HC Deb 14 May 1998 vol 312 cc541-63 4.52 pm
Mr. Michael Fallon (Sevenoaks)

I beg to move amendment No. 4, in page 1, line 6, after 'expenditure', insert `up to a limit of £20 million'.

The First Deputy Chairman of Ways and Means (Mr. Michael J. Martin)

With this, it will be convenient to discuss amendment No. 8, in page 2, line 3, at end insert— '(5) Any expenditure incurred under this section shall be separately accounted in the Commissioners' Annual Report to Parliament.'.

Mr. Fallon

Last Thursday, the House gave the Bill a Second Reading, but not without serious reservations. Those reservations were expressed from the Opposition Front Bench, from the Opposition Back Benches and from the Liberal Democrat Benches. Essentially, they concerned the lack of any connection between the Bill and the subsequent major legislation that it purports to introduce, the lack of accountability, the Bill's failure to specify expenditure, and the broad nature of the power being given to the Secretary of State for Social Security and the commissioners of the Inland Revenue.

The amendments are the first in a series that attempts to tidy up the Bill. Amendment No. 4 would introduce into the legislation a limit on the expenditure sought. The explanatory and financial memorandum makes it clear that the expenditure for which the Government seek authority should amount to about £15 million to £20 million. The Government are introducing the legislation because they have no authority to spend money for those purposes under existing votes.

However, we find no reference to the money itself, or to any limit, in the Bill. We think it right that there should be a limit. Indeed, the amendment was inspired by the Financial Secretary to the Treasury herself when she challenged us about whether we thought more or less money would be needed—on Second Reading there was much talk about fancy computers and the like. She said: We are confident that we have asked the House for the money that we need to develop this proposal".—[Official Report, 7 May 1998; Vol. 311, c. 889.] However, the Bill asks for unlimited expenditure, so it is important to put an upper limit into it. I am prepared for the Financial Secretary to say that £20 million is a bit tight, that she ought to have some leeway and that she ought to be able to come back to the House in future—that she should be allowed initial expenditure up to one level, but with the ability to come back and change it. However, I hope that the hon. Lady will accept that there should at least be some limit. The limit that we propose is that specified in the explanatory and financial memorandum—£20 million.

Amendment No. 8 insists that the money spent under the Bill should be separately and properly accounted for. Essentially, the Bill asks for a new vote and a new line of public expenditure, and we would like to see that expenditure separately accounted for in the normal accounts presented to Parliament by the commissioners. Perhaps the Financial Secretary will say straight away that that is what will happen, and that the money will be so accounted for. However, given the unlimited nature both of the discretion sought under the Bill and of the expenditure possible under that heading, it would be preferable to have that fact written into the statute.

Mr. Eric Forth (Bromley and Chislehurst)

I echo and strongly support what my hon. Friend the Member for Sevenoaks (Mr. Fallon) has said. To my regret, I come to the debate without having been able to participate in the earlier stages of proceedings on the Bill, and I am truly staggered by its nature—by its lack of any sort of framework or limitation. Surely what my hon. Friend suggests is not only reasonable, but would be expected by any taxpayer who was considering what Parliament is doing today.

One has only to look at the original text of the Bill to see that it represents a blank cheque. It contains not one but several phrases along the lines of the Secretary of State and the Commissioners may incur such expenditure as they think appropriate", and so on. The phraseology makes no attempt to circumscribe the areas of responsibility or to limit the expenditure.

One would have thought that, whether this is a preparatory, a speculative or a paving measure, or whatever one might call it, as a matter of responsibility and accountability to the taxpayer, there would be indications at this stage of the kind of limit that we could expect. The Bill does the exact opposite, and goes to extraordinary lengths to allow unlimited expenditure on unspecified activities that, in the opinion of certain people—albeit important and responsible people—should be undertaken. In coming to Parliament and asking for such an approach, the Government are chancing their arm to an unacceptable extent.

We are the custodians of the tax revenues of the people of this country. The Government come to the House of Commons from time to time to ask for moneys—sometimes very large sums—for specified purposes. However, this is a different matter altogether; we are in new territory. The Government are saying, "Trust us. We are not going to tell you what is going on here, but we would like the House of Commons to authorise us to spend any amount of money to pursue unspecified objectives." That strikes me as unacceptable. The amendments provide terms of reference against which the Government can be judged.

My hon. Friend the Member for Sevenoaks said that if the amount that he was suggesting in the amendment was unreasonable, he would consider a different amount—even a higher amount—providing the Minister was able to give an explanation of what the money would be used for. We have nothing to go on; the Bill does not tell us. Surely the Minister must have some idea in her head as to what is intended. There must be a plan or specification within each of the Departments involved. Surely the Government cannot be coming here and asking for an unlimited amount of money to do something that they would like to do.

5 pm

The Financial Secretary to the Treasury (Dawn Primarolo)

Did the right hon. Gentleman ask these questions when the Government of which he was a member put through paving legislation during their period in office?

Mr. Forth

Regrettably, I was not in a position to do so because I was incarcerated in the Government. I would have found it difficult, within the terms of collective responsibility, to have queried—especially on the Floor of the House—what the Government were doing. I may have harboured my inner thoughts on the matter; that is different. From my lowly position in the foothills of the Government, I may from time to time have thought that my colleagues were chancing their arm. But our roles are now reversed; no wonder the Financial Secretary looks so happy and I look so downright miserable.

We are dealing now with the Tax Credits (Initial Expenditure) Bill which the Government have proposed with completely unspecified demands contained within it. My hon. Friend the Member for Sevenoaks made a reasonable offer. If the Financial Secretary could demonstrate that the £20 million limitation that my hon. Friend was suggesting was not appropriate, he would be prepared to look at it again. That is a generous offer, but I hope that my hon. Friend has made it on the condition that the Financial Secretary is prepared to give a more detailed account of the activities she has in mind which involve the expenditure proposed by the Bill.

Amendment No. 8 seeks a reasonable and responsible requirement—separate accounting in the commissioners' annual report to Parliament. Two separate Government Departments are involved, and surely we should be told after the event—if we are not to be told before—what has happened in detail. This is a point of accountability. This is the classic role of the House of Commons—to undertake to look in detail at the Government's request to the taxpayer, and to express its view.

I am grateful to my hon. Friend the Member for Sevenoaks for giving the lead in the scrutiny process so that we may hear much more detail from the Financial Secretary. I look forward to her explanation, and we will judge on that basis whether we should press this and other amendments as we seek accountability.

Mr. Damian Green (Ashford)

It is important to set the amendments in context; they do not seek to stop the Government doing anything they wish to do. These are in no way wrecking amendments. My hon. Friend the Member for Sevenoaks (Mr. Fallon) has made it clear that we accept the principle of using tax credits rather than benefits if that is seen to be a better way in which to achieve the policy aim. However, there are important principles at stake, and the amendments would improve the Bill and the process of moving towards the working families tax credit. We welcome the principle, but it is important for the Committee to address the question why the Bill would be improved if a specific limit were imposed on the amount of money that can be spent.

