§ Mr. Dewar
I beg to move amendment No. 4, in page 1, line 22, leave out subsection (3).
This matter has been discussed at various times during the past few days. I almost said "a few weeks", because it seemed like that at times. It is worth having another quick look at the matter if only to settle fears and establish fact. After all, that is one of the classic purposes and aims of the Committee.
Perhaps this is a plea in irritation rather than mitigation but I was one of the gallant band of brothers which was here at 3 o'clock this morning, together with the Government Whip. He is wearing an exciting tie but I suspect that he will be feeling slightly jaded if, like me, he survived through the long passage of arms over the Ways and Means resolution.
I appear in a somewhat unlikely but not uncharacteristic guise because I suspect that I am on the Government's side in this matter. [Interruption.] It is a matter of some interest because during my time here—it will be 20 years in about two months—I have been engaged in debate, argument and sometimes a spasm panic over retrospective legislation. There are occasions when those who are debating such subjects do not entirely understand the nature of the beast. I include myself because I have no false modesty about these matters.
Earlier, the Minister referred to the retrospective principle and the impact of clause 2. Of course, subsection (3) concentrates on that aspect. My amendment, which I unashamedly say is a probing amendment, also relates to it.
I am pleased that my hon. Friend the Member for Bradford, South (Mr. Cryer) is here, because if he read in cold blood what I am about to say, he might imagine that it amounted to a criticism of his performance last night. That is not my intention. I think that my hon. Friend's display was spirited. As I moved through the Lobby just before 3 am I heard it described by a senior Conservative as a bravura performance. I have some sympathy with that view.
I am not sure that my hon. Friend's contribution was entirely in touch with the realities of the situation. We were greatly entertained—I hope that my hon. Friend does not object to that term—by the speculations about where that £4.6 billion had disappeared from. It certainly appeared as though a great disappearing act had been performed, because that £4.6 billion had disappeared from the books and was about to be recovered by some form of additional taxation heaped upon today's generation to pay for the mistakes of the past.
At other times in the debate we were led to believe that it was treasure trove, which might still be buried at the back of a filing cabinet at Richmond house. We listened to some splendid arcane arguments about how that money could be distributed for the greater good of humanity, in particular the people of Bradford, South.
I look forward to the rational, tidy explanation from the Parliamentary Under-Secretary of State, because he always displays such characteristics on such small, unimportant 1362 matters. If I were to take a barrack-room lawyer's view of the matter—on occasions I have been unfairly accused of such behaviour—
§ Mr. Dewar
Right on cue. Thank you.
It is possible to argue for the purpose of the debate that retrospective legislation concerns a rather more serious issue than that suggested last night. It is not designed just to put right a slip of the draftsman, which provided an unlikely legal basis for the proper conduct of affairs and which was not challenged. Retrospective legislation, of its nature, introduces a legal provision that is intended to relieve someone for acts which were clearly not proper and which might even have been outwith the law or ultra vires the capacity of the person concerned. Perhaps even more worryingly, retrospective legislation may replace money that has been misappropriated, misspent or otherwise wasted.
That did not happen in this case and that is why I think that the amazing and cheerful chase that took place in the small hours of this morning, in which some effective points were raised about the general conduct of the Government's business and their policy on the health service, may have been marginally wide of the mark.
I say that with considerable hesitation and I am aware of the fact that I may give unintentional offence. That should not be so because the debate was a useful exercise. It achieved almost all the aims that my hon. Friends for Bradford, South and for Bolsover (Mr. Skinner), as well as that small group of frondeurs and skirmishers who joined them, had in mind when they set out on the exercise.
My impression—I am sure that the Minister will rise to confirm, deny or explain it—is that there was a unanimity of view about how the formula governing the money which is collected in the national insurance contributions kitty should have operated. That formula resulted in an annual allocation to the national health service.
