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Grand Committee

Volume 669: debated on Thursday 24 February 2005

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Official Report Of The Grand Committee On The Commissioners For Revenue And Customs Bill

(Second Day)

Thursday, 24 February 2005.

The Committee met at quarter past three of the clock.

[The Deputy Chairman of Committees (Baroness Ramsay of Cartvale) in the Chair.]

Clause 11 [Treasury directions]:

moved Amendment No. 26:

Page 5. line 33, at end insert—
"( ) Any direction given under this section shall be in writing and a copy of it shall be laid before each House of Parliament within seven days of its issue."
The noble Baroness said: Clause 11 allows the Treasury to give directions of a general nature to the Commissioners for Revenue and Customs. That is similar to the existing power for the Treasury to direct the Inland Revenue and Customs and Excise. While the wording is somewhat different, it replicates the majority of the substance of the current relationship.

Clause 11 conceals an extension of the powers of direction to the collection and management of Customs and Excise—for example, the collection of VAT. We shall not object to that but I observe that the Explanatory Notes have been less than open and honest about it, which I regret. The Bill has been portrayed as one which does not extend existing powers. That is not in all instances an accurate description. I believe that it is incumbent on the Government to be open about that, for example, in the Explanatory Notes.

It has to be admitted that whenever we consider Bills and find powers of direction, especially when the Treasury is involved, our hackles rise. We always suspect the worst when the Treasury is involved and we usually try to delete such powers—rarely with success, it has to be said.

I have read the debate which took place in Standing Committee E in another place and can see that the accountability of Treasury Ministers to Parliament requires Ministers to have some explicit powers to direct the Commissioners for Revenue and Customs. I can also accept, in principle, that the words "of a general nature" are intended to convey that Ministers should not give directions as to how the tax system operates in specific cases. In particular, Ministers must not have the power to instruct the Commissioners for Revenue and Customs in relation to the affairs of individual taxpayers. It might have been better to formulate the power in terms which explicitly excluded individual taxpayers, but I shall not pursue that today.

I have seen the recent correspondence from the noble and learned Lord the Attorney-General arid the noble Lord, Lord Holme of Cheltenham, in his capacity as chairman of the Constitution Committee of your Lordships' House. I thank the noble and learned Lord for providing us with copies of that correspondence earlier this week; it was extremely helpful. I look forward to hearing what the Constitution Committee thinks of the noble and learned Lord's reply. However, for today, Amendment No. 26 seeks not to strike out the power of direction but to make directions subject to parliamentary procedure.

The amendment responds to residual concerns about the use of the power of direction, not to the power itself. In the hands of Ministers who are less than scrupulous—and I make no suggestion that this is a concern with current Ministers—such a power of direction could be manipulated to achieve a specific result while being dressed up as a general direction. Anyone who has looked to Russia and seen what has happened in relation to Yukos through the operation of the tax system will want to ensure that that could never ever happen in this country.

Amendment No. 26 simply requires that any direction made under Clause 11 should be made in writing and that a copy is to be laid before each House of Parliament within seven days. The way in which the power of direction is being used in practice will then be open and transparent. Parliamentarians and others who follow proceedings in both Houses will then have the opportunity to satisfy themselves as to the appropriateness—or otherwise—of the use of the power of direction.

It was suggested in another place that Treasury Ministers directed the Inland Revenue and Customs and Excise all the time, sometimes informally. The noble and learned Lord's letter to the chairman of the Constitution Committee has some flavour of this. I think that this confuses routine dialogue between Ministers and civil servants on the direction. This is a non-ministerial government department so Ministers do not direct the workings of the department in the same way as they do in, say, the Treasury.

Of course, those Ministers will be constantly involved with the commissioners and other officials about policy and other matters. When that happens, there will be a great many conversations about issues and there will usually be agreement as to how the Commissioners for Revenue and Customs are to proceed. But where there is no agreement, Ministers will have, in effect, a reserve power to intervene under Clause 11.

It is difficult to see exactly how the power might be used but perhaps there could be a direction to clamp down on a particular class of taxpayer in circumstances that the commissioners did not think were cost-effective or consistent with other policies they were operating towards that class of taxpayer or other classes of taxpayer; or perhaps Ministers might issue a ban on making compulsory redundancies even though the commissioners thought it necessary to do so in the context of the management of the collection of tax and the administration of the tax system.

Whatever the underlying reason, the purpose of the amendment is to ensure that Parliament is told that the direction has been made and to allow, if appropriate, a debate on the reasons for the direction being made.

In another place the Paymaster General argued that the Freedom of Information Act would provide sufficient safeguards. I do not think that it is reasonable to expect parliamentarians to invoke that Act as a substitute for proper disclosure to Parliament on matters where it can be seen in advance that Parliament will have an interest. Surely the issue of a direction in circumstances in which the commissioners would not wish to act is an area in which Parliament will have a natural and legitimate interest. I beg to move.

The problem I have with the amendment and with the clause is a definitional one of what constitutes a direction. Indeed, the noble Baroness alluded to this issue in her speech. As she said, the way in which the Revenue departments work with Treasury Ministers involves a dialogue. It is very similar to the way in which senior civil servants work with Ministers in any other department. Therefore, the way in which decisions are taken is very often not by way of a war order—a capital "D" direction—but as a result of papers going back and forth between departments over a period and agreement being reached on how to proceed. The problem that the noble Baroness runs into is how to decide what constitutes a direction and, in her mind, the matters that are really important and where there is a difference of view, as opposed to the considerable run-of-the-mill activity between the two departments.

When I was the private secretary to the chairman of Customs and Excise I acted as a form of conduit for most policy submissions from Customs to the Financial Secretary to the Treasury, who at that stage was the noble Lord, Lord Sheldon. He and his officials responded to those matters and on a day-to-day basis there was a great deal of paper going backwards and forwards and a great many decisions were taken—quite often with the Treasury stating, "This is what we want to do". In most people's parlance, that would constitute a direction but, in my view, there can be little reason for Parliament scrutinising that kind of exchange and decision-making in this case when compared to what happens in every other department.

There is an issue about the ordinary, run-of-the-mill doing of business and the probably very few cases—the noble Baroness has referred to some theoretical possibilities—where Ministers attempt successfully, via a direction, to get the Revenue departments to do something that they do not want to do. One of the problems in the debate is neither in another place nor here. Has anyone come up with a concrete example of where there has been a direction which has caused any problems? That is a pity.

Regarding the question raised by the noble Baroness about avoiding a Yukos operating in the United Kingdom, I was intrigued to hear the Chancellor of the Exchequer saying in China that he had had some discussions with Customs and Excise about deferring VAT for Rover—a classic case of a single taxpayer's business being subject to ministerial influence, if not direction. If the Chancellor goes to see the chairman of the board of Customs and Excise and says, "I've had this good idea about Rover. How about deferring the VAT for a couple of months?", it is quite difficult for the chairman, unless there is a categorical legal reason to prevent it, not to go along with that. Although I do not believe that there has been any impropriety in the way that the Chancellor has behaved—because there is some flexibility on VAT in certain cases—that is a straightforward case of a Minister interfering in an individual taxpayer's affairs.

Therefore, in reality there is a bit of a blurring of definition. If we could narrow down what was meant by a direction—with a capital "D", as opposed to the directions that go on all the time—I would have rather more sympathy with the amendment. I am worried that it may be unworkable as it stands.

I am grateful to the noble Baroness for referring to my correspondence with the noble Lord, Lord Holme. Copies of that have been made available and I hope that it deals with the general issue with which Clause 11 is concerned. I do not wish to take up the time of the Committee, given the way that the debate has been opened by the noble Baroness. Putting it very briefly, it is a way of allowing proper overall accountability in certain areas, while keeping Ministers away from the tax affairs of individual taxpayers.

I do not wish to respond in detail to the specific example given by the noble Lord, Lord Newby, except to say that, at the moment, the collection of management tax from individual taxpayers is a matter for Customs and Excise and the individual taxpayer. The Treasury does not get involved in such matters and did not get involved in the discussions between HM Customs and Excise and MG Rover, nor did the Treasury—neither Ministers nor officials—give any direction to Customs and Excise.

That is not the subject of our concern at the moment. I am sorry that the noble Baroness was concerned about the way in which the Explanatory Notes explained this provision. They state:
"It carries forward the existing oversight by the Treasury of the predecessor Commissioners' exercise of their statutory functions".
As I made clear in my letter to the noble Lord, Lord Holme, an area that is not subject to that at the moment, will be subject to that under Clause 11. I do not believe that anyone is hiding anything and the noble Baroness made clear that she was well aware of what Clause 11 would deal with—I draw attention to the bottom of page 2 of my letter to the noble Lord. Lord Holme.

I fully accept that that matter was included in the noble and learned Lord's letter to the noble Lord, Lord Holme, but I think that the Minister will accept that the Explanatory Notes were silent on that matter. That was the burden of my complaint, because we have been invited to consider the Bill and the Explanatory Notes. Given that the Bill was portrayed as one which did not extend such powers and, in fact, did so, my complaint is that the Government were not open in the Explanatory Notes, although I completely accept that the noble and learned Lord was open when he corresponded with the Constitution Committee.

3.30 p.m.

I do not want to take up too much in debating this. The noble Baroness pointed that out as an aside in the course of moving her amendment. All I want to add is that I would not accept any criticism on the grounds of lack of honesty in the Explanatory Notes. They talk about carrying,

"forward the existing oversight by the Treasury of the predecessor Commissioners' exercise of their statutory functions".
I repeat that I do not accept that there is anything misleading here.

However, I have been provided with the opportunity to raise a further point. In our Committee proceedings on Tuesday a point was raised about the technical seminar which took place on 8 February. Members of the Committee will recall that certain noble Lords attended it while others, including the noble Baroness, did not appear to have received notification. I have asked my officials to check that the correct procedure was followed. I can report that the seminar was publicised on 3 February in the party notices, and notification was given on the Whips' website, so there we are. However, copies of the notes which were handed out at the seminar have been placed on the Committee Table for any noble Lord who, for whatever reason, was either unaware of or unable to attend the meeting. I repeat the offer I made on Tuesday to the noble Baroness that my officials would be pleased to set up a further seminar. I mention it at this point because that will provide another opportunity to raise issues on the detail which the noble Baroness or other noble Lords might have.

Let me return to the amendment before us. The noble Lord, Lord Newby, has identified a real problem with it. The key issue when considering this amendment is the nature and frequency of what might be described as directions. Some see them as rare, exceptional and matters of great moment—that I believe is how the noble Baroness perceives them—and that may be because they are arrangements which apply to other bodies. But as I said in my letter to the Select Committee on the Constitution, in the case of the Revenue departments there is unavoidable and legitimate ministerial accountability for a fair and effective tax system, and with that accountability comes the need to have general oversight of the department.

One must look to the relationship that has developed between Treasury and Revenue departments, which involves frequent and informal contact between Ministers and the Revenue departments, very much as the noble Lord, Lord Newby, outlined. My right honourable friend the Paymaster General will continue to exercise her oversight of HMRC as currently for the Inland Revenue and Customs. As I said in my letter, that is done in a number of ways: initiating work by the department, setting overall direction for HMRC, or reacting to a submission from HMRC setting out proposals and asking her to make a decision. Examples often involve matters of strategy, their development and any significant changes to them by noting and commenting as necessary on the publication of HMRC's regular reports and statistics.

The point made by my right honourable friend in another place is that the departmental Minister for HM Revenue and Customs will deal with these matters in the same manner as departmental Ministers generally. She will consider submissions and often meet with officials and the commissioners where appropriate. She will then take any necessary decisions and communicate them to the department with the intention that they should he implemented. However, as we have recognised throughout this debate, there is a critical difference from a ministerial department in that the departmental Minister for HMRC will be concerned only at the general level of detail and for precisely that reason will not direct the commissioners in their consideration of an individual taxpayer's affairs. That is the fundamental reason for the use of the word "general" in Clause 11. The noble Baroness has graciously acknowledged that while she might have had a different formulation, she accepts what lies behind it and that broadly it meets the case.