Clearly, the amendments would be good for this House. I am a new Member of Parliament, still adjusting to life in this place. I may be forgiven for returning to first principles, and for asking why I am here, why all of us are here and what is the purpose of the House. As my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) made clear, one of the basic purposes of the House is to ensure that the taxpayers' money which the Government extract from all of us is not only spent well and responsibly, but is spent transparently. Ministers must not give themselves powers to spend indefinite amounts on purposes that may or may not be clear. The route to imposing the will of the Commons and to fulfilling that basic function of the House is surely to have as much detail as possible on new areas of expenditure that the Government may be planning.

The amendments would also be good for the Treasury. The Financial Secretary knows better than most that if any spending Department came along with proposals for paving Bills that allowed Ministers to do more or less what they liked without any attempt to control public expenditure, the first people to jump down their throats—before the Opposition parties in Parliament—would be her officials and, one assumes, Treasury Ministers.

It is in the interests of the Treasury that it can demonstrate to the rest of Whitehall that it is not saying, "Do as we say, not as we do." The Treasury should set an example to the rest of Whitehall, and should legislate responsibly to ensure that it allows for as much control and scrutiny of public expenditure as possible. That applies particularly to amendment No. 8, which would make the amount of public expenditure devoted to the matter transparent. The amendment is in the interests of the Treasury and is in line with the Government's alleged policy of increasingly open government. I hope that the Financial Secretary welcomes it.

I hope that no Treasury Minister would ever even think—let alone say at the Dispatch Box—that we are dealing with only £20 million, and that that sum is not particularly serious. One is reminded of a former distinguished Chancellor, Lord Howe, who said that, when talking about public expenditure, people tended to say that there was a billion here and a billion there, but that when the figures were added up, one was soon talking about real money. I would hope that Treasury Ministers would be even more fine-grained than that, and would think that even £20 million—although it is only a drop in the ocean of public expenditure—was a serious amount of money. Therefore, not to have control over it would be a bad thing.

The Bill is like the famous prospectus for the south sea bubble—a proposal was on offer to do things later about which no details could be given at the time. The Bill allows Revenue commissioners to spend sums of money that are not defined on projects that are ill defined. It is not good legislation, so I urge the Financial Secretary to accept the amendments.

Dawn Primarolo

The comments of Conservative Members revolved round misunderstandings of parliamentary procedure—they showed what short memories some hon. Members have. The right hon. Gentleman with the flashy tie—I cannot remember his constituency—

Mr. Forth

Bromley and Chislehurst.

Dawn Primarolo

The right hon. Member for Bromley and Chislehurst (Mr. Forth) at least had the good grace to acknowledge that he did not pay sufficient attention to paving Bills introduced by the Conservative Government—he does not understand what such Bills are supposed to achieve. Another misunderstanding concerned whether there was control over expenditure.

I cannot accept amendments Nos. 4 and 8. Amendment No. 4 would cap the preparatory expenditure that can be incurred, and amendment No. 8 would require the Inland Revenue alone to report the money that it expends under the Bill. I say, with respect, that the amendments are misguided; they add nothing to the Bill.

I remind the Committee that a paving Bill is needed to enable the Inland Revenue and the Department of Social Security to begin to spend money on preparations for the introduction of the tax credits that were announced in the Budget. On Second Reading, I detected considerable agreement on the importance of those preparations, which would enable proper consultation on the Government's policy so that the substantive Bill covered the areas that hon. Members would expect it to.

The Inland Revenue is not authorised to spend money on preparations because the tax credits represent a completely new area for it. The Department of Social Security is not authorised to spend money because the tax credit will eventually be administered by the Inland Revenue—the tax credit does not belong to it, so to speak.

We need a paving Bill because there is a gap in the two Departments' authority to do the work on the substantive legislation—we need to close that gap. As I explained on Second Reading last week, we cannot afford to wait to begin that work. It is important that tax credits are introduced according to the timetable that we announced, so that people can benefit from them as soon as possible. The paving Bill fills the gap and—Conservative Members mentioned accountability—properly brings the matter before Parliament for its approval.

The introduction of such a paving Bill is the right way in which to deal with the unusual situation that we face. The Bill follows the usual procedures, as can be demonstrated by reference to paving Bills introduced by the previous Conservative Government, which related to privatisations—the broad principle was brought before Parliament for endorsement, and the details were brought forward subsequently. Then as now, the paving Bill enabled work to begin on the broad concept because, then as now, there would otherwise be no authority to begin the work.

Conservative Members seem to suggest that the Government are trying to pull a fast one on Parliament. That is absolutely not the case, as past practice, the debate on Second Reading and the information that the Government have made available show. What Conservative Members have said speaks volumes about the previous Government's attitude to Parliament. The Labour Government's attitude is different, and I have fully explained why the Bill is necessary.

Mr. Forth

I hope that the Financial Secretary does not think that we are objecting to the principle of paving measures. Our objection is that there is no limit on the expenditure—we believe that it would not be unreasonable to impose such a limit—and that the Bill contains scant information on the way in which the moneys may be spent. Those are the two lacunae—we are not challenging the principle of paving legislation.

5.15 pm
The First Deputy Chairman

This is an appropriate moment for me to remind the Committee that we should not have Second Reading debates. We are talking about amendments Nos. 4 and 8, which deal with a limit—hon. Members must address their comments to the amendments and to nothing else.

Dawn Primarolo

Thank you, Mr. Martin. The right hon. Gentleman fails to understand that the Bill will not relinquish the proper financial controls on expenditure that apply to all Departments. Departments look for best value for money in all their spending. There is no question of incurring expenditure earlier than necessary.

The purpose of the Bill is to enable the most cost-effective preparations to be made; the Bill is not a licence to spend money. The estimates of costs in the explanatory and financial memorandum are, by necessity, tentative. They give Parliament an idea of the money that the two Departments may need to spend on the preparatory work between Royal Assent to this Bill and enactment of the substantive Bill, which we intend to introduce as soon in the next Session as the legislative timetable permits.

I tell the Committee in all honesty that we cannot say with certainty how soon we shall be able to introduce the substantive Bill, nor can we predict how long it will take before the measures of that Bill become law. The financial estimates are designed to take account of that uncertainty, but—I have never tried to conceal this from hon. Members—they are, finally, only estimates.

A cap on the total allowance is not the way in which to reduce the risk of money being wasted, if that is, indeed, the intention of the amendment. Perhaps Conservative Members' concern is to improve the control of spending by ensuring that no more than £20 million can be spent on the preparatory work, but the amendment would not do that either. There is nothing to be gained from Departments squandering money on matters that will not receive parliamentary approval, but everything to be gained from beginning the preparatory work that will enable the scheme not only to be implemented as early as possible, but to operate effectively.

On amendment No. 8, I ask why the Opposition want only one of the Departments to account specifically for expenditure. If they are concerned that there should be tighter financial controls on the expenditure, I must point out that all the expenditure of both Departments is tightly controlled—the Departments are scrutinised by the National Audit Office and, ultimately, by Parliament through the Public Accounts Committee, as hon. Members are well aware. It is not the case that there will be no accountability for the expenditure unless such accountability is specifically required in the Bill.

If Conservative Members are concerned about the potential waste should the detail of the scheme finally approved by Parliament differ from the assumptions made in the preparatory work, the amendments will not help. I ask the Committee to reject them on the basis that accountability is in place through the normal parliamentary processes. All public money is accountable, and the National Audit Office and the Public Accounts Committee are the watchdogs to ensure that it is.

