill merely to repeal the Human Rights Act and to make it clear that we would no longer accept the rulings of the European Court of Human Rights. I appreciate what my hon. Friend the Member for Dover said about the nature of international treaties, but it ought to be for this House to give a steer by stating that we think it is time to pull out of the European convention on human rights. I will explain, over the course of my comments, why I think that would be reasonable and feasible, why we could do it without any loss of international influence and why it would be entirely in tune with what the British people expect us to do.

My mind is taken back to the run-up to the last general election, when I detected two common themes that were brought up on the doorsteps, in street surgeries and when I chatted to people on the phone. I am not saying this to be directly critical of the previous Administration; this is just a fact and how I found it. First, people were concerned about what has been described as the “something for nothing” culture. I will not go down that avenue, because it has nothing to do with today’s proceedings. Secondly, they were concerned about the whole arena of human rights and the way they had been enforced in the years following the passage of the Human Rights Act. There was a feeling that we had somehow been dragged down a road that meant that criminals—I will hopefully have an opportunity to explore this in more detail later—are the one group in society who have the time to analyse in depth the detailed provisions of human rights legislation. That group, spurred on by lawyers, seem to have adopted the whole field as a lucrative source of income while incarcerated in one of Her Majesty’s prisons. That, above all, is what has caused my constituents, at least, to feel that somehow the system is letting them down. To put it in a nutshell, that is bringing the whole field of human rights into disrepute.

Perhaps I would not have introduced the Bill in exactly the same form, but it is nevertheless absolutely a step in the right direction. In common with my constituents, I am far from satisfied that the current position is acceptable, and what the Bill proposes would be far preferable. It would establish a situation that was much more even-handed and fair to the British people than currently, where our constituents feel that it is entirely wrong that time and again what they see as a foreign court is telling our courts and, in essence, this House what they should and should not be doing.

[Charlie Elphicke]

Is not the key and central point that we need to get the convention and the European Court of Human Rights out of our legal system so that our courts are not hog-tied by the European Court but can follow the hundreds of years of case law that has been developed in the English legal system?

[Mr Nuttall]

I am grateful to my hon. Friend for that intervention, because he hits the nail on the head. Part of the problem with the whole arena of human rights legislation is that, as the years have passed, particularly as the process has speeded up since 1998, we have ended up in a situation where because of judicial activism there is almost no end to the triviality of the cases that are being brought before the Court. I have some figures on that to which I may refer later. That brings the whole field of human rights into disrepute.

People traditionally thought of human rights in the context of what happened during the last century when unspeakable atrocities were inflicted on men and women by, principally, the Nazis in the second world war, and also behind the iron curtain. My right hon. Friend the Lord Chancellor said in an article in, I think, The Daily Telegraph before Christmas that anyone who is concerned about human rights should be aware of what Alexander Solzhenitsyn wrote in his portrayals of the brutality of the Soviet gulags under Stalin and his successors. Local Communist party members were sent to labour camps without trial for crimes as trivial as being the first to stop applauding at the end of a meeting. Peasant farmers were driven off their land and literally dumped at the end of a railway line in the heart of Siberia and left to fend for themselves or die. People were tortured to death in the basement of Moscow’s Lubyanka prison.

It was having in mind the atrocities that had happened in parts of Europe in the 1930s and ’40s that inspired Winston Churchill and other democratic leaders to come to together in the aftermath of the second world war to forge the European convention on human rights, which was signed in Rome back in 1950. It set out the fundamental rights regarded as the absolute basis for a democratic nation at the time, such as the right to life, the right not to be tortured and the right to a fair trial, which are not the sorts of things that we have seen litigation on in recent times.

It would be remiss of me not to welcome my hon. Friend the Member for Cheltenham (Martin Horwood) to the Chamber, given that we have commented on the absence of Liberal Democrats. We are delighted to see him here—he obviously did not celebrate last night’s result in Eastleigh too much—and look forward to hearing the Liberal Democrats’ views on the Bill later.

I have set out the background against which the 1950 European convention was crafted. What has gone wrong? We seem to have moved away from those very high moral principles. Although I hesitate to venture down that road, I will dare to do so in the absence of my hon. Friends the Members for Penrith and The Border and for North East Somerset. We have moved a long way from the sorts of rights that were in the minds of the draftsmen of the 1950 convention to where we are today.

Claiming that an individual’s human rights have been infringed has become something of a niche industry in the legal sector. There are now lawyers who appear to do very little else but engage themselves in making claims that one or other persons have had their human rights infringed. It is obviously a lucrative business. They often work at the taxpayers’ expense, thanks to the availability of legal aid. I would be interested to know—perhaps the Minister will be able to tell us this—how many of the claims relating to human rights legislation that go through the courts are funded privately. I venture to submit that there are very few indeed and suspect that the majority are funded through legal aid, a no win, no fee agreement, or charity sponsorship. I suspect that very few individuals pay for their own cases to go to court.