Given the nature and frequency of these contacts and discussions, and therefore these directions, it is clear that they are not of a kind that would warrant all of them being laid before the House in written form within seven days of their issue, as proposed in the amendment. They really are of a nature and frequency comparable to how other departmental Ministers oversee a substantial department. Therefore, like my right honourable friend, I do not consider that these directions justify the special treatment set out in the proposed amendment—treatment which departs from the customary relationship between the Revenue department and Treasury Ministers. That focuses on the point drawn out by the noble Lord, Lord Newby. I resist the amendment and I invite the noble Baroness to withdraw it.

This has been a useful debate. I entirely accept the point that the noble Lord, Lord Newby, made, as I understand how business is conducted between Revenue officials, Customs and Excise officials and the Treasury. At the heart of this lies the point on which the noble Lord, Lord Newby, put his finger: what are we trying to identify that requires parliamentary scrutiny? I certainly do not believe that the toing and froing on a day-to-clay basis is such a matter. However, if we step outside government departments—we are discussing a special government department as it deals with taxpayers, so it is not like the Treasury or the DTI; it is somewhat different from the run-of-the-mill government department—the NHS, for example, has a specific statutory power of direction. Those directions must be made public, as they arise when the Secretary of State tells a particular part of the NHS, or the whole of it, to do something that it would not otherwise do. Therefore, one is searching for a formulation—"direction" is the word used elsewhere in legislation concerning public bodies—that homes in on the occasions when Ministers say, "Do something that you would not otherwise do within your powers and responsibilities". I am prepared to accept for today that the formulation in my amendment does not work, but I do not think I am prepared to accept—does the noble Lord wish to intervene?

I just want to point out that the relationship between the Treasury and the Revenue department is close and continuous. There is no question of them having an argument. A direction suggests that there is something very seriously amiss in the relationship between the Revenue department and the Treasury. In my experience that rarely occurred. In the light of the frequent discussions that take place, the rarity of the need for such a provision should be emphasised. Perhaps my noble and learned friend might care to consider a longstop provision that would not be used generally but only when something has gone a little wrong and the relationship between the Treasury and the Revenue department is not quite as good as it is normally. We need to consider a longstop provision in those circumstances.

I am extremely grateful to the noble Lord, Lord Sheldon, as he makes exactly the case that I am trying to make. I am not concerned with the day-to-day exchange of submissions, responses from Ministers or discussions leading to decisions on the general management of the tax system but with those rare situations on which one is trying to throw a public spotlight. In those rare situations Parliament would want some kind of interest.

I am grateful to the noble Baroness. If I may respectfully say so, my noble friend Lord Sheldon comes to the definitional point to which the noble Lord, Lord Newby, referred. We do not interpret Clause 11 as referring only to grave moments of disagreement between those in HM RC and Ministers.

As is clear from my letter to the noble Lord, Lord Holme, from what I have said and from what was said in another place, we have in mind that the relationship to which Clause 11 refers covers precisely the frequent and common contacts to which the noble Lord, Lord Sheldon, from his experience, refers. In those circumstances, Clause 11 identifies the importance about generality; that is, to distinguish it from particularity in relation to individual taxpayers' affairs. It is precisely the frequency of those contacts that makes it inappropriate to have the sort of procedures to which the noble Baroness referred.

In a sense, there is not much difference between us, and I think that I shall blame parliamentary counsel for that. Parliamentary counsel uses the word "direction" in the Bill, and in predecessor Bills, in a quite different way from the way in which it has used "direction" in relation to any other public body. That is the source of some of the problem. As the noble and learned Lord has said, "direction" is used to cover those everyday exchanges, and not the exceptional. It is the exceptional on which I am trying to home in.

As the area of difference is relatively small, I shall look again at the issue and try to overcome the difficulties given to us by parliamentary counsel in its use of language that means one thing in one place and a different thing in another. I shall try to come up with a formulation that will adequately express what I am trying to get at; namely, that when Treasury Ministers respond in the case of a disagreement, there is an opportunity for outside scrutiny because we are dealing with a department that interfaces with individual taxpayers, which needs to be protected.

This has been a genuinely very helpful debate on identifying the issue, which is the rare area that the noble Lord, Lord Sheldon, identified. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

Clause 12 [Commissioners' arrangements]:

moved Amendment No. 27:

Page 5, line 37, at end insert—
"(1A) The Commissioners shall make arrangements for the establishment of a committee to review whether the internal financial controls of Her Majesty's Revenue and Customs secure the proper conduct of its financial affairs.
(1B) A majority of the committee established under subsection (1A) shall consist of persons who are neither Commissioners nor officers of Revenue and Customs."
The noble Baroness said: Clause 12 states that the Commissioners for Revenue and Customs can make arrangements for how they conduct their affairs. It is permissive. We have no fundamental problem with that. Amendment No. 27 deals with the absence of reference to one set of issues that should be accommodated within the arrangements made by the commissioners: there should be no optionality for the commissioners about making certain arrangements.

The amendment states that the commissioners must set up a committee,
"to review whether the internal financial controls secure … the proper conduct of its financial affairs".
In common parlance, it means having an audit committee. We discussed briefly audit committees on our first day in Committee. As I am sure the noble and learned Lord is aware, they are regarded as essential in the private sector, particularly for listed companies. The obligation is now in the combined code, although it has been required for some time.

Audit committees are also widespread in the public sector and the non-profit sector. For example, your Lordships' House has an audit committee. Customs and Excise currently has an audit committee chaired by one of its non-executives. I am not sure about the position in the Inland Revenue—perhaps the noble and learned Lord will be able to say—but I am sure that it has something similar.

It is also increasingly the case that legislation for public bodies specifically provides for audit committees. We can look at most of the recent Acts that have set up public bodies—I referred during our first Committee sitting to the Pensions Act 2004, the Bank of England Act 1998 and the Health and Social Care Act 2001, and there are a lot more. They set up audit committees as a hard-wired element of the structure because it is such an important area. Amendment No. 27 effectively states that the Commissioners for Revenue and Customs have to have an audit committee.

3.45 p.m.

The amendment also deals with composition. In the private sector you must have an audit committee composed entirely of independent directors. That position is generally taken in the other legislation for public bodies. But the practice in government departments is different. There is a variety of practice, some involving non-executives and some with a minority of non-executives. Nevertheless, it is important to understand the nature of the involvement of non-executives.

We know from our first Committee sitting and from the Explanatory Notes that the Government expect an audit committee to be created. That is welcome, because it is an absolutely essential part of the proper governance of any organisation. The point about the amendment is that it should he left neither to the discretion of the Commissioners of Revenue and Customs, nor to whether the Treasury chooses to issue corporate governance guidelines for government departments, which it may not ever get around to doing. It is important to set up the new organisation with the essentials of a well functioning body. I beg to move.

I have listened carefully to the noble Baroness, as I did on Tuesday, and studied her contribution to that debate, as reported in Hansard. I understand that there are a number of concerns where she feels unsighted on how HM Revenue and Customs will operate. I accept entirely that it is legitimate to want a clear picture of the new organisation. I hope that I will be able to reassure the noble Baroness and other noble Lords on those matters. As I indicated on Tuesday, I shall write to her and other noble Lords before the next stage with further detailed information covering the proposed organisation and structure.

I shall emphasise one or two important points. First, as I said on Tuesday, unlike Bills setting up non-departmental public bodies, the Bill does not set out the governance arrangements for this department because they are set out elsewhere. There is a significant difference between HM Revenue and Customs and a non-departmental public body in that, because it is a government department, scrutiny arrangements and so on are prescribed elsewhere and, because the commissioners are civil servants, their appointments procedures, pension arrangements and so on are centrally prescribed. When taking those facts into account, the level of detail set out in the Bill is comparable with other non-ministerial departments. I shall make reference to the proposed Charity Commission, the Office of Rail Regulation and the Water Services Regulation Authority. I shall cover that further in my letter. I recognise that no two departments are the same.

Perhaps I may go one stage further and give a little further information about the proposed structure of the new department and where it will be set out for scrutiny. First, it will be set out in the department's spring report, which is planned for publication and to be laid before Parliament within a very short time of the launch of HM Revenue and Customs. But I will send the noble Baroness a copy of the current proposals for those arrangements, which outline the top-level structure, the membership of those structures, especially the management board, in terms of commissioners and non-executive directors, and proposed committees. The department will publish two reports each year—spring report and annual reports—which will set out its top-level corporate governance arrangements.

Those two reports are part of an extensive set of reporting requirements that will apply to HM RC in line with other government departments. External scrutiny on those matters will continue as for the predecessor departments, including external audit by the National Audit Office, reporting to the Public Accounts Committee. I will describe these more in the letter that I hope to send, but they are important points to make.

As to the specific changes the noble Baroness proposes to Clause 12, Amendment No. 27 raises a number of issues. First, it proposes to make provision for the commissioners to establish a committee, which in corporate governance language is called an audit committee. Secondly, it sets out the overall purpose of the committee; that it should review whether internal financial controls secure the proper conduct of its financial affairs. Thirdly, the amendment stipulates the committee's constitution in terms of the numbers of non-executives who should form the majority.

In fact there is very little between us on what will happen. At the moment both the Inland Revenue and HM Customs and Excise have audit committees. HM Revenue and Customs likewise will. from its establishment, have such a committee. My right honourable friend the Paymaster General has already made that clear.

Moreover, the Bill makes specific provision in Clause 14(1)(b) for the commissioners to delegate their functions—other than certain specific reserve matters—to a committee established by them and which may include persons who are neither commissioners nor staff nor officers of Revenue and Customs; that is to say, non-executive directors. The Explanatory Notes specifically refer to this as a provision which, for example, allows the setting up of an audit committee. It is a very good example of a use of that power.

Again, as my right honourable friend has made clear, the audit committee will be chaired by a non-executive. Indeed, in line with best practice as laid out in the Combined Code on Corporate Governance in the Treasury's audit committee handbook, the intention is that all the members of the audit committee will be non-executives.

Finally, the amendment sets out the proposed purpose of the committee. I note, however—this is an important point—that this is again one of those areas where there is scope for development and change. For example, audit committees now regularly advise accounting officers on the strategic processes for risk control in governance and the statement on internal control which go wider than the financial accounting matters described by the noble Baroness in the amendment.

I suggested on Tuesday that there is a danger in putting such matters in the Bill rather than leaving them to the sensible arrangements to he imposed because this is a government department. One risks not being able to take account of good, proper, changing practice and experience.

So, in all respects, I hope that I have reassured the noble Baroness that all she seeks will he in place and that there is little between us. Ultimately, I do not consider it necessary to include a specific provision in the Bill. Indeed, I see a positive disadvantage in doing so. That, fundamentally, is why I resist the amendment.

I thank the noble and learned Lord for that response. He argues that on the grounds of flexibility the amendment should not be in the Bill. I look forward to using his arguments against his fellow Ministers when these provisions appear again—as they will—in other Bills. I did not make the language up; I stole it from Bills produced by his colleagues.

I am reassured that the intention is to have an audit committee and that it will be comprised solely of non-executives. Perhaps noble Lords would care to consider that for their own audit committee, which certainly does not have even a majority of non-executives. However, I leave that issue to one side.

I have one question for the noble and learned Lord. If the Commissioners for Revenue and Customs choose not to set up an audit committee—I understand that is the direction of travel at the moment—and there is no requirement in the Bill, what would be the Government's position?

We have been discussing the general power of directions and the Government would plainly need to consider whether that was an appropriate and proper way to proceed. Because we are talking about a government department, arrangements which the Government consider ought to apply to government departments—either generally or for the category in which this department would fit—may make it clear that the Government's view is that it is or is not appropriate to have that kind of committee.