Estimates provided in the Bill were intended to be helpful and not to be a cap. If Conservative Members want progress on the matter, given the safeguards that they know are in place, they will allow this paving Bill to go through, in the same way as they facilitated their own paving Bills when their party was in office.

Mr. Quentin Davies (Grantham and Stamford)

That explanation is far from satisfactory. The Financial Secretary does not need to explain to us what a paving Bill is; we all know that, and we have said that, in principle, we are not against such Bills. I am not sure that the hon. Lady has recognised that a paving Bill represents a considerable risk to the taxpayer because, should Parliament decide not to proceed with the substantive reform of working families tax credit—we shall have other opportunities to debate the merits of that—the £15 million to £20 million spent on setting up the systems will be lost and will not be recoverable by the taxpayer. That is an extremely good reason for having a limit, which is exactly why my right hon. and hon. Friends tabled the amendment.

The Treasury continues to be committed to cash limits, which the Conservative party introduced in government. If it is possible for the Treasury to have a cash limit on the entire expenditure of the Department for Education and Employment, the national health service or the Ministry of Defence, how come it is not possible to have a cash limit on one particular project that involves setting up systems and hiring and firing people to operate a potential working families tax credit?

The Financial Secretary avoided that issue altogether, and as a result, there is no way that we can withdraw the amendment. We will not press it to a vote, but we will not withdraw it: we will leave it to her either to accept it or to reject it, and to stand the consequences of so doing.

Amendment negatived.

Mr. Fallon

I beg to move amendment No. 1, in page 1, line 6, leave out 'in doing anything which in his or their opinion is appropriate.'. The Bill gives the Secretary of State and the commissioners the most extraordinarily wide discretion. We have already established that the Bill is extremely widely drafted. There is no limit on the expenditure that can be undertaken under it, now that amendment No. 4 has been negatived. There is no restriction on the changes to the two benefits that we were initially told the Bill concerned; in fact, the Bill is not confined to those: as Liberal Democrat Members pointed out last week, it could be used for the transfer of any benefit into an income tax credit.

Above all, as we shall see when we get to amendments Nos. 2 and 10, there is no link between the paving Bill and subsequent legislation, so we must ensure that expenditure authorised under this Bill is properly based on its aims, which should be properly and objectively defined within it.

According to subsection (1), The Secretary of State and the Commissioners … may incur expenditure not simply for the purpose of facilitating the listed matters but in doing anything which in his or their opinion is appropriate for such facilitation. In other words, the test is purely subjective. Almost anything could be classified as facilitating the changes and could have money spent on it.

Last Thursday, the Financial Secretary gave us a glimpse of some of the purposes to which the money may be put—this may strike a chord with my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth)—and said that the Government might want to spend some on the advertising that might be necessary". We know exactly how thin that line could be, with the deluge of brochures, pamphlets and publicity material that are used to promote the Government's policies.

Dawn Primarolo

rose—

Mr. Fallon

I seem to have struck a raw nerve.

Dawn Primarolo

The hon. Gentleman has not struck a raw nerve. I am trying to assist him so that he does not mislead the Committee. In fact, it was the Chairman of the Social Security Committee, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood), who asked me to clarify that point, and I told him that I was talking not about advertising the working families tax credit but about investigating how we could ensure maximum take-up. The record will show that that is what I said.

Mr. Fallon

I have the record to hand. The Financial Secretary specifically said: The expenditure that is requested in the paving Bill is to cover the costs … It covers, mainly, information technology changes; the provision to the public of information about the new tax credits; the advertising that might be necessary".—[Official Report, 7 May 1998; Vol. 311, c. 889.] We are getting into the Foreign and Commonwealth Office school of ministerial answers.

The plain fact is that subsection (1) has been far too loosely drafted. If the expenditure is appropriate for facilitation, it should be appropriate objectively, as specified in the legislation, and not determined simply by the opinion of the Secretary of State or the commissioners.

Dawn Primarolo

I have the record in front of me. I said: If I have given that impression, I am grateful to the hon. Gentleman for pointing it out. I was speaking about the development work to ensure proper take-up."—[Official Report, 7 May 1998; Vol. 311, c. 889.] That is a clear answer, on the record. Conservative Members do not want to oppose the working families tax credit, because they know how popular the concept is and how important the development work will be. That was especially clear from the points that they made about businesses on Second Reading. They try to misquote and twist what is said, and I hope that the record is now correct and that the hon. Member for Sevenoaks (Mr. Fallon) will acknowledge the fact.

I do not need to repeat the purpose of the Bill, but we need to point out again to Conservative Members—they have amazingly short memories—that accountabilities are imposed on Departments to ensure the proper scrutiny of the spending of taxpayers' money. Opposition Members want to give the impression that there will be a pot of money that Departments dip into without any check, but they know full well that both Departments need to spend the money to develop the working families tax credit and that the paving Bill does not affect the controls on that expenditure.

Both Departments will be accountable for the money that they spend on the project in the same way as they are normally accountable, to their permanent secretaries and to the chief accounting officer. The National Audit Office and the Public Accounts Committee are also there to scrutinise expenditure. There is no need for the amendment.

If the hon. Member for Sevenoaks is so keen to ensure the smooth introduction of the working families tax credit, both for those who will receive it and to ensure that business is properly consulted and the bureaucracy kept to a minimum, he should withdraw the amendment.

Mr. Fallon

That is not a particularly encouraging answer, but in view of the need to get on to the other amendments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Quentin Davies

I beg to move amendment No. 7, in page 1, line 15, at end insert— '(e) an assessment of the compliance costs involved in (c) and (d).'. The amendment provides for an assessment to be made of the compliance costs involved in the whole exercise—not merely the paving exercise but the working families tax credit exercise—which should be assessed as part of the preparations in the coming months. That is enormously important, because the public and businesses have not yet appreciated that the new working families tax credit, which is to be administered by the Inland Revenue rather than the Benefits Agency, will in fact be run by businesses, which will bear the real costs. This is one burden in the never-ending list of burdens that the new Labour Government are imposing on business, whether deliberately or simply out of negligence—or sheer ignorance of how businesses are run and the problems that such administrative and bureaucratic impositions can create for business, and small businesses in particular. We face the prospect of new trade union regulation, minimum wage legislation and a whole range of new burdens on businesses. The Bill will impose one more fairly major burden.

5.30 pm

As everyone knows, businesses in this country already bear the bulk of the administrative costs of running the income tax system. Under PAYE, which is administered by employers, the Inland Revenue has to do little other than receive a series of cheques. All the administrative work, deductions from salaries and so forth are done by employers, and that is a great burden on them. Over the years, they have had to face it and have put in the systems to cope. Employers, particularly small employers, complain very much about that, and rightly so.

The Bill will place a whole new burden on businesses, comparable to that placed on them by the introduction of PAYE but much greater. It will not merely double the burden that businesses have to carry as tax collectors for the state, but be a multiplication of that burden. It will impose a greater burden, first, because many details will have to be recorded that businesses did not have to bother about before.