That is a double whammy for the taxpayer, because as well as paying the costs of bringing the case, the British taxpayer picks up the bill if the case is lost but the European Court of Human Rights finds that there has been a breach of an individual’s human rights. In fact, it is probably a triple whammy, because as well as paying the legal aid bill and any damages awarded, we also have to pay the costs of those Government lawyers and civil servants who defend the case. As we have heard from my hon. Friend the Member for Dover, it was revealed recently in a parliamentary answer that Abu Qatada has received about half a million pounds of taxpayers’ money through the legal aid system to pursue his apparently never-ending series of appeals. I do not think that my constituents are alone when they express to me their outrage at the current system.

[Charlie Elphicke]

My constituents take the view that the half a million pounds that Abu Qatada has been given in legal aid could have been used to great effect to employ more teachers, nurses and doctors and to provide better public services. One reason why people are very critical of Labour for having brought in the Human Rights Act is that it has put an even greater strain on the public finances.

[Mr Nuttall]

My hon. Friend is absolutely right. Our constituents are outraged not because of human rights per se, but because of the knock-on effect and where it is leading us as a country. They see the hard-earned money that they have handed over to the Government in taxes being spent on cases, the majority of which are seen as trying it on. They see criminals behind bars bringing cases that are nothing more than fishing expeditions. The criminals have nothing to lose personally if the cases fail and everything to gain if they are successful. From the lawyers’ point of view, if they are being funded through the legal aid system, as is the case with prisoner voting, and they are successful with one case, they can go farming among the prison population to find dozens, hundreds or perhaps even thousands of other cases that they can adopt and bring forward for adjudication in order to claim damages.

[Charlie Elphicke]

Is it any wonder that the overwhelming majority of people tell pollsters that they see the Human Rights Act as a charter for criminals, the undeserving and lawyers? That is a key reason why we should have a new settlement to rebalance the situation and get some real justice back in the UK.

[Mr Nuttall]

My hon. Friend is absolutely right. That is one of the key reasons why the majority of people in this country would support the Bill.

We have not heard from the Opposition or our friends in the Liberal Democrat party. Perhaps they have been convinced by the strength of the arguments this morning, but they may well oppose the Bill. However, I find that supporters of all political parties support what my hon. Friend’s Bill seeks to do. It is not a party political issue among ordinary voters. They are all equally outraged at some of the cases that have hit the headlines in recent years. I agree with my hon. Friend that people see the Human Rights Act as something that diverts their hard-earned taxpayers’ funds away from the things that they should be spent on, such as providing more doctors and nurses, to paying lawyers to bring forward spurious cases.

Perhaps I could refer the House to one such case. Samuel Betteridge was a young man who raped a 14-year-old girl after luring her to his flat and forcing her to drink alcohol. In 2005 he admitted at Lincoln Crown court two counts of rape and one of attempted rape. His minimum jail term of five years was later reduced on appeal to three and a half years. His parole hearing was fixed for May 2009 but later postponed until January 2010.

Through his lawyers, Mr Betteridge appealed to the European Court of Human Rights on the grounds that the delay in his parole hearing violated article 5 of the European convention on human rights—the right to a speedy hearing. The Strasbourg judges, needless to say, agreed with Mr Betteridge’s submission and found in his favour. They said that

“the delay in reviewing Mr Betteridge’s case was the direct result of the failure of the authorities to anticipate the demand which would be placed on the prison system following the introduction of IPP sentencing”.

Those are indeterminate public protection sentences which, as the hon. Member for Hammersmith (Mr Slaughter) and other hon. Members know, are now being abolished—[Interruption.] Yes, changed; effectively abolished, perhaps.

[Mr Nuttall]

If my memory serves me rightly, together with my hon. Friend the Member for Shipley (Philip Davies) I took a similar view on that matter and— I think—went into the Division Lobby to try to avoid it happening. There is a place for such sentences but I do not want to be drawn down that avenue. This debate is not about sentencing policy, but that was the subject of the case I mentioned and it is therefore right at least to touch on how it came about.

The High Court in London originally dismissed the case, but the European Court of Human Rights backed Mr Betteridge and awarded the rapist £640 in damages plus £1,710 in legal fees—I bet that did not go far towards paying those fees. According to my information, Mr Betteridge was apparently not alone in receiving payments for delayed parole hearings and was one of 100 prisoners who has received in total more than £313,000 over the past three years as a result of an alleged breach, found to be an actual breach, of their human rights. Most of our constituents would agree with Robert Oxley of the TaxPayers Alliance who said:

“It’s disgusting that taxpayers are being made to pay for an award to a rapist thanks to European Court meddling.”

Of course, he was referring to the European Court of Human Rights, not the European Court of Justice.

As the House is aware, that was not the only case to hit the headlines. A case with an even more substantial effect, certainly on proceedings in this place, was that of Hirst, which was, in effect, the leading case on prisoner voting rights. In 1979, John Hirst used an axe to kill his landlady in her own home. In the following year he was convicted of manslaughter on the grounds of diminished responsibility and sentenced to life imprisonment with a tariff of 15 years, after which he could be released on licence. In fact, he was not released until May 2004 because of concerns that he might present a danger to the public; for example, he was found guilty of an offence under prison rules when, in 1998, he slammed a van door against a female prisoner officer.