The noble Baroness asked whether the Government would have a view on that. I believe, without any direction from behind me to say that I am wrong, that the Government would have a view on it, which we would discuss and no doubt put forward.

I was hoping that the noble and learned Lord would say they would direct the Commissioners for Revenue and Customs to set up an audit committee, but he did not go quite that far. That is a great pity, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 agreed to.

Clause 13 agreed to.

Clause 14 [Delegation]:

I should inform your Lordships that if Amendment No. 28 is agreed to, I cannot call Amendment No. 29.

moved Amendment No. 28:

Page 6, line 26, leave out from "Commissioners" to ", or" in line 28.

The noble Baroness said: In moving Amendment No. 28 I shall speak also to Amendments Nos. 29 and 30, all of which are probing amendments in relation to Clause 14.

Clause 14 allows the commissioners to delegate their functions. We believe that it is important to understand the limits of that delegation. Clause 14 allows the commissioners to delegate to a committee. As drafted. that can include people,

"who are neither Commissioners … staff … nor officers".

Amendment No. 29 is really a technical query. By virtue of Clause 2, the staff of commissioners are known as officers of Revenue and Customs. I am therefore at a loss to see why subsection (1)(b) of Clause 14 refers both to "staff of the Commissioners" and to "officers of Revenue and Customs". Surely they are the same people. If they are not, how do staff who are not officers fit into the Bill? Is it, for example, possible that there are staff of the commissioners who are not officers and who are not therefore required to make the declaration of confidentiality required by Clause 3? That is a narrow and technical point.

Amendment No. 28 strikes out all of the words in parenthesis in subsection (1)(b), so that you can only have committees comprised of commissioners and no others. As I say, it is a probing amendment to ascertain the use to which the provision will be put. The Explanatory Notes refer to an audit committee. While I am not trying to reopen the question of the audit committee, I would like the Minister to outline what else the provision will be used to legitimate. It is easy to point to an audit committee but rather difficult to see what else it might be used for.

It is important that we understand what is intended because the range of functions that could be delegated is very extensive. There are some excepted functions in subsection (2) covering orders and warrants, but that leaves a whole range of functions relating to the assessment and collection of taxes including VAT, the payment of tax credits, administering child trust funds, valuing property, enforcing customs laws and so on. Those functions include dealing with specific taxpayers. That is why understanding the limits on delegation are important.

If the involvement of those who are neither commissioners nor officers in paragraph (b) causes problems, the ability in paragraph (c) to delegate to "any other person" is potentially even more troublesome. Amendment No. 30 deletes paragraph (c) on a probing basis. While the potential effect of that is partly mitigated by the requirement for commissioner oversight in subsection (4), I am concerned about what the commissioners might seek to delegate and the capacity of individual commissioners to oversee the work of people to whom they have delegated. The commissioners will be busy and cannot be expected personally to supervise a lot of other people.

4 p.m.

As I assume the word "person" includes companies and other bodies corporate—so the commissioners could, in theory, delegate to a company which in turn employed hundreds or thousands of employees—I struggle to see how the commissioners could monitor the exercise of functions that they have then delegated.

I have a question on the declaration of confidentiality in Clause 3, which applies to commissioners and officers of HM Revenue and Customs. A number of outsiders can come within the delegation framework, either being appointed to a committee or having a delegation under subsection (1)(c). As there is no restriction on the delegation of functions in relation to individual taxpayers, is it proper that those persons should not be bound by a confidentiality declaration, an important feature that we debated on our first Committee day?

These are probing amendments, but they are not mere technicalities because they raise issues of quite great significance. I beg to move.

If you added to paragraph (c) the words "to any other person competent to discharge the delegated function", you would limit that and, to some degree, cope with what has been said.

The key point of Clause 14 is to provide for the delegation by commissioners of the exercise of commissioners' functions other than those reserved to them by subsection (2). It is important, perhaps particularly given the observation just made by the noble Lord, Lord Campbell of Alloway, that decisions to delegate be taken in accordance with the arrangements determined under Clause 12. Under those arrangements the commissioners could also collectively decide not to delegate so as to keep to themselves other functions in addition to those reserved to them under the Bill.

Subsection (1)(b) provides the ability to delegate the exercise of functions to one of the commissioners' committees, whose members may include persons who are neither commissioners nor officers. Amendment No. 28 would still allow the commissioners to delegate functions to one of their committees but it would leave the position of members of such committees, be they officers or non-executives, less than clear.

We absolutely take the view that non-executives can make an independent, authoritative, highly valuable contribution to such top-level committees. I am sure that we would not want by any amendment to seek to prevent non-executives from playing that part. I would be concerned that the amendment would result in a loss of clarity about this important area of delegation. I want also to emphasis again, noting the point made by the noble Lord, Lord Campbell, that the overall accountability remains with the commissioners, even where there has been a delegation. The commissioners will need to ensure that their committees are effective and support them in the discharge of their responsibilities.

On Amendment No. 29, the noble Baroness makes a not unfair point about the distinction between "stair and "officers". As she points out, given what is said in Clause 2, "officers" and "staff" may, broadly speaking, be seen as interchangeable. Even though the reference may he belt and braces, it serves this purpose. Let me explain why. It is intended that there should be no restriction on the commissioners' power to establish committees that are fit for purpose and to delegate functions as appropriate to them. Therefore, we do not want the potential membership of those committees to be restricted. The wording ensures that by covering all of these categories.

There will, for example, be members of the commissioners' staff, perhaps support staff, who will be officers of Revenue and Customs, but will not, as any part of their work, confer any of the functions that are by statute conferred on officers of Revenue and Customs. That expression makes it clear that people who are not otherwise connected with HMRC in any capacity can be considered for appointment to a committee.

I accept that there may be an element of belt and braces in the Bill by making it clear that the people on the committee may be neither commissioners, nor staff nor officers. But we would rather have that stated in that way, so that there can be no doubt that the potential category is as wide as we intend it to be, rather than risk some debate that someone does not fall within one of those categories and, therefore, cannot be included.

Belt and braces is always a convenient argument, but could the noble and learned Lord explain how the belt-and-braces point applies to the confidentiality declaration? I understood that that was meant to catch everyone on the payroll. He is now suggesting that some other people might not be caught within that, and that there remains a category of person who is not an officer.

I am making it clear that there does not remain such a category of person. What is important is that the declaration in Clause 3 does apply to officers. It does not apply to people who are not staff in any sense at all. What became apparent in our debate on Tuesday is that non-executive directors, contractors, consultants and so on will not make such a declaration. Those who sign a contract of employment will do so. I should repeat what I said on Tuesday: those persons will none the less still be bound by the statutory duty of confidentiality and the criminal offence that is created by the Bill; they just will not be required to go through the solemn declaration stage. That is covered by Clause 3.

Fundamentally, on Clause 14, the clarity of the provision, which is ultimately what matters, is none the worse for adopting this belt-and-braces approach. The noble Baroness probed whether there was a distinction in our mind between one category and another. Essentially, I have said that there is not, but, to make the clause work as it is intended, this broader formulation has been used.

Amendment No. 30 would remove the ability of the commissioners to delegate their functions "to any other person", that is, a person who is neither a commissioner nor an officer of Revenue and Customs. The noble Baroness said that this is a probing amendment. If I am correct, she identified one example where she recognises that this works in relation to an audit committee. She asked what other sort of examples there might be. For example, Customs commissioners currently delegate to authorised contractors their power to dispose of forfeited goods from Queen's Warehouses. That is an example of a delegation to someone who is neither an officer nor a commissioner.

The provision does not give any wider power to make such arrangements than already exists. I again refer to subsection (4), which provides that "any other person" must act under the directions of the commissioners and the commissioners have a duty to monitor the exercise of the delegation as if the other person were an officer. So we have chosen to go about proper control in a perhaps different way from that suggested by the noble Lord, Lord Campbell of Alloway—to ensure that delegations will be effectively controlled and will be included in HMRC's management of risks as required by good corporate governance.

I am obliged to the noble Lord. I have sought to give explanations in response to the probing questions put. I hope that they are satisfactory and that the noble Baroness will feel able to withdraw her amendment.

I thank the Minister for his explanations. However, I am still unclear about the different kinds of committees. We know about the delegation to committees under subsection (1)(b), but I do not think we were told about what other kind of delegation might he used.

The noble Baroness is right and I apologise for that. I cite, for example, a committee set up to look at human resource matters. Non-executives with relevant experience would be included in the membership of such a committee. In the letter that I shall write about corporate governance matters, I shall seek to give other examples of the sort of committees that would be set up, but I hope that the noble Baroness has at least an idea of the committees we have in mind.

I thank the noble and learned Lord. Moving away from issues of corporate governance, let us look at the delegations that may be made under subsection (1)(c). I raised the question of delegation to a body corporate, which could in turn involve a lot of other individuals. I am probing here to Find out whether any delegations are made to Cap Gemini, Fujitsu or other major contractors involved in the Inland Revenue. I am trying to find out how this delegation will be used and then to test what kinds of practicable constraints will be put on them—given that those delegations could be very significant. Will the commissioners be able to operate effective controls similar to those provided by the Act regarding employed officers, which will be absolutely crucial? I am still trying to assess the scale of the problem.

The question posed by the noble Baroness is really whether the expression "any other person" in Clause 14(1)(c) could include a body corporate as well as an individual person. Plainly there will be cases involving individuals, but unless and until I am told otherwise, it seems to me that the phrase "any other person" could as a matter of ordinary statutory construction include a corporate person.

The important point is that Clause 14(4) imposes on commissioners obligations to,
"monitor the exercise of the function by that person, and in the exercise of the function the delegate shall comply with any directions of the Commissioners or of those Commissioners".
Obviously, the commissioners will have to do that in an effective manner, but I see no reason why they should not be perfectly satisfied that a body corporate carrying out outsourced functions such as the provision of support services, hotel accommodation, travel bookings, advice on occupational health and so forth—all the functions that the commissioners would otherwise have to provide themselves—can do so properly. Indeed, that may be by far the best way to carry out such functions. To ensure that that is the case, the commissioners will have to monitor the exercise of the functions of the person, and I do not see any difficulty today over such monitoring being carried out on a body corporate. We have moved on a great deal since the days when we could focus only on what people could do rather than what bodies corporate could do.

I am extremely grateful to the noble and learned Lord for that confirmation. It crystallises the nature of the concern I sought to raise in these amendments, which is that the functions which can be delegated are very broad. They go beyond hotel accommodation and IT support; they go to practically everything that the commissioners have the power to do with the exception of those few areas listed in subsection (2). I am concerned that because there are so few constraints, this Bill in effect allows the commissioners to sub-contract to persons, individuals or bodies corporate functions that are close to individual taxpayers, matters which may involve confidential taxpayer information and related issues that we shall debate in greater detail.

Given the very light restriction on delegations, we shall need to look again at whether this is an appropriate scheme of delegation. Given that the restrictions on delegation are so light, while I accept that the commissioners are obliged to oversee the functions, it is another thing entirely to say that they are overseeing someone else if they have delegated 50 per cent of their functions. Nothing in the Bill would stop them doing so.

4.15 p.m.

I do not wish to prolong the debate. I invite the noble Baroness, when she considers the matter further, to take into account some additional matters. I refer first to the very important extent of the non-delegable functions. Secondly—and the noble Baroness may be pleased to hear me say this— Ministers will be in a position to give general directions on the sort of functions that it would not be appropriate to delegate. Thirdly, there is the nature of the supervision and the external scrutiny required. Fourthly, the commissioners' functions are being delegated. That is different from seeking to delegate, for example, some function of an officer which arises under the relevant Acts which allow for the collection and management of tax. That may be an important point for the noble Baroness to consider. Because she mentioned confidentiality, I have already made the final point about how the confidentiality provisions remain in any event. Perhaps the noble Baroness would like to explore that point more in the technical seminar if she decides to take up the invitation.

