HL Deb 10 July 2002 vol 637 cc763-5

7.38 p.m.

The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Amos)

rose to move, That the draft order laid before the House on 12th June be approved [32nd Report from the Joint Committee].

The noble Baroness said: My Lords, I shall speak also to the draft United Nations and International Court of Justice (Immunities and Privileges) (Amendment) Order 2002.

These two orders were laid before the House on 12th June 2002, together with Explanatory Memoranda now required for all affirmative statutory instruments. They are similar and so, for the convenience of the House, I shall discuss them together. They provide for refunds of insurance premium tax (IPT) and air passenger duty (API)) to the United Nations and International Labour Organisation paid in the exercise of their official activities.

Thirty-five international organisations already have relief from IPT and APD under existing legislation. Those are international organisations of which the United Kingdom is a member and which have headquarters or offices based in the United Kingdom and those others, although not based here, to which we are legally obliged to give relief from such taxes and duties. The United Nations and ILO will bring the total to 37. Unlike the majority of the other international organisations, there were legal complexities in this instance which had first to be resolved.

Refunds of IPT and APD are given to meet our international obligations. It is established international practice that a state should not tax other states through the intermediary of an international organisation and that the host state should not derive undue fiscal advantage from the presence on its soil of an international organisation.

IPT is levied on buildings, on household contents and on vehicle insurance policies. Some areas of insurance, such as life, pensions and permanent health insurance, are exempt. Basic liability to pay and account for the tax rests with the insurance company.

APD applies to all passengers departing from UK airports, irrespective of when and where the ticket was acquired. APD is collected by the carrier or agent issuing the ticket and charged to the customer at the time of purchase. Rates vary depending on whether the destination is within or beyond the European economic area and the class of travel. Both IPT and APD were introduced in 1994.

The orders confer only those privileges and immunities that we are internationally obliged to confer and will allow us to treat the United Nations and ILO on the same basis as 35 similar organisations. I am satisfied that the orders are compatible with the European Convention on Human Rights. I beg to move.

Moved, That the draft order laid before the House on 12th June be approved [32nd Report from the Joint Committee]—(Baroness Amos.)

Lord Howell of Guildford

My Lords, we on this side have no dispute with the purpose and aim of these two orders. But perhaps I may clarify one or two relatively minor aspects. I understand that the orders extend relief to the International Labour Organisation and to the International Court of Justice, thereby bringing from 35 to 37 the number of international organisations to which we extend these reliefs. As the noble Baroness said, they give freedom from paying insurance premium tax and air passenger duty.

I believe that the general principle, which is one of complete common sense as well as being established, is that states do not go around seeking to benefit fiscally from international organisations which happen to be based on their soil. The principle is a large one, but I believe—the noble Baroness will correct me if I am wrong—that the revenue implications of this are extremely small.

I believe that the figures of £3,000 for immunities for ILO officials and £2.000 for International Court of Justice officials have been mentioned in another place. Perhaps I may ask whether that is right and whether that money is now to be returned from the Foreign and Commonwealth Office to those organisations, having been removed from them previously, or whether it relates to future revenues foregone. Secondly, do we know approximately how many personnel are covered by the orders? Does the total also include expert consultants who may be employed by those two organisations or by their representative offices in the UK?

Those are small queries. If the noble Baroness does not have the answers to hand immediately, I shall fully understand that, and perhaps she will write to me later. Those are the only queries that I have.

Lord Goodhart

My Lords, these orders seem to be very much in line with standard practice, and we have no objection to them.

Baroness Amos

My Lords, I shall try to respond to the questions raised by the noble Lord, Lord Howell. IPT was introduced from 1st October 1994 and APD from 1st November 1994. The tax and duty have already been collected and therefore should be refunded. The money has been allocated by the Foreign and Commonwealth Office for that purpose.

With regard to the amounts involved, we estimate that the figures which the noble Lord quoted are correct. The amount will be in the region of £3,000 per annum for the United Nations and £2,000 for the ILO. I am unable to answer the noble Lord's question concerning the number of personnel covered or whether consultants would be included. I shall be happy to write to him on that point.

Lord Howell of Guildford

My Lords, it is possible that I am confused, but the orders refer to the "United Nations" as a type of generic label. They also refer to the International Labour Organisation and the International Court of Justice, which I am not sure the noble Baroness mentioned. Are we dealing with three organisations here or simply two?

Baroness Amos

My Lords, one order with which we are dealing is the draft United Nations and International Court of Justice order. The other deals with the specialised agencies of the United Nations. I commend the order to the House.

On Question, Motion agreed to.