Mr Hirst used his time in prison to teach himself law. He became a student of human rights legislation and a serial litigant against the authorities. There is no time this morning to go into his various cases, but suffice it to say that in one of them the court ordered that the Government pay Hirst £1,000 in damages and a further £7,500 in costs. That was before what we might call his cause célèbre—Hirst v. United Kingdom (No. 2)—which was to prove far more controversial, and related to whether his human rights had been violated because he was not able to vote while he was in prison.

[Charlie Elphicke]

The case of Hirst is entirely clear-cut. He is a man soaked in blood. He is remorseless and unapologetic, yet he uses taxpayers’ money to seek the right to vote. I am hard pressed to think of a more despicable and evil person in this country.

[Mr Nuttall]

My hon. Friend echoes the views of many millions of our constituents across the country. Hirst submitted a claim to the European court based on article 3 of the first protocol—the right to free elections—which states:

“The High Contracting Parties undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature.”

The wording of article 3 does not actually confer individuals with a right to vote. When the Grand Chamber gave its judgment, it stretched a point; the court had already decided in the case of Mathieu-Mohin and Clerfayt v. Belgium that article 3 included an individual’s right to vote and to stand for election.

It is illuminating to consider how Hirst built on the previous Mathieu-Mohin case. It shows how rights are developed incrementally, case by case, salami-slicing common sense and gradually moving away from what most people would think article 3—in this case—actually meant. As was discussed during our debates on prisoner voting, the Court ruled that this issue had not been considered here. I submit that it was considered in section 3 of the Representation of the People Act 1983. It may not have been debated specifically—I was not here at the time—but presumably that was because both sides of the House took it for granted that prisoners would not have the vote. That was accepted by the whole country and the whole House.

Taxation Freedom Day Bill

Debate between Charlie Elphicke and David Nuttall

Friday 25th November 2011 Commons Chamber

[Mr Nuttall]

Yes; in view of recent publicity I am sure that all Government Ministers will want to make announcements to the House first.

The purpose of tax freedom day is set out clearly in clause 1(2), as being to mark the day in each year when

“the United Kingdom’s net national income (calculated from the beginning of the calendar year) reaches the level of the United Kingdom’s estimated level of national taxation for that calendar year.”

At this point the whole matter becomes more complicated. The term “total national taxation” is helpfully defined in clause 1(3) as including

“all forms of direct, indirect and local taxation”,

and as my hon. Friend the Member for Kettering mentioned, the task of making this calculation is given over to the Office for National Statistics. However, the problem with that approach is that very few people’s personal tax freedom day would actually coincide with the day specified under the Bill. Levels of council tax vary throughout the country and dwellings are divided into several bands within council tax. It seems to me that in this age of personalisation of services, the Bill could usefully go on to provide for the notification to each individual taxpayer of their personal tax freedom day.

That is not a new idea. In Canada, the Fraser Institute provides a personal tax freedom day calculator which takes into account variables such as the age of the head of the household, their marital status and the number of children they have. I wonder whether the TaxPayers Alliance app for mobile telephones and tablet computers that my hon. Friend mentioned earlier could be adapted to provide a personal tax freedom day for individuals.

What about so-called non-taxpayers? I am always mystified by the term “non-taxpayer”. I accept that there are people who, for various reasons, might not pay income tax, and thanks to the steps that this Government are taking, fewer and fewer people are paying income tax. I am pleased that we are moving towards the target of a £10,000 personal allowance each year. That is a huge improvement in the field of tax simplification and it has meant, for example, that this year’s £1,000 increase in the personal allowance has removed an additional 800,000 people from the burden of paying income tax.

However, we should not fall into the trap of thinking that those who do not pay income tax are non-taxpayers. They could still be liable for council tax. They may still have to pay insurance premium tax. If they travel, they will have to pay air passenger duty. Whenever they purchase goods or services that are liable for VAT, they will have to pay value added tax. The list goes on.

[Charlie Elphicke]

I thank my hon. Friend for giving way; he is being extremely generous in taking interventions. My own research has indicated to me that the effective tax rate on the least well-off in the past 10 years, under the previous Government, was higher than the effective tax rate on the richest. That is the inequality fostered under the previous Government.

[Mr Nuttall]

Yes, and we must not allow ourselves to think that people who are non-income tax payers are non-taxpayers. There is a great difference. They would, I suspect, be very surprised if the total tax liability from all the various forms of indirect taxation was calculated and expressed, as the Bill seeks to do in a general way for the nation, as their own personal tax freedom day.

We should ask ourselves why this approach to transparency has not been adopted before now by the Government and by previous Governments. The idea of a tax freedom day was developed decades ago in 1948, in the aftermath of world war two, when a Florida businessman who went by the great American name Dallas Hostetler trademarked the phrase “tax freedom day”. He proceeded to calculate it for the nation for the next two decades until he retired in 1971, when he transferred the trademark to the Tax Foundation, which ever since has continued to calculate the American tax freedom day. It is used as a mechanism for illustrating the proportion of national income that is diverted to fund the annual cost of Government programmes.