I am sure that the Financial Secretary is about to tell the Committee that the Benefits Agency will make the assessment then inform employers how the tax coding must be changed for the individual. The fact is, however, that people's family circumstances will now be relevant to the amount of money deducted from or added to their wages in the form of working families tax credit, so a range of factors that have not been taken into account in the calculation of tax codes will have to be considered. Since there will be more factors, there will also be more changes. More computer entries will be required and employers will need more complicated systems with more complicated software to cope. Things will go wrong, and there will be greater administrative and managerial burdens and problems to be resolved. That is a considerable charge on business, particularly small businesses.

Mr. Forth

I hope that I am not anticipating my hon. Friend's point—if I am, I look forward to his clarification—but I am anxious that the amendment is too permissive and not sufficiently mandatory. Clause 1 states that any of the following things may be done, and lists them (a) to (d). The amendment adds (e), which is an assessment of the compliance costs involved", but as I understand it that assessment will not be required. Does my hon. Friend think that the amendment is strong enough in that regard?

Mr. Davies

My right hon. Friend has a strong point. When the substantive Bill is before us, he might like to table a stronger amendment. We are showing how reasonable the Conservative Opposition are. We are starting the discussion of the concept of working families tax credit positively, making tentative suggestions and trying to be as helpful as we can to the Government. My right hon. Friend does not believe in a softly, softly approach when dealing with the Labour party, and I dare say that experience will prove him right, but we are starting the Parliament with a relatively softly, softly approach. I can assure him that, if it does not work, we shall return to the harder line that he suggests.

Small businesses have not yet focused on the burden on employers. When they do, it will be a nightmare prospect. What is more, the Bill will open up a new dimension in the relationship between employers and employees. Even if employees do not directly have to inform employers of a change in family circumstances—divorce, marriage, children, the people with whom they live or with whom they cease to live—those details will be available to employers, because they will be evident from the change in the tax codes that the Benefits Agency provides.

Finally and most significantly, an enormous potential compliance cost is involved on which we must have assurances from the Government this afternoon. At the moment, net pay is less than gross pay. If an employee is paid £200 a week in gross pay, some of it will be paid to the national insurance fund and to the Inland Revenue through PAYE, and the balance will go directly to the employee. With the working families tax credit, in certain cases net pay will be more than gross pay, so the employer will have to pay out more than the salary or wage of the employee in question, and the difference will presumably be refunded subsequently by the Benefits Agency. That will create a significant cash flow cost for employers as well as a considerable financing burden.

I have two questions for the Financial Secretary. First, by what measures will she compensate employers for that cost? I take it that they will be able to charge the Benefits Agency interest, which should fully compensate them for their financing costs. I also take it that that will not be less than the working capital cost that the employer pays when borrowing money from the bank, as that would be totally unfair and a new tax on employers.

Secondly, what will be the position of employers who have already reached their borrowing limit with the bank? The requirement imposed by the Government through this measure, which is essentially for additional working capital, may push them through the limit and cause severe cash flow constraints, which might undermine the viability of the business. What assurances can the hon. Lady give the Committee on those matters? They are of the greatest economic importance and importance to businesses, as well as to employees, as the most perverse result of the measure might be, as I am sure she would agree, to reduce employment and create a major deterrent to employers to take on people who are, or look as though they are likely to be, the beneficiaries of working families tax credit.

Dawn Primarolo

I like the hon. Member for Grantham and Stamford (Mr. Davies)—I sincerely hope that that does not damage his political future—

Mr. Forth

Yes, it does.

Dawn Primarolo

I am sorry. It is a shame that the hon. Member for Grantham and Stamford did not read the Second Reading debate before he commented on cash flow, burdens on employers and the need to keep compliance costs to the minimum, which were points made by his hon. Friend the Member for Sevenoaks (Mr. Fallon) in that debate. I realise that I am not allowed to repeat the arguments and will merely refer the hon. Gentleman to columns 886 and 887 of the Second Reading debate, which deal with compliance costs, working with employers and the need to keep those costs low.

On cash flow, I pointed out to the House that procedures are in place to deal with a similar situation to the one that the hon. Gentleman described in respect of statutory sick pay and maternity pay. Part of the reason for the paving Bill to start consultation, particularly with employers, is to find whether similar procedures would be appropriate for tax credits, and how best they should be administered. The measure deals with exactly the points raised by the hon. Member for Grantham and Stamford on the involvement of business and whether there are extra compliance costs.

The right hon. Member for Bromley and Chislehurst (Mr. Forth) got it in one when he mentioned the problem with the amendment and gave the reason why I am going to ask the Committee to reject it. It gives us powers to incur the expenditure but does not oblige us to undertake a compliance cost assessment. That is clearly not what the hon. Member for Grantham and Stamford intended. It is therefore defective and does not achieve its objectives.

The project team of the Inland Revenue and the Department of Social Security has already met representatives of the business community, and will regularly meet and consult them, to ensure that we minimise employer compliance costs. That has to be a major part of our discussions with employer groups, payroll organisations and others. When the Bill to introduce working families tax credit comes before the House, hon. Members would expect discussions on compliance to be part of the debate. I ask the Committee to reject the amendment—first, because it is defective and does not achieve what its mover said he wanted it to; and, secondly, because what it is intended to achieve will be done anyway. No amendment is necessary

Mr. Fallon

I am disappointed and hurt that I did not receive a sign of affection similar to that conveyed by the Financial Secretary to my hon. Friend the Member for Grantham and Stamford (Mr. Davies). I see that I shall have to work harder whether in this Committee or in that to which we shall shortly return upstairs.

This was a mild amendment, as the Financial Secretary said. It would not make the compliance costs mandatory but it would at least introduce them into the Bill and ensure that they were discretionary. She keeps saying that she intends to minimise the overall cost to employers, but she gave us no idea of the extent to which she recognised the cash flow problems of businesses, in addition to the administrative problems.

As my hon. Friend the Member for Grantham and Stamford said, in many companies, the net pay of employees who receive the credit will be higher than their gross pay. The first payment will have to be made at least 19 days before the other payment. There will be a negative cash flow impact on business and a positive one on the Treasury. I think that there is a case for compensating employers who have to live with that cash flow impact. It is certainly a matter to which we shall return when the major legislation comes before the House. In the meantime, because of the Financial Secretary's failure to recognise the additional burden on business, I am not minded to withdraw the amendment.

Question put, That the amendment be made:—

The Committee divided: Ayes 119, Noes 227.

