§
(" . The provisions of Schedule (Recovery of contributions where income tax provisions not applicable) shall have effect with respect to the recovery of—
§ The noble Baroness said: My Lords, I shall speak also to Amendments Nos. 33, 38 and 43. These amendments concern the procedures available to enforce the collection of contributions that have not been paid at the right time. Let me make it clear that we are dealing here with NICs that are not the subject of any unresolved dispute between the contributor and the department over whether NICs are properly due. We are concerned here simply with unpaid debts.
§ The amendments give the Inland Revenue, from next April, access to exactly the same methods of enforcing the recovery of unpaid NICs as it currently has for tax. The amendments permit summary proceedings for the recovery of smaller NIC debts in magistrates' courts. They also give authorised officials who are not lawyers the right to take county court proceedings.
§ I shall set out the current position. Tax enforcement provisions currently apply for the recovery of unpaid contributions that are already collected by the Revenue—that is, 94 per cent. of total NICs. But the procedures available to the Contributions Agency to gather in the other 6 per cent. are currently not as comprehensive as they are for tax. We are talking principally here of flat-rate Class 2 NICs paid by the self-employed and that part of Class 1A NICs paid directly to the Contributions Agency.
§ Apart from the use of proceedings in the High Court for very large NIC debts, the only method the Contributions Agency has to enforce the recovery of unpaid NICs is having DSS lawyers take county court proceedings, or sheriff court proceedings in Scotland. In the Social Security Act 1988 those powers were supplemented to allow officials to recover contributions by distraining on the goods of debtors and by the equivalent process under Scottish law, thereby bringing recovery procedures for NICs a step closer to those which have long been available for tax.
§ We propose now to complete the alignment process begun last year in time for the transfer by extending NICs recovery powers in two ways. The first is to allow summary proceedings for the recovery of NIC debts under £2,000 to be taken in magistrates' courts in England, Wales and Northern Ireland. Again, that mirrors existing tax law. The Revenue's experience is that summary proceedings are an effective way of collecting small debts. They are likely to be the most effective way of collecting unpaid Class 2 NICs from the self-employed. Your Lordships will recall that the recently published report of the Comptroller and Auditor-General on the National Insurance Fund expresses concern about the high level of Class 2 arrears. This proposal directly addresses that concern, as well as being fully justified in its own right. No Scottish equivalent of the proposal is needed, as last year's Social Security Act has already made provision for equivalent recovery action to be taken there.
§ The other proposal is to give officials who are not lawyers the right to conduct proceedings in the county court, and in the sheriff's court in Scotland, to recover NICs. Collectors of Taxes already have that power for tax and indeed for the NICs that are recovered through the tax system.
816§ That change will avoid the need for Revenue lawyers to scurry around the country at public expense to conduct proceedings that are normally of a quite routine character. That would be a waste of scarce and expensive resources and will be a greater waste when recovery proceedings, which currently have to be taken in the High Court, are devolved to county courts.
§ Those new provisions appear in the new clause and new schedule. The other amendments extend the new provisions to Northern Ireland and make a consequential amendment in the Social Security Contributions and Benefits Act 1992. I beg to move.
§ Lord HigginsMy Lords, the noble Baroness was rather surprised at the number of amendments that I put down for Committee stage. I am rather surprised at the number of amendments that the Government are tabling on Report. I understand of course that the situation in Northern Ireland may have changed in a relevant way and I am certainly not going to call for recommittal at this point. I merely say that the House has ahead of it in this Session a massive amount of social security legislation. One certainly hopes that government amendments will appear at least at Committee stage. It is not very satisfactory for amendments to be tabled on Report, when one can only intervene once, as against bandying matters back and forth. Given the extraordinarily heavy and complex legislative programme. we should get amendments as soon as possible.
I have one simple question for the noble Baroness. Under these new clauses, does the Inland Revenue obtain greater powers than the Department of Social Security and the IR have at present?
§ Baroness Hollis of HeighamMy Lords, the noble Lord should accept the difference between Bills introduced in this House and legislation that is introduced in the other place and then comes to us. The noble Lord knows that this is a highly technical Bill, which is why he put down a whole lot of amendments before the Committee stage. I am grateful that the noble Lord accepts the Northern Ireland difficulties.
When a Bill starts in this House, one expects far more government amendments as a result of the complexities of cross-drafting and so on than would be the case with the two other major pieces of social security legislation. I hope that Members of the other place will give that legislation the careful scrutiny and revision that is the customary practice of your Lordships.
In answer to the noble Lord's final question, no, they will have the same powers.
§ On Question, amendment agreed to.
§ Clause 4 [Powers relating to enforcement]:
§
Lord Higgins moved Amendment No. 3:
Page 2, line 46, at end insert ("until 31st August 2001").