As my hon. Friend the Member for Shipley mentioned, since 1990 the Tax Foundation has been calculating a separate tax freedom day for each state. The concept of calculating a nation’s tax freedom day is enormously popular around the world. Dozens of countries produce their own calculations. There are too many, the House will be relieved to hear, for me to list individually. What is important for the purposes of comparison is for the calculations to be based on the same year. Fortunately, that can be done in the case of the European Union.

Last year a newspaper in Brussels entitled L’Anglophone compared the tax burdens for workers earning a typical wage in each of the 27 member states of the European Union. It took into account the income tax contributions and the social security contributions made by the employee and the employer, and included a projected value added tax contribution. From this research we see that the latest tax freedom day in one of the member states occurred in Hungary. It was 6 August, the 218th day of the year, representing a tax burden of an eye-watering 59.4%. The earliest tax freedom day in the EU was in Cyprus—this endorses the statistics produced by my hon. Friend—where it was calculated to be 13 March, or day 72, representing a tax burden of just 19.4%.

The importance of establishing a correct basis for calculation is perhaps best illustrated by looking at just one of those countries: Belgium. The accountancy firm PricewaterhouseCoopers calculated that for the second year running tax freedom day in Belgium fell on 8 June, whereas L’Anglophone research indicated that it fell almost two months later on 3 August, or day 215, representing a tax burden of 58.5%. The authors of L’Anglophone explained the discrepancy by noting that PricewaterhouseCoopers’s figures

“count revenue from all taxes (including those on corporate profits, petrol, cigarettes, &c.) and thus present a more complete picture of the country’s total tax burden.”

They added that it is

“an average applied to all Belgians—not all Belgian workers; in 2008, less than half of Belgium’s population (4.99 million working out of 10.67 million citizens) was legally working. Consequently, a huge share of Belgium’s tax burden is borne by the working population.”

That demonstrates the need for consensus around the world on an agreed formula for calculating tax freedom day, and I submit that that should be discussed and agreed at a future meeting of the G20. It also demonstrates the complexity of the tax involved and why for many people a personalised approached might be the way forward.

Another complication that would become apparent when comparing one year with another is the effect of a leap year. Indeed, next year will be affected, as 2012 is a leap year. It is worth noting that leap years have a slightly distorting effect on comparisons, to the extent of 1/366, or 0.27%.

I must deal with one of the major criticisms I have heard levelled at the idea of publishing a tax freedom day: the notion that that somehow devalues the importance of the work done by those engaged in public service. I do not accept that for one minute. I think that the British people are quite capable of recognising the need to pay our armed forces and police forces and all those who are essential public sector employees. The introduction of a taxation freedom day will provide citizens with a reminder of the amount of tax they pay and an opportunity to consider whether what they pay is reflected in the value of the public services they receive.

I have another concern, about the requirement set out in clause 1(2) stating that the UK’s net national income will be

“calculated from the beginning of the calendar year”.

I understand that the Adam Smith Institute calculates tax freedom day in that way. Indeed, having looked at the systems used around the world, it seems that calculating it from the start of the calendar year is the usual way. However, I suspect that that has arisen because in America the tax year is the same as the calendar year and, as the concept of tax freedom day started in America, that is what has been adopted in other countries.

Here in the United Kingdom, however, we of course run our tax year from 6 April, so I wonder whether it would not be simpler and easier to calculate the figures for notional income and the level of taxation on the same basis as the tax year, rather than the calendar year. Again, we could consider that in more detail in Committee.

The calculation period is particularly relevant when one considers the Chancellor of the Exchequer’s duties, which are set out in clause 2. The Chancellor will be required before the last day of November to estimate the taxation freedom day in the following calendar year, which will mean having to estimate the levels of taxation and spending for the following year before the annual Budget. The whole process might be better aligned with the annual Budget, however. Indeed, it could become a centrepiece of each year’s Budget, so that when the Chancellor made the annual statement he announced the annual tax freedom day.

It would of course be simple to base the calculation on the traditional tax year, and for the number of days required to be calculated on that basis. For example, if the 2011 Adam Smith Institute figure for the UK of 149 days—representing 40.8% of the year—had been calculated from 6 April, taxation freedom day would have been 1 September, and for the purposes of international comparison it could then, as it is now, be given as 30 May, the equivalent date from a 1 January start.

There is a further problem with calculating a national figure, and it arises in respect of Scotland. The Scottish Parliament now has limited tax-raising powers of its own, and if it exercised them it would lead to a distortion of the national figure. The existing power to increase income tax by 3p in the pound has not been used, but, when the new powers become available after the passage of the Scotland Bill, and with a Scottish National party Government in power in Scotland, they could be used, so a separate figure ought to be calculated for Scotland. It would not be fair or equitable for the UK Government to be criticised for spending decisions taken in Holyrood.

In conclusion, the Bill raises important issues about the levels of taxation and spending. Increased transparency in Government spending is vital, and I warmly welcome the measures that the Government have already taken to reveal the detail of public expenditure. Shining the searchlight of public scrutiny on the spending decisions of politicians is without doubt one of the best ways to control Government spending, and such moves help at the micro-level, but this Bill will extend the principle of public scrutiny, openness and transparency to the macro-level.