Division No. 276] [5.43 pm
AYES
Ainsworth, Peter (E Surrey) Brazier, Julian
Allan, Richard Browning, Mrs Angela
Ancram, Rt Hon Michael Bruce, Ian (S Dorset)
Arbuthnot, James Bruce, Malcolm (Gordon)
Baldry, Tony Burnett, John
Bercow, John Burns, Simon
Beresford, Sir Paul Burstow, Paul
Blunt, Crispin Butterfill, John
Boswell, Tim Cable, Dr Vincent
Bottomley, Peter (Worthing W) Chapman, Sir Sydney (Chipping Barnet)
Brady, Graham
Chope, Christopher Laing, Mrs Eleanor
Clappison, James Lait, Mrs Jacqui
Clark, Rt Hon Alan (Kensington) Letwin, Oliver
Clifton-Brown, Geoffrey Lidington, David
Collins, Tim Lilley, Rt Hon Peter
Cormack, Sir Patrick Lloyd, Rt Hon Sir Peter (Fareham)
Cotter, Brian Loughton, Tim
Cran, James Luff, Peter
Curry, Rt Hon David MacGregor, Rt Hon John
Davey, Edward (Kingston) McIntosh, Miss Anne
Davies, Quentin (Grantham) Maclean, Rt Hon David
Davis, Rt Hon David (Haltemprice) McLoughlin, Patrick
Day, Stephen Malins, Humfrey
Duncan, Alan Maples, John
Duncan Smith, Iain Moss, Malcolm
Emery, Rt Hon 4Sir Peter Norman, Archie
Evans, Nigel Ottaway, Richard
Fabricant, Michael Pickles, Eric
Fallon, Michael Prior, David
Forth, Rt Hon Eric Randall, John
Foster, Don (Bath) Redwood, Rt Hon John
Fox, Dr Liam Rendel, David
Fraser, Christopher Robathan, Andrew
Garnier, Edward Robertson, Laurence (Tewk'b'ry)
Gibb, Nick Ruffley, David
Gillan, Mrs Cheryl Russell, Bob (Colchester)
Goodlad, Rt Hon Sir Alastair St Aubyn, Nick
Gorman, Mrs Teresa Sanders, Adrian
Gray, James Sayeed, Jonathan
Green, Damian Simpson, Keith (Mid-Norfolk)
Greenway, John Smith, Sir Robert (W Ab'd'ns)
Spicer, Sir Michael
Grieve, Dominic Stanley, Rt Hon Sir John
Hamilton, Rt Hon Sir Archie Steen, Anthony
Hammond, Philip Streeter, Gary
Hancock, Mike Swayne, Desmond
Harvey, Nick Syms, Robert
Hawkins, Nick Taylor, Ian (Esher & Walton)
Hayes, John Tredinnick, David
Heald, Oliver Trend, Michael
Heathcoat-Amory, Rt Hon David Tyrie, Andrew
Horam, John Welsh, Andrew
Howard, Rt Hon Michael Whittingdale, John
Howarth, Gerald (Aldershot) Wilkinson, John
Hughes, Simon (Southwark N) Willis, Phil
Hunter, Andrew Woodward, Shaun
Jack, Rt Hon Michael Yeo, Tim
Jackson, Robert (Wantage) Young, Rt Hon Sir George
Johnson Smith, Rt Hon Sir Geoffrey
Tellers for the Ayes:
King, Rt Hon Tom (Bridgwater) Mr. Nigel Waterson and
Kirkbride, Miss Julie Sir David Madel.
NOES
Ainsworth, Robert (Cov'try NE) Burden, Richard
Alexander, Douglas Burgon, Colin
Allen, Graham Butler, Mrs Christine
Anderson, Donald (Swansea E) Byers, Stephen
Armstrong, Ms Hilary Campbell, Alan (Tynemouth)
Ashton, Joe Campbell, Mrs Anne (C'bridge)
Atherton, Ms Candy Caplin, Ivor
Atkins, Charlotte Casale, Roger
Barnes, Harry Chapman, Ben (WirralS)
Battle, John Chaytor, David
Beard, Nigel Clapham, Michael
Beckett, Rt Hon Mrs Margaret Clark, Rt Hon Dr David (S Shields)
Bennett, Andrew F Clark, Paul (Gillingham)
Berry, Roger Clarke, Charles (Norwich S)
Best, Harold Clarke, Tony (Northampton S)
Betts, Clive Clelland, David
Blizzard, Bob Clwyd, Ann
Boateng, Paul Coffey, Ms Ann
Bradley, Keith (Withington) Cohen, Harry
Bradshaw, Ben Coleman, Iain
Brinton, Mrs Helen Colman, Tony
Buck, Ms Karen Cook, Frank (Stockton N)
Cooper, Yvette King, Ms Oona (Bethnal Green)
Corbett, Robin Kingham, Ms Tess
Corbyn, Jeremy Laxton, Bob
Cranston, Ross Leslie, Christopher
Crausby, David Levitt, Tom
Cryer, Mrs Ann (Keighley) Lewis, Terry (Worsley)
Cryer, John (Hornchurch) Linton, Martin
Cunningham, Jim (Cov'try S) Livingstone, Ken
Dalyell, Tam Lock, David
Darting, Rt Hon Alistair Love, Andrew
Davey, Valerie (Bristol W) McAvoy, Thomas
Davies, Geraint (Croydon C) McCabe, Steve
Dean, Mrs Janet McCartney, Ian (Makerfield)
Denham, John McDonagh, Sbbhain
Dismore, Andrew Macdonald, Calum
Dobbin, Jim McDonnell, John
Dobson, Rt Hon Frank McIsaac, Shona
Doran, Frank Mackinlay, Andrew
Dowd, Jim McNulty, Tony
Drew, David McWalter, Tony
Eagle, Angela (Wallasey) McWilliam, John
Eagle, Maria (L'pool Garston) Mahon, Mrs Alice
Edwards, Huw Mallaber, Judy
Ellman, Mrs Louise Marshall, David (Shettleston)
Ennis, Jeff Marshall, Jim (Leicester S)
Field, Rt Hon Frank Meacher, Rt Hon Michael
Fisher, Mark Meale, Alan
Fitzpatrick, Jim Merron, Gillian
Fitzsimons, Lorna Michael, Alun
Follett, Barbara Michie, Bill (Shef'ld Heeley)
Galloway, George Milburn, Alan
Gapes, Mike Miller, Andrew
Gardiner, Barry Moffatt, Laura
George, Bruce (Walsall S) Moran, Ms Margaret
Gerrard, Neil Morley, Elliot
Gibson, Dr Ian Mudie, George
Gilroy, Mrs Linda Mullin, Chris
Godsiff, Roger Norris, Dan
Goggins, Paul O'Brien, Mike (N Warks)
Golding, Mrs Llin O'Hara, Eddie
Gordon, Mrs Eileen Organ, Mrs Diana
Grant, Bernie Palmer, Dr Nick
Griffiths, Jane (Reading E) Pearson, Ian
Hall, Mike (Weaver Vale) Pendry, Tom
Hall, Patrick (Bedford) Perham, Ms Linda
Hamilton, Fabian (Leeds NE) Pickthall, Colin
Healey, John Pike, Peter L
Henderson, Ivan (Harwich) Pope, Greg
Heppell, John Pound, Stephen
Hesford, Stephen Prentice, Ms Bridget (Lewisham E)
Hewitt, Ms Patricia Prentice, Gordon (Pendle)
Hill, Keith Primarolo, Dawn
Hodge, Ms Margaret Prosser, Gwyn
Hope, Phil Purchase, Ken
Hopkins, Kelvin Rammell, Bill
Howarth, Alan (Newport E) Rapson, Syd
Howarth, George (Knowsley N) Reed, Andrew (Loughborough)
Howells, Dr Kim Robinson, Geoffrey (Cov'try NW)
Hughes, Ms Bevertey (Stretford) Rooker, Jeff
Hurst, Alan Ross, Ernie (Dundee W)
Hutton, John Ruddock, Ms Joan
Iddon, Dr Brian Russell, Ms Christine (Chester)
Illsley, Eric Ryan, Ms Joan
Jackson, Helen (Hillsborough) Sawford, Phil
Jamieson, David Sedgemore, Brian
Jenkins, Brian Shaw, Jonathan
Johnson, Alan (Hull W & Hessle) Sheldon, Rt Hon Robert
Jones, Ms Jenny (Wolverh'ton SW) Simpson, Alan (Nottingham S)
Singh, Marsha
Jones, Dr Lynne (Selly Oak) Skinner, Dennis
Jowell, Ms Tessa Smith, Rt Hon Andrew (Oxford E)
Kaufman, Rt Hon Gerald Smith, Angela (Basildon)
Keeble, Ms Sally Smith, Miss Geraldine (Morecambe & Lunesdale)
Kennedy, Jane (Wavertree)
Khabra, Piara S Smith, John (Glamorgan)
King, Andy (Rugby & Kenilworth) Soley, Clive
Southworth, Ms Helen Vaz, Keith
Stevenson, George Vis, Dr Rudi
Stewart, David (Inverness E) Walley, Ms Joan
Stewart, Ian (Eccles) Ward, Ms Claire
Stinchcombe, Paul Wareing, Robert N
Strang, Rt Hon Dr Gavin Watts, David
Stringer, Graham White, Brian
Stuart, Ms Gisela Whitehead, Dr Alan
Sutcliffe, Gerry Wicks, Malcolm
Taylor, Rt Hon Mrs Ann (Dewsbury) Williams, Alan W (E Carmarthen)
Wood, Mike
Taylor, David (NW Leics) Woolas, Phil
Thomas, Gareth R (Harrow W) Wright, Anthony D (Gt Yarmouth)
Timms, Stephen Wright, Dr Tony (Cannock)
Tipping, Paddy Wyatt, Derek
Todd, Mark
Touhig, Don Tellers for the Noes:
Truswell, Paul Janet Anderson and
Twigg, Stephen (Enfield) Mr. Kevin Hughes.

