Before I proceed with the business of the House, I wish to make a statement about demonstrations in Parliament square and issues of control and access to the House.

First, let me make it clear to the House that I support the right to demonstrate, but as right hon. and hon. Members have made clear through points of order the recent demonstration by Tamils has caused disruption to the work of the House and to individuals and organisations seeking access to it. It has also involved considerable cost to the House and to the police and exposed many issues of health and safety.

In the light of those difficulties, and given the distribution of responsibilities for Parliament square between various authorities, I can tell the House that I have arranged a meeting with the Minister for Security, Counter-Terrorism, Crime and Policing, the deputy Mayor of London responsible for policing, the leader of Westminster council and an assistant commissioner of the Metropolitan police to discuss how demonstrations in the square can be better regulated so that the functioning of Parliament is not impeded and the health and safety of individuals is not breached. I shall come back to report any progress that we can make to resolve this highly unsatisfactory situation.

On a point of order, Mr. Speaker. I thank you for that statement, and I hope that you will bear in mind during your discussions the pain and suffering that the Tamil people are going through. We must understand their need to express their point of view, in the hope that the British Government and others can encourage a ceasefire in Sri Lanka. These are desperate people shouting out for help, and I think we should listen to them.

I note the points that hon. Gentleman makes. He has always been consistent regarding this matter.

Further to that point of order, Mr. Speaker. Is it right that a Member should use your statement to further a political cause? Would you argue that that is not what your statement was about?

I have known the hon. Member for Islington, North (Jeremy Corbyn) for many years. He made his comment through a point of order in good faith, and I think we should leave it that.

Please can you, Mr. Speaker, tell us the date of the meeting that you have convened?

Today, at 5 o’clock. How’s that?

On a point of order, Mr. Speaker. My point has to do with the meeting and the demonstration. Like you, many of us have had considerable involvement with the demonstration. Would you be willing to accept a short note from any colleagues who have had some professional involvement with the police and others with regard to the events of the past few weeks? We want to assist you, and to make sure that the resolution of the matter commands the consensus of the whole House, irrespective of hon. Members’ individual views on the demonstration and the issue involved.

I am always happy to receive representations from all hon. Members throughout the House. Thank you.

On a point of order, Mr. Speaker. We have focused today on events with regard to Sri Lanka and the Tamil demonstrators, but over recent years there have been a number of demonstrations of different kinds. We need to bear it in mind that London is a global city, and that we cannot have its centre and our Parliament regularly disrupted by any organisation whatever.

I note the hon. Gentleman’s point of view.

On a point of order, Mr. Speaker. The Joint Committee on Human Rights produced a report on policing and protest a few weeks ago, and one of our recommendations was that there should be no surprises, either from demonstrators or in the policing of demonstrations. We also stressed the importance of dialogue between police and demonstrators. In the light of that, would you consider inviting organisers of the Tamil protest to meet the people whom you are seeing later today, to discuss terms of reference for the demonstration?

I am meeting the people with responsibility in this matter, but who they write to is up to them. Let me make it clear: as I said in my statement, I believe that it is part of the democracy that we live in that people are entitled to demonstrate around Parliament, and therefore in Parliament square. However, what we have out there at the moment is a blocking-off of the right of others to demonstrate, and that is a deep concern to me. The square is an absolute shambles, and that should be taken into consideration as well.

rose—

Order. I will not be holding court on the statement that I have made. The statement was clear and the meeting is at 5 o’clock, so I think that we should move on.

Bill Presented

School Bus (safety) Bill

Order. Before I call the right hon. Member for Gordon (Malcolm Bruce) to present his Bill, I draw the House’s attention to the fact that the Bill’s long title was printed incorrectly in the Order Paper. A revised page of the Order Paper with the correct long title has been issued.

Presentation and First Reading (Standing Order No. 57)

Malcolm Bruce, supported by Miss Anne Begg, Mr. David Blunkett, Peter Bottomley, Mark Pritchard, Willie Rennie and Sir Robert Smith, presented a Bill to make requirements relating to the design and operation of school buses; to make provision about road safety training for drivers and users of school buses; to establish a School Bus Safety Council; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 16 October, and to be printed (Bill 95).

I beg to move,

That leave be given to bring in a Bill to make provision for minimum standards for football goalposts.

Eighteen years ago, an 11-year-old boy from my constituency, Jonathan Smith, was killed during an away game of the Witham under-12s. Jonathan was swinging from the crossbar when the goalpost fell on him, ruptured his heart and left his family devastated. Since his death, Jonathan’s mother, Brenda Smith, who is here today watching the presentation of this Bill, has fought a tireless campaign to improve the safety of goalposts.

I pay tribute to the hon. Member for Waveney (Mr. Blizzard), who secured a debate on this important subject in Westminster Hall in January 2000. Nine years on, however, there is still no legislation to improve goalpost safety standards.

The beautiful game has a devoted following in all parts of the House. Many of us, including, I am sure, the Secretary of State for Culture, Media and Sport, are wary of imposing new rules, regulations or requirements on the game, its clubs, supporters or amateur players, but my Bill is not an example of health and safety gone mad. I am not talking about professional football, or families having a kickabout in their back yard, and I am not out to ruin anyone’s fun. As a passionate Newcastle United fan and father of five, I do not need to be told how important football is to young people. I know only too well that millions of people regularly enjoy playing football, and we need to encourage them to do so, but we also need appropriate legislation to help to keep them safe.

It is true that some progress has already been made. We now have a good British Standards Institution standard, an up-and-running scheme to replace unsafe goalposts, some growing publicity, and letters of support for Brenda Smith from Her Majesty the Queen, sports personalities and the Football Association, among others.

In 2005, a new BSI standard was introduced. The Football Foundation says that

“the standard is good, the standard is solid”.

Nevertheless, manufacturers and buyers are only recommended to comply with it. In addition, the FA distributed more than 1 million leaflets to help clubs, schools and councils to understand better the risks posed by unsafe goalposts and how safety measures should be applied practice.

The Football Foundation operates an excellent scheme, which allows any FA-affiliated club, local authority, school, community group or club in the national league system step 7 and below to apply for a 50 per cent. grant to replace any of their goalposts that do not adhere to the recognised BSI standard. However, my Bill seeks to go a step further, by making the replacement of any goalposts that do not meet the BSI standard mandatory by 2012. That will include goalposts used on property owned by councils, schools and clubs.

The Bill will target in particular goalposts made before 1996—the year in which British standards were first produced for goalposts. Despite the introduction of those standards, the FA says that some schools still use, for example, wooden goalposts, which are not illegal, but which do pose a threat to the children using them. Other unsafe goalposts include those that are corroded, rusted or free-standing, or those with metal cuphooks on the posts of crossbars.

In 2005, the FA identified approximately 15,000 goalposts that did not meet the BSI standard. The Football Foundation has, to date, offered 3,192 grants with a value of nearly £2 million. As the grants can be offered for multiple goalposts, they have enabled about one third of the unsafe goalposts identified to be replaced. That is an admirable achievement, but more can be done.

I admit that I was surprised when I first became aware of the risk posed by unsafe goalposts. Since Jonathan’s death in 1991, at least 10 other children in the UK and many others worldwide have been killed by falling goalposts. Even more have been injured, suffering broken limbs, bruising and fractured skulls, often leaving permanent damage and disfiguring scars. Adults, too, have also been injured in the same way: I recently heard from the parents of another constituent who, 10 years ago, when she was in her mid-20s, had an unsecured goalpost land on her, causing severe injuries for which she is receiving treatment to this day. I am sure that other hon. Members have similar stories.

The Football Association says that one of the biggest problems is when children swing on goalposts, and I suppose that one answer is to admit that it is difficult to stop children wanting to play on goalposts. Nevertheless, we can minimise the risk as far as possible by ensuring that goalposts are fit for purpose, properly installed and well maintained.

The goalpost that killed my constituent’s son, Jonathan, was simply made of scaffold poles welded together, weighing 200 lb, that were not fixed to the ground. Jonathan was playing in a game for under-12s, who weigh perhaps 60 or 70 lb; they would not have been at risk if purpose-built, lightweight plastic or aluminium goalposts had been in use. Installation and maintenance is as important as manufacture; indeed, the current Football Foundation scheme insists on professional installation and offers training in proper maintenance techniques. Local authorities already have to organise an independent annual check on the conditions of their own pitches. I believe it would be a simple matter to ensure that the safety of the goalposts was also checked at this time.