§ The noble Lord said: My Lords, on the point that the noble Baroness has just made, I am not sure that last year's Social Security Bill, which went through the other place first and to which we passed hundreds and hundreds of amendments, gives much cause for 817 optimism. No doubt it will be easier, for the reasons she mentioned, to avoid amendments at Report stage to future legislation.
§ We have spent considerable time in Committee on the enforcement provisions and in particular on the relationship between the enforcement provisions available to the Inland Revenue and the Department of Social Security. The purpose of the amendment is to see how those changes work out. It has been suggested by the Institute of Directors that it would be appropriate that the matter be reviewed and that the powers ought not to be changed in the way proposed within a given timescale unless that review has reported. It might be worth having the noble Baroness's reaction.
§ We have debated that matter to some extent but the Institute of Directors raises some specific points. It seems that Inland Revenue inspectors will be able to enter business premises at any time without warning and question employees. I raised that issue on Second Reading. There is also the question of whether or not the employee can be seen alone. We have debated also whether the employee can insist on a professional adviser being present. Perhaps the noble Baroness will let us know what the position is.
§ The extent to which the Inland Revenue uses any additional powers is something that we shall have to see in practice. There is concern that with the combination of two sets of powers, because it is a cumulative process the dividing line between the powers of the IR as the tax-collecting authority and its powers as regards national insurance may become blurred.
§ The Institute of Directors makes a point that had not occurred to me but it may be one that the noble Lord, Lord Goodhart, will wish to raise. Will the fact that failure to supply information is being decriminalised alter the situation with regard to the right to refuse to incriminate oneself? It is somewhat of a backhanded argument as to whether the civil penalties may be imposed and people will be obliged to admit that they had erred. I hope that the Minister will consider that. In particular, does she feel it would be appropriate for these matters to be reviewed?
§ All of us have a history in relation to these matters. I well recall my attempt to steer through the original value added tax legislation. It was bad enough saying why all the various items should be taxed, but once the enforcement provisions, which the Inland Revenue had had for the past 700 years, were put into legislation, everyone was up in arms. I had the most terrible trouble with lots of lawyers. Often, it is only when matters are changed or codified that people become aware of the real powers of the revenue departments. Therefore, it would be helpful if the noble Baroness would respond to this point, which is causing some concern in the business community, even though, as she points out, business is basically in favour of the transfer.
§ 4 p.m.
§ Lord SkelmersdaleMy Lords, as a former managing director of a small business, I have had experience of visits by staff in what is now the social security Contributions Agency to the person who does 818 the wages. I have also had experience of the Inland Revenue visiting for the same purpose; and also of not one, but two, inspections by the VAT man. So over a period of time I have become used to inspections by statutory bodies. I see no harm in that.
However, for the three departments that I just mentioned, we may now read two. We shall be told that the Inland Revenue wants to come and talk to the person who does the wages for the business. However, we shall not necessarily be told under what hat that person is coming—whether he or she wishes to examine the social security contributions part of the operation or the PAYE part. It is extremely important that when the initial contact is made regarding an inspection that is made absolutely clear. Otherwise, there could well be some confusion, and that is not right.
§ Baroness Hollis of HeighamMy Lords, I am in some difficulty and shall take your Lordships' guidance. Many of the detailed points raised were addressed to Amendment No. 39. As I am sure your Lordships will have noted, that amendment was tabled in response to most of the points raised by the noble Lord, Lord Higgins. I wonder whether it would be for the convenience of the House if I respond to Amendment No. 3 and speak also to government Amendment No. 39 so that effectively we group together the two issues. Perhaps that would be sensible. As many of the detailed points relate to Amendment No. 39 perhaps I may first address Amendment No. 3 and then turn to those detailed points.
§ Lord GoodhartMy Lords, if the Minister will excuse me, I do not wish to speak to Amendment No. 3; however, I do wish to raise a few questions in relation to Amendment No. 39.
§ Baroness Hollis of HeighamMy Lords, in that case, we shall have to proceed with the amendments separately. I must therefore ask your Lordships to wait for answers until we come to Amendment No. 39; otherwise, we shall be repeating ourselves.
I note that the noble Lord opposite looks surprised. Amendment No. 39 was designed to address the very issues that were raised by the noble Lords, Lord Higgins and Lord Skelmersdale, at our previous meeting and which they have raised again today. I am therefore rather baffled that the noble Lord has spoken to some 20 amendments before we come to them.
§ Lord HigginsMy Lords, I accept whatever is convenient for the House. If that is so, I am not quite clear why the Government did not ask for the amendment to be grouped. Perhaps the noble Baroness would deal with points that arise on this amendment but do not arise on Amendment No. 39, and then we may consider the remaining issues when we come to Amendment No. 39.
§ Baroness Hollis of HeighamMy Lords, Amendment No. 3 is a general amendment. It would time limit powers that successive governments have found acceptable for 50 years. Indeed, the party opposite 819 were instrumental in adding to powers of inspection as recently as the 1997 Fraud Act. So we can see no case for such a dilution of powers merely on account of the Contributions Agency transfer.
