HC Deb 24 February 1999 vol 326 cc429-32 5.53 pm
Mr. Quentin Davies (Grantham and Stamford)

I beg to move amendment No. 1, in page 2, line 16, leave out line 16.

Mr. Deputy Speaker (Mr. Michael Lord)

With this, it will be convenient to discuss amendment No. 2, in page 2, line 18, leave out from 'prosecutions)' to end of line 19.

Mr. Davies

The most irrefutable evidence of the fact that the Government are determined to disguise from the general public the full moment and purport of what they are trying to achieve in social security by running down and eroding the national insurance system is that we have had two debates on social security Bills this week—one yesterday and one today—and they have done everything possible, using all the tricks available, to curtail debate and distract attention.

Yesterday, the Government clearly chose to have Second Reading of the Welfare Reform and Pensions Bill on a day when there was a major statement on the euro that was bound to take the time of the House and capture the headlines. Today, a Bill that abolishes the Contributions Agency and merges it with the Inland Revenue is to be discussed after we have had three ministerial statements. Our debate will again be necessarily, but very unfortunately, curtailed.

Yesterday's Bill represented the policy aspect of the Government's attack on our national insurance system, while today's represents the administrative side of the same project. Until now, the Contributions Agency has had a separate role, with responsibility, which it has taken very seriously, for collecting national insurance contributions and for the integrity of the separate national insurance fund. All that is to be abolished and the agency will be folded into the Inland Revenue, which collects direct taxation revenue, so in practice there will be no distinction between the national insurance fund and the general Consolidated Fund. That is exactly what the Government are aiming for.

Clause 3 has a peculiar quirk—it disapplies certain provisions of the Inland Revenue Regulation Act 1890. The amendment would prevent the disapplication, in subsection (3)(c), of the provisions allowing officers to conduct proceedings before justices. It is a matter of common sense that it would not always be in the public interest for the Contributions Agency or, henceforward, the Inland Revenue, to have to brief solicitors and banisters, at their usual fees, to present matters to the courts. It is sensible to provide for officers of the Revenue to have rights of audience. Why, though, is that to be disapplied in the clause but reapplied in paragraph 21 of schedule 1?

I made that point in Committee and received no satisfactory answer. The whole point of Report is to pick up either problems that have been identified and not resolved in Committee or assurances that have been given in Committee by Ministers and not fulfilled. That enables the House to take a view, in the light of those failures, on how the Bill should be amended before it finally proceeds to Third Reading.

Amendment No. 2 is, again, a commonsensical amendment. The rights under the 1890 Act of the relevant authority—the Inland Revenue subsuming the Contributions Agency—to mitigate fines and stay proceedings are to be abolished, and that is a thoroughly retrograde step. It is extremely important that any bureaucracy with the wide-sweeping administrative powers that the Revenue has should be able, when it is clearly not in the public interest to proceed against a citizen, to decide not to do so, or indeed to mitigate fines. That negative discretion should be retained, and a positive discretion could be very dangerous to the liberties of the subject.

The Minister told me in Committee that subsection (3)(f), disapplying section 35 of the 1890 Act, was there because the discretion was already provided, or would be provided, elsewhere in the Bill or in other statutes. She gave me an assurance at column 59 of the Official Report of our Committee that she would give me chapter and verse before the conclusion of our proceedings. She did not do so, and I hope that she will rectify that now. I am afraid that the Opposition intend to continue to take seriously such assurances given by Ministers in Committee.

6 pm

The Economic Secretary to the Treasury (Ms Patricia Hewitt)

As the hon. Member for Grantham and Stamford (Mr. Davies) will recall, we had some interesting discussions on the points covered by amendments Nos. 1 and 2 in Committee. Since then, we have had a further, detailed look at the exceptions provided for in clause 3(3). The technical point spotted by the hon. Gentleman and covered by amendment No. 1 has also been spotted by my officials.