The Government have argued that enough has already been done and that a voluntary code will suffice. In a letter sent to my constituent, Brenda Smith, in September last year, the Department for Culture, Media and Sport said that the Government still

“do not have any current plans to introduce legislation covering this area”.

I agree that support, guidelines and recommendations are a major step forward in creating good practice, but we can do more to ensure that no other family has to mourn losing a child who should have been celebrating winning a football game.

Other countries have taken more robust action on this issue. The New South Wales Government in Australia passed legislation prohibiting the manufacture of goalposts that did not meet strict criteria. This guarantees that goalposts cannot fall or tip over, and that they are of a limited weight and force.

I never imagined that I would suggest to the House that France is a country that has anything to teach us about the beautiful game, but the French have legislated for a safety standard that makes the manufacture, distribution or use of non-standard goalposts illegal. I am sure that when it comes to goalpost safety, even my hon. Friend the Member for Stone (Mr. Cash) would not object to our following the French lead.

Given the simple and accessible scheme already in operation, 2012 is a realistic target. The year of the London Olympics is also an important symbolic target, proving that we have a commitment to grass-roots sports and that we care as much for safety as for success. That would be a great British Olympic legacy.

The Football Association says it has

“done as much as possible internally and externally”,

while the hon. Member for Vauxhall (Kate Hoey), a supporter of this Bill and a previous sports Minister, said that pushing for legislation on goalpost safety was “obviously a longer-term solution”. Well, it is now 18 years since Brenda Smith lost her son—and that is not just the long term, but a whole lifetime. I hope that I will receive the support of all hon. Members for this Bill to place our children at the heart of a culture of safety and awareness, and to make minimum safety standards for goalposts mandatory by 2012. I commend it to the House.

Question put and agreed to.

Ordered,

That Mr. Brooks Newmark, Mr. Don Foster, Rob Marris, Mr. John Grogan, Mr. David Anderson, Kate Hoey, Mr. Simon Burns, Alistair Burt, Mr. John Randall, Mr. Mark Field, Mr. Nigel Evans and Stuart Hosie present the Bill.

Mr. Brooks Newmark accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 16 October and to be printed (Bill 961).

On a point of order, Sir Alan. I seek your guidance. Yesterday in Committee, it appeared to more than one Member, including me, that a Member was simply reading from a handheld device, such as a BlackBerry, to make an intervention. Is that in order?

The hon. Gentleman was perhaps more observant than the occupant of the Chair, as it is clear that such a practice is not permitted under the ruling originally given by Mr. Speaker on the use of personal digital assistants in the Chamber. In interventions in particular, and even in a wider sense, reading from either mechanical means or paper should be practised as little as possible if the spirit of “Erskine May” is to survive.

Further to that point of order, Sir Alan. May I assist you? My recollection is that the Member concerned was not in your line of sight or that of whoever was in the Chair at the time.

I say to the hon. Gentleman that the line of sight of other Members is more varied than is possible from the Chair. The matter could have been raised as a point of order at the time, but I suppose it is better late than never. I thank the hon. Gentleman.

Clause 92

Duties of senior accounting officers of large companies

I beg to move amendment 4, page 45, line 18, after ‘after’, insert ‘the first anniversary of’.

The amendment refers to clause 92, which imposes additional duties on senior accounting officers of large companies. The Financial Secretary can be assured that schedule 46 will be discussed in some detail in Committee upstairs, because it raises issues that need to be explored properly. From time to time, we have been complimentary to the Government when they have consulted on legislation: we recognised their efforts in consulting businesses on the taxation of foreign profits, and, after a somewhat tortuous process, the outcome of that consultation was satisfactory.

The apparent absence of consultation was one of the criticisms of clause 92. No one, whether from the industry or an adviser, has come forward to say that they were consulted. The clause has therefore come as a surprise to a large number of people. There is considerable concern among advisers and the industry about what the clause means in practice. The heart of the amendment applies to accounting periods beginning immediately after the Bill receives Royal Assent, because businesses seeking to comply with the proposal have a very short period to understand its purpose and the additional burdens and costs imposed on them, and they seek guidance. The purpose of my amendment is therefore to delay the implementation by a year to give the Government, Her Majesty’s Revenue and Customs, businesses and their advisers time to understand the implications, costs and benefits.

I am following the logic of the hon. Gentleman’s amendment, which is reasoned and, on the whole, has much to be said for it. If one starts to consult before putting proposals in a Bill, however, it is almost impossible to get anything down before it is publicised and various wrecking attacks are made on it. Will he please believe in the good faith of the Government in getting the proposal out there and committing themselves to the consultation that is vital to make it a success, and in which he and his party have a role?

The hon. Gentleman makes an important point, but as we discussed in yesterday’s debate on corporation tax, businesses are angry and frustrated about the lack of consultation before measures are announced, and that is one of the factors that makes Britain a difficult place in which to do business. They want a predictable, certain tax system, in which matters are clearly flagged, and they want more consultation, before legislation is introduced rather than after. From the direction of travel of HMRC, businesses had no sense that the measure was likely to be included in the Bill.

I accept that there must be consultation before the legislation is introduced, and that will be the intention, so I am sympathetic to the hon. Gentleman’s point. But believe me, the best way to get the proposal through in the end is to get something down on which we then consult.

I do not agree with the hon. Gentleman. Consultation should have taken place before the Bill was introduced, but now we have the Bill, we need to consider what to do with it. The thrust of my amendment is that we need to get the proposals right, and we need time to do so. If senior accounting officers are to sign off on whether they have appropriate systems of tax accounting for financial periods starting effectively from when the Bill is passed, they will need guidance. They will need to comply for the whole year, and they will have only a matter of weeks before they must know what is meant by the proposal. I would be pleased if the Financial Secretary followed my amendment and decided to defer implementation by a year. That would achieve the objective of the hon. Member for Coventry, North-West (Mr. Robinson) in getting consultation, it would achieve what I would like, and it would give industry and advisers time to make it work properly.

My biggest concerns are about the Bill’s unintended consequences, its impact on our economy’s competitiveness, and the costs that will be incurred. The regulatory impact assessment flagged up big concerns about the impact of the Bill, and it reminded me of the impact that the passing of the Sarbanes-Oxley legislation in the States had on American businesses, and of its benefit to London’s competitiveness. I have always joked that a statue should be erected in the City of London, first to reflect the contribution of Messrs. Sarbanes and Oxley to the success of the City, and secondly, as a reminder that hastily introduced, ill-thought-through legislation can be damaging.

The clause seems to muddy the water as to auditors’ responsibilities and board responsibilities. It does not say whether the senior accounting officer has to be resident or non-resident. It would be better if we debated such issues before the provision is implemented.

My hon. Friend is absolutely right. We have talked about large companies, and there is also the issue of limited liability partnerships. We think private companies are included as well as public companies. It is not clear who the senior accounting officer should be. Should it be the finance director, or the director of tax? What happens if the parent company is overseas and it has a very flat structure, with lots of operating companies in this country? Does each one have to complete a certificate? There is a raft of questions to which we do not have answers, yet companies will have to start to comply with the measure within a matter of weeks. That is my concern.

Clause 92 introduces schedule 46, which is for discussion later in Committee, but as the issue of timing causes the hon. Gentleman concern, it is fair to look at that schedule. Paragraph 19 of that schedule provides for regulation-making powers. It would help the Financial Secretary to address the hon. Gentleman’s concerns about timing and involvement, which I quite understand, if it were clearer in the Bill what those regulations would be about, and when they might be made.

Indeed, and the hon. Gentleman makes an important point about those powers. Perhaps when the Financial Secretary responds, he could say whether he expects draft regulations to have been published by the time we debate schedule 46. It would be helpful if that did happen, because given the nature of the consultation that has taken place to date, we would not feel comfortable passing legislation without having seen a draft of the statutory instruments that will implement the detail of the measure. The issue is not just one of consultation. It is about what the measure means in practice. How far does it go? There are already legislative requirements on companies relating to their accounting systems. There is also HMRC guidance on accounting systems already in place.

On drawing up a set of statutory accounts, a number of my hon. Friends, and the hon. Member for Coventry, North-West will know from their business background that businesses are required to have in place a set of accounting systems that enable them to draw up financial statements. Companies’ financial statements will be audited. Auditors will rely on the systems and controls in place to ensure that the accounts are drawn up on a proper basis. The Companies Acts also confer duties on directors to keep adequate accounting records, and there are penalties if they misfile. There are already obligations on companies to ensure that the tax charge and tax balances figures that appear in their accounts are based on proper accounting systems, so it is not clear how much further the Government are seeking to go in imposing additional duties on senior accounting officers. Again, that is a matter on which we need clarification.