Question accordingly negatived.

Mr. Fallon

I beg to move amendment No. 2, in page 1, leave out lines 17 and 18.

The First Deputy Chairman

With this, it will be convenient to discuss amendment No. 10, in page 1, line 20, at end insert— '(2A) Subsection (1) above shall apply to expenditure on any of the things there mentioned for a period of twelve months after this Act comes into force, but shall not apply thereafter in respect of any of those things unless a Bill giving, or purporting to give, approval to that thing has been read a second time in the House of Commons.'.

Mr. Fallon

With this last group of amendments, we address the serious issue of the lack of a relationship between the Bill and the legislation it presages. We have been told time and again that the Bill is a paving Bill, yet there is nothing in it to link it to any subsequent legislation. Indeed, clause 1(2)(a) specifically states that the powers in the Bill shall be exercisable whether or not Parliament has given any approval to the changes that are being introduced. That means that all the expenditure and administrative effort could be undertaken, but the changes themselves—the replacement of benefits with tax credits—could be postponed or even cancelled.

That is an extraordinary provision. Presumably, it has been put in the Bill to remove any doubt about whether the powers need to be linked to any subsequent legislation. Amendment No. 2 would delete that provision, and amendment No. 10 would introduce the link that is necessary to ensure that the Government can spend money on preparation, get on with consulting business and install the equipment that will be needed, but that, sooner or later—we suggest slightly sooner—the subsequent legislation must be presented to the House.

Amendment No. 10 has been reasonably carefully drafted to ensure that the Government can at least get going and spend some of the money without having to wait for the subsequent legislation to be passed—indeed, they do not even have to depend on that legislation being passed—but that they have to present to the House and obtain Second Reading for a Bill to establish and give statutory authority to the various changes described in subsection (1). That is essential. Otherwise, the Government could spend millions, even billions, of pounds on a particular course and decide in the end not to make the changes. If this is a paving Bill, it should be linked properly to the legislation that will follow it.

Mr. Forth

I am grateful to my hon. Friend the Member for Sevenoaks (Mr. Fallon) for drawing this matter to the attention of the Committee. When I first saw clause 1(2)(a), I could not believe my eyes. Any purportedly serious legislation that states: The powers … shall be exercisable whether or not Parliament has given any approval on which any of the things there mentioned depends makes one pause for thought—to put it mildly. I shall say this for the paragraph—and these are my only words of welcome for it: it is absolutely consonant with the spirit of the rest of the Bill. As Opposition Members said earlier, it contains no detail whatsoever and is a catalogue of blank cheques, unconstrained powers, and unidentified aims and objectives. However, in the context of the parliamentary process, subsection (2)(a) is perhaps the most worrying aspect.

6 pm

That brings us back to what we said when discussing a previous amendment. As my hon. Friends have noted, we are reasonably content with the broad objectives of the Bill—there is no dispute about that. However, those objectives are stated in the broadest possible manner and contain no detail at all. That makes things difficult for responsible Members of Parliament on the Government or Opposition sides. I am delighted to see that one distinguished Government Back Bencher has joined the debate—I hope that we shall hear from the hon. Member for Bethnal Green and Bow (Ms King) shortly. I apologise, as I can see another Government Back Bencher. I think that I see two Labour Members packing the Chamber—

The First Deputy Chairman

Order. I shall not allow the right hon. Gentleman to get away with that. He should speak to the amendment and not refer at length to who is in the Chamber. He is in the Chamber; I am in the Chamber; and I am listening to him.

Mr. Forth

We make a great double act, Mr. Martin, and I am grateful for that.

The Bill lacks any details that provide a reference point for Members of Parliament—whether numerous or not—to scrutinise, question and hold the Government to account. The more vague the Bill and the less detail it contains, the more difficult it becomes to promote accountability, which is primarily the responsibility of the official Opposition. Subsection (2)(a) goes further than that by seeking to extend the powers in clause 1 and becoming completely open-ended and unspecified.

That is why I welcome the amendment, which seeks to remove subsection (2)(a) altogether. I hope that the Minister will explain why it was deemed necessary to include that provision in the Bill. I cannot for the life of me guess what the justification could be. At the very least, the Minister owes us a comprehensive explanation of the necessity of the provision and why it has been drafted in a way that arouses our suspicions. If the Government wanted to take the Opposition with them, one would think that they would frame measures in such a way as to provide some reassurance. However, the Government seem to be doing the opposite. Bills that are drafted in this way cause unease and suspicion among hon. Members, which is most regrettable. I hope that the amendment will lead to a full explanation, if nothing else.

That brings me to the second amendment that my hon. Friend introduced so ably. There is a risk that I may part company from him here. If I am reading the amendment correctly—this is also how I interpreted his explanation—it suggests that a mere Second Reading of subsequent legislation would provide a trigger for expenditure. I am not sure what was in my hon. Friend's mind when he drafted the amendment, but that strikes me as being a rather unusual approach, and I am not too happy with it. It is at odds with the argument that I am making—a fact of which I am rather conscious, so I shall point that out before anyone else does.