Clause 4 and schedule 4 of the Bill were introduced at the Lords Report stage for very good reasons. The power for the Revenue to recover small national insurance contribution debts, such as tax debts, in the magistrates courts will make the process of collecting contributions more effective. We agreed on that point in Committee. Unfortunately, at that time it was not noticed that there would be less room for doubt if the Bill also allowed section 27 of the Inland Revenue Regulation Act 1890 to apply to NICs, so no consequential technical amendment was tabled in the other place.

There is unlikely to be a problem in practice, but there is, in principle, the possibility of challenge to the right of a non-lawyer official addressing the court in any proceedings that have not been commenced in their name. Having said that, amendment No. 1 would go too far, because the wholesale removal of clause 3(3)(c) would cause duplication by section 27 of the 1890 Act of other express provision for non-lawyer representation elsewhere in the Bill. If amendment No. 1 were accepted, the whole Bill would have to go back to the other place, taking up time there which could be used much more usefully than in considering a minor technical amendment. For those reasons, I cannot accept the amendment, but I can reassure the hon. Member for Grantham and Stamford that the application of section 27 to NICs will be secured by a Government amendment to the Welfare Reform and Pensions Bill. Meanwhile, we intend to postpone the commencement of clause 3(3)(c).

Amendment No. 2 returns to an issue that the hon. Member for Grantham and Stamford also raised in Committee. It reflects his concern, which I share, that the Inland Revenue should be able to mitigate penalties that apply in relation to national insurance contributions. I can assure him that the amendment is not required to achieve that effect.

As I stressed in Committee, the main provisions governing what the Inland Revenue can do in relation to penalties are in the Taxes Management Act 1970, and not the considerably more ancient Inland Revenue Regulation Act 1890, which amendment No. 2 would bring further into play. Those provisions apply, among other things, to pay-as-you-earn and national insurance contributions that are recovered alongside PAYE, and will be extended to national insurance contributions generally by clause 3(2) of the Bill. It is those Taxes Management Act rules which provide the reassurance the hon. Member for Grantham and Stamford is seeking.

I promised the hon. Gentleman chapter and verse, and I refer him to section 98 of the Taxes Management Act. Hon. Members will have seen that paragraph 1 of schedule 5 to the Bill extends the penalty provision to cover failure to comply with a contributions inspector's enforcement powers, by bringing section 110ZA of the Social Security Administration Act 1992 into the table in section 98. While section 98 allows the Inland Revenue to charge penalties, it also provides—this is the crucial reassurance the hon. Gentleman seeks—for the Inland Revenue to seek less than the maximum possible penalty.

Sections 100 to 100B of the Taxes Management Act apply where the Inland Revenue decides to levy a penalty in some amount. They ensure that the person affected by the penalty charge has the right to appeal against the levy of the penalty, and its amount, to the general commissioners or the special commissioners, who are independent of the Inland Revenue. The commissioners can decide that a smaller or no penalty is payable.

There is more. Section 102 of the Taxes Management Act gives the Inland Revenue a further power to mitigate any penalty. Section 102 is short, and it may help the hon. Member for Grantham and Stamford if I read it out: The Board"— the Inland Revenue— may in their discretion mitigate any penalty, or stay or compound any proceedings for a penalty, and may also, after judgment, further mitigate or entirely remit the penalty. In the light of those reassurances on both points, I hope that the hon Gentleman will feel able to withdraw his amendments.

Mr. Quentin Davies

I am grateful to the Minister. She has now given the House full details in answer to the point raised in amendment No. 2 and I accept her comments in good faith that she has had legal advice that the protections we sought are in the previous legislation.

I do not know whether to be pleased or sorry about amendment No. 1. Most of us feel chuffed if we manage to spot a technical error in a Bill, but if I have contributed to improving a Bill of which I thoroughly disapprove, I feel unhappy. In either event and in the light of the assurances we have had, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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