One of the things that has surprised industry about the measure is that industry felt that it was working very closely with HMRC on risk assessment—on making sure that HMRC understands the risks in business relating to accounting for tax. Industry feels that that process has been much more open than it perhaps was historically. Guidance on tax compliance risk management is now published as an HMRC manual. It makes it clear that systems have become a key issue in moving corporates away from high risk and towards low risk. There has been a pilot scheme involving detailed systems reviews of 10 large corporates, and numerous other systems discussions are going on with large corporates, both within HMRC’s large business service and outside that unit in the local compliance large and complex teams.

A lot of work is already going on in HMRC with large companies so that they understand the risks for businesses in producing accurate assessments of their tax position. Under the Finance Act 2008, HMRC has the absolute right to see statutory records. Also under that Act, there is an obligation on corporate businesses to provide reasonable assistance to HMRC’s information technology auditors. There are already significant obligations on companies to work with HMRC, so it is not clear, from a tax angle—let alone from the angle of the normal responsibilities placed on a company through the Companies Acts—what more HMRC is looking for through the powers in the Bill.

May I try to assist the hon. Gentleman? Of course, I cannot speak for HMRC, but as ever, I can refer to the explanatory notes. Volume 4, paragraph 23 of the explanatory notes refers to clause 92 and schedule 46, and it says:

“Currently, there is no legal obligation on any particular director or company officer to ensure that the company has appropriate tax accounting arrangements.”

That seems to be the perceived mischief at which clause 92 and schedule 46 are directed. I have to say to the hon. Gentleman that I am surprised that there is currently no such legal obligation.

The hon. Gentleman makes a point about enforceability and about which person should be under an obligation, but of course a senior accounting officer will already have to sign off the tax returns when they are filed, a finance director will have to sign off the accounts, which include a calculation of the tax liability, and directors are responsible for maintaining proper accounting records. There may not be a specific obligation relating to tax accounting, but there are already broad responsibilities placed on directors to maintain proper accounting records. HMRC needs to justify why it is going beyond the existing tax and legal obligations on companies to provide proper tax accounting systems. That justification is missing. It is a question of HMRC trying to establish what the benefits and costs are of the enforceability that we are discussing. That is what is missing.

I was about to comment on personal accountability. The measure imposes a fine of up to £5,000 on senior accounting officers for non-compliance. I suspect that any senior accounting officer would seek indemnity from their company, and would also look to their auditors. It is a slightly odd situation; the accounting officer will provide the certificate to the auditors, but he will also look to the auditors for compliance.

There is an important point to make on the issue of materiality. I know from my experience as an auditor that one works to a “true and fair view”. There is a concept of audit materiality in that, and it depends on the company to say where that threshold of materiality applies. It is not clear where it applies in the case that we are considering. Clearly, the fact that the Government introduced the proposal suggests that the level of materiality in company accounts is not sufficient: otherwise, they would not have needed to include the clause. They would have been content for the matter to rest where it is. I am not sure whether the Government are clear about where they believe that materiality should be. How much inaccuracy would HMRC be prepared to tolerate in the preparation of tax accounts?

There is a real problem, because although only one fine can be levied per year, one presumes that if there was a problem with tax records going back several years, there would be multiple fines. Some poor fellow could retire, and be sitting in Sandbanks in Poole, and get a knock on the door one day. Let us say that, on his watch, there was a problem with record-keeping in a particular company for four or five years; that person could be asked for £20,000 or £25,000. We need more information, because such a situation would very much go against the grain of limited liability, and the liability of boards.

My hon. Friend makes an important point. We will tease out the detail of the measure in Committee—whether it is retrospective, for what period people will be liable, and so on.

On the issue of materiality, let me put a scenario to the Financial Secretary. I do not know what his experience was after the VAT cut in the pre-Budget report. I remember doing a bit of Christmas shopping and being surprised at the number of shops which, rather than calculating the impact of the VAT cut at the till, relied upon the assistant at the till to do a manual calculation on his or her calculator. I hope that in most cases that calculation was correct—[Interruption.] The hon. Member for Wolverhampton, South-West (Rob Marris) asks whether I checked. Despite the fact that I am a chartered accountant, and although I sit at annual general meetings and check that the accounts add up, in the anal way that accountants have, I did not crosscheck the calculations. What I did check, though, was that the VAT cut was calculated not as 2.5 per cent. of 100 per cent., but as 2.5 per cent. of 117.5 per cent. That bit was okay.

Would the senior accounting officer of, say, John Lewis—come to think of it, John Lewis is a partnership, and I do not know whether partnerships are in or out of the proposed regime, but it is a large business—be accountable for somebody at the till making such a manual calculation on a calculator? I think John Lewis programmed its tills properly, so perhaps that is an unfair example. Any big retailer that did not have time to programme its systems after something unexpected happened, such as the VAT cut, would be dependent upon somebody with a calculator to calculate the reduction at the till. Is that material or immaterial? To my mind it is immaterial. If there was a systemic problem in calculating the VAT cut, I suspect that that might be moving towards material, but we need some guidance on materiality.

I know that materiality is a difficult issue for many organisations, particularly regulators, to deal with. If the regime is to work in a way that will reduce the cost burden on business and maximise the value, industry needs some guidance on what is material from HMRC’s perspective, if HMRC is not prepared to rely on the concept of materiality used in the audit of statutory accounts.

The senior accounting officer’s responsibility is to take reasonable steps. We would not have a big discussion on that, although I, as a lawyer, have some idea what that means. Although I understand the hon. Gentleman’s concerns, it has certainly been found in the field of health and safety, which is my specialist background, that if a particular director is nominated as responsible for safety—not for every incident on the shop floor, but to assume overall responsibility for taking reasonable steps to make sure that there are safe systems and so on—safety improves. I expect the Government’s approach is similar in respect of tax accounting.

That is fine, but there is already an obligation on directors to maintain proper books of records. They already have to sign off the accounts. If there was no responsibility anywhere in the business for signing off the books and records or for signing off the accounts, that would be a valid point. That is probably why it is in the Companies Act already. But we are going beyond the existing requirements, to create a new obligation on senior accounting officers, and I query the need for that move, given all the checks and balances that are in place already through the directors’ statutory duties, the audit and the work that HMRC is doing with large corporates on risk management. What is the rationale for going that much further, given all the existing legal responsibilities?

I am grateful to the hon. Gentleman for his generosity in giving way. There is almost a clash of backgrounds here, but I think it is helpful. In the safety field, similarly, there is a panoply of legislation going back to the Factories Acts, the Factories Act 1961, the Health and Safety at Work etc. Act 1974 and so on, and the law of negligence stemming from the seminal case of Donoghue v. Stevenson in the 1930s. Having a nominated director seems to focus the mind of the organisation, even though there is that legislative background and all those duties exist. I suspect the Government’s approach may be that similar focusing is needed in some companies—a minority—regarding tax accounting.

I am still not persuaded. That is why I look forward to the Financial Secretary’s reply, in which I hope he will lay out explicitly, for the first time in public, what the rationale is for the measure. On Second Reading there was not much reference to it.

Behind the measure lies the particular role that the chief financial officer plays in a company. He is the ultimate point of accountability. That is why, in all the companies with which I have been involved, small ones and some comparatively large ones, the chief financial officer has always had the right of appealing direct to the board as a whole, quite apart from the chairman, and to the chairman, but separate from the executive officer. The provision is, in a sense, an extension of the very particular position that the chief financial officer has in relation to an extremely sensitive issue. The Bill is trying to take that a little further by imposing a sanction—which will no doubt be covered by an indemnity—so that the responsibility is registered personally, as all financial matters are and as the hon. Gentleman rightly says, and directly with the financial officer.

The hon. Gentleman and his hon. Friend the Member for Wolverhampton, South-West are trying valiantly to justify the measure, but I am not persuaded. There are already checks and balances in place to ensure that. If there was feedback from HMRC’s risk assessment that directors were not taking their responsibilities seriously and that there were big gaps in risk, that would be an issue. I also question whether HMRC is concerned that there are material issues with tax compliance. I would expect that to be picked up by auditors and appropriate adjustments to be made.

