VAT: New Buildings (Hansard, 1 July 1987)

Lord Bruce of Donington
My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

§ The Secretary of State for Trade and Industry (Lord Young of Graffham)
No, my Lords. As I stated in my replies to Questions from the noble Lord, Lord Stoddart of Swindon, on 6th October 1986 and on 16th October 1986, infraction proceedings are a legal issue and the pleadings are strictly confidential to the parties in dispute.

Lord Bruce of Donington
My Lords, is the noble Lord aware that the registrar of the European Court of Justice has made it quite clear that the parties to the dispute are under no restriction as regards making their own pleadings public? Is the noble Lord further aware that in so far as those pleadings contain a reference to the case of the Commission, the Commission has no objection to their publication? In view of the fact that the imposition of, say, 15 per cent. VAT on all new building would add very significantly to building costs in the United Kingdom, will the noble Lord take steps to ensure that the public is aware of the arguments which the Government have put forward in this connection? What are the Government afraid of?

§ Lord Young of Graffham
My Lords, as regards disclosure by the parties concerned, there is nothing in the rules of the court regulating the disclosure by them either of their own pleadings or the pleadings of others. However, there is a convention, recognised equally by the Commission and by member states, that the confidentiality of the other party's pleadings is to be respected as being in the best interests of the conduct of cases. The key point is that the Commission's legal agent, who has the responsibility for the conduct of cases before the European Court, has categorically said that the Commission will not consent to the disclosure of the pleadings themselves. Without that authorisation, we are bound to respect the confidentiality of pleadings.
However, a summary of the pleadings is made available by the court about a week before the oral hearing in the report for the hearing itself. The oral hearing is open to the public and it is also normal practice for the pleadings to be summarised by the court when it issues its judgment some months later.

§ Lord Denning
My Lords, is the Minister aware that at present, under our value added tax as of 1983, some of our goods and services—notably new houses—are zero-rated and are not liable to pay VAT? In these proceedings before the European Court, the European Commission seeks to overrule our statute of 1983 and require the goods and services which I have mentioned and which are presently zero-rated to be liable to VAT.
Is it not desirable that the Members of this House and the people of this country should know what the 249 arguments are that are being put before the European Court, so that they can be supplemented, added to and improved, if need be? I do not say that the Government will not put the arguments properly. However, the British taxpayer and all of us ought to know the arguments which are being put before the court.

§ Lord Young of Graffham
My Lords, I am grateful to the noble and learned Lord. However, I wonder what would have happened if, during his long and distinguished career, any person had attempted to change the rules of the court over which he presided with such distinction. I believe that we are bound by the position we have at the moment. The Question has only to do with the production of pleadings. The case will be fought, and fought vigorously, by the Government.

§ Lord Wedderburn of Charlton
My Lords, will the noble Lord place in the Library the communication, apart from that with the agent, upon which his argument rests?

§ Lord Young of Graffham
My Lords, I shall certainly see if I can obtain such a communication.

§ Lord Broxbourne
My Lords, having regard to what my noble friend has said concerning the confidentiality of pleadings, does he not think that there may be a proper distinction to be drawn between actions involving private parties and actions brought under Article 164 by the Commission against a member state? In view of the absolute obligation imposed on a member state to abide by the decision of the court and to take the necessary remedial measures under Article 171, does the Minister not think that there is great force in what was said, with such authority, by the noble and learned Lord, Lord Denning?

§ Lord Young of Graffham
My Lords, I am grateful to my noble friend. However, at the moment we are bound by the conventions relating to proceedings before the European Court, and as the Commission's legal agent has stated categorically that the Commission will not consent to disclosure of the pleadings, there is little we can do.

Lord Bruce of Donington
My Lords, I am sure that the noble Lord does not wish to mislead the House. However, is he aware that a disclosure by the United Kingdom of its own pleadings in the case would not be in breach of any rule of the European Court? That was confirmed by the registrar, who said: There are no rules as to what the parties say out of court and there are no contempt procedures". Is the noble Lord further aware that, in contradiction to what he has said concerning the Commission, a Commission representative, Mr. Etienne Reuter, said: We have not put pressure on the British Government and they have not put pressure on us"? He also stated that he had no objection to the publication of the pleadings.

§ Lord Young of Graffham
My Lords, I said two or three minutes ago, in answering a supplementary question to the Question of the noble Lord, Lord Bruce, that there is nothing in the rules of the court which regulates the disclosure by a party of either its own pleadings or the pleadings of others. However, there is a convention which is recognised equally by the Commission and by member states that the confidentiality of the other party's pleadings is to be respected as being in the best interests of the conduct of cases. I repeat that the key point is that the Commission's legal agent, who has responsibility for the conduct of cases before the European Court, has stated categorically that the Commission will not consent to disclosure of the pleadings.

Lord Bruce of Donington
My Lords, I am sorry to return to the point again; but in the light of the noble Lord's observations, will he cause to be placed in the Library an authenticated copy of the convention to which he has referred?

§ Lord Young of Graffham
My Lords, I have already said I shall endeavour to do so.