This Bill is not he occasion for substantial change of powers since the aim of the Bill is to transfer the CA as a "going concern". We have been clear from the outset that professional advisers would be nervous that there might be a levelling up of powers. This we have very deliberately not done.
Nevertheless, we accept that the statutory powers of enforcement under NICs legislation that the Inland Revenue will inherit will not be fully consistent with the existing powers in relation to tax. It is in no one's interests to have any lack of clarity or certainty about the state's powers to ask questions or ask to enter premises.
We anticipate that, after this legislation takes effect, the Inland Revenue will be consulting with a range of opinion about desirable harmonisations of tax and NICs. Indeed, those discussions have already started. Some areas for discussion would be on the details of the charging rules. Others would be on the administration powers and administrative processes to the extent that they impinge on employers and others.
So we see considerable merit in conducting a review of inspectors' powers, taking into account the rights of individual contributors as well as the interests of employers and the need to block fraud.
Such a review needs to be done properly, running well beyond the timescale of this Bill. Moreover, the review needs to look at the wider context. The Inland Revenue is being given other tasks such as policing the national minimum wage and student loan recovery, and handling the working families tax credit. All three involve employers, although we hope to burden them as little as possible.
It may be that, on close examination, different powers are indeed needed for different purposes. But our starting-point must be that a Revenue officer visiting an employer should have much the same powers, and limitations on those powers, whatever the purpose of the visit—in other words, as much congruence as possible.
I am conscious that the Committee on the Enforcement Powers of the Revenue Departments, set up in 1980 under the distinguished chairmanship of the noble and learned Lord, Lord Keith of Kinkel, took some four years to produce its reports. And enactment of its recommendations, in detailed consultation with representative bodies, took another five years.
That committee was exemplary in its thoroughness and very wide-ranging in its scope. While we want this review to be thorough, we do not intend to be so wide-ranging. That is, not least, because we want to see the outcome—which I do not pre-judge—on a much faster time-scale.
Nevertheless, that precedent leaves me cautious about accepting a particular timetable for replacement legislation to be in place. Hence I should not see it as responsible to time limit the current, indeed ancient, inspectors' powers. Unlike the matters covered by the 820 Keith Committee, we shall not be able to make all the changes that may prove desirable in the annual Finance Bill. Instead, we may need to amend social security legislation or, perhaps, DTI legislation where the national minimum wage is concerned.
I hope that what I have said reassures the noble Lord, Lord Higgins, that we seek clear, workable and effective powers for inspectors, which balance privacy against protecting contributors' rights and blocking fraud. Our detailed proposals are set out in Amendment No. 39. Given the review I have announced, I hope that the noble Lord will withdraw his amendment. We share what we understand to be the noble Lord's concern. It is merely that we believe that a proper review, especially in the light of the Bath study, is a more appropriate and robust basis for achieving the same end as the one he proposes in his amendment, which would effectively mean a guillotine and would therefore cut across a decent and proper review of several sets of concurrent but not at present fully consistent powers. I hope that in the light of that explanation—namely, that we accept the noble Lord's concern but believe a better way of dealing with the matter is by a properly informed consultative review, as we are currently exploring—he will feel able to withdraw his amendment.
§ Lord HigginsMy Lords, the intention of the amendment was to introduce the idea that there might be a review. Therefore I can happily withdraw the amendment, although there may be some outstanding points on Amendment No. 39 to which we shall come in due course—although that amendment, as I understand it, is designed to deal with points I raised in Committee. I shall read the noble Baroness's reply carefully. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 7 [Decisions by officers of Board]:
§
Baroness Hollis of Heigham moved Amendment No. 4:
Page 3, line 40, after ("made") insert ("for the purposes of this paragraph").
§ The noble Baroness said: My Lords, perhaps I may speak also to Amendments Nos. 5 to 10. These are all technical amendments.
§ Amendments Nos. 4 and 5 deal with two technical points arising in Clause 7(1). The first ensures that the regulations referred to at the beginning of paragraph (f) mean only those made for the purposes of that paragraph rather than regulations governing entitlement generally to SSP or SMP. The second deals with the missing consequential amendment in paragraph (h) which was mentioned at Committee stage by the noble Lord, Lord Goodhart. We are most grateful to the noble Lord for pointing it out, however embarrassing it may be to the parliamentary draftsman. It is a case of "Bingo!" for the noble Lord, Lord Goodhart, He was absolutely right.
§ Amendments Nos. 6 and 7 make clear provision for the kinds of decisions that can be varied or superseded in accordance with regulations under Clause 9.