A single, simple day can be tracked each year. It can be monitored, and I venture that it could become a feature of general election contests, with the parties including in their manifestos their target for tax freedom day over the lifetime of the following Parliament.

I sincerely hope that the Bill receives its Second Reading and is able to proceed into Committee, so that we can take it through its remaining stages when we meet again on 20 January.

European Union Bill

Debate between Charlie Elphicke and David Nuttall

Tuesday 11th January 2011 Commons Chamber

[Charlie Elphicke]

Thank you, Mr Gale. You have saved me from having to get myself out of that one.

[Mr David Nuttall (Bury North) (Con)]

My hon. Friend made a point about the explanatory notes. Is not the real problem with clause 18 enunciated in paragraph 109 of those notes? It states:

“This clause does not alter the existing relationship between EU law and UK domestic law; in particular, the principle of the primacy of EU law.”

That is what upsets the British people, and it is for that reason that we ought to put the matter of sovereignty and of our continued membership of the EU to the British people in a referendum.

[Charlie Elphicke]

Personally, I believe that it is wrong to see EU law as having primacy. I underline again that the UK Parliament is sovereign, and has decided to be part of the EU and allow its laws into our national life through the medium of the European Communities Act 1972. Equally, it is abundantly clear that the UK Parliament could change that position. To my mind, clause 18 amounts to a codification of that principle, which is clear from the Factortame case and from the metric martyrs, Thoburn case. In the latter case, as Members will recall and as paragraph 107 of the explanatory notes explains, it was argued that EU law

“includes the entrenchment of its own supremacy as an autonomous legal order”.

That argument was rejected. It is an important principle to understand: there is no autonomous legal entrenchment from the European Union. It is taken into account and part of our law only because we have made it so.

I can do no better than quote Lord Justice Laws, who hit the nail on the head. He said:

“Parliament cannot bind its successors by stipulating against repeal, wholly or partly, of the European Communities Act.”

When I was a law student, studying my books, I always viewed Professor Dicey’s principle as giving voice to the doctrine of parliamentary sovereignty. It is quite simple—I always thought of it as: the last Act to hit the statute book takes precedence. If it says anything different from a previous Act, the latter is discarded to that extent.

Lawful Industrial Action (Minor Errors) Bill

Debate between Charlie Elphicke and David Nuttall

Friday 22nd October 2010 Commons Chamber

[Mr Nuttall]

My hon. Friend is absolutely right. I was about to come on to the history of how we arrived at where we are today, albeit briefly as I do not want to go too far back. It is important to remember that a couple of hundred years ago it was completely illegal for workers to join together at all. We have now happily moved on, but there is perhaps a case for tightening trade union legislation, and I believe that a number of other matters could be more usefully included in the Bill. I assume that people in the trade union movement want to see it prosper, go forward and make itself ready for the 21st century.

[Charlie Elphicke (Dover) (Con)]

Does my hon. Friend think that now is the time to be passing legislation to make it easier to strike, when we need to pull ourselves out of this massive recession the country has had to face, thanks to the shambolic economic policies of the Labour Government? At another time in the future, when the country is perhaps doing better—

[Charlie Elphicke]

It is not nonsense; it is accurate. It was Labour Members who caused the recession and now they are trying to make it easier to strike. That is not a fiscally responsible thing to do.

[Mr Nuttall]

I thank my hon. Friend for that intervention, which highlights the real danger. He strikes to the heart of the matter, because as the nation tries to emerge from the recession, we need to do everything we can to put dynamism back into British business. The last thing that we want is a return to the dark days of the 1970s, and the problems of the 1980s, when the news headlines were dominated by industrial unrest and strife. If those days returned, the economic competitiveness of British business would be damaged, and that would be good neither for this country nor for trade unions in general.

--- Later in debate ---

[Mr Nuttall]

I certainly will, Madam Deputy Speaker. To be fair, I think that I have already dealt with my hon. Friend’s point. I agree that there is a danger that that will happen if the Bill is allowed to proceed in its current form. However, I think it relevant to point out briefly—very briefly, and for the good of the trade union movement—that trade union membership has halved since the 1980s, from 13 million to 6.5 million. I fear that if the Bill were allowed to proceed and a further period of industrial unrest were to follow, there could well be a further decline, perhaps—although it is not for me to say—a terminal decline in union membership.

Let me now do what you have rightly asked me to do, Madam Deputy Speaker, and turn to the detail of the Bill.

[Charlie Elphicke]

Given that the Court of Appeal reversed the injunction in the British Airways case, does my hon. Friend think that the Bill is necessary at all?

[Mr Nuttall]

No, I do not. We have not yet had time to see the details of the Court of Appeal’s decision in the case of British Airways plc v. Unite. The court’s judgment, which was quoted by the hon. Member for Hayes and Harlington, was quite clear in regard to the effectiveness of the law.