A good example of where finance directors can get leant on, I suppose—with no insidious implication—would be some of the big banks, such as Royal Bank of Scotland, where even the non-executive directors had nothing to say as liabilities racked up. I wonder where the finance accounting officer was in that. It is another aspect of his position, not directly related to tax, but it is clear why singling out one aspect—in this case, tax—and giving it a special focus could have a bearing and give him a reinforced position on the board.

I have great deal of respect for the hon. Gentleman’s business experience. He comes to the House with some knowledge of large companies, but I am not yet persuaded. The case has not been made. It goes back to the point that I made at the start, which he and I first tussled with, about the lack of consultation. The Government have not gone out there in advance of the Bill to make the case for the requirement. If the case was made, we might well change our minds. That is why time is needed to sort out the issue and nail down exactly why it is needed and what the consequences are.

Presumably the penalty is levied directly by HMRC on the company without recourse to courts—I see nothing that involves courts or appeals—and presumably the company gives the name of a senior accounting officer. Do the tax authorities have to accept a particular name? Some people have a certain reputation with the tax authorities—they may call it battle honours. Clearly, somebody who had had quite a few penalties levied against them might not be the most popular person for the Revenue to deal with. There are many issues here, and I am not sure the Government have explained them fully.

My hon. Friend makes an important point. That is part of the challenge. The case has not been made, which is why people outside are perplexed about the need for the measure.

I have touched on materiality and talked about normal accounting systems. “Tax accounting arrangements” is a vague term. Is it simply the processes? Is it the technology or the people involved? What does “appropriate” mean? These are details that we need to take into account.

The measure’s impact assessment raises some questions. The Government say:

“We forecast an improvement in Exchequer receipts of £140 million over 4 years.”

So it would be quite helpful—perhaps before we reach schedule 46—if the Government were to produce an estimate of how the forecast was reached and what they expect to emerge as a consequence of their focusing responsibility on an individual.

The impact assessment also highlights the Sarbanes-Oxley Act, which I touched on earlier. The assessment says:

“This measure draws on the US 2002 Sarbanes-Oxley Act which put obligations on senior officers of US corporations to certify amongst other things that: they have established and are monitoring certain internal controls, and they have disclosed any material weaknesses in those controls to the company auditors.”

That rang alarm bells in my mind, because the Act had a big impact on business in the United States and created some concern about whether the mooted takeover of the London stock exchange by the New York stock exchange would introduce extra-territorial regulation—whether Sarbanes-Oxley would apply here in the UK.

The issue reminded me of a debate that I had with the current Secretary of State for Children, Schools and Families when he was the Economic Secretary to the Treasury. On that occasion, we debated the Investment, Exchanges and Clearings Houses Bill, which was introduced as an attempt to avoid imposing extra-territoriality on UK businesses, triggered by concerns about the impact of Sarbanes-Oxley. I am therefore rather surprised that the Government have used that legislation to back up this measure, because, at the time, the right hon. Gentleman, referring to a conversation with Christopher Cox, the then chairman of the US Securities and Exchange Commission, and Hank Paulson, the then US Treasury Secretary, said:

“I think that they both share my analysis of the current dangers of the Sarbanes-Oxley regime, which is that the way in which it has been implemented is both burdensome and insufficiently risk-based and that therefore it does not achieve the initial intention.”—[Official Report, 28 November 2006; Vol. 453, c. 1039.]

I should have thought that somebody in the Treasury might have remembered that exchange when drawing up the regulatory impact assessment, because they then could have said that perhaps Sarbanes-Oxley was not the best precedent to cite. Indeed, I should have thought that the Chancellor might have remembered the precedent, because, in a 2007 speech to the Institute of Chartered Accountants, he discussed the reforms that were being introduced in the UK and compared them with the US, saying:

“During a visit to the US last year, I was struck by the extent to which the approach taken by Sarbanes-Oxley—overly burdensome and prescriptive rules—was now seen as the wrong response.”

I do not know whether the Financial Secretary shared the contents of the impact assessment with the Chancellor. If so, the Chancellor might then have remembered that he was quite sceptical about the benefits of Sarbanes-Oxley and the prescriptive rules that it imposed.

Of course, the issue goes right to the top, because even the Prime Minister recognised the implications. He said:

“I was under the same pressure as US legislators to impose blanket proscriptions such as Sarbanes-Oxley. I resisted”—

a great dividing line in politics, there—

“in favour of maintaining a flexible principles-based approach. We will allow nothing to undermine that commitment.”

The Government have argued before that measures inspired by Sarbanes-Oxley are overly burdensome and prescriptive, but the measure before us rings alarm bells: the Treasury has not learned the mistakes of Sarbanes-Oxley and seeks to impose its rules and approach to tax accounting. Interestingly, Deloitte and Touche, when commenting on Sarbanes-Oxley, also queries its relevance, saying that it is

“questionable how relevant the Sarbanes-Oxley experience should be here as the US legislation was developed specifically in relation to financial reporting and so arguably does not extend to tax return preparation process.”

Sarbanes-Oxley led to the significant deterioration in the relative competitiveness of the US when compared with other jurisdictions, but the Bill’s regulatory impact assessment says that

“it”—

the measure—

“has no impact on competition”

and costs are “negligible”. The Government could not have reached that conclusion without having consulted industry first, but they did not, so they are not in a good position to make that statement.

Again, we return to the issue of consultation. The Government must understand the true cost to business. I am sure that Messrs. Sarbanes and Oxley, at the time of their Bill’s passage through Congress, said, “Oh, don’t worry, it will have no impact upon competition, it won’t involve additional costs on business”; that they were quite breezy about it, in the same way that the Financial Secretary is quite breezy about it in the impact assessment that he has signed off; and that, only when it was too late, did they realise that it had a cost and an impact on the US’s competitive position. I just counsel caution.

The Treasury has rather rushed into the initiative, and it is not clear who its author is. I do not get the impression that HMRC has embraced it as warmly as it would if the initiative had been one of its own; and I do not know whether it was a follow-up to the G20 summit, whereby someone said, “Something must be done,” or a response to the TUC’s campaign on the tax gap—a political, knee-jerk reaction in the same way that Sarbanes-Oxley was to problems in the United States. It is not clear who is the father of this great idea.

Before the hon. Gentleman probes the genesis of the measure, I note that he talked about the costs for competitiveness. However, there are real costs, too. Schedule 46 describes accounting arrangements, including arrangements for keeping accounting records, and many businesses will simply assume that that means that they need to get the most up-to-date and expensive enterprise accounting system. The hon. Gentleman will know that the real cost of delivering that—in monetary terms, consultancy fees and management time—can be quite enormous.

The measure could be expensive, and that is part of the problem. No one knows quite how expensive it will be, because no one knows the detail of a measure that was published without consultation. We would have had a better idea of the cost if someone had bothered to ask business beforehand, rather than just slapping it into a Finance Bill as a cracking idea that might get a few cheers from Back Benchers, trade unions—whoever it was targeted at—and saying, “We’ll just finesse the detail later.” That is not good enough, given the issues that this country already faces about the competitiveness of its tax regime, predictability, stability and certainty.

I am bemused by the clause, as are professional advisers and business. I am not even sure that we have a clear justification from the tax people. I talked about systems and materiality, and there are more than 20 taxes that could affect business. Does the clause apply to the accounting for each tax? Is it simply restricted to corporation tax, VAT, pay-as-you-earn and national insurance—the mainstream taxes? Or will business have to look at other taxes, too? I have not even discussed its impact on UK subsidiaries of overseas businesses or how somebody in the UK will get comfort on overseas subsidiaries, because the issue goes back to materiality.

rose—

The hon. Gentleman looks like he is about to make a point, but I know from my experience of working with multinationals that an organisation’s control over, and knowledge of what is happening with, small overseas subsidiaries can be quite limited. It is down to risk and judgment.

The hon. Gentleman asks who fathered the provision; I think that it probably has many fathers. In parts of, for example, Barclays, it seems that no one, including the finance director, knew what was going on, particularly in the separate overseas companies, many of which were seemingly set up for tax purposes. I do not know whether the Government intend to tackle that, but there is a real problem in making a chief finance officer sign off responsibility for the whole company. I understand from my right hon. Friend the Financial Secretary that we are targeting the very biggest companies. If it is the intention to make the chief finance officer responsible for what happens in all a company’s operations, although it is necessary, we must think carefully about what we are doing.