§ The effect of Amendment No. 6 is to make it clear that decisions that supersede earlier decisions can be varied. Amendment No. 7 ensures that a decision which 821 has been confirmed or varied by the tax appeal commissioners can subsequently be superseded—but only where circumstances have changed since the decision in a way which justifies a different decision. Nothing in the amendments creates a general right for officials to overturn decisions of an independent tribunal.
§ There are a number of possible circumstances where decisions may need to be varied. Examples are where the original decision was incorrect for some reason, such as being based on incomplete or incorrect facts. Where circumstances change so that the continuing effect of an original decision is no longer appropriate, then a fresh decision can be made to supersede the original decision. For example, the employment status of an individual may be one such matter in which there may be a move between employment and self-employment.
§ The purpose of Amendment No. 8 is to ensure that a variation by an officer of an earlier decision, and a decision which supersedes an earlier decision, both carry a right of appeal to the tax appeal commissioners.
§ As it stands, Clause 10 expressly confers a right of appeal against decisions made under Clause 7 of the Bill. But without this amendment there would be no explicit right of appeal against the variation or superseding of a decision. Amendment No. 8 makes clear provision for appeals in both of those instances.
§ Amendments Nos. 9 and 10 are further technical amendments to ensure that regulations made by the board can cater for matters that arise pending or out of decisions.
§ As it stands, Clause 13 (1)(a) enables provisions to be made in regulations for matters arising pending a decision by an officer of the board, but we believe that we need to provide also for matters which arise pending the determination by the tax appeal commissioners of an appeal from such a decision.
§ The regulations may need to provide in particular for the arrangements to be made for the payment of contributions due under a decision of an officer while that decision is under appeal. Amendment No. 10 enables such provision to be made. These are all technical amendments. I beg to move.
§ Lord GoodhartMy Lords, I agree that these are all technical amendments. I can only say that, knowing the great skill of the parliamentary draftsmen, it is a rare occasion when one is able to score a goal against them.
§ Baroness Hollis of HeighamMy Lords, the House and we on the Government Benches in particular are grateful to the noble Lord for his perspicacity on his feet. I hope that your Lordships will accept the amendment.
§ On Question, amendment agreed to.
§
Baroness Hollis of Heigham moved Amendment No. 5:
Page 4, line 5, leave out ("that Act") and insert ("the Social Security Administration Act 1992").
§ On Question, amendment agreed to.
822§ Clause 9 [Decisions varying or superseding earlier decisions]:
§
Baroness Hollis of Heigham moved Amendments Nos. 6 and 7:
Page 5, line 17, after ("Act") insert ("(including a decision superseding an earlier decision)").
Page 5, line 21, at end insert (", and
( ) for any such decision as confirmed or varied by the tax appeal Commissioners on appeal to be superseded, in the event of a material change of circumstances since the decision was made, by a subsequent decision made by an officer of the Board.").
§ On Question, amendments agreed to.
§ Clause 10 [Appeals against decisions of Board]:
§
Baroness Hollis of Heigham moved Amendment No. 8:
Page 5, leave out lines 28 and 29 and insert—
("(A1) This section applies to any decision of an officer of the Board under section 7 of this Act or under regulations made by virtue of section 9(1)(b) of this Act (whether as originally made or as varied under regulations made by virtue of section 9(1)(a) of this Act).
(1) In the case of a decision to which this section applies—").
§ On Question, amendment agreed to.
§ Clause 13 [Matters arising as respects decisions]:
§
Baroness Hollis of Heigham moved Amendments Nos. 9 and 10:
Page 7, line 6, at end insert—
("( ) pending the determination by the tax appeal Commissioners of an appeal against any such decision,").
Page 7, line 10, at end insert—
("( ) Regulations under this section may, in particular—
§ On Question, amendments agreed to.
§ 4.15 p.m.
§ Clause 19 [Payments in respect of money purchase contracted-out pension schemes to be made out of National Insurance Fund]:
§
Lord Higgins moved Amendment No. 11:
Leave out Clause 19.
§ The noble Lord said: My Lords, this amendment proposes to leave out Clause 19. I raised the amendment because I am not clear as to the principle of the clause. The clause affects payments in respect of money purchase contracted-out pension schemes to be made out of the National Insurance Fund. Again, I should declare an interest, although the fund of which I am chairman is a final salary scheme and not a money purchase one.
§ There has been a long history, following the original Budget of the Chancellor of the Exchequer in which the changes in advance corporation tax deprived many pension funds of about £5 billion. Subsequently, a series of changes were recommended by the Government Actuary with regard to how the rebates should be 823 adjusted between money purchase and final salary schemes and personal pensions. However, alas, the recommendations of the Government Actuary were not accepted. The overall effect was to push people back into SERPS and, I imagine, in turn to generate more public expenditure of about £500,000.
§ This is all in the context of the explanatory note which appears at the right hand margin, but I am still not clear as to the purpose of the clause. The problems I have just mentioned have been serious. Much of the clause refers to Northern Ireland and we understand why those changes may be necessary. Even if the situation in Northern Ireland continues as the Government and everyone hope, there are other amendments which reflect the possible change in the situation there.