There has been such a long line of cases of this kind, and it is interesting to note that time and again they have involved the same union: Unite. One would think that by now Unite, and the people whom it employs to conduct the ballots, would have learned how to do it, but apparently not. The Master of the Rolls recognised that. Delivering his dissenting judgment in the Court of Appeal, he said that he agreed with Mr Justice McCombe, who had delivered the earlier judgment in the Queen’s bench division. He said that he did

“not consider that the Union has a good prospect of establishing at trial that it complied with section 231. On the contrary, I would not regard its prospects as promising.”

He reached the conclusion that

“the requirements of section 231 seem…at least as at present advised, to be unnecessarily prescriptive and strict, particularly insofar as they can be relied on by the employer and particularly in a case such as this… Having fallen foul of the technical rules of the 1992 Act in a ballot a few months earlier, the Union might have been expected to take particular care over complying with all those rules in what was effectively a rerun of that ballot.”

So there we have it: the Master of the Rolls saying in terms that the union had had one chance, and had got it wrong. A few months later it did effectively the same thing, and got it wrong again. My hon. Friend the Member for Dover (Charlie Elphicke) is quite right.

Let me now return to the detail of clause 1, which seeks to amend section 232B of the Trade Union and Labour Relations (Consolidation) Act 1992. Subsection (2) would add the words “or notice”. Previously compliance had been required only if a ballot had been held, but sections 226 to 230 require notice to be given to the employer as well. Section 226A requires the notice to be given

“not later than the seventh day before the opening day of the ballot”,

and to be

“received by every person who it is reasonable for the union to believe”

should receive it.

In considering whether this is a sensible provision, I ask myself why notice should not be given to all the other people who would be affected. I would consider it sensible for the Bill to require it to be given not just to the employer, but to others who would be affected by the union’s actions, such as post office and railway users’ groups. Section 226 states that it would help the employer to be able to make plans and bring information to the attention of some of his employees, because other employees might be seriously affected if half their colleagues walked out on strike. It is entirely right that there should be compliance—full compliance—with the requirement for notice to be given.

[Mr Nuttall]

Indeed. The time is needed so that other people—not just other employees—can be notified. Deliveries may need to be stopped, and customers may be waiting for those deliveries.

There is a strong argument for increasing the notice period. Section 226A(1)(a) requires only seven days’ notice, which is not very long. It will include a weekend, so there will be only five working days. That is not a long time in which to make all the necessary preparations, especially when the company involved has never experienced a strike before and does not know what to do. There will be a lot to be done in those seven days. There is a lot of merit in the argument that the period should be extended to 14 or 28 days, so that people know where they stand if a union starts to take industrial action.

[Charlie Elphicke]

My understanding—correct me if I am wrong—is that the substantial compliance provision would allow for exemption from section 234A of the 1992 Act, which deals with the notice to employers of industrial action. Does my hon. Friend think that substantial compliance might be a notice sent in the post but not delivered? Is that substantial compliance or not? Should not an employer receive actual notice and have some certainty about that?

[Mr Nuttall]

My hon. Friend makes an interesting point, which we will look at in more detail when I look at the next paragraph of the subsection. The problem with the Bill is that it not only introduces the novel concept of substantial compliance, but extends the scope of the 1992 Act to cover not just the ballot but the notice provision. Therefore, it is doing two things at the same time. Incidentally, the provision also extends the number of sections to which the exemption applies, which we will look at later.

May I move on to subsection (1)(b) of section 232B, which states that the failure will be disregarded if

“the failure is accidental and on a scale which is unlikely to affect the result of the ballot”.

It seems that, when the 1992 Act was amended, the then Labour Government knew exactly what they were doing. They were providing for minor errors to be discounted. In section 232B, they specifically allowed for a failure which is

“accidental and on a scale which is unlikely to affect the result of the ballot or, as the case may be, the failures are accidental and taken together are on a scale which is unlikely to affect the result of the ballot”.

That seems to be straightforward and simple to understand.

--- Later in debate ---

[Mr Nuttall]

My hon. Friend is absolutely right about that point, although I had not thought of it, because employers face having to start delving into matters into which they will probably never have delved and that could be, as he says, a very expensive and time-consuming business. It would be far better for employers to get on and deal with the job that they are there to do, which is to try to run their businesses and companies profitably.

Subsection (5) deals with the burden of proof and makes it the job of the employer to prove that there has been a failure of “substantial compliance”; it puts the burden of proof on the employer. I submit that it is the job of the trade union to prove that it has complied with the rules. I sometimes refer to this as the 51:49 rule, because proving something on the civil standard of the balance of probability means that on a 51:49 balance it is more likely than not to have occurred. I believe that I am right in saying that we were told during the opening remarks of the hon. Member for Hayes and Harlington that proving this was not difficult, but if that is the case, it is not difficult for the trade unions to prove that they have substantially complied with whatever provision they are alleged not to have complied with. As we have said, what does or does not constitute substantial compliance is a matter of great debate. For example, has there been substantial compliance where a notice has been sent but not in the right form or where it has been partially or badly photocopied?

[Charlie Elphicke]

Will not the reversal of the burden of proof and the introduction of this wholly uncertain new test be very counter-productive, because we have such strong and well-understood case law and precedent in this area that this approach might damage the position of trade unions?

