HC Deb 05 July 1999 vol 334 cc724-8

'.—(1) In section 200 of the Taxes Act 1988 (expenses of Members of Parliament), in subsection (2), for the words from "the cost of" to "Strasbourg" substitute "EU travel expenses" and after that subsection insert—

"(3) For the purposes of subsection (2) above 'EU travel expenses' are the cost of, and any additional expenses incurred in, travelling between the United Kingdom and—

  1. (a) any European Union institution in Brussels, Luxembourg or Strasbourg, or
  2. (b) the national parliament of another member State.".

(2) This section has effect in relation to sums paid on or after 1st April I999.'.—[Dawn Primarolo.]

Brought up, and read the First time.

Dawn Primarolo

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this, it will be convenient to discuss Government amendment No. 25.

Dawn Primarolo

This clause makes a small but necessary change to the tax rules dealing with the payments that Members of Parliament receive to cover the costs of visiting European Union institutions. In 1991, the House set up a scheme to meet the costs of one visit a year to EU institutions in Brussels, Strasbourg and Luxembourg. To avoid any uncertainty about the tax treatment of payments made under the scheme, the Conservative Government introduced what is now section 200(2) of the Income and Corporation Taxes Act 1988 to take them outside the scope of any tax charge.

On 26 May this year, the House passed a resolution extending the range of destinations covered by that scheme. Members can now also get the costs of one visit a year to the national Parliament of another EU member state. We need to carry that through to the tax rules; otherwise, we shall have a tax exemption for some payments authorised by Parliament for hon. Members' EU travel, but not others. The new clause extends section 200(2) to take in the additional destinations now included in the House scheme.

We also need to make a consequential amendment to schedule 5 of the Bill to ensure that the same rules apply to any corresponding payments made to Members of the Scottish Parliament and of the devolved Assemblies, in line with the resolution of the House.

Mr. Oliver Letwin (West Dorset)

I do not want to tarry long on the new clause, because there are juicier morsels to come. However, I should like to ask the Paymaster General two or three questions.

We recognise that, in principle, the measure flows from a resolution of the House, to which the Minister referred. During the debate on that resolution, my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis), who occupies a special position in the House, mentioned that: There has been a decline in the reputation of this institution in the past few years and went on to say: It is vital to the authority of this institution that we maintain the public perception of the integrity of Members of Parliament"—[Official Report, 26 May 1998; Vol. 332, c. 416.] Doubtless, the Paymaster General recalls my right hon. Friend's remarks. In the light of those remarks the House made an amendment—originally tabled by my right hon. Friend, I believe—to the resolution that required Members who took up the option of a trip to Paris, Rome and so on to state in advance the purpose of their visit. That gives rise to my precise questions.

If a visit is for a specific business reason, why would it be taxable? Why is it not analogous to a business visit engaged in by any private sector employee who has correctly stated that the purpose of his visit is a business purpose, which counts as a business expense and is not taxable?

As the Paymaster General reminded the House, under clause 48 of the Bill, Members of the Scottish Parliament and Members of the Welsh Assembly have to be treated in the same way as Members of this Parliament; therefore, they will be subject to the same tax treatment if new clause 9 and amendment No. 25 are accepted. In the light of my previous question, it is material to ask whether that would apply even if the Scottish Parliament and the Welsh Assembly had not passed resolutions with an amendment analogous to that which my right hon. Friend tabled in this House. In other words, might not Members of the Scottish Parliament and Members of the Welsh Assembly be exempted from tax simply by virtue of the analogy with membership of this House, even if they do not have to make the declaration on which procedures in this House will now be founded?

If that is the case, is it not an example of the very problem to which devolution generally gives rise? We seek to give the Welsh Assembly and the Scottish Parliament certain freedoms of manoeuvre and we forsake the ability to vet whether, in fact, those freedoms of manoeuvre are being used in a way that is responsible from the point of view of taxpayers. Things will have come amiss if it turns out that Members of the Scottish Parliament can do what Members of this House would have been able to do if my right hon. Friend's amendment had not been passed—get both free trip and tax exemption without having to state in advance why they are going on the trip and prove that it is a business affair. If I am mistaken in my assumption, I should be grateful for clarification from the Paymaster General.

9 pm

Mr. Peter Luff (Mid-Worcestershire)

I shall not detain the House for long. The new clause leaves rather a nasty taste in the mouth when one considers all the other new clauses that we are debating this evening which are designed to increase the tax take, and often to take more tax from very vulnerable members of our society. Here we have a group of Members of Parliament, who could hardly be described as vulnerable, seeking to obtain new tax advantages for themselves at the taxpayers' expense.

There is a strong sentiment in many parts of the House that the original resolution was a mistake, and that tax advantages should have been retained entirely to European institutions. That pass has been sold and the privilege has now been extended to other, national Parliaments. I am sceptical about whether people will find sufficient reason to justify the additional trips to national Parliaments. There would be a rough justice in maintaining the present tax concessions rather than handing money back to MPs for these freebies.