I find myself in the unusual position of having difficulty understanding why my hon. Friend has included that provision in his amendment. It is somewhat at odds—I invite my hon. Friend to correct me if I am wrong—with the argument that I am making about detail and accountability. If my hon. Friend is saying that a mere Second Reading would enable further expenditure to take place without Parliament knowing the details of that expenditure, my fear is that it would lead to a lack of accountability, and I am arguing that the Bill should be more accountable.

If the amendments are put to the vote, I might ask for them to be put separately. I shall be able to support whole-heartedly my hon. Friend's first amendment, which hits the nail on the head. Regrettably, unless I hear from my hon. Friend the Member for Sevenoaks or my hon. Friend the Member for Grantham and Stamford (Mr. Davies), I am reluctant to support amendment No. 10 at this stage because I fear that it is at odds with the thrust of my argument this afternoon.

Mr. Malcolm Bruce (Gordon)

I rise briefly to echo the concerns expressed about subsection (2)(a). I agree with the right hon. Member for Bromley and Chislehurst (Mr. Forth) that the phrase that appears in the Bill is quite extraordinary. I suppose that it is bold to include such an expression in legislation, because basically it says, "Please give us an unspecified amount for an unspecified time to do something that may not subsequently receive the approval of Parliament". My hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood), in his capacity as Chairman of the Social Security Select Committee, referred specifically to that on Second Reading.

While I do not have the same reservations as some Conservative Members about the Bill's ultimate objective, all hon. Members recognise that, although the working families tax credit and connecting benefit with the wage packet as a reward for work are good ideas, there are many difficulties associated with the measure that the Government have been unable to explain to the Committee. It is fair for the Government to say that they must make preparations. I do not object to a Bill that says that the Government must make preparations in order to provide information that will ultimately form the basis of more substantial expenditure. However, that is a little difficult to take when the Government will not define the time scale or the amount that they propose to spend or make the measure in any way conditional on Parliament's approving the subsequent legislation.

Some people may believe that this is an academic argument—they will look at the Government's majority and say, "They have a majority, so what is the problem?" There are two problems. The first involves a fundamental principle: either the House operates as a democratic Chamber or it does not. Whatever the size of a Government's majority, they should not presume that all their legislation will be passed. Secondly—and more to the point—the Government may find that although there is much support for the principle behind their plans, the detail is substantially different.

In those circumstances, I believe that it is not unreasonable for the Committee to apply some defining framework to this legislation. I understand the concerns expressed by the right hon. Member for Bromley and Chislehurst. I suspect that he does not want one penny to be spent on preparations: he views amendment No. 10 as effectively sanctioning that expenditure and simply putting a time limit on it. I have no problem with that. As I recall, my hon. Friend the Member for Roxburgh and Berwickshire was concerned about the haste with which the Bill was being introduced, and suggested that more detail should be in evidence before we give the Government a blank cheque.

For those reasons, and not because I oppose the Government's aims, I consider the amendments pertinent. I hope that the Financial Secretary will recognise that there is genuine concern that we are being asked to approve a measure which might go out of control. I am sure that she will understand that if she or any other Minister has to tell the House in a year's time that the Government have spent £40 million and still do not have the answers, the record of today's debate will be quoted back at them.

Mr. Green

I am grateful to follow two such distinguished and experienced parliamentarians. Their remarks have removed one of the doubts in my mind. When I read the words covered by amendment No. 2, I was puzzled about what they meant. As a new Member, I could not understand how a Government could, even in a paving Bill, claim powers that would be exercisable whether or not Parliament has given approval. I attributed that to my own inexperience, but I now know that others more experienced than I am find the proposal extraordinary.

How could the powers be exercisable if Parliament did not approve the measures designed to follow this paving Bill and bring in the tax credit system? I hope that the Financial Secretary will explain that. On Second Reading, it was pointed out that the powers that the Government are taking under the Bill could be spread to almost any part of the benefits system. One suspects that that is the intention—the Government are introducing a way of allowing greater power to be exercised to change the balance between benefits and tax credits, without returning to the House.

Apart from the arguments in principle that were deployed by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) and the hon. Member for Gordon (Mr. Bruce), there is a practical objection. Any legislation that allows such latitude to a Government must be suspect. One of the possible side-effects of the Bill is that the tax credit could have a significant effect on the public spending figures and particularly the public borrowing figures.

As the money is transferred from public expenditure to tax credits, there will be an effect on some of the most important macro-economic statistics, which—not to put too fine a point on it—will look better, even though, in reality, nothing will have changed. If the Government are giving themselves the power to do that over a wide front, one would have to be naive to assume that that power would not be extremely tempting for a Government who had run into trouble with their public borrowing.

The Government already have form in terms of attempting to take powers without proper respect for parliamentary scrutiny. It is therefore understandable that many Opposition Members are suspicious. Bagehot famously divided the constitution into the efficient and the dignified parts. I sometimes think that the Government have invented a third category—the inefficient part of the British constitution. They regard the House of Commons as inefficient because it can stand in the way of administrative fiat. That is what the Government dislike, but, as that is the purpose of Parliament, we must assert the powers of House at every opportunity, as amendment No. 2 does.

I agree with my right hon. Friend the Member for Bromley and Chislehurst that amendment No. 10 does not sit easily in a group with amendment No. 2, as it approaches the problem in a different way. Amendment No. 10 can be considered a backstop. If the Government are not minded to accept amendment No. 2, which would remove the problem caused by the clause as drafted, amendment No. 10 would give the House a chance to return to the matter after a year and take a view on whether the Government should be allowed to proceed as they intend.

Mr. Forth

Does my hon. Friend agree that even if a Bill were given a Second Reading, we could not be certain whether it sanctioned a particular level of expenditure, as that might come out only later, in Committee? Does my hon. Friend see the danger in that?

6.15 pm
Mr. Green

I agree; that is important. If I had to choose between the amendments, I prefer amendment No. 2. Amendment No. 10 would be acceptable, though less good.

The hon. Member for Gordon said that the argument may seem academic, but there are practical implications. We already know that the Government's legislative timetable for the year is in trouble. They are holding over the House the nuclear threat of sitting into August. It is not inconceivable that legislation planned for the next Session may not emerge in the Queen's Speech—

The First Deputy Chairman

Order. The hon. Gentleman is going far too wide of the amendment.

Mr. Green

I am grateful for that guidance, Mr. Martin.

The 12-month rule in amendment No. 10 may be practically relevant, even if the amendment is inadequately drafted, as it may well be more than 12 months before the legislation that will follow this paving Bill emerges.

The argument would be important even if it were simply academic, because of the principle of enforcing proper parliamentary procedure and scrutiny, but it may have a practical point. The overall point illustrated by the amendments is that in a peculiar way, this is a paving Bill that does not pave. If nothing happens afterwards, the Bill proceeds anyway. One of the effects of the amendments, especially amendment No. 2, would be to make it a proper paving Bill. Something must follow it for the Bill to have effect. For those reasons, I support the amendments.

Dawn Primarolo

I remind the Committee that the Government are publicly committed to introducing the new tax credits from October 1999. The paving Bill is the first step in ensuring that that will happen. As I said with regard to all the amendments and on Second Reading, the purpose of the Bill is to enable the two Departments to begin the necessary preparatory work now, in order to meet that timetable. I have also said that the substantive legislation will be presented to enable us to fulfil our plans and meet the timetable for introduction. On Second Reading, I made it clear that the Government were aiming for the next Session.