The hon. Gentleman makes an important point about whom we are targeting and the level of control. I remember that the changes that corporate governance control measures introduced got people to examine some of their businesses in more detail. I am conscious of his point about the very largest companies, but I am not sure whether we are considering only those companies. The regulatory impact assessment states:

“Turnover—more than £22.8 million

Balance sheet total—more than £11.4 million

Employees total—more than 250”.

What constitutes “large” for the Government is therefore relatively small.

My hon. Friend the Member for Coventry, North-West (Mr. Robinson) drew on a brief conversation that we had earlier. I will say something specifically about the point that the hon. Member for Fareham (Mr. Hoban) raises, and about narrowing the scope of the provision when I catch the Chairman’s eye.

I am pleased that we seem to have forced a concession from the Financial Secretary. Again, it illustrates the point about ill-thought-through measures and lack of consultation. If the Government had thought matters through properly, the regulatory impact assessment would be better defined than it was when the Financial Secretary signed it off on 20 April. If he is already seeking to narrow the scope, is it a sign that things are coming apart? It demonstrates the weakness of the approach of rushing into something and having to unravel it afterwards.

We had the same experience in last year’s Finance Bill on the treatment of residence and domicile. The relevant provision was delayed till the end of consideration of the Bill to cope with a raft of further amendments on Report. We were assured that it was the last legislation on the matter, yet—lo and behold—this year’s Finance Bill includes more provisions on residence and domicile as a consequence of lack of consultation. I therefore believe that the Government are starting to retreat from their initial position as on 20 April.

Let me reinforce the point that the hon. Member for Coventry, North-West (Mr. Robinson) made. I was with one public limited company, which had 140 units in the UK and one overseas, for five years. It would have been extraordinary if the finance director had been expected to spend half his time examining 139 units and the other half looking at one unit, simply to understand the one overseas operation.

In a way, that goes back to risk and materiality. [Interruption.] The hon. Member for Wolverhampton, South-West said from a sedentary position, “The Bermudan subsidiary.” That is not a reflection on the company for which the hon. Member for Dundee, East (Stewart Hosie) worked. It is interesting to ascertain what constitutes the gap that we are considering. Is it simply straightforward accounting for day-to-day transactions and the normal run of business, or are we looking at a layer of tax planning above day-to-day transactions? Are the Government targeting the latter? I am sure that any attached risks will emerge from HMRC’s risk analysis procedures.

I have spoken for longer than I intended. I thought that I would make a brief contribution to the debate, but hon. Members have made many useful comments about how the provision will work in practice.

I end with a quote from the Institute of Chartered Accountants, which helps summarise the position. It says of clause 92:

“This proposed new requirement appears to impose further onerous obligations whilst adding nothing new in terms of tax compliance. The proposed measure is disproportionate because it applies a potentially onerous personal liability on all the senior accounting officers ab initio. HMRC’s risk analysis procedures should identify the small number of large companies that do not have adequate accounting systems to prepare a correct and complete return. Rather than introduce this measure, if HMRC is concerned about internal accounting systems it would make more sense to extend the existing declaration that is required on the corporation tax return.”

That is a balanced criticism of the provision, which has been hastily introduced with inadequate consultation. There are many grey areas, yet companies will be required to comply with it from an accounting period that starts the day after the Bill receives Royal Assent, without sight of draft secondary legislation. In the interests of maintaining industry’s confidence in HMRC and ensuring that HMRC knows what it is doing, the reason for doing it and what the costs and benefits are, we should delay implementation until the first anniversary of the Bill’s passage.

I want briefly to take up a few points in the light of that discussion. I shall start from the same point as the Conservative spokesman. Clearly, there must be a great deal of consultation on this provision, and it should not be implemented until the consultation has ironed out the bulk of the problems that are bound to be associated with it. However, I put it to the hon. Member for Fareham (Mr. Hoban) that if we consulted in detail on legislation like this before including it in a Bill, we would never get the Bill, because of the attitude of those who, understandably, do not want any form of additional regulation, bureaucratic control or paperwork, or any of the costs that the hon. Member for Dundee, East (Stewart Hosie) identified. We would never get there, so it is much more sensible to produce something first. HMRC is in touch with all companies’ accounting officers. It knows what it is after, and the companies do, too—and that knowledge is built into what is before us. It is not as though the provision had been plucked out of the air—although it may sometimes suit the Opposition to suggest that that is the case.

The time to deal with the detail will be when the Bill goes into Committee upstairs. The companies meet HMRC in between the Committee sittings—that is how it always happens—and I am sure that the Government will be open to amendment, where appropriate. The hon. Member for Fareham makes a good case for consultation, which does happen, but he gets it the wrong way round if he thinks that we could have such detailed consultation before including anything in the Bill.

However, I think that a year’s delay would be sensible, if there were agreement on that—but whether the Government would go that far, I do not know.

Join us in the Lobby.

There is no question of that. If the hon. Gentleman ever had to work with HMRC and companies—a remote possibility—I would urge him not to believe that he can undertake meaningful consultation before first producing something in a Finance Bill.

Does my hon. Friend share my concern that in the body politic in the United Kingdom, we—this applies to all parties—have developed a regrettable tendency, which is that although we all say that discussion and debate are good, when someone changes their mind as a result of that debate, we claim that they are performing a U-turn, and that that change of mind proves that the original measure was ill thought out or rushed? That is regrettable, because that is what we do in this place: we share ideas here and discuss them, and occasionally people change their minds. That is an honourable thing to do.

Indeed, it is not just honourable; it is the correct way to proceed. I used to start debates in Committee by saying, “Look, this is for discussion and we are looking to get it right.” If a point then came when the Minister made a sensible compromise or came to an agreement—not that that would necessarily happen, because in those days the Opposition had often not even tabled an amendment for the first sitting—we would hear, “The Government are collapsing! A huge concession! Holes knocked in the legislation!” That is not what Committee is about. I never had a problem with reaching for amendments, if that was the right thing to do—that is the whole purpose of the process—providing, of course, that they did not vitiate the essence or the purpose of the Bill. Indeed, if an amendment commends itself to the Minister, it should enhance the Bill.

I was interested in what the hon. Member for Fareham said about the law that was introduced in the United States in the wake of the Enron and WorldCom scandals, when the United States went in for what we called “heavy regulation”, which contrasted with what we over here called “light-touch regulation”, which I am sure the hon. Gentleman and the Financial Secretary will remember. I was not in the Treasury at the time, but I knew what was going on. We thought that that difference would give us a huge competitive edge, but it is interesting to see how things turned out.

That issue was meant to be about financial controls, but what went wrong with the banks was, in large part, to do with the lack of financial controls, albeit in a different sector now. Despite the heavy regulation in the United States, the problem started there—Gillian Tett has shown that clearly in her book “Fool’s Gold”—and then it spread, and we are clearly caught up in it. However, that regulation did no good for the sector that was about to blow up in the United States, whereas our light-touch regulation is now being blamed for what happened here.

What clearly went wrong was that people were not being intelligent about regulation—that is what it comes down to—and neither were the central banks. Although we took away regulation from the Bank of England and gave it to the Financial Services Authority, the Bank still had an overall direct responsibility. I remember Eddie George saying, “I’m afraid of a systemic collapse,” which is why he wanted that responsibility, and the money for it. That responsibility was clearly left with the Bank of England when we made that change. It is no good for the Bank to say, “It was all passed over to the FSA.” It was not: the integrity of the entire banking system was left clearly with the Bank.

Everybody was looking at the wrong thing, or not looking hard enough at the right thing. That is what happened in the United States. If we do not focus intelligently on the area that poses a threat to the economy, we will do no good, whatever sort of regulation we have, however many people we have and however many pieces of legislation we have to back it up.

May I give my hon. Friend an example? The Canadian banking system has been far stronger than the banking systems in the USA or the United Kingdom. However, in Canada, under the Office of the Superintendent of Financial Institutions, there is less regulation. Banking is more heavily regulated in the USA, but the Canadians take a risk-based approach, on the basis that: “We know risk when we smell it and we’ll get in there.” It is not just a question of regulation; it is a question of philosophy.

My hon. Friend is dead right, and I agree with him entirely. The idea of bureaucracy regulating entrepreneurial banks will never be terribly effective.