I shall not prolong the debate further. We have had a useful debate and identified the areas that repay further consideration, which I shall do between now and the later stages of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 29 and 30 not moved.]

moved Amendment No. 31:

Page 6, line 31, at end insert—
"( ) issuing instructions under section 20(1)(a),"
The noble Lord said: In moving this amendment and all the amendments hereafter which appear in my name, I am really standing in the shoes of my noble friend Lord Northesk. He is the animating genius behind these amendments, and I am simply here to represent his case. I propose to spend a little time on Amendment No. 31 in the hope that my observations will inform later debates without the need for me to repeat them.

As Members of the Committee will be aware, the current Administration have not been backward in recent years in introducing legislative provision for the management of information and data held by Government. In the context of the Revenue authorities, there was, of course, Part 2 of the Criminal Justice and Police Bill of 2001. In the event, as a result of the general election that year—and, it has to be said, reservations about the proposals from these Benches and elsewhere—that provision fell and was not enacted.

Later in that same year, the Government returned to the matter with Parts 3 and 11 of the Anti-terrorism, Crime and Security Bill. As I am sure the Committee recalls, these provisions were duly enacted in an amended and—at the insistence of your Lordships' House—restricted form.

In short, the debate about how to legislate for the management of government-held information and data is by no means new. Moreover, there is a discernible sense in which the opinion of your Lordships' House, in so far as it has been expressed up to now, is at variance with—I put it no stronger than that—the aspirations of government policy in this area.

Insight about this can be gleaned from the thinking that underpins the report from the Performance and Innovation Unit entitled Privacy and data-sharing: The way forward for public services, published in April 2002. The eminently reasonable—perhaps even desirable—strategy promulgated in the report is that of managing information and data cross-departmentally as a means of delivering better and more focused public services. As the Prime Minister says in his foreword to the report,
"there is great potential to make better use of personal information to deliver benefits to individuals and to society, including through increased data-sharing".
In the context of this Bill, it is apparent that this approach provides a focus for how Ministers are anticipating that not only the reality of integration but also the specific provisions of Clauses 17 to 23 will operate. As the Paymaster General expressed it in another place on 8 December 2004 at column 1170:
"It is about delivering truly joined-up services to taxpayers, and about creating an organisation that can meet taxpayers' needs because it can look across their affairs and tailor its services to their particular circumstances",
a sentiment echoed in terms by the noble and learned Lord the Attorney-General.

But there is an inevitable tension here with the requirement to satisfy Article 8 rights to privacy. To be absolutely fair, the PIU report does not shirk this aspect of the matter. It accepts that:
"Public trust in the way that public sector organisations handle their personal data—and protect their privacy—is vital to the relationship between the citizen and public services".
Moreover, the report recognises that this is an immensely complex area. Indeed—dare I say?—legislation such as the Data Protection Act has the distinction of being among the most arcane and impenetrable currently to be found on the statute book. Nevertheless, while acknowledging both the legitimacy of concerns about privacy rights and the complexities of the situation, the thrust of its conclusions seems to attach more importance to developing ways of unlocking perceived barriers to the delivery of "joined-up" services rather than strict adherence to the existing corpus of data protection legislation. For example, it advances the proposition that data-sharing gateways could and should be established via secondary legislation. In a variety of ways, I can detect that the drafting of the Bill is imbued with elements of the same sort of logic.

I should stress that I recognise fully that better co-ordination of individuals' information and data could well produce benefits in terms of more responsive services. But. however desirable that may be, the way in which such goals are delivered should not give rise to any diminution or compromise of privacy rights. That being so, our plain preference is that processes for the sharing or pooling of information and data should be sanctioned only by means of specific statutory provision in primary legislation. This is, after all, the situation that has prevailed historically. Indeed. it is manifestly reflected in a number of the specific provisions we are currently considering, not least, for example. Schedule 2.

I would not wish to be misunderstood about this. As the Joint Committee on Human Rights has said:
"We welcome the seriousness with which Article 8 rights have been treated".
I agree wholeheartedly. The Bill's sensitivity to issues of data privacy compares very favourably with the most indifferent drafting of other measures, such as the database provisions of the Children Bill last year or, indeed, the identity cards Bill. 1 have no doubt that this is a reflection of the degree of seriousness that Treasury Ministers attach to taxpayer confidentiality as a means of sustaining the integrity of the tax system. It is that very fact, together with our conviction that, of necessity, provision in the primary statute must be clear and unequivocal, which has prompted the amendments that have been tabled.

I turn to the specific amendment under consideration. Clause 14 permits the delegation of functions of the commissioners other than the matters reserved by subsection (2). I do not dispute the administrative benefits of that. However, in the light of the crucial importance of taxpayer confidentiality—and we are all agreed on that—it is in my submission inappropriate that the function of issuing instructions as to the circumstances under which information can be disclosed, as provided for in Clause 20(1), should be delegated. Such matters are too important to be sacrificed on the altar of administrative convenience. They should be dealt with at commissioner level to ensure that they, and their implications for the integrity of the tax system, are engaged at the appropriate level.

Here the Committee will be aware that a recurrent theme in the scrutiny of legislative provision for the management of information and data is the level at which authorisation for any proposed operation is set. For us it stretches credibility that such a sensitive issue could be delegated to an unspecified "any other person", as provided for at Clause 14(1)(c). Indeed, I would be grateful if the noble and learned Lord the Attorney-General could give the Committee some insight as to what category of person it is intended that this would include.

I hope that I am not being too obtuse and facetious here—certainly it is not my intention—but, as I read the clause. I see nothing that would prevent the commissioners delegating any of their functions, let alone those relating to information disclosure, to, for example, an office cleaner. I accept, of course, that in the event that would not happen: but that should not disguise the fact that potentially the legislation permits it. Nor, of course, do I intend any disrespect to office cleaners, who do a wonderful job for which we are all very grateful. But as I have already suggested, what matters here is that the regime is not only robust in its own right but is also perceived to be robust, if only because, as the PIU report accurately recognises, these are matters that engage "public trust".

Against this background the purpose of the amendment is straightforward. It seeks to add the function of issuance of information disclosure instructions, as provided for at Clause 20(1)(a), to the list of reserved matters in subsection (2) of the clause that we are discussing. In so doing, it ensures that this function cannot be delegated. I very much hope that the noble and learned Lord the Attorney-General will feel able to respond with at least a degree of sympathy to my concern as expressed here. I beg to move.

I have considerable sympathy both with the general point being made by the noble Lord and his specific point in this amendment. However, I have a slight difficulty about understanding what one means by delegation in certain circumstances. Under the provisions of Clause 14(2), none of the currently specified acts can be delegated to a single commissioner. These include,

"approving an application for a warrant to search premises".
I may be mistaken but I find it very difficult to believe that the board of Customs and Excise sitting as a board looks at applications for a warrant to search premises in an individual case. I suspect that what happens is that an investigation officer who wishes to apply for a warrant makes a submission to a commissioner and that that commissioner decides the case.

My understanding is that the boards of the Inland Revenue and Customs and Excise do not really operate like a corporate board in terms of having a whole raft of information and decision-making coming before them, but that they delegate—very often to a single commissioner—responsibility for an area of policy. Unless I am mistaken, they do not meet frequently to discuss corporately many matters.

While I would have complete sympathy with the amendment if it referred to not only the board of the new department but also to a single commissioner, I have a query that these issues will not go to the board anyway. These things do not go to the board. In a way, it is a question relating to the whole of subsection (2) because I do not believe that these issues would go to the board as opposed to a single commissioner, and yet, under subsection (1), a single commissioner cannot have delegated powers in those areas. Can the Minister clarify that situation?

4.30 p.m.

Perhaps I may offer what little insight I have from having been on the management board of the Inland Revenue. I fully accept that the board of the Inland Revenue is not a day-to-day operating unit, but it was my understanding at the time that those functions were exercised by the board of the Inland Revenue—that is, those commissioners of the Inland Revenue—which is one of the reasons why there was a clear separation from the management board.

My point was that, in practice, that meant very often that there was just a single commissioner and that there was not a corporate decision.

Let me deal straight away with the point raised by the noble Lord, Lord Newby. It is interesting that the reason the noble Baroness answered as she did and the noble Lord spoke as he did may be because their respective core experience comes from the two different constituent bodies. I am told that the Inland Revenue board do look at every search warrant but the Customs and Excise board do not.

That difference in current law and practice is carried forward in the Bill because it is only Inland Revenue warrants to which this non-delegable reserved function applies under Clause 14(2)(b). The position in relation to Customs and Excise is different and the current position is carried forward. This may be looked at in the powers review, about which we have spoken already, because of course in this sort of area we are keeping things as they are for the time being.

As regards the issues of principle and the substantive amendment, we have a lot of sympathy with the fundamental point made by the noble Lord, Lord Kingsland—it would have been made by the noble Earl, Lord Northesk, if he had been in his place—that, where possible, information gateways should be in primary legislation. This clause—and I will come to the safeguards in the clause—really only permits in a narrow range of public interest cases that information will pass under the Clause 20 regulations. I would expect that where it appears over a period of time that a regular flow of information is going in a particular way to the same body, one would look for an opportunity to make that a statutory gateway in some appropriate primary legislation.

Against that background, Clause 20 provides a power to make regulations to permit the disclosure where it is in the public interest to do so, and where that public interest is identified in regulations to be made in accordance with the procedures under the clause.

Why do we need that power? Let me be clear that HM Revenue and Customs will always use statutory gateways for disclosure where it is possible. But there will sometimes be situations where there is a public interest in disclosing, but where existing gateways do not allow for the type of disclosure that the situation requires. In the past, when faced with those types of situations, Customs has acted in accordance with government guidance and exercised its implied powers to disclose in the public interest. It seems that, in line with a commitment to taxpayer confidentiality, it is appropriate to increase the transparency of what is an existing process by constraining the degree to which commissioners can exercise that discretion, which is exercised currently. That is what Clause 20 and the regulations allowed by it will do.

I want to place on the record that the power to regulate for that type of disclosure will be used only sparingly to create new regulations. Members of the Committee may have had the opportunity to look at the draft regulations, which have been placed in the Library, so they are available. They indicate all the areas that would be covered if the regulations were passed in this form. I shall not read them all out now for the record but I shall take one or two. They are disclosures,
"(a) made to public bodies in order to honour international and other agreements to which they and the United Kingdom or Her Majesty's Government are party, in relation to the movement of persons, goods and means of transport into and out of the United Kingdom where the disclosure is necessary for the purposes of the prevention or detection of crime, fraud or evasion".
It is narrow in three respects: it must be necessary to honour international and other agreements; it must be in relation to the movement of persons, goods and transport; and it must be necessary for the purposes of the prevention or detection of crime, fraud or evasion.

The next sub-paragraph refers to disclosures,
"to a body responsible for the regulation of any profession, for the purposes of reporting misconduct on the part of its members"—
the noble Baroness will recognise the significance and importance of that,
"where a member of a profession has provided services to a client of his which affect the client's proper compliance in relation to any matter which is subject to the exercise of any function of the Commissioners or of officers of Revenue and Customs within the meaning of Section 46(2) of the Act".
Again, it is a specific public interest disclosure. I respectfully invite Members of the Committee to examine the draft regulations to see how narrow they are.

I have not seen the draft regulations. If that is the situation, why cannot the substance of that limitation be put on the face of the Bill? Why are we fiddling around with secondary legislation? This is a fundamental right.

I have not seen the draft regulations under Clause 20, although I was aware that they existed. Although it is often helpful to see how government intend to use their powers initially, that should not cloud one's view about whether the powers that create them are desirable. Often, seeing the draft regulations merely confirms that certain things should be in the Bill and nothing else. So, often, just seeing the draft regulations does not take one much further as regards agreeing that the powers would be used satisfactorily.

