HL Deb 08 July 2003 vol 651 cc136-8

3.10 p.m.

Lord Freeman asked Her Majesty's Government:

What purpose is intended to be achieved by the Treasury review of the Inland Revenue and Customs and Excise announced by the Chancellor of the Exchequer.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey)

My Lords, the primary focus of the review will be to make public service delivery more effective and efficient. It will examine the best organisational arrangements for delivering the Government's tax objectives. It will consider the case for changes in the law where necessary to allow the full benefits of particular arrangements to be realised, and it will pay particular attention to the need to ensure the continued effectiveness of the core business of revenue collection and administration.

Lord Freeman

My Lords, if it is confirmed by this review or otherwise that financial loss has been suffered by those who have applied for tax credits and not yet received payments due to inefficiencies in the system, will the Minister confirm that the Inland Revenue code of practice will definitely permit compensation?

Lord McIntosh of Haringey

My Lords, there has been a great deal of misrepresentation on this issue, although I can give the noble Lord, Lord Freeman, the assurance that he seeks. It has been claimed that there has been a great deal of loss. There has certainly been delay in dealing with telephone calls and with correspondence. Anyone who has applied for tax credits and has shown his or her eligibility for tax credits will get the money which is due.

Lord Newby

My Lords, can the noble Lord confirm that one option being considered by the review is whether the Inland Revenue and HM Customs and Excise might merge? Within that context, will the review be considering whether the extensive powers which are currently held by Customs officers might be extended to Inland Revenue officials?

Lord McIntosh of Haringey

My Lords, I am glad to be answering a supplementary question which is about the original Question on the Order Paper. Yes, I can confirm that that is one of the options being considered. The matter of the potential merger of the Inland Revenue and Customs and Excise has been on the public agenda since a parliamentary committee of inquiry in 1862. It was last considered by the Government in 1993 and by the Treasury Select Committee in 1999. So this is not a new proposal, if indeed that is what emerges from the current review. But the question of the powers of Customs and Excise and Inland Revenue officials will undoubtedly be a part of the review.

Lord Brooke of Alverthorpe

My Lords, can my noble friend say who is to undertake the review and when it will report?

Lord McIntosh of Haringey

My Lords, the review will be conducted by the Treasury and it will report in due course.

Lord Saatchi

My Lords, in the discussion of this merger, has there not been an unattractive tendency lately to blame Inland Revenue officials for faults which really lie with Ministers—for example, the Chancellor landed the Inland Revenue with the task of administering tax credits, which have nothing to do with tax at all? As the Minister is aware, it was in your Lordships' House that it emerged that 90 per cent of all tax credit payments totalling £15 billion a year actually exceed the total tax liability of the recipient. In other words, they are not tax credits at all.

Lord McIntosh of Haringey

My Lords, if there has been criticism of officials in the Inland Revenue, it has not come from the Government. The Chancellor has explicitly praised the Inland Revenue for the way in which it has taken on the very substantial additional tasks imposed on it by the tax credit regime.

The Earl of Northesk

My Lords, in reviewing the administration of tax, will this review also investigate the issue of fraud, particularly in respect of tax credits?

Lord McIntosh of Haringey

My Lords, there are continuing reviews on the issue of fraud, just as there are continuing reviews on, for example, failures of prosecution for fraud, if that is to what the noble Earl, Lord Northesk, is referring. One such review being conducted by Mr Justice Butterfield will be reporting very shortly, probably next week. We shall be interested to see the findings.