To return to clause 92, I am pleased that we are approaching the issue in the way that we are. I am sure that the Government will listen hard to what the industry says, and I am sure that we can get things right. As for why we are focusing on tax as we are, to me that does not pose the sort of problem that it seems to pose for the hon. Member for Fareham. In view of the multiplicity of taxation arrangements burgeoning throughout the world, I can quite understand the position of the United States Government under President Obama and that of the German and French Governments, who have always been strong on this issue, and why we have a particular focus in the UK on strengthening tax function and tax accountability; the words in the Bill speak of all this. It seems inevitable that that should be part of the review that we are having, when so much of the tax take appears to be disappearing overseas. I am not sure that that is directly linked, but I cannot help but feel that it is part of the mentality that has led to this part of the Bill.

The proposals are far-reaching in their implications and were introduced without meaningful notice or consultation. I have received representations from groups such as the Chartered Institute of Taxation and the Institute of Chartered Accountants in England and Wales, and from companies such as PricewaterhouseCoopers. They have raised a series of concerns with me, as they no doubt have with MPs from all parties, about the potential implications of what we are considering, including what they regard as possibly unforeseen implications. Indeed, the hon. Member for Fareham (Mr. Hoban) read out a quotation from the Institute of Chartered Accountants that summed up those concerns precisely.

I propose to highlight three concerns that my party and I have about the Government’s proposals, and then to suggest how we might deal with them. The first concern is about the aspect of personal liability. All parties in the House would wish to see companies that failed to comply with the law dealt with accordingly, but the Government’s proposal makes a distinction between the organisation and the individual. The hon. Member for Poole (Mr. Syms) asked what implications that might have, and whether they might go further than the Government envisaged. It is therefore important to explore the aspect of personal liability in greater depth in Committee.

Our second concern is about the lack of clear definition. Paragraph 8 of schedule 46 says that only the most recent senior accounting officer will be liable, but there will still be issues if errors have been made in the past. If the most recent senior accounting officer has been in post only for a short period, the provision may not be so satisfactory, whereas if he or she has been in post for a long time, we would be able to go back much further. There is therefore some doubt about how the provision will apply in practice.

No one knows what HMRC thinks will constitute adequate or accurate reporting systems. One person’s idea of adequacy may be markedly different from another person’s. Indeed, in accountancy, one person’s idea of accuracy may occasionally be different from another person’s idea of accuracy. As far as I am aware, no guidelines have been published so far to clarify those points.

My final point about the lack of definition is about the implications for UK multinationals based primarily in this country—a point that was made earlier. However, I do not think that the following point has been made: what if the senior accounting officer is not based in the United Kingdom, even if most of the company is? How will the law work in practice then?

The third area of concern that I have identified in gathering together the themes that others have expressed to me relates to the regulatory burden and the costs involved. The rules will be up and running from October, and there is genuine anxiety that this does not provide a fair period for companies to respond and incorporate the new rules into their practices. My understanding is that the Government say that the new arrangements merely formalise the procedure that is often observed by companies, but all the representations that have been made to me by the industry bodies that I have just named suggest that the legislation goes further than that. There are also questions about the cost to business and the anticipated extra yield to the Exchequer, and about whether the additional money raised will be sufficient to justify the potential additional cost to business.

Those are my concerns, based on my discussions with others. Thinking through these issues as carefully as I can has led me to come up with four brief guiding principles for seeking to address the situation. First, my party believes that we should support measures to improve accountancy procedures in the interest of transparency. Everyone would accept that we want to see companies complying with the law in a transparent way, and not unreasonably trying to avoid their obligations.

I completely understand the Government’s desire to maximise the tax yield within the laws of this country, particularly when we have such an enormous public deficit. The need for the Government to raise money is obvious for all to see. We also recognise, however, that there are many concerns over the wording, the short notice period, the regulatory burden and the personal penalties in schedule 46. It is therefore reasonable to allow this measure to go to Committee, because although the overall objective of greater transparency is reasonable, there will need to be further consideration of those specific points.

The second point relates directly to the amendment tabled by the hon. Member for Fareham, with which I have a lot of sympathy. It is logical to provide for some breathing space in which the rules can be reviewed, so that companies do not fall foul of them unwittingly. Some concerns have been raised with me, however. First, there could be a tendency for some companies—not those that observe best practice, which are unlikely to fall foul of the rules anyway—to see a year’s delay as another year in which they can ignore the problem, and they might not be any better prepared when the legislation comes into force than they would have been if it had taken effect sooner. To be more cynical, one could suggest that other companies could use the year to give themselves more time to think about how to evade the spirit of the law.

The hon. Gentleman is making an important point about how people could use the year’s delay. He will know from reading the Bill that there are two certificates involved: a type A certificate and a type B certificate. Certificate B is used when a company cannot sign off using certificate A and some explanation is required. One concern that has been expressed is that in the first year many businesses will have to file type B certificates anyway, and give an explanation of why they cannot comply, not because they are being difficult or because their systems are not up to scratch, but because of the short notice period. There is a danger of confusing the picture by rushing this measure in with undue haste, without properly identifying which companies are not compliant and which are.

I completely accept the hon. Gentleman’s point, and his honourable intentions. The trade-off that we always have to grapple with on these occasions is that if a measure has some merit—we all accept that there is some merit in the Government’s proposals—we have to decide how long to delay introducing it in order to ensure that it will work even more effectively. There is a strong case for saying that the added benefit of having a more workable measure will justify the year’s delay in implementation, as the hon. Gentleman’s amendment suggests. However, I believe that such a delay would have potential downsides as well as advantages.

My third point is that I hope the matter will be examined in further detail in Committee. I am sure that the Committee will not seek to remove the clause altogether today, and I hope that I will be able to table amendments in Committee that could reconcile these points, as that might be a more appropriate forum in which to discuss them.

My final point is a broader matter of principle. Objections have been raised about the so-called concept of naming and shaming. I want to put on record the fact that my party is not against naming and shaming per se—the practice might have a part to play—but we want to ensure that it is those who deliberately evade tax who are treated in that way, rather than those who have made a genuine, and in some cases very small, error. The state should not treat individuals and their reputations in a heavy-handed way. If it puts their names into the public arena in a way that damages their career prospects and other private interests, and subsequently finds that that action has been out of all proportion to the offence—which might have been committed unwittingly as well as being modest in scale—it will have exceeded its power in terms of its relative might and the individual over whom it wields its power. We need to observe that important principle in our deliberations. We need to strike a balance between transparency and effectiveness, and between the rights of the individual and the understandable desire of the Government to collect tax revenue legally owed to them.

We accept that there is some virtue in the proposals, but they require considerable further attention, and it might not be desirable to bring these matters to a head this afternoon. After we have heard further representations in the House and externally, we should try to come up with proposals in Committee that are more satisfactory to more people who have a direct interest in these matters.

I declare my interest in today’s proceedings on the Finance Bill, as shown in the Register of Members’ Interests.

I agree with the amendment tabled by my hon. Friend the Member for Fareham (Mr. Hoban). His proposal is very sensible, given the speed with which the Government are trying to rush through the measure.

Although I have a number of questions, I am glad that the Minister has already said that he will tell us House more about the definition of a large company, because that will be useful for our debate. Under the provisions, a company will have to notify Her Majesty’s Revenue and Customs of the name of its senior accounting officer. I assume that it will also have to provide the company’s address, but will it have to provide all the company’s addresses for which the officer is responsible? Will he or she have to give their home address, as they will have some personal responsibility for what is discharged? Will the individual in question have to be resident—could they be a non-dom? These are important questions. HMRC does not require people to have DNA tests, but you never know.

We have to be very careful when setting out what we want from senior accounting officers. We have already discussed subsidiaries, including overseas subsidiaries and those that are sometimes set up for particular financial transactions, such as the purchase of plant, and I think that there are difficulties involved in that. I also think that there are difficulties involved in the appointment of a new senior accounting officer. The first thing that he or she will have to do is go through all the accountancy procedures and conduct a risk analysis of every part of the business. In the case of large companies, that could not be done particularly quickly. We shall need to see HMRC guidance on what senior accounting officers have to do.

Consensus is emerging on the need for a transparent financial and accounting system. There might be a need to improve and tighten up tax accounting arrangements, but I am not convinced of the merit of the Government’s approach. The question that I am still asking is, “Why now?”

The hon. Member for Coventry, North-West (Mr. Robinson) described some ways in which pressure could be put on finance officers in the banking system, but I do not think he was suggesting that there was any evidence that that had already happened. While his observations were valuable as theoretical points, they left me still wondering what specific evidence had led HMRC to require clause 92 to deal with an existing problem. It would be helpful if the Financial Secretary could return to that question.