I beg to differ with the noble Baroness. A question is raised as to how the clause will operate. The draft regulations demonstrate, as I understand it, the things currently envisaged for the regulation. They cover prevention or detection of crime, fraud or evasion in relation to movement of persons et cetera under international agreements, and a body exercising public functions in relation to the protection of public health and safety. I suggest that, when one looks at the draft regulations, one will find that they are all proper, laudable, public interest reasons why disclosure should be permissible. They are all proper reasons for allowing a disclosure under Article 8 of the European Convention, to which I shall return.

The real point being made against the clause is a broader one so I shall make it now. It is being said that there should be included only those things that you can think of today. They must be done by primary legislation and there shall be no ability to add to or to amend in the light of changed circumstances other than by primary legislation.

That is an onerous position to put us all in, because circumstances may well arise in future where it is apparent to all responsible and right-thinking people that there are circumstances in which disclosure should be made. For example—and this may be a bad example because it does not come from the box—following the events of 11 September, the United Nations at that stage put in a number of obligations to deal with what was perceived to be an important and serious threat. Part of that was the disclosure of information; we may need the ability to be able to respond to that under properly protected secondary legislation, subject to affirmative resolution, which this matter will be, and constrained in a number of ways, which I will deal with, rather than having to wait for primary legislation.

I am surprised that the noble and learned Lord said that it was an "onerous" obligation. Of course it is. It is an onerous obligation on the Government. If you do not have it in primary legislation, it is onerous on the general public. It is the wrong approach. If you are going to derogate from a position and involve confidential information, you should put the scope of the limitations on the face of the Bill. I cannot see any objection to that.

"Onerous" may have been the wrong word for me to use. "Inflexible" or "rigid" may have been closer to the mark. I am unrepentant in saying that I disagree with noble Lords who take a different view and say that you can only have a public interest gateway, however legitimate, important and essential it may be, if you think of the need for it at the time of your original primary legislation. If not, you have to wait for an opportunity to take further legislation through the full processes of Parliament.

Perhaps I may examine the safeguards that are provided under Clause 20 and then I shall return to the amendment, because, in many ways, the noble Lord invited us to go beyond the specific amendment. The clause allows regulation to be made only when the Treasury is satisfied that the need for HMRC to make that type of disclosure is in the public interest. Secondly, in addition to specifying a purpose for the regulation, the disclosures authorised may be limited or restricted, such as limiting the disclosure to a type of information or to a person or a class of person. Thirdly, regulations may prohibit the further disclosure of information and if they do so, shall provide for this to be subject to the same criminal offence that is provided for in Clause 19. Fourthly, and importantly, all regulations are subject to affirmative resolution.

As I said at the outset, we are seeking to increase, at least as far as Customs is concerned, the existing transparency. Customs rightly considers that it has an implied power to make certain disclosures which increases the transparency and subjects it to a strong parliamentary scrutiny procedure.

Regarding the amendment, two things are needed for a disclosure. First, it must be in the public interest, in accordance with the regulations. Secondly, it must be on commissioners' instructions. It is that element which the noble Lord would seek to make a non-delegable function. It would mean that all instructions for public interest disclosures—notwithstanding that they fall within the existing regulations—would have to be considered specifically by the commissioners themselves. I suggest that it would be unrealistic to suggest that the commissioners would have to deal with each and every instruction.

Sometimes disclosures need to be made at very short notice—there might be an urgent danger to a member of the public. It is difficult for the commissioners to predict all these circumstances. So the official would have to revert to the commissioners, which would create a delay with potentially serious consequences.

4.45 p.m.

I would, therefore, strongly say that there is a case for delegating the ability to issue instructions. However, I entirely accept that it is appropriate that there are safeguards in those delegations and their extent. First, all disclosures remain subject to the requirements of the Data Protection Act and the Human Rights Act. Secondly, a number of administrative safeguards will be in place to ensure compliance with the requirements of those two Acts.

The noble Lord, Lord Kingsland, asked me to say to what sort of person authority will be delegated. Although he recognised that it was wholly unrealistic, he gave the example of delegation to the office cleaner. Plainly not; the delegation that is in mind will extend only to more senior staff. The authority will not be delegated to junior staff. That will ensure that there is an appropriate level of accountability and authority for any instructions made. The noble Baroness indicates that it does not say that on the face of the Bill. However, I am standing at the Dispatch Box on behalf of the Government saying that that is the way in which this will operate.

In addition, management checks will be built in to ensure that all public interest disclosures are not only authorised but are fully compliant with the provisions of the Human Rights Act and the Data Protection Act. So all staff who make disclosures in the public interest will be required to maintain a full audit trail of to whom the disclosure is made, the information in the disclosure and the purpose of disclosure. Training and guidance will be given to all staff to ensure that public interest disclosures are made lawfully.

I should hope that my statements on behalf of the Government on how this will operate will reassure Members of the Committee that this will not be used to delegate to office staff. In particular, having drawn attention to the narrowness of the proposed public interest gateways as shown in the draft regulations, I believe that that in itself already constrains considerably the sort of areas with which we are concerned. If the amendment were accepted, ultimately, it would unrealistically require the commissioners to consider each and every instruction for disclosure, and that would not make sense in the context of operating this business.

I should tell the Committee that the sound system is not working properly, though I am happy to report that it has been getting through to Hansard upstairs. So nothing has been lost in that respect. As you will observe, however, the lights are not coming on. If the noble Lord, Lord Kingsland, could wait to let us know what he has decided to do with this amendment, it will give them a chance to make some adjustments. I am assured that it will take less than half a minute.

[The Sitting was suspended from 4.48 to 4.50 p.m.]

I am most grateful. I am afraid that my rather prolix introduction to this amendment proved, so far as the noble and learned Lord the Attorney-General was concerned, rather like a mayfly to a spring trout. He, quite understandably, could not resist the temptation of dealing with a number of issues that fell strictly outside the amendment. I do not in any way admonish him for that; if anyone was at fault, it was myself.

Before I deal with the specific issue to which the amendment gives rise, I refer to one or two matters that the noble and learned Lord the Attorney-General addressed. We are extremely grateful to the noble and learned Lord for lodging in the Library a copy of the draft regulations. No doubt the contents of those regulations raise perfectly proper considerations in the context of the definition of public interest. However, that does not constrain in any way this or any future government issuing further regulations which might not fall into such an admirable category. I would therefore like the noble and learned Lord the Attorney-General to pay particular attention to the intervention of my noble friend Lord Campbell of Alloway about the importance of having a definition of public interest on the face of the Bill.

I entirely accept the response of the noble and learned Lord the Attorney-General to my noble friend Lord Campbell of Alloway when the noble and learned Lord said, "Of course, if I do put something on the face of the Bill it cannot possibly be comprehensive because I cannot anticipate events in the future of which no reasonable person could possibly have had foreknowledge". I am sure my noble friend and I both accept that that is so.

Nevertheless, just because it is impossible to think of everything that one might want to put on the face of the Bill, it does not seem to me, with great respect to the noble and learned Lord, that we should not put something on the face of the Bill which reflects the underlying principles of Article 8 of the convention. After all, the convention is something that the noble and learned Lord and his government wished on the nation. It seems, in my respectful submission, only proper that its provisions should now be respected. It is my understanding of the law which underpins Article 8 that something more specific than a general expression of public interest is required. However, we shall return to that matter in later amendments and I do not intend to dilate on that any further.

As far as the specific amendment is concerned, I was extremely grateful to the noble Lord, Lord Newby, for his suggestion that the expression "commissioner" might be substituted for "commissioners". That seems to me to be a wholly appropriate and extremely helpful gloss on our own amendment. The noble and learned Lord the Attorney-General expressed the view that it would be most onerous for the commissioners to have to consider every case of public interest disclosure. I respectfully submit that that would not be so. Public interest disclosure as a basis for disclosure would, in my submission, be relatively rare. If one adds the suggestion of the noble Lord, Lord Newby, that it is a matter which could be dealt with perhaps by a duty commissioner on the telephone for a certain period of time, 24 hours a day, that would be a perfectly acceptable administrative way of dealing with the matter—just as one has a High Court judge in the High Court on 24-hour duty to deal with applications for interim injunctions. I see no reason why the commissioners should not adopt the same practice.

But supposing the noble and learned Lord the Attorney-General is right in saying that one would need a wider reservoir of officials in the new organisation to deal with sudden and unexpected situations where a public interest disclosure was desirable. I would suggest that he adopts the practice adopted in the Financial Services Act 1986, where specific categories of officials are designated to deal with particular matters connected with emergencies.

I see no reason why, if the noble and learned Lord feels that he would need to go beyond the category of commissioner, he could not say that officials at a certain grade-level could exercise that delegated power. Simply to have an open-ended definition, as the noble and learned Lord suggests, seems to provide no protection for the citizen.

I will withdraw the amendment because, in any case, I cannot put it to the vote. But it is a matter to which, I know, the Opposition, at any rate, will return on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clauses 15 and 16 agreed to.

Schedule 2 agreed to.

Clause 17 [Use of information]:

moved Amendment No. 32:

Page 7, line 21, at end insert "but only in pursuance of an order of the Court"
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 35 to 37. I am grateful to my noble friend Lord Kingsland for moving Amendment No. 31 because it leads us at long last to the main point of substance on the structure of the Bill, on which there is fundamental disagreement.

Amendment No. 32 is concerned with the use and exchange of confidential information obtained from one department for one purpose and used for another purpose by either department. My noble friend Lord Kingsland has just said that the business of sharing information should be subject to specific statutory provision in the Bill. I totally agree. I shall not take time dealing with the delegation point on Clause 14(1)(c), to which I also happen to agree, as it is slightly wide of the mark on this amendment.

The use and sharing of information was considered in the report of the Joint Committee on Human Rights, at paragraphs 1.14 to 1.18, to which I should like to refer later if there is time. They are referred to in context—my noble friend Lord Kingsland rightly referred to that—with Article 8 of the European Convention on Human Rights, which has been spoken to, up to a point, on day one of the Committee, as reported at col. 266 of Hansard.

Amendment No. 33 to Clause 18(2)(b) engages Clause 20 as one of the exceptions to afford disclosure in the public interest in the same context as it was considered in the report of the Joint Committee on Human Rights: Article 8 of the European Convention on Human Rights. That is dealt with in paragraphs 1.23 and 1.24 of the report. to which I shall refer later.

Amendment No. 36 relates to Clause 18(2)(c), which affords disclosure for the purpose of civil proceedings. Amendment No. 37, which relates to paragraph (d), which affords disclosure for the purpose of criminal investigations and proceedings, was also considered in paragraph 1.25 of the Joint Committee's report. All were referred to in a highly critical manner in the context of want of compatibility. I shall come to that if there is time.

5 p.m.

The purpose of all the amendments to which I am speaking is to bring the exercise of these powers, which is what they are, under some form of control "in accordance with law"—an express provision of Article 8(2)—and to afford the safeguards as provided by Article 8(2) and as proposed in paragraphs 1.26 to 1.33 of the report. These safeguards relate to the case that I am putting forward and I shall read them quickly. Under the heading "Stronger safeguards", the report states:
"Although we broadly welcome the protection for taxpayer confidentiality in the Bill, we consider that there is some scope for introducing stronger safeguards to ensure that the power to disclose confidential information … is not abused.
"The Government rely on the fact that when making disclosures of confidential information, HMRC will be under a duty to comply with both the Human Rights Act 1998 and the Data Protection Act 1998".
Pausing there for a moment, the noble and learned Lord referred to the safeguards provided by the Human Rights Act in the context of the delegation to which my noble friend referred.

Returning to the report, the committee stated—or "we" stated, as I was a member of the committee—that,
"While this is legally correct in practical terms it does not provide an answer to the lack of effective safeguards for the reasons pointed out by the Privy Counsellor Review of the Anti-terrorism, Crime and Security Act 2001 ('the Newton Report') in the context of that Act's provision for public bodies"—
and this is a public body—
"to disclose information to assist criminal investigations or proceedings, or to the intelligence and security agencies".
We then quote and adopt what was said in the Newton report:
"The protection offered by the Human Rights Act 1998 and the Data Protection Act 1998 seems to us to be illusory since the burden will lie on the individual to complain about the disclosure of their confidential information in circumstances where, almost by definition, he or she will be unlikely to know that disclosure has occurred".
In other words, the view is taken that it is a myth, a kind of mirage. It may suit government to look into it, but it affords no safeguard at all.