[Mr Nuttall]

There is a real danger of that. One of the reasons why it would be wrong for us to pass this Bill in its current form is that it would damage the standing of the trade unions. There is a real risk that they will find it more difficult to recruit new members if they are seen to be moving back to the 1970s, and if there is such a return, there is a real risk that our economic competitiveness will be damaged. Before I deal with which groups might be affected by this measure—it is important that we examine that and consider who will be affected outside this House if the Bill is allowed to pass into law—I shall address the requirements of subsection (5). Placing the burden of proof on the employer would be a major change and such a provision was not in the previous legislation. I have heard no good reason this morning why it would be a sensible way to proceed.

Clause 2, which deals with the short title of the Bill and commencement, is relatively uncontroversial. However, it might be suggested that the period of one month before the legislation comes into force is not sufficient. Clause 2(3) contains a fairly unusual provision. It states:

“This Act applies in relation to industrial action taking place (or proposed to take place) on or after the day on which it comes into force.”

That leaves the definition of what “proposed to take place” means open to some doubt.

--- Later in debate ---

[Mr Nuttall]

My hon. Friend is quite right. That is a point that I did not consider fully—I apologise for that—when going through clause 1(3). There is a risk that that subsection, taken together with subsection (5), will mean that the employer now has the problem—it will be a problem—of bringing before the courts evidence that there has been substantial compliance or non-compliance. All the evidence might well be in the hands of the trade unions, and it will be very difficult for an employer to be able to satisfy a court and, under this Bill, they would have that responsibility. Employers would have that burden placed on them. How on earth can they be expected to fulfil and meet that requirement when the information is in the hands of the trade unions? As my hon. Friend reasonably and rightly says, it would perhaps be more understandable for there to be a provision in the Bill to require the information that the court needed to be handed over so that there could be no doubt that there was a full requirement for the trade unions to hand over to the employer all the relevant information to enable the employer to submit an action to the court. Without that information, the employer would have no reasonable basis on which to instruct their solicitor, and there would be no way for a solicitor to instruct counsel, because they would not have the facts and figures to enable them to make their case.

[Charlie Elphicke]

My hon. Friend is making a technical and detailed speech, but do I understand his case correctly? Is it that the Bill will create uncertainty for trade unions and employers, and that it will benefit lawyers and result in a massive wodge of cash for them? That is just what happened when the previous Government handed over all coal compensation cases to a bunch of lawyers. Surely that is unacceptable.

[Mr Nuttall]

My hon. Friend makes a good, reasonable point. The law would not be clarified in any way by the Bill, but there is a real danger, as I have pointed out, that it would take us back to the situation we faced in the 1970s and 1980s. Much of the case law would be made redundant, and we would face yet more legal actions—

--- Later in debate ---

[Charlie Elphicke (Dover) (Con)]

It is not my intention to speak at great length or to filibuster the Bill, but it does need legislative scrutiny. I take issue with the hon. Member for Hayes and Harlington (John McDonnell) who suggests that any desire to scrutinise, examine or otherwise consider this Bill is somehow reprehensible or wrong. After all, the Opposition spend most of their time doing that to Bills, and when we put pressure on them they roundly criticise us for not allowing proper scrutiny. It is right that this House should scrutinise Bills.

The new intake may be new, but we are not naive. We have been sent here to scrutinise legislation and to clean up politics. For many of us in the new intake, the behaviour of previous Parliaments and the disgraceful abuse of expenses were unacceptable, inappropriate and wrong. The disrespect to this House—including its symbols—by Members of the previous Parliament was inexcusable, inappropriate and wrong. To bring before this House a private Member’s Bill that is obviously controversial and highly partisan in nature is an outrageous and disgraceful thing to do. This day should be for legislation that will pass with the support of both sides of the House. It is wholly wrong and inappropriate to waste the time of this House by bringing before it legislation that will divide it. There are other issues that we could have been discussing today on which the House is united and agreed. I say to the hon. Gentleman that it is inappropriate, inexcusable and wholly wrong to do this to this House and the other Members who have legislation to be considered today. We could have been passing useful law today, but I do not think that that will happen. We could have been talking about matters that unite us, but for which there is too little parliamentary time.

I especially condemn the hon. Gentleman because not only does his Bill lack support on this side of the House, but—as we have just heard from the hon. Member for Llanelli (Nia Griffith)—it lacks support on his side of the House.

[Mr Nuttall]

That point is important. When I made my brief comments, I was not aware of Opposition Front Benchers’ stance, but I am not surprised because the Labour Government introduced the provisions in 1999 and therefore it is to be expected that Labour Front Benchers will stand by what they said. The provisions have stood the test of time and no one has sought to change them before now.

[Charlie Elphicke]

I agree with my hon. Friend, who makes a powerful point. The Bill is highly technical and seeks to change things that seem technical, but it has the support of no major party in the House. The Bill is also highly controversial in that it seeks to extend the right to strike, but in reality would extend only uncertainty and the getting of money by our legal friends—I used to be one, I regret to confess. We should not proceed in that way.

