HL Deb 09 March 1999 vol 598 cc129-31

3.16 p.m.

Read a third time.

Clause 27 [Short title and extent]:

Baroness Rawlings moved Amendment No. 1:

Page 11, line 27, at end insert— ("(3) With the exception of this section this Act shall not come into force until the Secretary of State has laid in draft before the House of Commons an order contained in a statutory instrument making such provision relating to the tax liability of the CDC as will encourage private sector investment in it, and the order has been approved by resolution of that House. ").

The noble Baroness said: My Lords, we did not have the intention to speak at Third Reading as both the noble Lord, Lord Redesdale, and myself hoped that this amendment would be accepted at Report stage. Unfortunately this was not the case. We have therefore had to bring it back once again despite the Minister's welcome assurances that amendments to the Bill to include tax provisions would be introduced at a further stage. We, the Liberal Democrats, and I trust Her Majesty's Government, believe that a CDC PPP must be tax efficient to be successful. We would be failing in our duty as a revising and scrutinising Chamber if we let this Bill go through to the other place without this aspect on the face of the Bill.

I wish to make it absolutely clear that this is in no way meant to be a wrecking amendment. Without these essential tax provisions the CDC/PPP Bill is seriously flawed. We understand that the Minister argued at Report stage: we believe that secondary legislation would be the wrong way to make this kind of provision concerning tax". —[Official Report, 2/3/99; col. 1557.] He argued that it should be done by primary legislation. If it is so important, why do the Government present a Bill without such crucial provisions already in place? I am afraid that if the Minister is unable to accept this amendment we will have no alternative but to test the will of the House. I beg to move.

Lord Redesdale

My Lords, we on these Benches would rather not use the procedure of testing the will of the House on Third Reading. However, the Minister made it clear at a previous stage that our amendment was unacceptable. This in no way detracts from our support of this worthy Bill. I look forward to the Minister's erudite comments on how the amendment is flawed, a subject upon which he waxes so lyrical. The House would be failing in its role as a scrutinising Chamber if it did not raise certain points.

The Bill is deficient in that without tax provision the CDC will not be able to operate in the private sector. The Minister may say that he has given a copper-bottomed guarantee on the Bill. However, it would be an act of faith for us to allow the Bill to go through all its stages in this House with the provision that the Government will have worked out the problems associated with the Bill by the time it reaches the House of Commons. At the moment, there may be a copper bottom, but there are severe holes in the shape of the Bill. I very much hope that the Minister will accept the amendment, but I fear that he will not.

Lord McIntosh of Haringey

My Lords, I will not follow the noble Lord's metallic arguments. However, I am afraid that I will have to repeat part of what I said at Second Reading because I have been asked, quite reasonably and properly, for the same assurances again. I can confirm that it is the Government's view that the CDC has to be tax efficient if it is to achieve its goal of investing in developing countries using private capital raised in the context of a competitive private investment market dominated by offshore funds. The Government have already agreed the broad principles for a tax solution that will provide the CDC public-private partnership with the required tax efficiency. Work is continuing on the details. However, I am sorry that such work has not been concluded to a sufficient extent to allow us to bring forward the necessary amendment to the Bill today. We intend to introduce the necessary amendments to the Bill at the appropriate time in the House of Commons.

I repeat what I said about the amendment. It would require the Secretary of State to lay before the House of Commons an order-making provision as to the tax liability of the CDC, such provision as will encourage private sector investment in it, and to have that order approved by the House of Commons. We certainly agree with the aim of the amendment but, as I have said before, we disagree with the approach in that the proper way to make the necessary provision about the CDC's tax is by amendment to the current Bill and not by secondary legislation. The amendment is also technically defective because the Secretary of State does not currently have power to make tax provision of this kind by secondary legislation. The amendment probably—I say "probably" because these are arcane and legal questions—does not give her any such power. Even if the amendment must be read as impliedly giving some power, the extent of that power is poorly defined.

I am sorry about this but I think we can come to a reasonable conclusion. I have made it clear that if the amendment is added to the Bill it would be the Government's intention to ask the House of Commons to remove it and to make the necessary substantive provision about tax by further amendment to the Bill. On that basis, if the noble Baroness wishes to put her amendment to the House, I would advise my noble friends not to oppose it.

Baroness Rawlings

My Lords, I understand that we are unable to have the details of the tax provisions at the moment and that should the amendment be accepted it might be removed in the other place. But, as I said, the intention should be on the face of the Bill as it leaves this House for the other place. I am very sorry that the Minister is unable to accept the amendment. I am afraid that I shall have to test the will of the House.

On Question, amendment agreed to.

An amendment (privilege) made.

Lord McIntosh of Haringey

My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill be now pass. —(Lord McIntosh of Haringey.

On Question, Bill passed, and sent to the Commons.