That is the fact of the matter that the noble and learned Lord the Attorney-General will not accept. It is one of the fundamental issues of contention that will arise and remain throughout the proceedings of the Bill and will have to be resolved in a Division.

Paragraph 1.28 of the report states:
"The applicability of both the HRA 1998 and the DPA 1998 is therefore no substitute for the strong safeguards in the statutory scheme to ensure that power to disclose confidential information about an individual … will generally be unaware, is only exercised in circumstances where it is proportionate to do so".
The noble and learned Lord, my noble friend and I were talking about safeguards.

Paragraph 1.29 states:
"Three important safeguards which are desirable in relation to regimes for the disclosure of confidential information are pre-disclosure assessment, prior authorisation and external oversight".
I have interpreted prior authorisation in the form in which I have put all of these amendments; that is, that they are,
"in pursuance of an order of the Court".
I have not put the High Court. I have only sought judicial control in some form.

The same difficulty is arising on the new terrorism Bill; that is, whether, before you do something that invades someone's old or traditional rights, you should have prior authorisation via a judicial form, not after. So that is an important matter.

Paragraph 1.30 continues:
"The Bill at present contains no requirement that a pre-disclosure assessment be made of the proportionality of disclosing information on a particular individual in the context of the particular purpose which is sought to be served by disclosure. In our view the Bill should contain an express requirement that, before any decision to disclose confidential information is made, a structured assessment of the proportionality of such disclosure … should always be made".
I will refer to only one further extract at this stage. Of course, prior authorisation lies at the root of my case. Paragraph 132 states:
"The Newton Report points out that prior authorisation safeguards have traditionally been considered particularly important when an individual is unlikely to know that such powers are being exercised against him. It recommended that the rigorousness of such a prior authorisation safeguard should be a function of two factors: the seriousness of the crime being investigated and prosecuted"—
my noble friend Lady Noakes took that point at Second Reading—
"…and the sensitivity of the information being disclosed".
Paragraph 1.32 also states:
"Internal authorisation might be appropriate in certain cases",
which the report then deals with. It states that prior judicial review might be necessary in other cases, and so forth.

Paragraph 1.32 states that,
"The Newton Report recommended that Parliament should be given the opportunity to decide what level of authorisation should be required"—
not the commissioners—
"depending on the seriousness of the crime and the sensitivity of the information".
In our view, the same applies in relation to the present Bill. As your Lordships will know, the Newton report related to the Serious Organised Crime and Police Bill.

Speaking to the amendments, perhaps I may deal with two questions that arose. I made a very short reply to the noble and learned Lord's speech on our first day in Committee, at cols. GC 267–8 of the Official Report. He said then, as he said today. that the Human Rights Act and the Data Protection Act are strong and sufficient safeguards. I have given the Committee a reference sufficient to show that, in the opinion of the Joint Committee on Human Rights, they are not.

Secondly, the noble and learned Lord said that both departments—and this was the issue that arose on day one and carried over from Second Reading—retain powers to settle arrears of tax and to offer civil settlement; and because that was so, there was no cause for concern that the powers would cease to exist. I was arguing this amendment and raising this point but that was not my case at all. I never said that the powers did not exist. My concern—and the concern of four noble Lords who have vast experience of the Treasury, including a triumvirate from the Benches opposite, two of whom are present at the moment—was about the total diversity of cultures as between the two departments and their working practices. We have heard today the noble and learned Lord explain a particular diversity. The Revenue department should remain independent of Customs and Excise in the interests of the protection of the individual taxpayer. That is how it was put on Second Reading by the noble Lord, Lord Thomas of Gresford.

Note in this context must be taken of coercive investigatory powers under the Serious Organised Crime and Police Bill, on which the Joint Committee on Human Rights also reported as engaging Article 8(2), a matter raised by my noble friend Lady Noakes at Second Reading. Note also has to be taken of the resort by the Customs and Excise to what is called a writ of assistance. Nobody else has any recourse to this; you get it from the Queen's Remembrancer. He is usually the Senior Master over the road in the law courts. It is a general search warrant entirely free from any form of judicial control, which authorises forcible entry and is justified on reasonable suspicion even if no goods are found. Now there is a rather different type of approach to enforcement from what is usually done in the Revenue, and there is a genuine concern here.

I shall end by referring, on Amendment No. 32, to paragraph 1.14. It states:
"The Bill provides that information acquired by the Revenue and Customs in connection with one of their functions may be used by them in connection with any other function. The purpose of this provision is to enable the internal sharing of information … so that information inherited from any of the predecessor departments can be used to support any function of the new department, not just the function in relation to which the information was originally acquired".
The report continues:
"Internal information sharing is expressed to be subject to certain limits".
But it is the conclusion that,
"The internal use by HMRC of information about taxpayers is an interference with Article 8 rights, but one which is capable of being justified".
The conclusion is that certain suitable safeguards are wholly requisite, about which it has written to the Government.

As regards Amendment No. 35, the reference in the report is to paragraphs 1.23 and 1.24, again on the public interest. It states:
"Our principal concern is with the uncertain scope of the 'public interest disclosure' exception provided by clauses 17(2)(b) … Those clauses provide that the statutory duty of confidentiality does not apply to a disclosure made for a purpose of a kind … The kinds of purposes for which public interest disclosure is permitted are not therefore defined on the face of the Bill, but left to be specified in regulations".
My noble friend Lord Kingsland has taken that point. I need say no more on paragraph 1.23.

Paragraph 1.24 states:
"In our view this gives rise to a risk of non-compliance with the requirement that interferences with Article 8 rights must be in accordance with the law. The definitions which have been left to regulations should be on the face of the Bill".
Amendments Nos. 36 and 37 deal with using the material for civil or criminal investigations and so forth. I shall not read paragraph 1.25, which is the relevant passage. I just take the point that there is a real difficulty about whether there should be disclosure to foreign agencies. There is no limitation or restriction whatever, which is a matter that should be in the Bill. I apologise for taking rather a long time.

The structure of the Bill is manifestly defective. Appropriate powers against misuse of powers are wholly requisite. This is a matter to be revisited at a later stage. I beg to move.

The range of issues set out by the noble Lord have flowed in no small measure from the Joint Committee on Human Rights which, in a number of cases, has suggested that the Treasury should give more information about what is intended. Indeed, a letter was sent from the chair of that committee to the Chancellor on 2 February asking for a response on 14 February. I do not know whether the response has been forthcoming. I certainly have not seen it. If I had seen it, I think that I would feel much better informed in dealing with this whole raft of measures.

It was sent on 10 February. I hope that when the noble Lord has had a chance to read it he will feel not only better informed but reassured.

I hope that I am both. But it would have been extremely helpful if the practice used in the response by the Government to our own Select Committee had been followed—namely, that we were given an opportunity to see this material in advance of the Committee stage. I believe that I am not the only person who has not seen it.

For clarification, was it the one that was sent to the chairman of our committee?

Yes. It was sent to the right honourable Jean Corston MP on 10 February 2005. I shall make inquiries as to its circulation. Perhaps I may respectfully make the point that the noble Lord was a member of that committee and might therefore have hoped to have received from his chairman a copy of the letter responding to the inquiries that he had.

If I may say so, the noble Lord, Lord Newby, knew that an answer to an inquiry to us should have been given by 14 February; it is now 24 February. Had he wished to know whether we had replied and had not otherwise had a chance to see the document in advance of this debate, I would of course have answered the question and provided him with a copy.

Perhaps I may make a general point. It is always extremely difficult from the opposition Benches to find the resources to chase individual deadlines. But it is helpful, and often works, that the Bill team will alert the Minister to the need to circulate material that becomes available after certain events, such as Second Reading, and send it to Members of the Committee. Otherwise we are in an impossible position where we raise issues and discover material that has only just become available, meaning that we virtually wipe out the usefulness of the Committee stage, which puts much greater pressure on the later stages of the Bill.

It would be helpful if the noble and learned Lord and his staff could bear that in mind during the remainder of the conduct of the Bill.

I have made my point on that. Extensive reference has been made to the report of the Joint Committee on Human Rights. In its final sentence it said that a request for information by 14 February was made. Indeed, the burden of the report was to say, "We would like more information on certain issues". That has been provided. I shall obviously look to see what arrangements we made but I do not believe it is inappropriate to say that those who have referred to the report might perhaps have asked whether there had been a reply, which should have been received 10 days ago but was received longer ago than that.

The noble Lord's series of amendments all would place an obligation to obtain prior judicial approval for any of the disclosures the Bill authorises. Under Clause 17 it would be disclosure within existing departments and disclosure between departments; and under Clause 18 it would be disclosure under the public interest function, disclosure for the purposes of civil proceedings and disclosure for the purposes of criminal proceedings.

As to the first of those, there is already sharing on a daily basis both within departments and, indeed, between these two departments. As the Explanatory Notes make clear, this has been happening since 1972 and is authorised by existing statute. It would be impossible for the department to carry out its business if now it was required to go to a judge to ask for permission each time it wanted to share information that it had been sharing for the past 30 years; or each time its prosecutors wanted to prosecute someone for evading tax it had to go to a judge first to say, "Please can we talk to our prosecutors and tell them what it is about"; or each time it wanted to sue for the recovery of tax in civil proceedings it was told, "You have got to go to a judge first to find out whether you are allowed to tell your civil people that they can sue for your money". I understand the point about safeguards, and I will deal with it. However, I respectfully say that the noble Lord's proposal to have prior judicial approval on each and every one of these occasions would be unduly burdensome, to put it mildly, as far as the department and the courts are concerned. It is not what happens at the moment and it is not necessary now.

However, I do not for a moment disagree with the noble Lord that it is important to have safeguards regarding information provided by taxpayers. Strong safeguards exist in the Bill. It contains the declaration of confidentiality, the obligation under Clause 18 to maintain confidentiality, the criminal offence which is created, and the whole code of disclosure which Clauses 17 to 21 set out. This is a very transparent form of disclosure.

The noble Lord makes a point based on European jurisprudence that it is necessary, for the purposes of Article 8 of the European Convention on Human Rights, that disclosure should be in accordance with the law. Well, here we are—the law is setting out in the Bill when disclosures may be made.

Strong safeguards are available. I shall not develop my point on Clause 20 again because I was taken gently to task by the noble Lord, Lord Kingsland, for spending a little bit of time on it before, but, as I have indicated, it provides a number of safeguards on the way in which information can be disclosed. Furthermore, the Human Rights Act and the Data Protection Act continue to apply to the operations of HMRC. It is not, with respect, necessary to set them out again on the purpose of the Bill. It is not, for example, necessary to say that a disclosure needs to be necessary and proportionate to the aim, because that is something which the Human Rights Act imposes overall.

The Government have taken the view that it is not necessary each time a Bill is passed to put into it obligations which appear under the Data Protection Act or the Human Rights Act. That is why the committee stated that it would be confusing and superfluous to draft on that basis. Given that Members of the Committee have not had an opportunity to see the letter which came from my right honourable friend two weeks ago to the chair of the Joint Committee on Human Rights, it would probably be wearisome for me to go into detail, but I invite them to look at it and very much hope that it will reassure them. But I must resist the amendments of the noble Lord, Lord Campbell of Alloway, requiring prior judicial approval.

These probing amendments were designed to raise this fundamental issue, and the noble and learned Lord agrees that there is a fundamental issue here. I wholly accept that in their present form they are not acceptable and would certainly not be retabled in that form.