I know that I should have the relevant figures in the back of my mind. I feel guilty about setting out on the debate without having done the necessary in-depth research. If I remember rightly, only about 14 per cent. of NHS expenditure comes from the national insurance fund, the rest comes from general taxation. It is rather like the poll tax, if you will allow me one sentence on it, Mr. Lofthouse, and the figures that expressed it as a percentage of total local government expenditure. It was always a remarkably small percentage, at between 11 and 12 per cent., because the rest of the money, certainly in England, was provided through, I believe, the standard spending assessment. We have a different system north of the border and my hesitation about that term is due to the fact that I am a little rusty on the exact terminology.
As I understand it, the 14 per cent. over the years has been properly allocated. I use the words in a lay sense, as everyone thought that it should have been allocated and no one would have thought that anything untoward would have happened if it had not been found out in some recess of Richmond house by some fiendishly ingenious draftsman. Perhaps it was the personal work of the Minister. Perhaps he will tell us? Perhaps, as the new broom at Richmond house, who has his own form of careful craftsmanship, he came across the fault. The Minister can explain that.
1363 Anyway, someone found that ambiguity, as the Minister of State referred to it, which may at some future date have allowed someone of a malevolent disposition to challenge the propriety of the legal basis on which the acceptably proper allocation took place. The Minister was only making clear that that ambiguity cannot be traded on at some future date and cannot cause upset or disorder in the affairs of the national health service. That is not retrospective in the full sense of the word or retrospective in the sense in which we would normally want to look, to use a fine Scottish word, sidyways at the provision.
Therefore, tentatively at this stage, I am not mindful to force the matter to a Division or to unnecessarily prolong the debate, but I am prepared to listen to other hon. Members speak on the matter. My hon. Friend the Member for Bradford, South may want to argue the toss.
§ Mr. Dewar
I am sorry to hear that. My hon. Friend is absolutely right. At that stage, my hon. Friend the Member for Bolsover (Mr. Skinner) was just warming up nicely and in his 56th minute and, in my untutored view—I do not want to challenge the Chair—he was in order for at least 90 seconds of that time. Under those circumstances, someone was thoughtless and unkind enough to move a closure motion and we heard no more. However, that deprived us of the scholarly and textual analysis of the clause that I am sure that the Minister would have provided.
My hon. Friend the Member for Bradford, South is, on occasions, a much misunderstood man. He is showing typical common sense in saying that he should not rush in to pick a fight or to argue the toss on that matter until he has heard the official explanation. I am sure that I have interpreted it correctly and that my hon. Friend's stance implies that if he is not satisfied with the Minister's reply, he can return to the issue with renewed force and authority, having inspected the wares that the Minister is about to lay before the Committee. It is common sense and my hon. Friend's attitude is admirable. It would ill become me to stand between the Committee and what the Minister has to say because, if the Minister's comments are useful to my hon. Friend, almost certainly, they will be useful to me.
On that basis of friendliness and the kind of constructive spirit in which Committees of the whole House ought to be conducted, I look forward to hearing what the Minister has to say.
§ Mr. Hague
I am delighted to have an opportunity to respond to the points made by the hon. Members for Glasgow, Garscadden (Mr. Dewar) and for Bradford, South (Mr. Cryer), and by their colleagues during the unfinished debate on the Ways and Means motion last night. Much alarm was expressed about the matter in our earlier debate. The hypothesis advanced by the hon. Member for Garscadden about what has happened was much nearer to the truth than was some of the alarm expressed last night.
I stress at the outset that no money has been borrowed and that nobody has been ripped off, as was suggested last night. No money has been lost, and no money has been spent that has not been accounted for properly. No money has been spent in any way other than the way in which 1364 Parliament intended it to be spent. No money has been misplaced. There is no scandal of the kind about which some hon. Members wondered.
In answer to one of the first questions asked by the hon. Member for Bradford, South last night, there is no retrospective charge on anyone who pays into the national insurance fund. The provision has no implications for the payments that people have made or will make. It makes no difference to any individual; it is simply a matter of ensuring that the legal cover for payments made out of the national insurance fund to the national health service is correct and in order for the future and for the past few years.