§ Leaving Northern Ireland to one side, if the helpful Explanatory Notes are to be believed, what is happening is that the national insurance rebates will be funded from the National Insurance Fund. There are arrangements for paying in and paying out from the Consolidated Fund to the National Insurance Fund, but I am not clear as to the purpose of the merry-go-round. Earlier, we discussed the role of the National Insurance Fund and there were discussions between the noble Lord, Lord Goodhart, and myself as to whether it is a pipe or a tank, with flows inwards or outwards.
§ However, the function of the fund becomes increasingly uncertain with respect to why particular amounts of money—on a substantial scale presumably—should be paid in one direction or another. I wish to ask the Minister whether it has anything to do with the other problems I mentioned which still have severe repercussions. Alternatively, is there some object to the clause which I have been unable to discern? I beg to move.
§ Baroness Hollis of HeighamMy Lords, the noble Lord asked what was the purpose of the clause. Since we are not now in the Committee stage, I can give an answer and if he has more detailed questions I may have to respond to him in correspondence.
Clause 19 corrects a defect in the legislation which governs the financing of national insurance rebates for COMPS (contracted-out occupational money purchase pension schemes). It represents a technical amendment in relation to government accounting mechanisms and does not affect individuals in or employers running occupational pension schemes.
The Pension Schemes Act 1993 should provide for COMP rebates to be funded from the National Insurance Fund and for any rebate-associated recoveries to be paid into that fund.
However, through inadvertence—possibly because the noble Lord, Lord Goodhart, was not a Member of your Lordships' House at the time—no such provisions have been made. Instead, the legislation only provides for the age-related element of COMP rebates to be paid out of money provided by Parliament. Therefore, rebates have been paid from the Consolidated Fund.
824 The clause corrects Section 177 of the Pension Schemes Act 1993, the section which governs the general financing arrangements for that Act, to allow COMP rebates to be funded from the National Insurance Fund and for recoveries to be made direct to the fund. It also provides for the fund to reimburse the Consolidated Fund the moneys paid out during the current tax year in respect of such rebates. For completeness, the Northern Ireland legislation is also amended correspondingly.
I hope that that answers the noble Lord's question as to the purpose of Clause 19. It is to correct the Pension Schemes Act 1993. Because this is Report stage and we therefore do not engage in debate, I should be happy to follow up in writing any queries the noble Lord may have.
§ Lord SkelmersdaleMy Lords, before the noble Baroness sits down, perhaps in her ultimate response, which must surely be by letter at this stage, she could answer a question from me. Subsections (3) and (4) of Clause 19 make it clear that repayment from the National Insurance Fund into the Consolidated Fund for the purposes mentioned by the Minister will be a short-term operation. The provision states:
during the period beginning with 1st April 1998 and ending with the passing of this Act".There is no need for the Minister to respond now; I would not dream of putting her under even more pressure.
§ Lord HigginsMy Lords, I am not sure that I am clearer than I was at the outset. Leaving to one side the broad political issues, if I understand the matter correctly, the noble Baroness does not suggest that the provision corrects something which results from the failure of the Government to agree to what was recommended by the Government Actuary. It all dates back to 1993. I am not clear what has been happening in the meantime and why the terms of the clause as it stands are so restricted in time. What has been going on between 1993 and now? If it has been all right since 1993, presumably people have not been paying out the sums without proper parliamentary authorisation. Why is it now necessary to make the change? The whole thing is a merry-go-round anyway and at the end of the day it makes no difference whether the money is paid out of the Consolidated Fund or the National Insurance Fund.
The money all comes from you and me and everyone else in the country, either by way of contributions or by way of tax. Obviously there is some case to be made for it being paid out of one fund or another and the noble Baroness would know about that. I should like to continue with the idea that there is a contributory principle, and so on, and to that extent it is best that it comes out of the National Insurance Fund. However, I really do not understand now, for one moment, what the situation is. No doubt the noble Baroness could perhaps write to us and, if necessary, we can put it on the record at Third Reading. Subject to that, I would not 825 wish to press the amendment, even though I am not the least bit clear as to what the consequences will be. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 21 [Special provision for certain contracts]:
§
Baroness Hollis of Heigham moved Amendment No. 12:
Page 10, line 25, leave out subsection (1) and insert—
("(1) This section applies to—
§ The noble Baroness said: My Lords, in moving Amendment No. 12, I should like to speak also to Amendments Nos. 13 and 14. This is another group of technical amendments which I hope will not detain us long. I explained in Committee some of the complex contractual relationships with which we are dealing as part of the transfer of the CA to the IR. The amendments in this group deal with subsidiary contracts made under a framework agreement. Perhaps the best way of illustrating this is by an example. The department has a framework agreement with a supplier to provide desk-top computers at a set price. The department then places orders for individual computers under that agreement. This amendment simply allows those subsidiary contracts to be transferred or not, as the case may be, so that the same department, either the DSS or the Inland Revenue, holds the contracts for the whole lot. This is a straightforward and technical provision. I beg to move.