I saw the letter to the chairman of the Joint Committee on Human Rights when it arrived. It rejected all our arguments, and, if I may say so, I did not think that the reasoning of rejection was at all sound. I did not want to take up time arguing what was really a side issue. Now, of course, people can judge what they think of the reasoning of the response. I do not mean any offence to the noble and learned Lord, but I thought that that was a wholly inadequate response, so I personally did not bother with it. I was not trying to conceal it from him, I just thought that it was irrelevant.

5.30 p.m.

I am glad that the noble and learned Lord and I are at one on the principle of safeguards. We do not agree over whether they should be on the face of the Bill, as is proposed by the Joint Committee on Human Rights—I believe that that is essential. But I take the point that safeguards are essential and I think that he takes it, too. But the safeguards that are provided, to which the noble and learned Lord referred, are manifestly inadequate for the purpose.

I remember the other interpretation from the letter that suggested, "Well, it's in the Bill, therefore it's according to law". But that was not the way that the committee looked at it. It said that "according to law" meant some form of legal control over the use of the powers in the Bill, which is quite different. I am grateful for that opportunity to address this matter, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 17 agreed to.

Clause 18 [Confidentiality]:

moved Amendment No. 33:

Page 8, line 13, leave out paragraph (a).
The noble Lord said: Before I speak to the amendment, perhaps I may say to the noble and learned Lord the Attorney-General that I did not intend to take him to task for straying into Clause 20 when we were supposed to be discussing Clause 14. I do not blame him for doing that. It was my siren sounds that proved too great a temptation to him.

The amendment refers to subsection (2) which deals with the issue of confidentiality. I shall be brief. Let me begin by reassuring the noble and learned Lord that my purpose is entirely to probe. I wish to test the boundaries of the provision. As evidenced by our earlier debates, we are all agreed that the statutory duty of confidentiality in respect of taxpayer information is entirely welcome. That said, it seems that that drafting of paragraph (a) could have the effect of undermining this important principle.

As I read it, this paragraph delivers a broad widening of the scope for disclosure available to HMRC, with no restriction on the persons or bodies to whom information could be given, on the character or scope of the information to be disclosed, or on any further onward disclosure. In effect, in the absence of any specific restrictions on the face of the Bill, any official of HMRC—and that in itself is a broad category of persons—will be able to disclose any information to any one at any time, subject only to the disclosure being for the purpose of one of the functions of HMRC.

The noble and learned Lord will, I am sure, discern that a major cause of my concern is that this could have the effect of relieving HMRC of any requirement to obtain further statutory gateways permitting disclosure in specified circumstances. In turn, this would severely limit the capacity of Parliament to scrutinise properly each individual extension of disclosure powers. That would be an undesirable state of affairs. Accordingly, I trust, or, at least, hope, that the noble and learned Lord will offer me some comfort. I beg to move.

I hope that I can meet the noble Lord's request. Clause 18 provides, as the legislation for the predecessor departments did, for prescribed circumstances where disclosure is permitted. As I said at Second Reading, the disclosures allowed for by Clause 18(2)(a) could range from advice to Ministers on policy matters to day-to-day operational activities. I would ask noble Lords to note that this ability to disclose for their functions already exists in the predecessor departments. The existing legislation allows staff of Inland Revenue or Customs and Excise to disclose in accordance with their official duties.

The noble Lord is concerned to explore the breadth of the power, but it is important to note that the purpose for which disclosure may be made is constrained by being.
"for the purposes of a function of the Revenue and Customs",
"does not contravene any restriction imposed by the Commissioners".
Both are important. "Function" means the functions given to HMRC by Parliament—the collection and management of revenue—and those which are ancillary to it, such as management functions, provision of training for staff and so on. Staff will not be able to use this paragraph any time they feel like it. It must be for the purposes of the function.

Nor does it do away with the need for statutory gateways, the noble Lord's other point, because this is simply business as usual for the department. Current legislation already allows Inland Revenue and HM Customs and Excise to disclose in accordance with their official duties and they cannot choose to say something is their function—their functions are what their functions are, as given by Parliament.

Regarding the second part, there are already controlled, limited circumstances about when such disclosures can be made. Controlled, limited circumstances will continue to be the order of the day under the new body. I hope that the noble Lord will accept the essential point that it is important for HMRC and its customers to be able to take part in the sort of activities that I have outlined and that it is necessary to have the provision for disclosure for that purpose. I hope that the noble Lord will be reassured.

Perhaps I may intervene briefly. The noble and learned Lord referred to the existing law where the derivation table is from a Finance Act. This House does not have the opportunity to review finance Bills—which troubles some of us—which means that a number of important areas of law are not scrutinised by your Lordships' House. It occurs to me that these particular powers, when they were set up in 1989, will not have been scrutinised. That is a general comment on the way that finance Bills are examined in another place. The noble and learned Lord referred to "controlled and limited circumstances". What are they?

As regards the first part of the noble Baroness's questions, I am talking about an existing state of business which has operated, as she said, for 15 or 16 years. We are simply proposing to take that forward. Given the time, it would probably be more accurate if I included what I had in mind in relation to the controlled and limited circumstances that I shall write to her when we have completed the Committee stage.

I am most grateful to the noble and learned Lord for his response. He will recall that, in my opening remarks, I expressed my concern in the context both of a widening of the scope of disclosure available to HMRC and an increase in the numbers of persons and bodies to whom information could be given in comparison with the existing situation. Am I right in interpreting the noble and learned Lord's reply that I am simply wrong about that and ought not to be concerned? Is he, in effect, saying that the Bill simply endorses the status quo with respect to the scope of confidentiality and the number of people involved? If so, that would be the end of the matter.

The answer is yes, it does, except for the position of the prosecuting authority, RCPO, which we will deal with later in the Bill.

I am most grateful to the noble and learned Lord for that reply, which was most helpful. I shall look at the additional features on the landscape, which are the powers of the prosecuting authority, and, depending upon my conclusions, come back or otherwise on this matter on Report. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 34:

Page 8, line 18, leave out "20 or"
The noble Lord said: The purpose of the amendment, taken with the clause stand part Motion, is clear, namely to delete Clause 20.

My first reading of that provision provoked a question in my mind as to why the Revenue and Customs authorities might need to resort to a public interest test as a justification for the disclosure of information. The reasons for doing so are entirely unclear, at any rate to me, and I would be grateful if the noble and learned Lord could clarify the Government's thinking, ideally by giving some specific examples.

As things stand, I cannot see what the public interest exemption adds to the already extant statutory gateways that permit disclosure. For example, albeit that they are not mentioned in Schedule 2, powers to disclose for any purpose connected with criminal prosecution or investigation are already provided for by Section 19 of the Anti-terrorism, Crime and Security Act 2001, while the Social Security Administration (Fraud) Act 1997 grants powers to disclose to the Department for Work and Pensions for social security purposes. By the same token, to cite just a few examples from Schedule 2, Section 24 of the Teaching and Higher Education Act 1998, Section 20 of the Immigration and Asylum Act 1999 and so on also grant powers of disclosure.

One possible answer, of course, might be the following. The joint code of practice that emerged from the revenue departments in connection with the provisions of the Anti-terrorism, Crime and Security Act states:
"The Inland Revenue has very strict rules on the confidentiality of information".
It is legally obliged to keep customers' affairs completely confidential. The code continues:
"Information can only be disclosed where legislative provisions permit the disclosure of information or where the customer involved has consented to the disclosure. The approach of HM Customs and Excise is similar, but disclosures may also be made where there is an overriding public interest in doing so."
This suggested to me that Clause 20 may be necessary because of the different cultures of the Inland Revenue and the Customs and Excise services. Perhaps the clause could be justified because of differences of nuance in the legal powers. So, having checked the reference in the transposition note, I looked up Section 182, subsection (6)(a) and (c) of the Finance Act 1989. It states: "For the purposes of this section a disclosure of any information is made with lawful authority if, and only if, it is made—

(a) by a Crown servant in accordance with his official duty,…

(c) to, or in accordance with an authorisation duly given by, the person responsible".

Yet we are unable to establish any correlation between that and the drafted text of Clause 20. Here I would be grateful if the noble and learned Lord the Attorney-General could perhaps explain the methodology of how the one was derived from the other. I say again, we simply cannot see what purpose the public interest exception is intended to achieve.

5.45 p.m.

The noble and learned Lord the Attorney-General will again realise that a great deal of our antipathy towards this clause stems from our preference for statutory gateways for disclosure to be enshrined clearly in primary legislation. But it goes even deeper than that. In particular, I echo the concern expressed by the Joint Committee on Human Rights about the uncertain scope of the exception. Paragraph 1.23 of its report states:
"The kinds of purposes for which public interest disclosure is permitted are not therefore defined on the face of the Bill, but left to be specified in regulations made by the Treasury. Moreover the regulation-making power is extremely wide".
We would go further. It is so broad as to create the possibility that all the welcome safeguards that the Bill contains could be overridden. For example, if the regulations were to define a public interest purpose or disclosure as "to assist the regulatory functions of" a government department, the effect would be to give HMRC an almost unfettered power to disclose taxpayer information under almost any circumstances. That simply cannot be a correct approach in law.

As an addendum to this, it is also worth considering some interesting statistics, unearthed by the Privy Council review chaired so outstandingly by my noble friend Lord Newton of Braintree, on the Part 3 disclosure provisions of the Anti-terrorism, Crime and Security Act. It would seem that, between January 2002 and September 2003, the Inland Revenue made 19,909 disclosures under the Act, whereas Customs and Excise made 796. Bluntly, it is extremely hard to credit that Customs and Excise, given its culture of close liaison with the police and security services, could have made over 19,000 fewer disclosures than its tax-collecting counterpart. Rather, it is tempting to conclude that the discrepancy arises because the bulk of Customs disclosures post 2001 are still being made on the basis of public interest, with correspondingly less requirement for scrutiny and record keeping than is required by the anti-terrorism Act.

I do not know what view my noble friend's committee took of Customs practice in this regard. Its report was silent on this, although it does say that the Inland Revenue had,
"implemented the disclosure regime in a responsible way".
Be that as it may, what matters here is that there are legitimate grounds for supposing that a public interest exception has the effect of weakening the safeguards of the disclosure regime.

All in all, we are most unhappy about the clause. Is its inclusion in the Bill really justified? As the Joint Committee on Human Rights makes plain:
"the Explanatory Notes also refer to 'other public interest reasons' compatible with Article 8, without specifying which such reasons are relied upon to justify the powers to use information. We would remind the Government that the onus is on it to specify the precise aims which are relied upon in Article 8(2) as justifying the interference with Article 8 rights".
Those are our sentiments exactly. I beg to move.

I start by clarifying something that I said on the last amendment. I apologise. I was asked about the extension of the scope of disclosure and I referred specifically to RCPO. I should have added the prosecuting authorities in Scotland and Northern Ireland and the external scrutiny bodies which will have oversight of HMRC. I wanted to say that now so that the noble Lord will be able to take it into account in his considerations.

I am most grateful to the noble and learned Lord for that addition. It is so characteristic of him to want to he absolutely accurate. I am most grateful.

I am obliged. In large measure I have dealt already with Clause 20 because the effect of the amendment would be to take it out altogether.

Let me reiterate a couple of points. Customs have in the past, acting in accordance with government guidance, exercised implied powers to disclose in the public interest. The Inland Revenue has also disclosed in the public interest in the past—for example, when asked by police for assistance in murder investigations. Since 2001 it has used the provisions of the Anti-terrorism, Crime and Security Act to make these kinds of disclosures.

The point I wish to underline is that the Bill will increase the commitment to the principle of taxpayer confidentiality by making transparent what disclosures may be permissible in a way in which the implied powers and the exercise of the implied powers do not. This will constrain the degree to which the commissioners can exercise their discretion.

The noble Lord asked in what kind of cases the power to make regulations will be used. The Joint Committee on Human Rights also asked that question. Let me make it clear that I shall provide copies of this correspondence to all noble Lords: nothing that I said before was intended to suggest that I would not do so. I shall try to make available all information that may be helpful to noble Lords in the course of our consideration of the Bill. The answer given to the Joint Committee was to draw attention to the draft regulations which were sent to the committee, a copy of which has been placed in the Library. They identify, in answer to the noble Lord's question, the kind of areas in which regulations will be used.