Clause 2 deals with the ambiguity, as my right hon. Friend the Minister for Social Security and Disabled People accurately described it, that has been uncovered in the amending provisions of the Social Security Act 1989 concerning the allocation paid out of national insurance contributions to the national health service. As the Committee knows, the allocation to the national health service is a long-standing provision. The hon. Member for Garscadden was approximately correct in his thoughts about the percentage of national health service funding that is paid for through this route.
Many people traditionally associate treatment under the health service with having paid contributions, even though treatment is in no way dependent on a contribution condition. The 1989 Act altered the structure of national insurance contributions for employees, which is what led to the mistake in the first place. The Act introduced for the first time the concept of an initial percentage and a main percentage. The former would apply to earnings up to the lower earnings limit, and the latter to earnings above that level. I think that I am carrying the Committee with me so far.
Before the 1989 Act, there was a single percentage of 5 per cent., 7 per cent. or 9 per cent. applicable to each level of earnings, and the NHS allocation was a set proportion of that percentage. However, with the 1989 Act, the initial percentage became just 2 per cent.
It was generally agreed in the House and elsewhere that, because the figure was so low, the national health service allocation should apply only to the higher range of earnings on which contributions were paid—that is, between the lower earnings limit and the upper earnings limit— [Interruption.] There is a bit of disruption by my colleagues from the Whips Office. Typically, that rate was 9 per cent.
I am sure that we can all see what the logic was at the time, and I am sure that we continue to agree with it. Given that the allocation to the national health service was 1.05 per cent.—more than half the value of the 2 per cent. initial rate—there was little point in dividing the 2 per cent. in that way. It was believed that contributions to the national health service would instead come out of the payments between the lower earnings limit and the upper earnings limit.
The amendment to the previous legislation by the 1989 Act sought to achieve that intention, but it did so by distinguishing the contributions on which the allocation was payable by referring to them as contributions paid at the main primary percentage rate.
I am sorry to disappoint the hon. Member for Garscadden. It was a diligent official, rather than the new ministerial broom at Richmond house, who first recognised that, because the statutory definition of the main primary 1365 percentage rate was in terms of contributions payable at 9 per cent.—10 per cent. from next April as a consequence of the Bill—it was possible to construe the legislation so that an allocation to the health service was not payable where the main contributions were at a rate that was a variation of the 9 per cent. rate. For example, people in their firm's occupational pension scheme pay the lower contracted-out rate of contributions, which is currently 7.2 per cent., or will be 8.2 per cent.
There is ambiguity about whether those contributions, which, of course, are quite a large part of the total, were properly covered by the 1989 Act. Clearly, that would be quite contrary to the long-standing tradition of the health service allocation, and contrary to what the Government and Parliament intended. It could not possibly have been intended at the time. That is why the simple amendment before the Committee aims to place the matter beyond doubt with retrospective effect.
As I mentioned on Second Reading, I share the scepticism and reluctance to which hon. Members have referred about retrospective legislation, but here we have an instance of not trying to change the policy's intention. We are not trying to change anything that has been done over the intervening years. We are removing any ambiguity about the legal cover, so that payments can be —and have been—properly made out of the national insurance fund to the NHS.
I hope that that is a relatively clear explanation, and that it answers the points that hon. Members have raised. In the light of that, I hope that the hon. Member for Garscadden will feel free not to press his amendment.
§ Mr. Cryer
It is worth commenting that the explanation from the Minister is perfectly understandable, but it demonstrates the dangers that face the House when we hand over to Ministers the powers to make delegated legislation. By a quirk, the requirement for this change is by primary legislation. There are some parts of delegated legislation that are not subject to any further parliamentary procedure. Over the years, this quite significant error was not detected when the legislation went through its Committee stage, or at Second or Third reading. Now that the Government have come to amend it, the faulty interpretation has been discovered.
