HC Deb 24 February 1999 vol 326 cc436-8
Mr. Quentin Davies

I beg to move amendment No. 6, in page 22, line 8, at end insert— '(4AA) All such deductions, withholdings and payments by the Inland Revenue from sums due to the National Insurance Fund in each financial year shall be subject to a specific audit and report by the Audit Commission.'. Again, this is unfinished business from upstairs to which we thought it right to draw the attention of the House. The explanatory memorandum refers, on page 251, to a large number of costs, amounting in gross terms to something in the order of £50 million, which will be incurred as a result of bringing together the Inland Revenue and the Contributions Agency. It also talks about savings of £1.4 million in 2000–01, rising to £5.5 million in 2002–03.

Anyone who reads the explanatory memorandum will therefore reach the reasonable conclusion that there will be a net cost to public funds of several tens of millions of pounds at least. It was with more than some surprise, therefore, that we heard the Under-Secretary say in Committee: There will be savings in public money".—[Official Report, Standing Committee D, 16 February 1999; c. 12.] We never heard what those savings would be. I am perfectly prepared to believe that, despite the substantial initial costs, the Government may count on some savings in future. I am prepared to believe that they will be so great that even when properly discounted to proper value, the net position is positive. However, if that is so, it does not appear in the evidence that the Government have produced, and the only reasonable conclusion that one may draw from the explanatory memorandum is the reverse impression that there will be a net cost to the taxpayer. It is clear that a further explanation is required, and I hope that we shall hear one now.

Ms Hewitt

I fear that the hon. Gentleman has addressed amendment No. 5, which was not selected, rather than amendment No. 6, which he moved. If I may, I shall explain why amendment No. 6 should be rejected, and I trust that the hon. Gentleman will be content with that.

Amendment No. 6 deals with the question of the Inland Revenue charging its administrative costs to the national insurance fund in relation to the collection of national insurance contributions. That was an issue on which the hon. Gentleman expressed considerable concern in the Standing Committee, and I trust that I shall be able to reassure him this evening.

My first point is that there is nothing new in the Inland Revenue charging the appropriate amount of its expenditure to the national insurance fund. That happens already, because the Inland Revenue is responsible for collecting 94 per cent. of national insurance contributions and for carrying out most of the associated administration. Of course, the Revenue charges only the cost belonging to its functions in relation to contributions to the national insurance fund.

The second point is that Parliament has already addressed, quite comprehensively, the matter that concerns the hon. Gentleman. The existing law—primarily part XII of the Social Security Administration Act 1992—specifies the expenses that can be charged to the national insurance fund, whether by the Department of Social Security or the Inland Revenue. The Act also rightly requires the Comptroller and Auditor General to examine and certify the accounts of the national insurance fund, in a report that is laid before us annually. In other words, the National Audit Office acts as the external auditor of the national insurance fund as well as of expenditure by the Inland Revenue. The NAO also provides us with an annual report detailing the outcome of its independent scrutiny of the national insurance fund. Nothing in the Bill changes that situation.

Thirdly, the amendment would involve the Audit Commission in the scrutiny of expenditure. Although I have a high regard for the work of the Audit Commission, that extension would not be sensible or appropriate. It would duplicate effort, with both the National Audit Office and the Audit Commission acting as external auditors of the national insurance fund. It would confuse the division of responsibilities between the National Audit Office, which examines the accounts of Government Departments, and the Audit Commission, which audits local authorities and national health service bodies such as hospital trusts.

I hope that I have made it clear that amendment No. 6 is both unnecessary and inappropriate. I hope that the hon. Gentleman will feel able to withdraw it; if not, I must urge the House to reject it.

Mr. Quentin Davies

I am extremely grateful, as may be imagined, to have had an opportunity to put on the record the considerable concerns expressed in amendment No. 5. The Government have been saved from answering those concerns, and I can see both Ministers laughing, doubtless with great relief. Amendment No. 5 relates to a serious question about the use of public funds, and our points are now on the record. Had I been allowed to do so, I should have wanted to call a vote on it if I had not received the assurances that I required. We do not know whether the Bill will cost or save the taxpayer money, although it seems certain that it will cost the taxpayer a substantial amount. We shall return to that point in another context.

I accept the Minister's assurances on amendment No. 6. The Audit Commission will plainly have a dual responsibility to audit the Inland Revenue in the normal way and to audit the national insurance fund for as long as there remains a national insurance fund, which, unfortunately, seems increasingly something of an illusion. If any future problem is identified by the Audit Commission, or in any other way, and if excessive expenses are being charged to the national insurance fund by the Revenue, we shall certainly remind the Minister of the assurances that she has given the House. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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