§ On Question, amendment agreed to.
§
Baroness Hollis of Heigham moved Amendments Nos. 13 and 14:
Page 10, line 34, leave out ("functions transferred to them by virtue of this Act") and insert ("transferred functions").
Page 10, line 46, leave out ("functions transferred to them by virtue of this Act") and insert ("transferred functions").
§ The noble Baroness said: My Lords, I beg to move these two amendments formally.
§ On Question, amendments agreed to.
§ Clause 22 [Power to transfer functions by Order in Council]:
§
Baroness Hollis of Heigham moved Amendment No. 15:
Page 11, line 25, at end insert—
("(bb) any function under section 7 of the Social Security Act 1986 (occupational pension schemes becoming contracted-out between 1986 and 1993), so far as that section remains in force by virtue of paragraph 22 of Schedule 6 to the Pension Schemes Act 1993,").
§ The noble Baroness said: My Lords, I beg to move Amendment No. 15 and at the same time speak to Amendments Nos. 16 and 17. As I said in Committee, Clause 22 is intended to allow us the flexibility in the light of operational experience to make adjustments by Order 826 in Council at the edges of the boundary drawn between the DSS and the Inland Revenue. If your Lordships remember, this was particularly pressed on us by the noble Lord, Lord Goodhart, who was worried as to whether it was right to replace the appeal decision with a unified appeal tribunal rather than with the Special General Commissioners of Tax.
§ These amendments add one small area to the scope of the clause so that it covers all the areas of contracted-out pension business. In addition to its functions under Part III of the Pension Schemes Act 1993, the contracted-out employment group of the Contributions Agency also carries out some functions under Section 7 of the Social Security Act 1986, which covers incentive payments made by the Secretary of State to pension schemes becoming contracted out between 1st January 1986 and 5th April 1993.
§ As drafted, Clause 22 does not cover this work and so Amendment No. 15 includes these functions in the clause and Amendment No. 17 add references to equivalent Northern Ireland legislation. Amendment No. 16 makes good the omission of Northern Ireland provisions which correspond with provisions referred to in subsection (2). I beg to move.
§ On Question, amendment agreed to.
§
Baroness Hollis of Heigham moved Amendment No. 16:
Page 12, line 27, after ("Fund.") insert—
("( ) references to section 1(1) of the Social Security Contributions and Benefits Act 1992 and section 161(1) of the Social Security Administration Act 1992 have effect as references to section 1(1) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 and section 141(1) of the Social Security Administration (Northern Ireland) Act 1992,").
§ The noble Baroness said: My Lords, I beg to move Amendment No. 16 formally.
§ On Question, amendment agreed to.
§
Baroness Hollis of Heigham moved Amendment No. 17:
Page 12, line 27, after ("Fund,") insert—
("( ) references to section 7 of the Social Security Act 1986 and paragraph 22 of Schedule 6 to the Pension Schemes Act 1993 have effect as references to Article 9 of the Social Security (Northern Ireland) Order 1986 and paragraph 21 of Schedule 5 to the Pension Schemes (Northern Ireland) Act 1993,").
§ The noble Baroness said: My Lords, I have already spoken to this. I beg to move the amendment formally.
§ On Question, amendment agreed to.
§ Clause 23 [Corresponding provision for Northern Ireland]:
§
Baroness Hollis of Heigham moved Amendment No. 18:
Page 12, line 35, at end insert ("do any of the following")
§ The noble Baroness said: My Lords, I beg to move Amendment No. 18 and to speak also to Amendments Nos. 19 to 28 and also to Amendment No. 45. This group of amendments would change the mechanism by which functions in respect of Northern Ireland would transfer. While they provide greater flexibility, they would not affect the policy intention or the eventual result. They are about form rather than substance.
827§ At Second Reading, I said that national insurance contributions operations are managed by the Contributions Unit, which is part of the Northern Ireland Social Security Agency. As in Great Britain, the bulk of NICs are collected by the Inland Revenue alongside tax. Further, centralised functions, such as maintaining the records of contributors in Northern Ireland, are done by the Contributions Agency in Great Britain on behalf of the Northern Ireland Social Security Agency. Accordingly, we intend that the Contributions Unit should transfer to the Inland Revenue at the same time as the Contributions Agency.
§ As currently drafted, Clause 23 provides for a two-stage transfer via the DSS. The first stage from the Northern Ireland Department to DSS would be done by Order in Council under Section 86 of the Northern Ireland Act 1998. The second transfer, from DSS to the Inland Revenue, would be done by Order in Council under this clause. That was consistent with the aim that the Northern Ireland Assembly should start work on 1st February.