Hon. Members cannot have it both ways. They cannot call on the Government to consult properly, to consider the options, and not to take Parliament for granted or make assumptions about what may follow, and then propose amendments Nos. 2 and 10, which would do exactly that.

The hon. Member for Gordon (Mr. Bruce) asked a number of questions and argued the points made by his hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) on Second Reading. In answer to his first question, the purpose of the Bill is to give the Government authority to undertake the development and consultation that every hon. Member who has spoken in the debate so far has recognised is necessary. It would be a miracle if we could settle on only one option and develop it. We need to explore the options. That is what consultation is about. Therefore, amendment No. 10, which introduces restrictions, is unhelpful.

The hon. Gentleman then pointed out how much this would cost. I draw his attention to the financial effects of the Bill and remind him that, inevitably, these are estimates. We have provided the Committee with the best estimate. Conservative Members repeatedly seem to forget that the Bill does not affect the controls on public expenditure and the need for the Department to be financially accountable to the Public Accounts Committee, the National Audit Office and its accounting officer. There is no question of a lack of accountability.

I do not think that the hon. Member for Gordon is suggesting that the Government should delay the introduction of the working families tax credit in opposing this paving Bill. Nor are other Opposition Members. They would not stand a cat in hell's chance on the doorstep of families who want to receive child care credits and understand how much the working families tax credit will help them to tackle poverty and support them in work if they explained, "We denied you all this money because we thought we should take a year longer." The Government's request is reasonable. We want a paving Bill so that we can undertake consultation and development work. That will ensure that when we introduce the legislation we have the tax credits ready and the House is fully informed. I ask hon. Members to reject amendment Nos. 2 and 10 because the controls they seek are unnecessary. The Government's undertakings are clear. Hon. Gentlemen should support the Government and ensure that the legislation is consulted on, well drafted and introduced on time.

I have one further point to make. It has been drawn to my attention that it was remiss of me not to wish the hon. Member for Sevenoaks (Mr. Fallon) a happy birthday. I do so now. In the good spirit in which I know he will celebrate his birthday, I am sure he will support the Government on Third Reading.

Mr. Quentin Davies

The Financial Secretary has great charm and I am sure that my hon. Friend the Member for Sevenoaks (Mr. Fallon) is touched at having his birthday remembered in this fashion and, indeed, recorded by Hansard for the world to know about tomorrow morning.

Once again, the hon. Lady has not dealt properly with the thrust of these important amendments. Their importance was well brought out by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), my hon. Friend the Member for Ashford (Mr. Green) and the hon. Member for Gordon (Mr. Bruce). Both my right hon. Friend and the hon. Member for Gordon used the same phrase—a blank cheque. That is what the Bill is all about, and the House of Commons should not tolerate a blank cheque. A blank cheque will be forced on the Committee if we are not careful tonight.

My right hon. and hon. Friends deserve a considered response to the point they raised in relation to amendment No. 10. They asked why the Bill should be confirmed as a paving Bill only if the substantive Bill is read a Second time. The implication was: why did we not include in the amendment a reference to Third Reading or Royal Assent? Once again, my right hon. Friend demonstrates that he thinks that it would be appropriate for the Opposition to take a hard-nosed stance and to show no trust in the new Labour Government. Perhaps he feels that we have been excessively conciliatory in our dealings with them.

The essential point is that we are concerned with the extraordinary pretentiousness of clause 1(2)(a) which states that the powers shall be exercisable whether or not Parliament has given any approval on which any of the things there mentioned depends". We thought that at the very least we should make it clear that if the substantive Bill is not introduced or fails on Second Reading, and Parliament clearly has no general intention to proceed along this line, the paving Bill and the powers that it confers on the Government would be brought to an end. That is the least that we can expect from the Government. It is perfectly reasonable of my right hon. Friend to think that we might go for rather more, but I am sure he agrees that we should expect at least that.

I must ask the Financial Secretary what will happen if she introduces the substantive Bill, as she has undertaken to do—it is interesting that we have already have a commitment for the Queen's Speech this autumn—but it fails to receive a Second Reading. What will happen if the House decides not to proceed in the direction set out by the Chancellor of the Exchequer in his Budget speech? What will happen to the powers in the paving Bill? We must have an answer to that before we take matters any further tonight. While that key question is in the hon. Lady's mind and before she can avoid it, I shall sit down and listen with interest to her answer.

Dawn Primarolo

I have explained why a paving Bill is required and why we need these powers for the two Departments to undertake the consultation and development work. It is the Government's clear intention to introduce legislation within the timetable. Given the hon. Gentleman's keen interest in that timetable, I am sure that he will do everything possible to ensure the legislation's speedy passage through the House.

Mr. Fallon

I assure the Financial Secretary that we have ensured that the legislation will go through the House reasonably smoothly. Indeed, we have been co-operating to that effect by agreeing to take all the remaining stages tonight, but she cannot expect this legislation to pass without any scrutiny whatever.

The hon. Lady provided only two justifications for the absence of any connection between this Bill and the legislation which will follow. First, she said that there was a public commitment to produce this legislation. I remind her that the Government made a public commitment to produce a Green Book at the time of the Budget, but that did not appear. They made a public commitment to produce a White Paper on union recognition last autumn and to produce a defence review by this spring, but those documents have not yet appeared. It is no use her simply saying that the Government are committed to doing this. We believe that our amendment would secure the necessary link.

Secondly, the hon. Lady suggested that whatever money was spent, there was some accountability. It was the Labour party which hammered the last Conservative Government about the sum spent in preparation for the community charge. All that money was similarly accountable for to Parliament. It was spent, and she, perhaps rightly, criticised how much was spent. Therefore, that suggestion will not wash.

The hon. Lady has not answered the concern we raised in amendment No. 2 or explained why this curious paragraph is necessary. She has not justified lines 17 and 18 which every hon. Member who has spoken in the debate finds puzzling. In effect, they provide that whether or not Parliament approves the ultimate transfer of benefits into credits, she can go on and spend the money. Those lines should have been justified, and amendment No. 2 would delete them from the Bill.

Amendment No. 10 did not win the unanimous support of the Committee. I take a more moderate view than my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) and my hon. Friend the Member for Ashford (Mr. Green). They are hard men, and perhaps they wanted me to press for the subsequent legislation to receive Third Reading and Royal Assent before the money could be spent. I was endeavouring to be helpful. We want the preparations to go well, but we also want to ensure that there is a longstop at the end. Specifying a Second Reading would at least have shown the Government's intention. Yet again, the Financial Secretary has failed to justify these wide-ranging powers, but, because of the hour, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Sir Peter Emery (East Devon)

On a point of order, Sir Alan.

The Chairman of Ways and Means (Sir Man Haselhurst)

I am given to understand that the right hon. Gentleman's point of order relates to another matter. It might be for the convenience of the Committee if we complete the business before us.

Sir Peter Emery

Further to that point of order, Sir Alan. The matter is urgent.

The Chairman

Order. The Bill has to be reported first.

Bill reported, without amendment.

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