It behoves us all to ensure that legislation is examined as scrupulously and tightly as possible. It is a reflection on the Government that they are putting this Bill through the House rapidly, and other bits of legislation from time to time under a guillotine. It has not happened on this occasion, but there is always the danger that, if legislation is examined under pressure and in haste, that sort of dangerous fault can develop.
Although in this case there has been no question, one of the difficulties—
§ The Chairman of Ways and Means (Mr. Michael Morris)
Order. The hon. Gentleman is making a point about Second Reading. He should be speaking directly to the specific amendment.
§ Mr. Cryer
I am just coming to that, Mr. Morris.
There is a danger that, if we do not table amendments that are sympathetically treated by the Government, such as the amendment before us, they will push legislation through and incorporate the sort of errors that have been 1366 discovered on this occasion. It is a lesson for us all that we must be as zealous as we can in ensuring that legislation is as clear and free from interpretation, particularly where, unlike this, challenge can be made through the courts, because, if legislation goes from this place that is open to challenge in the courts, it means that we have all failed.
§ Mr. Dewar
I take seriously your strictures about wandering, Mr. Morris. It might help you if I said—I can speak only for myself—that I do not intend to delay the Committee on clause stand part. The debate on the proposed removal of subsection 3 will allow me to say all I want to say on the matter.
I am disappointed that the Minister did not find the error himself. I have watched him for only a short period, but he always strikes me as keen. When I was a boy, I was a great enthusiast of the novels of P. G. Wodehouse, in which there was a character called "the Efficient Baxter". He was an extraordinarily diligent secretarial figure, who went around making a perfect pest of himself by discovering things and pointing out the errors of other people's ways. The Efficient Baxter had rimless spectacles that gleamed even when the sun was not shining.
The Under-Secretary has not got that way yet, although his forehead is not a bad substitute. I hoped that he would have performed an Efficient Baxter-like task and discovered a lacuna in the legislative cover for the activities of his Department that had gone undetected for a long time. We must live with that disappointment, and I am prepared to do so, but I hope that the Minister does better next time.
I followed most of what the Minister said, and I am prepared to accept his explanation. This is a highly technical subject. In my early days in the job, I used to sit and listen to people talking about LELs and UELs, using all the jargon and shorthand of the national insurance contribution world. It took me a long time to understand what all that meant. For a while, I thought that they were referring to American colleges or football teams. It was only after a while that the truth dawned.
The Minister has allayed my reasonable fears, and perhaps even my unreasonable fears, and it may be only that the de minimis rule has gone slightly wrong. I am happy that is should be put right in this way.
My hon. Friend the Member for Bradford, South (Mr. Cryer has done us a service. I hope that he will not be hurt when I say that there are occasions, coming late through the corridors when I have heard Members, usually Conservative Members, saying uncharitable things about my hon. Friend. [HON. MEMBERS: "Never!"] I am afraid that it is true. It is usually because he has had the courage and tenacity to stand up to speak in a debate on a Ways and Means resolution or a money resolution, to ventilate something that has caught his fancy and his attention. He is not normally closely associated with me in Labour party terms.
§ The Chairman
Order. I have great difficulty in relating what the hon. Gentleman is saying to amendment No. 4, but perhaps it will become clear.
§ Mr. Dewar
I am happy to say that it may not become clearer, because it is about to stop. I was, in passing, making the point that an outsider would say that my hon. Friend the Member for Bradford, South and I illustrate the 1367 rich diversity of opinion that co-exists happily within the Labour party. I admire his work as Chairman of the Standing Committee on Statutory Instruments, and he is right—even comparatively technical matters such as this should be properly challenged and scrutinised. I know that, in dark and secret places, he spends hours carrying out that task, and we are grateful for that.
Although we have discovered nothing of great moment in this exercise, it is right that the Minister should be forced to explain matters and, where we see the appearance of a retrospective provision, due explanation should be given. In this case, due explanation has been given. I rest content and beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 2 ordered to stand part of the Bill.
§ Clause 3 ordered to stand part of the Bill.