I note that the resolution to which the new clause refers enables MPs to be paid twice the corresponding civil service class A standard subsistence rate. The perk seems to be very generous as it is, and it would be perfectly reasonable to tax this extension of it. I do not accept the logic of the Paymaster General's opening remarks.

Mr. Fabricant

The Paymaster General opened the debate by saying that this is a small but necessary amendment, but I am not sure that it is necessary. At the moment, the provisions apply to Brussels, Luxembourg and Strasbourg, and only £44,500 out of a total budget of £250,000 has been spent, so clearly there is not much of a demand for the provision.

I said earlier that I wondered where all the Labour Members were. I notice that there are now two Labour Back Benchers present. I suggested that while we were debating the taxpayers' money, most of them were in the fleshpots of London. What bothers me is that after the new clause has been passed, they will be visiting the fleshpots of Berlin or the beaches just east of Athens, which will now fall under the aegis of the measure.

As my hon. Friend the Member for Mid-Worcestershire (Mr. Luff) said, the economy is contracting and the weakest in society are suffering. It is typical of this Government that the pigs are being lead to the trough at such a time.

Mr. Andrew Love (Edmonton)

Does the hon. Gentleman accept that when the original motion came before the House and was fully discussed, only two or three members of the Opposition opposed it in the debate and, more importantly, voted against it when we went into the Lobbies?

Mr. Fabricant

The point is how many Labour Members voted against that motion. Two wrongs do not make a right. If only £44,500 out of a budget of £250,000 has been used, the provision is under-utilised. I put it to the House that these trips are yet more jollies, which seem to have been promoted since the Government came to power.

Mr. St. Aubyn

Will the Paymaster General tell us how much of the budget will be spent under the new provision? What will she do if too many of her colleagues demonstrate a propensity to indulge in this new form of subsidised travel so that the fund is exhausted before the end of the year?

Dawn Primarolo

Opposition Members need to keep this measure in proportion. As my hon. Friend the Member for Edmonton (Mr. Love) said, when the original motion was discussed the official Opposition did not oppose it. The normal procedure is to make such trips tax-exempt.

The hon. Member for West Dorset (Mr. Letwin), who spoke from the Front Bench, asked why we need a specific tax exemption at all. Several provisions in the Income and Corporation Taxes Act 1988 deal specifically with Members of Parliament; they reflect the nature of Members' duties. In most cases, deductions for any payment to meet the cost of Members' visits to European countries would be available under the ordinary schedule E rules, but it would sometimes be difficult to determine whether a visit would meet the qualifying conditions. Section 202 of the ICTA avoids that uncertainty by taking payments to Members of Parliament who have been authorised under the terms of the House scheme out of the scope of any tax charge.

As hon. Gentlemen will know, Members of Parliament will have to apply in advance and give the reasons for and purpose of their visit, and whom they will be meeting, before the travel is agreed by the House. The Fees Office will require information on the visit's purpose, location, duration and the persons or organisations to be met to be sure that the visit is within the resolution of the House.

Mr. Fabricant

I take the hon. Lady's point that Members will have to give an official reason, but what is to stop someone visiting an institution for three days and then spending a further week on the trip at their own expense having had the travel paid for them by the House of Commons—or should I say the taxpayer?

Dawn Primarolo

The rules of the House are laid down and Members are required to comply with them. As the hon. Gentleman well knows—I do not know whether he is advocating an avoidance scheme—that is the correct way in which to behave. I am sure that he behaves in that way. To infer that any other Member would not comply with those requirements is ungenerous of him, to put it mildly.

The hon. Member for West Dorset asked whether legislation was needed to extend the Westminster tax scheme to the devolved Assemblies; the answer is yes. Without the amendment, the Westminster tax rules would not automatically apply to the devolved Assemblies, as should happen.

Mr. Letwin

The question I asked was whether if, for example, the Scottish Parliament did not agree an amendment or pass a resolution that would require Members of that Parliament to make the same declaration in advance, would they nevertheless be tax exempt?

Dawn Primarolo

My understanding is that the rules of the House on the terms under which Members of Parliament can travel, as provided under the resolution of the House, are clear, and that those rules extend, therefore, to Members of the Welsh Assembly and the Scottish Parliament.

The hon. Member for Mid-Worcestershire (Mr. Luff) felt that the proposal was yet another perk for Members of Parliament. As I said at the beginning of my remarks, it is important to keep this matter in perspective. In most circumstances, Members are treated for tax in the same way as employees generally. We are dealing with specific provisions to deal with one or two minor areas where the position of Members of Parliament does not fit easily into the general tax framework.

No more money is being made available. The budget of £250,000 for Members' visits to European institutions remains unchanged. The amendments simply bring the resolution of the House into the tax legislation—as was the practice of the previous Government. It is an entirely reasonable thing to do. I commend the new clause to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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