As a member of the new intake, I was driven to be here today at the request of several constituents, who wrote to me. One letter stated:

“John McDonnell’s Lawful Industrial Action (Minor Errors) Bill will have its Second Reading in the House of Commons on 22 October and I urge you to attend Parliament to ensure this takes place.

The Bill has been introduced in response to a raft of recent cases where courts have ruled”

as we have heard, and I will revert to that shortly. The letter goes on:

“These cases have meant British law now imposes fetters on unions in relation to ballots which are unprecedented in Europe”.

That piqued my interest. I thought that I had to respond to my constituent because, unlike Members of Parliament in former times, I believe in writing back to my constituents and taking an interest in that in which they wish me to take an interest. I am nothing if not a servant of my constituents.

I therefore read the Bill and the explanatory notes. Paragraph 6 of the explanatory notes, which, I believe, the hon. Member for Hayes and Harlington wrote, states:

“A number of recent judicial decisions have revealed a degree of uncertainty on the scope and application of section 232B—for example, in the meaning of ‘accidental’ in subsection (1)(b). The cases have also highlighted, among other things, that the section does not apply to errors, however minor, in the giving of notice under section 226A or 234A. It remains unclear where the burden of proof lies in the event of a dispute as to whether an error involves loss of the protection of section 219.”

Yet, as we have heard in the debate, the Bill creates a new uncertainty. Those provisions of trade union law have been in place for the past two decades and more, and they are well understood by the courts and the legal system.

Will introducing the new test of “substantial compliance” help the unions? I do not think so. It will help create uncertainty and it will help lawyers, but it will not help the trade unions. I say that as someone who is broadly a supporter of trade unions and their legitimate right to use their economic power to withdraw their labour if that is the collective democratic will. As a supporter in principle of the right to strike, I think that the Bill is wrong because it creates a new uncertainty where certainty had been garnered over time. As a supporter of trade unions, I think that the measure’s aim is wrongful; as a supporter of employers, I do not believe that their time should be taken up in instructing lawyers and coping with new uncertainty. They need some certainly for their business planning.

Is the Bill necessary? Paragraph 7 of the explanatory notes states:

“In May 2010 an interim injunction was granted by McCombe J in British Airways plc v. UNITE the Union on the basis of alleged failure to comply with the provisions of section 231 of the 1992 Act regarding information about the result of a ballot. The Court of Appeal… reversed that decision.”

It threw out the injunction. The explanatory notes continue:

“Smith LJ stated that ‘it appears to me very likely that the judge at trial would hold that there had been substantial compliance’”.

The explanatory notes cite a case as the mischief that necessitated the Bill, when it actually proves the opposite. Paragraph 7 goes on to say that in paragraph 149 of the judgment, Lord Justice Smith

“observed: ‘I consider that the policy of this part of the Act is not to create a series of traps or hurdles for the Union to negotiate. It is to ensure fair dealing between employer and Union and to ensure a fair, open and democratic ballot’… However, the other two members of the Court reached their decision on different grounds.”

The hon. Gentleman’s case is that a mysterious uncertainty remains over the effect of insubstantial errors on the operation of the ballot and notice provisions, but I think there is no such uncertainty. It seems to me that the Court of Appeal ruled fairly and squarely in favour of discharging that injunction. The mischief cited as a reason for introducing the Bill seems, when one gives it close examination and reads it with some degree of care, not to be a mischief at all.

[Charlie Elphicke]

My hon. Friend is absolutely right. Court of Appeal decisions, by our system of precedent, bind future decisions of that court and all lower courts. As I am sure he knows, only the Supreme Court can change and overrule a precedent. That is highly unlikely, and highly unusual in cases such as BA v. Unite.

[Mr Nuttall]

One real danger of the Bill is that the current set of established legal precedents would effectively become worthless. We would be back to square one, because new section 232B of the Trade Union and Labour Relations (Consolidation) Act 1992 has not been considered by the courts.

[Charlie Elphicke]

I completely agree with my hon. Friend, who makes a strong, powerful point. The situation is that the hon. Member for Hayes and Harlington alleges an uncertainty that seems not to exist.

The Bill would seem on the one hand to reverse the burden of proof, and on the other to introduce a concept of substantial compliance that creates even more uncertainty. As a former lawyer, I know that the concept “substantial” is relatively well understood: it normally means 80:20. However, substantial compliance in the context of the Bill creates a further question. What is 80:20 in terms of compliance?

[Mr Nuttall]

Is my hon. Friend suggesting that 20% of members need not be consulted? Would that be regarded as substantial compliance under the Bill? That would be outrageous.

[Charlie Elphicke]

My hon. Friend makes a good point. What does substantial compliance mean? I am not sure. The hon. Member for Hayes and Harlington really should have drafted the Bill properly to include a proper definition of substantial compliance. That might at least have earned Labour party support, if not necessarily Conservative support. If before laying the Bill without any discussion he had worked with the Government, it might have been less controversial. He could have worked with his own party to produce something that could achieve the kind of consensus that there should be for private Members’ Bills.