What the hon. Gentleman says about my comments is pretty well true, but given the entirety of what has happened to investment and other banking systems in America and here, it is hard to escape the conclusion that not just the risk element but the overall finance control system in those banks was nowhere near strong enough.

That is a valid point, but I am trying to establish whether there is a causal link between what happened to the banking system and the introduction of clause 92. So far I have seen no evidence of that, or of a causal link with other things that have gone wrong.

The hon. Member for Coventry, North-West (Mr. Robinson) made a good point about the banks. The views of accounting officers on the company and its reports might depend on whether they were in line for bonuses.

As usual, my hon. Friend makes an interesting observation.

I was not sure whether the hon. Member for Coventry, North-West was saying that it was not a good idea to consult before provisions were inserted in a Bill because that would lead to the distortion of those provisions, but if that were the case, I would not see the point of consultation at all. His argument undermines the whole process and casts an unnecessary pall over what I consider to be the positive and mature way in which organisations such as the Institute of Chartered Accountants have approached consultation on a range of issues with a number of bodies, including the Government.

My basic premise is indeed that it is better to invite consultation once the purpose of proposed legislation has been stated but, as I tried to explain to the hon. Member for Fareham (Mr. Hoban), the corollary is that the Government must be prepared to amend legislation, realistically and willingly, in the course of the consultation.

That is an interesting point, but I do not believe that the trust that is necessary between the bodies being consulted and whoever is consulting them will be strengthened by the fact that they are being consulted only when the structure and philosophy of legislation has already gone quite a long way down the road.

Let me say a bit more about philosophy. The hon. Member for Wolverhampton, South-West (Rob Marris) made a valid distinction between the philosophical differences between the approaches to the clause adopted by the two sides of the Committee which, I think, are exemplified by paragraphs 23 and 24 of the explanatory note on clause 92. Paragraph 24 establishes what we consider to be the better principle-based approach in stating:

“Ensuring appropriate tax accounting arrangements are in place is no more than compliant companies will be doing already.”

There are two points to be made about that.

“Ensuring appropriate tax accounting arrangements are in place”

is the principle that we would expect to underlie the clause, while the words

“is no more than compliant companies will be doing already”

raise the question of why the clause is needed at all. What evidence will there be of the number of non-compliant companies, and how is that number to be established?

Paragraph 23, which the hon. Gentleman quoted, states:

“Currently, there is no legal obligation on any particular director…to ensure that the company has appropriate tax accounts arrangements.”

To me, that illustrates a tendency towards a rules-based system which, in my view, has a number of negative effects on companies’ positive approach to organising their affairs. I am in the principles-based camp; I do not think that we should tie things up unnecessarily.

I wish to turn to the Sarbanes-Oxley Act comparison, because a number of issues arise there. Given that a comparison has been made with that measure and that reliance has been placed on the experience of it, I wonder whether any reasonably substantial and detailed work has been done to examine its effects. It is fine to talk in terms of generalisations and broad comparisons, but we need detailed experience if we are going to rely on it. We have seen one aspect of how that measure could materially affect companies: the additional costs and obligations that it puts on them. I understand that the accounting profession takes the firm view that additional costs arise from the measure.

The other issue that Sarbanes-Oxley raises has already been touched on in relation to materiality. The Act introduced something related to financial accounting rather than to tax accounting. As I understand it, built into that system is a concept of materiality. We need an indication from the Minister as to whether we are now accepting the concept of materiality in tax returns as well as in financials.

It would be useful to understand a bit better the way in which what is required by the clause will interact with the existing accounting framework. Most accounting systems comply with UK generally accepted accounting principles, but are we now saying that changes will be needed to UK GAAP to reflect the tax aspects of the measure? Are we saying that, for tax purposes, we will need additional requirements above UK GAAP? The measure does not address the question of integration within one system and how we judge, in terms of the prospect for revenues, other accounting regulations—not just UK GAAP but overseas regulations.

For the reasons that I and that many hon. Members have given in the light of the uncertainty surrounding the clause, I support the amendment.

We have had a useful discussion on this important measure. In the Budget, the Government took difficult decisions to support fiscal consolidation, taking steps to support businesses and households, but also setting out the credible path that we must follow to return public finances to sustainability in a fair way. Protecting tax revenues is an important part of that. It is right that as part of our fiscal consolidation, we act now—I recognise that there is some urgency—to lock in tax compliance and to protect tax revenues.

The majority of senior accounting officers are already ensuring that appropriate tax accounting arrangements are in place in their companies or groups. For them, the burden of the new requirement will be minimal, requiring little more than to certify the existence of what is already in place. However, a minority—I think it is quite a small minority—of companies do not have robust systems and processes in place. It is difficult for either the company or HMRC to know whether the right tax is being paid. We want identified individuals to take responsibility for putting that right. I will give a couple of examples.

If the weaknesses in the system were so great, would not the Minister have expected those companies’ accounts to have been qualified?

Let me give the hon. Gentleman the examples that I have in mind. There have been companies where tax computations are calculated incorrectly each year due to known accounting system problems. We want it to be clear whose job it is to sort that out. One group had systems problems every year, could not identify the source of the problems and could not satisfy HMRC that the tax computation was correct. It needs to be crystal clear whose responsibility it is to resolve such an issue. Therefore, this is not about human error or genuine mistakes, as paragraph 1 of schedule 46 makes clear. It is about systems problems leading to persistent under-reporting of tax.

On amendments, may I suggest that the Minister looks at the definition of a senior accounting officer? Currently the definition is

“the director or officer of the company who has overall responsibility”.

I think that it should be a director; it should not just be an officer, who could be below board level. I want the focus to which I referred in one of my interventions on the generous hon. Member for Fareham (Mr. Hoban).

I will certainly reflect on that, but it should be for the company to determine who will have the overall responsibility that the schedule sets out, so I would be hesitant about being more prescriptive.

The point of the person being on the board, as opposed to being an officer, is that being on the board carries certain specific personal liabilities. The chief financial officer or the person with tax responsibilities might in many cases be taken off the board precisely so that they avoid that sort of responsibility, which a directorship carries with it. Will my right hon. Friend undertake to look into this point?

I will be very happy to reflect on it, but it should be the company concerned that makes the judgment as to which individual should carry this significant personal responsibility, which is rightly set out in this part of the Bill.

The hon. Members for Fareham and for Taunton asked when guidance would be ready, and I agree with them about the importance of getting the technical guidance right. The legislation must be implemented in a way that is consistent with the intention that I have set out. There should be minimal impact on companies and their senior accounting officers who already have robust systems in place, and HMRC is having some good discussions with those involved. It will work with them to develop and agree the guidance, and I will ensure that draft guidance is with the Committee before it considers the schedule.

The hon. Members for Fareham and for Henley (John Howell) talked about the reference to Sarbanes-Oxley in the impact assessment, and I understand why they did so, but we need to make it clear that we are not here importing Sarbanes-Oxley legislation to the UK. Sarbanes-Oxley is very extensive and covers a far wider range of issues than the quite limited measure in question, such as corporate governance, financial reporting and company law, rather than tax. No specific element of Sarbanes-Oxley is replicated in clause 92 or schedule 46. There is an analogy in that an element of personal responsibility is a characteristic of both the Sarbanes-Oxley legislation and this measure, but none of the specific Sarbanes-Oxley measures is replicated here.

Let me pick up on some of the other points that have been raised in the debate. I hope that former accountants enjoying their retirement in Sandbanks and elsewhere will be reassured to learn that because the obligations imposed apply only in relation to financial years beginning on or after Royal Assent, there is no question of any senior accounting officer being held retrospectively responsible for any shortcomings in a company’s tax accounting arrangements.

I have mentioned one set of regulations that the draft schedule gives us the power to introduce: those to restrict the number of companies. As I have made clear, we will not be introducing such regulations, because we will take the action through amendment instead. We will be able to bring forward in draft form the other set of regulations, on penalties, that schedule 46 allows us to introduce before we reach that part of the debate in Committee.

The Government should be able to expect senior accounting officers to be satisfied that they have the appropriate systems in place to ensure that they can submit accurate tax returns. As I hope I have suggested, there is a problem, which clause 92 addresses.

Will the right hon. Gentleman comment on the issue of materiality? We discussed this point earlier in the context of the materiality that auditors use to sign off accounts. What level of materiality will HMRC employ when looking at the appropriateness of tax accounting systems and the accuracy of returns?