§ It is now clear that, despite all the efforts that have been made, the Assembly will not start work that early. So we now think it makes more sense to provide in this Bill for a direct transfer of the operational functions from the Northern Ireland Department to the Inland Revenue. That will ensure that a seamless transfer of operational functions can happen for the whole of the United Kingdom in April.
§ Amendment No. 21 provides the flexibility to perform a direct transfer of policy functions to Treasury and Inland Revenue, if that looks the best way of securing the policy intention of a simultaneous policy transfer to the Chancellor's departments across the United Kingdom. Amendment No. 22 retains the option of a two-stage transfer.
§ So the clause as amended would facilitate a simultaneous operational and policy transfer on 1st April across the whole of the UK. Or it could be used to transfer operational functions to the Inland Revenue, and policy functions to DSS, on 1st April, with a subsequent onward transfer of GB and Northern Ireland policy functions on the same day.
§ Amendments Nos. 19, 21, and 28 allow for the restructuring and renaming of Northern Ireland departments that is proposed to happen before the Assembly starts work. These amendments retain our policy intention of a single operational transfer across the UK on 1st April—I understand that there is a question mark in relation to that, given the speed of the Northern Ireland developments—and a single date for the policy transfers to Treasury and Inland Revenue. I beg to move.
§ Lord HigginsMy Lords, I can understand the reason for flexibility. If it can be short-circuited in the way which has just been described, why was it not done that way in the first place?
§ Baroness Hollis of HeighamMy Lords, I am not sure what the noble Lord means by "the first place".
§ Lord HigginsMy Lords, we are changing the system, as I understand it, and doing it directly from the 828 department without going into, so to speak, a holding pattern meanwhile. I just was not quite clear why, if this can be done now to give flexibility, the Government did not make this arrangement in any case.
§ Baroness Hollis of HeighamMy Lords, I think the most useful thing I can say to the noble Lord is that we expected all this to have happened by 1st February and that the Northern Ireland Assembly would be up and running by 1st February, so that this would then have followed conventional practice in other departments. If I can help the noble Lord further on this as to whether there is some technical reason, I will come back to him, but that is my understanding.
§ On Question, amendment agreed to.
§
Baroness Hollis of Heigham moved Amendments Nos. 19 to 28:
Page 12, line 36, leave out ("Secretary of State") and insert ("relevant Northern Ireland authority").
Page 12, line 38, leave out ("or 2").
Page 12, leave out lines 40 to 43 and insert—
("(b) make provision for transferring from the relevant Northern Ireland authority to the Secretary of State any other function in relation to Northern Ireland which relates to any of the matters specified in paragraph 10 of Schedule 2 to the Northern Ireland Act 1998 (excepted matters),
(bb) make provision for transferring from the relevant Northern Ireland authority to the Board or the Treasury any function in relation to Northern Ireland corresponding to a function transferred to the Board or, as the case may be, the Treasury by virtue of section 2 of this Act, and").
Page 12, line 46, at end insert—
("(1A) If an Order in Council made under this section by virtue of subsection (1)(b) above has transferred to the Secretary of State any function in relation to Northern Ireland which corresponds to a function transferred to the Board or the Treasury by virtue of section 2 of this Act, Her Majesty may by a further Order in Council under this section make provision for transferring that function from the Secretary of State to the Board or, as the case may be, the Treasury.").
Page 12, line 47, leave out from ("may,") to end of line 2 on page 13 and insert ("for the purposes of the Order").
Page 13, line 8, leave out from first ("provision") to ("as") in line 11.
Page 13, line 11, at end insert (", including—
Page 13, line 12, leave out subsection (3) and insert—
("(3) A certificate issued by the Board, the Secretary of State or the Treasury that any property vested in a Northern Ireland department immediately before an Order under this section takes effect has been transferred by virtue of the Order to the Board, the Secretary of State or the Treasury, as the case may be, shall be conclusive evidence of the transfer.
(4) A certificate issued by the Board or the Treasury that any property vested in the Secretary of State immediately before an Order under this section takes effect has been transferred by virtue of the Order to the Board or the Treasury, as the case may be, shall be conclusive evidence of the transfer.").
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Page 13, line 16, at end insert—
("( ) Subsection (1A) above does not limit the powers conferred by section 22 of this Act in relation to Northern Ireland.").
Page 13, line 16, at end insert—
("( ) In this section "the relevant Northern Ireland authority", in relation to any function, means the Northern Ireland department by which the function is exercisable.").
§ The noble Baroness said: My Lords, I beg to move these amendments formally.
§ On Question, amendments agreed to.
§ Clause 27 [Short title, commencement and extent]:
§ [Amendment No. 29 not moved.]
§
Lord Higgins had given notice of his intention to move Amendment No. 30:
Page 14, line 30, leave out ("the passing of this Act") and insert ("such day after 30th November 1999 as the Secretary of State may, by order, appoint").
§ The noble Lord said: My Lords, I had indicated that I would move Amendment No. 30 but as we have already debated its substance, I shall not move the amendment.
§ [Amendment No. 30 not moved.]
§ [Amendment No. 31 not moved.]
§
Baroness Hollis of Heigham moved Amendment No. 32:
Page 15, line 3, at end insert—
("( ) section 2 and Schedule 3 so far as they amend section 177 of the Social Security Administration Act 1992 or section 88 of the Northern Ireland Act 1998,").
§ The noble Baroness said: My Lords, I beg to move Amendment No. 32 and to speak also to Amendments Nos. 36 and 37. If I may deal with this slightly back to front, Amendment No. 36 is a technical amendment, which extends slightly the powers of the existing joint authority, comprising the Secretary of State for Social Security and the Departments of Health and Social Services for Northern Ireland, that co-ordinates the social security system across the United Kingdom. It ensures that the joint authority will continue to be able to make adjustments between the Great Britain and Northern Ireland National Insurance Funds once those funds have been transferred to the control and management of the Inland Revenue.
§ Amendment No. 37 makes the same changes to the powers of the new joint authority, which will include also the Chancellor, to be set up under the 1998 Northern Ireland Act when the Northern Ireland Assembly starts work. Finally, Amendment No. 32 makes a consequential adjustment in Clause 27 so that these amendments apply in Northern Ireland. I beg to move.
§ On Question, amendment agreed to.
§ 4.30 p.m.
§
Baroness Hollis of Heigham moved Amendment No. 33:
Page 15, line 4, at end insert—
("( ) section (Recovery of contributions where income tax recovery provisions not applicable) and Schedule (Recovery of contributions where income tax recovery provisions not applicable),").
§ On Question, amendment agreed to.
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§
Baroness Hollis of Heigham moved Amendment No. 34:
Page 15, line 15, leave out from ("any") to ("and") in line 16 and insert ("enactment which extends to Northern Ireland,").
§ The noble Baroness said: My Lords, I believe that this wins the record for being the briefest amendment-moving speech this evening. Amendment No. 34 is a technical amendment to the subsection of Clause 27 which extends to Northern Ireland the repeals schedule to the Bill. In the light of additional material now in that schedule, that provision is now too restrictive and needs to be drawn in more general terms. I beg to move.
§ On Question, amendment agreed to.
§ Schedule 2 [Transfer of functions under subordinate legislation]:
§
Baroness Hollis of Heigham moved Amendment No. 35:
Page 27, line 31, at end insert—
| ("S.I. 1996/1245. | The Social Security (Additional Pension) (Contributions Paid in Error) Regulations 1996. | All the regulations.") |
§ The noble Baroness said: My Lords, following my exchanges with the noble Lord, Lord Skelmersdale, in Committee, we have given further thought to the functions conferred on the Secretary of State in statutory instruments. As a result, this technical amendment adds to the list in the schedule a further instrument which confers functions on the Secretary of State in cases where contributions have been paid in error. I hope that the amendment will receive the full support of the noble Lord, Lord Skelmersdale. I beg to move.
§ Lord SkelmersdaleMy Lords, I was delighted to see the amendment because obviously the object behind my probing amendments to Schedule 2 in Committee persuaded the Government and their advisers to have another look at the schedule. Clearly they have done that. They had a tiny look immediately before Committee stage which was possibly prompted by me, possibly not; I do not know. They made one small alteration at that stage. Now a fairly significant alternation has been made. Another statutory instrument has been introduced into the list in Schedule 2. In welcoming the amendment, I am especially pleased that column 3 refers to, "All the regulations".
§ On Question, amendment agreed to.
§ Schedule 3 [Transfer of other functions to Treasury or Board]:
§
Baroness Hollis of Heigham moved Amendments Nos. 36 and 37:
Page 36, line 8, at end insert—
(".—(1) In section 177 of the Social Security Administration Act 1992 (co-ordination with Northern Ireland), in subsection (3)(a), for "to make" there is substituted "to require the making by the Inland Revenue of".
(2) This paragraph shall cease to have effect on the commencement of the repeal by the Northern Ireland Act 1998 of section 177 of the Social Security Administration Act 1992.").
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Page 37, line 9, at end insert—
§ ("Northern Ireland Act 1998 (c. 47)
§ . In section 88 of the Northern Ireland Act 1998 (the Joint Authority), in subsection (3), for the words from "power" onwards there is substituted "power—
- (a) to require the making by the Commissioners of Inland Revenue of any necessary adjustments between the National Insurance Fund and the Northern Ireland National Insurance Fund, and
- (b) to make any other necessary financial adjustments."").
§ On Question, amendments agreed to.
§ Baroness Hollis of Heigham moved Amendment No. 38:
§ After Schedule 3, insert the following new schedule—