As the hon. Gentleman knows, companies already have an obligation to deliver correct and complete returns. The measure ensures that the minority of senior accounting officers who do not oversee systems that generate correct and complete computations take responsibility for addressing that. That is the level of the bar that we envisage applying.

There may be a systemic problem in a system that means that the calculation of tax on each transaction is out by as little as a penny or as much as a pound, and clearly those different amounts will have a different impact on the tax liability. How precise does the Revenue expect to be in applying these sanctions to senior accounting officers?

That is a perfectly fair point and we will certainly need to address it in the guidance, but what is important is that this is about ensuring that the systems are sound and robust, rather than about the dangers of mistakes that might from time to time occur.

The right hon. Gentleman gave an example earlier involving a company that was systemically under-reporting tax due from year to year. How much is involved in that case?

I do not know the precise figures in that case. The hon. Gentleman mentioned the figure that we set out in the Budget documentation on Budget yield over the next few years arising from this measure. We estimate that in the first year there will be an additional tax yield of £40 million, and a rather larger sum in the years after that. Cumulatively, we are therefore talking about significant sums, and this is an important contribution that is needed for the fiscal consolidation that we require.

As I have said, we need to make some amendments, including in the light of perfectly fair points made in this debate.

There is a natural preoccupation that systems should be robust, but it has always struck me that systems can be as robust, detailed and complicated as we like, but they are only as good as the people who operate them. It is good that this complementarity has been introduced. Systems must be robust, but in order to make sure that they work properly, the first officer responsible has to see to it that the sanction and responsibility put on them will achieve just that end.

My hon. Friend is right and I am grateful to him for making that point.

The hon. Member for Taunton is right that it does not make sense to defer this measure for a year. There are certainly some detailed measures that we need to introduce and debates that we need to have, and as I have signalled, some amendments will need to be tabled. There would, of course, be a cost in deferring for a year. We need to get on with it, and the Government’s response in terms of the fiscal consolidation we have set out needs to proceed. I therefore hope that the hon. Member for Fareham and his hon. Friends will feel able to withdraw their amendment. If they do not, I hope the Committee will reject it.

I am not convinced by the Financial Secretary’s response to the debate. He talks about what we are considering being an appropriate measure of fiscal consolidation that will raise £40 million in the first year. This is in the context, of course, of a budget deficit of £175 billion. I asked him about the monetary amount of the systems error that he prayed in aid in respect of this measure, but he did not know how much that was going to be. I worked out, not in a systematic way but on the back of a notional fag packet, that the amount involved per business covered by this measure would be £30,000 to £40,000, which is not a material sum. I am just not persuaded yet that the Financial Secretary has made a case as to why we should impose this legislation on large businesses, notwithstanding the welcome concession that he has made in restricting the number of businesses to which it will apply. Why would this measure be imposed without any real work having been done by the Government on the costs that businesses will incur as a consequence of its introduction?

I do not know whether it is appropriate to say so in these circumstances, but it is a pleasure to serve under your chairmanship, Mr. Atkinson.

Vehicle excise duty was one of the stories of last year’s Finance Bill and the 2008 Budget. I will be relatively brief—and I can assure the Exchequer Secretary that this issue will not keep her here until the early hours of the morning—but it may be useful to return to the proposals in that Budget. In particular, I wish to take the opportunity to pay tribute to the tenacious work of my hon. Friend the Member for Putney (Justine Greening) in examining and unravelling the Government’s case.

The Committee will recall that in the 2008 Budget the Chancellor of the Exchequer set out his proposals to reform vehicle excise duty, which included introducing a greater range of gradations in bands on the basis of CO₂ emissions. He told the House that that was a sensible green measure, saying that

“the road tax system should do more to support the use of more carbon-efficiency…There will be an incentive to encourage drivers to choose the least polluting car.”—[Official Report, 12 March 2008; Vol. 473, c. 297.]

My hon. Friend started to examine the details of that policy and several points emerged.

First, the Chancellor claimed that the proposal was a green measure, but it clearly sought to raise revenue. Of course, the proposals on vehicle excise duty in this Finance Bill have been largely shaped by the arguments and the analysis of last summer. Thanks to my hon. Friend’s work, it emerged that the original proposals would reduce motor vehicle emissions by 160,000 tonnes a year by 2020. To put that in context, that is a fraction of 1 per cent. of total transport CO₂ emissions, which in 2006 amounted to 120 million tonnes. We can see immediately that the proposals’ green credentials were somewhat weakened, and I would be grateful if the Exchequer Secretary gave her assessment of the green benefits of the original proposals and of the proposals in clause 14.

Another green argument needs to be addressed. It was persuasively argued that a number of older cars would essentially become unsaleable and have to be scrapped as a consequence of the new VED scheme, which would have an environmental impact. I do not wish to deviate from the subject of VED, but that point throws up the issue of the environmental impact of the car scrappage schemes. It would be helpful if the Minister said a word or two on the environmental pluses and minuses of scrapping older cars. Clearly, newer cars are more efficient and, by and large, have lower CO₂ emissions, but quite a lot of carbon is involved in car manufacture. I ask that purely to inquire about the Government’s analysis.

May I inquire, purely to seek information, whether the hon. Gentleman can confirm that his party stands by its commitments on green issues, particularly on green taxation?

Yes, we do. I shall come back to that point—that was a perfectly fair question. I suspect that quite a bit of this afternoon will be devoted to green taxation of one sort or another. After this debate, we will debate fuel duties and I want to say quite a bit more on the subject at that point.

My second point is to ask whether the VED proposals in the last year’s Budget and those in this Finance Bill are retrospective. I have already praised my hon. Friend the Member for Putney, but a word should also be said about the hon. Member for Blyth Valley (Mr. Campbell), who tabled an early-day motion and secured considerable support from both sides of the House—

What about the hon. Member for Wolverhampton, South-West (Rob Marris)?

Indeed, it would be a great omission not to mention him.

Is the measure retrospective? If someone has bought a car that was made or registered after 2001, and subsequently found that they will pay more VED in future years, they are committed to that car. They are stuck with it and are faced with a tax bill that they did not anticipate. People argued whether the provision was retrospective—I think that it is —and I would be grateful if the Minister confirmed her view. On 14 May 2008, in column 1495 of Hansard, she referred to page 121, paragraph A.97 of the Red Book, which, she said, contained details of the retrospective element. It seems to me that there is a retrospective element, and that point applies to this clause, albeit that the effects are less dramatic than perhaps was originally envisaged last year. Will the Minister confirm her interpretation of that point?

That raises the issue of unfairness and of who will be hit by the provisions. The hon. Members for Blyth Valley and for Wolverhampton, South-West asked who would be affected by the change in VED. Let me put that in the context of the clause, although that question could still be asked of the original proposals. It would appear that some 1.2 million drivers will experience rises of more than £200, and that many others will be affected. They would say that it is very difficult to change their behaviour when they have already acquired the cars, which comes back to the green taxation point I was making a moment or so ago.

Will the hon. Gentleman give way?

I will. I should make it clear that the figures I have been quoting are those given in the debate last year. If the Exchequer Secretary can update me, I would be very grateful.

Will the hon. Gentleman at least acknowledge that we are talking about increases in VED this year of no more than £5 per car and increases of no more than £30 next year?

I do. In the pre-Budget report, the Government changed their position, and many of my remarks praise those who were able to persuade the Government to do so. I am asking the Minister to explain what persuaded them to change their position. Was it the argument that it was not a green tax? Was it the argument that it was retrospective? Was it the argument that those who were going to be affected were not just rich executives driving around in gas guzzlers but those across the income distribution scale? What persuaded the Government to move from the position we were in this time last year to the position we are in now, where, as the Minister says, the increase will be no more than £5 this coming year and no more than £30 next year? I am trying to understand the Government’s position.

There is continuity in what we had last year and what we have this year. In both the Budget and the pre-Budget report, which essentially set out what we have now, the Government stated that the majority of drivers will be better off or no worse off under the proposals. That is right, in my understanding. However, it is right in relation to the original proposals only if one includes those drivers who are not paying graduated VED at all. Let me quote the figures from last year—I am sure that the Minister will update the Committee on the figures for this year. The vast majority of the 15.5 million motorists who paid graduated VED would pay more. I would be grateful if the Minister said that that figure no longer applies.

I want to make it clear that we are not just talking about the larger models. The duty would also apply to people who drive Ford Mondeos. I should declare an interest as a driver of a Ford Mondeo estate—

A larger car.