Let me emphasise one very important point: all the purposes identified under the draft regulations are acceptable under the European Convention on Human Rights. They are specifically limited to those purposes and any other purpose suggested would have to be acceptable under the convention. Why? Because these regulations will be subject to the affirmative resolution procedure. That means, under the procedures the Government have accepted, that a Minister will be required to make a declaration of compatibility with the European Convention on Human Rights when such regulations are laid.

Obviously it also means that those regulations will be subject to parliamentary scrutiny. Indeed, if I may take the noble Baroness back to what she said on the first day in Committee, she was particularly anxious that certain matters should be subject to what she described as, I paraphrase, strong parliamentary scrutiny of affirmative resolutions. So they cannot be used for anything at all—absolutely not. They will have to be compliant with the European Convention on Human rights.

The difficulty is—it happened with the report—the Government take one view and say that what they are doing is in conformity with human rights, and there is another view which says that what they are doing is not. This happens on many Bills. So it is absolutely pointless to say. "What we do has to be in conformity with human rights". What we do is what the Government consider is in conformity, but may not be. That is why my noble friends and I want this on the face of the Bill. We want clarity.

Let me take a moment to respond. With respect, I do not share the noble Lord's view. Indeed, I thought that he and I would be absolutely in agreement about the fact that one of the effects of the Human Rights Act is precisely that the Government cannot just say what they think is compliant with the Human Rights Act. There are two important sanctions here. A regulation has to be put forward for parliamentary scrutiny. If both Houses of Parliament take the view, using the affirmative resolution procedure, that the regulation is not compliant with the Human Rights Act or, for that matter, is undesirable on other grounds, Parliament does not approve. That is a strong sanction.

The second sanction is that the Human Rights Act gives the courts the power to interpret and occasionally to strike down legislation which is incompatible with the Human Rights Act. Here, as the noble Lord will know from his great experience, there is, to the potential litigant, an advantage in something being specified in a regulation—that is, in secondary legislation—which can be struck down, whereas primary legislation cannot be.

Both sanctions are in place, so while I understand that there can be proper and legitimate disagreement from time to time as to whether something does or does not meet the provisions of the Human Rights Act, there exists the safeguard that the Minister will make a declaration of compatibility—I have talked about this in the House on previous occasions. That means that the Minister has to be satisfied that the legislation is compatible, and that is on legal advice, or, at least, more likely than not, the courts would uphold it. Secondly, Parliament, and ultimately the courts, if they take a different view, can say so. It is in no sense an open-ended power.

I want to mention one further set of operational safeguards. If there is any concern that Clause 20 might give the commissioners powers to issue very general open-ended instructions authorising all sorts of disclosures, I am very happy to place on the record an absolute assurance that that is not the case and will not happen.

The clause requires the commissioners to be satisfied that they should exercise the ability to make a specified disclosure offered to them by regulations. They will not authorise each and every disclosure, for some are made on a regular basis, but they will have oversight of the classes of information to be disclosed and in authorising a type of disclosure will have to have regard to Human Rights Act obligations.

The clause provides for a disclosure to be made under Clause 20. First, the Treasury must be satisfied that the need for regulations is in the public interest. Secondly, both Houses of Parliament must approve the need for regulations. Thirdly, the Commissioners for Revenue and Customs must give instructions for the disclosure to be made.

In short, the clause increases the transparency of an existing authority for the commissioners in either department to authorise disclosure of information. It provides for good and strong safeguards, and this high level of scrutiny and safeguard reflects our recognition of the importance of the confidentiality of taxpayer information.

I am most grateful to the noble and learned Lord for his very full response to this amendment.

Our concern has been made perfectly obvious, and I shall not repeat the substance of it again. In our submission, the first paragraph of Article 8 can only be constrained or resiled from in certain specific circumstances. I accept entirely that any regulation made under the clause will have, ex post, to conform with Article 8. It would be perfectly possible for somebody to challenge a regulation on the grounds that it fell outside the terms of Article 8. But in our submission, that is not a sufficient protection for the citizen.

Let me put again the question to the noble and learned Lord that I asked in my opening remarks. If the regulations to which he referred were to define a public interest purpose for disclosure as,
"to assist the regulatory functions of",
a government department, the effect would be to give HMRC an almost unfettered power to disclose taxpayer information under practically any circumstance. Does the noble and learned Lord agree with my submission that a regulation which permitted disclosure simply to assist the regulatory functions of a government department would be outside the terms of Article 8 of the European Convention on Human Rights?

6 p.m.

The noble Lord has asked me a question, but I shall ask him two questions in return. First, does he think that it is outside the terms, in which case why are we debating it? Secondly, does he think that the House would accept it, in which case why are we debating it?

I would be very surprised if the House would accept it, although the noble and learned Lord has to remember that under normal circumstances, this House would find it constitutionally difficult to vote against the Government on an item of delegated legislation. So it may be that political considerations would intervene to prevent the House voting against the Government, even though the view of the House was that the regulation was outside the terms of Article 8.

Why should the individual have to rely on such an uncertain constitutional convention? If the constraints were built into the Act, the Government would not dare to attempt to take such an initiative in the first place.

Does not the noble Lord agree that the effect of the Human Rights Act is that the requirement that the regulations should comply with Article 8(2) is already written in?

That is true if you look at the certification of the Bill, or if you compare a copy of the Human Rights Act with what the Government do. It is certainly true to say that there is a prospective conformity; but that does not mean that either this Government or a future government would necessarily not have a go if they wanted to put on to the statute book a delegated power that goes beyond the constraints of Article 8.

There is no useful purpose in furthering this exchange. I think that I understand where the noble and learned Lord is coming from. I shall reflect on what he has said and I may come back to this matter on Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 35 to 37 not moved.]

moved Amendment No. 38:

Page 8, line 32, after first "the" insert "explicit"
The noble Lord said: This amendment advances the proposition that, in the case of the exemption for disclosure of information made with the consent of the individual concerned, the grant of that consent should be explicit. At first blush this might seem to be a modest proposal: but we adjudge it to be a matter of some substance.

We do not dispute that both the Data Protection Act, by virtue of Clause 22, and the Human Rights Act will apply to disclosures made under this legislation. Indeed, I congratulate the Government on the inclusion of Clause 22, the more so because too often it is omitted from similar provisions in other legislation. But, as Members of the Committee will be aware, such safeguards are not so robust as they may first appear.

The Privy Council review of the anti-terrorism Act pointed out that, in many ways, the safeguards are "illusory" since the burden lies on the individual to complain about the disclosure of their confidential information in circumstances where, almost by definition, he or she will be unlikely to know that disclosure has occurred. In other words, given the construction of the subsection, how is a data subject going to know whether or not his information has been inappropriately disclosed unless he has been consciously involved in an original grant of consent to disclose?

In part I suspect that I can pre-empt the Government's response here. On the one hand it is entirely justifiable to argue that it would be inappropriate to seek explicit consent in circumstances where disclosure is made for the purposes of criminal proceedings and the like. Here, so far as I can tell, there is no implication in the construction of paragraph (g) that the concept of consent, explicit or otherwise, would apply. Indeed, as is made plain in paragraphs (c) to (g), the routes to disclosure for such purposes stand outside any requirement for consent.

On the other hand, there may well be a suggestion that HMRC should not be unnecessarily hamstrung by having to seek explicit consent for disclosures that relate to no more than internal management processes. As the noble and learned Lord will already have gathered, we have some hesitancy about this in any event. We do not accept that, as a matter of course, there is a case for suggesting that administrative convenience justifies a diminution of rights to data privacy. I might favour an opt-in procedure not dissimilar to that operating in the context of electoral registration, but perhaps that goes a little further than the scope of the amendment before us.

That said, it seems to me that the construction of the paragraph is such as to be entirely focused on circumstances where the consent of the individual concerned should be sought. Indeed, the example cited in the Explanatory Notes would appear to confirm this. I beg to move.

I shall deal with this briefly. Clause 18(2)(h) provides a gateway, but only where the person in question has actually consented, so there is nothing between us on that. What would be achieved by putting in the word "explicit"? I understand it to mean that it would require the taxpayer to say something along the lines of: "I allow this kind of information about these aspects of my tax affairs to be disclosed by HMRC to this person". That would be explicit, but the consequence would be that it would not cover the situation which I understand officers typically encounter. The taxpayer will say, "I want you to do this for me", and that necessarily requires a disclosure of some information in order that the thing can be done. In those circumstances, the officer would have to go back to the taxpayer and say, "I am sorry, I cannot do what you want until you spell out in these terms your consent that the information should be disclosed to this person". That would make it much more difficult to do business, not from the point of view of administrative convenience for HMRC, but for the convenience of the customer.

What is clear, and I hope the noble Lord will agree that this is what matters, is that whatever is the precise form, there has to be actual consent from the original taxpayer. It must be clear both to the officer and to those reviewing the officer's work at a later date that the taxpayer has consented to the disclosure. It should not be necessary to require it to be in any specific form so long as it is clear that there has been consent. I hope that the noble Lord agrees that that will provide the necessary protection we both seek.

I seek clarification of the suggestion that taxpayers write to HM Revenue and Customs saying, "I want you to do this for me". In the early part of my career I handled a fair amount of tax business, but I cannot ever remember writing a letter to the Revenue which, when paraphrased said, "I want you to do this for my client". I am struggling to think of the kind of situation where a taxpayer communicates with the Revenue asking it to do something for them. I would be grateful for clarification.

Perhaps I may be of help to the noble Baroness. I am going back into the history of when I used to work in the Revenue. On many occasions people would ask us to speak to their accountant saying, "Please give him this information and have a conversation about the issue".

I would suggest that that is adequately covered by the arrangements for the appointment of agents. The information flows only in the context of the appointment of an authorised agent.

My noble friend Lord Brooke has given exactly the kind of example we have in mind. A taxpayer may ask the Revenue, "Please sort this out with my accountant". While the taxpayer does not say, "Please sort this out with my accountant by giving him the information I have submitted to you and disclosing it for this purpose", it will be absolutely clear that consent has in fact been given.

I am most grateful to the noble and learned Lord for his response. I think that I am reassured by what he has said and, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

In calling Amendment No. 39, I must advise noble Lords that if this amendment is agreed to, I shall not be able to call Amendment No. 40 by reason of pre-emption.

moved Amendment No. 39:

Page 8, line 40, leave Out sub-paragraphs (iii) and (iv).
The noble Baroness said: I shall move Amendment No. 39, which is an amendment of my noble friend Lord Northesk. Not only has my noble friend's name been erased, as we discussed earlier, but the gremlins have also incorrectly allocated the amendment to my noble friend Lord Kingsland. I shall certainly move the amendment at the request of my noble friend Lord Northesk, and I hope also—since his name now appears above the amendment—at the request of my noble friend Lord Kingsland. I shall speak also to Amendment No. 40, which is tabled in my name.

Clause 18 sets out the basic duty of confidentiality which we have been debating, and it applies to HM Revenue and Customs "officials", who are defined in subsection (4) in a way which, I believe, is intended to be broad and to cover all those connected with the Inland Revenue who potentially come across confidential information.

Amendment No. 39 is probing in nature and seeks to delete sub-paragraphs (iii) and (iv) from Clause 18(4)(a). The amendment is designed to ascertain the relationship between those who have a duty of confidentiality under Clause 18 and those who make a declaration of confidentiality under Clause 3. We have touched on this aspect before. It seems that those covered by sub-paragraphs (iii) and (iv), who are by definition neither commissioners nor officers of HM Revenue and Customs, are also not within the Clause 3 declaration requirements.

The question I want to put to the noble and learned Lord is why it is that Clause 18, which is rightly intended to be wide in its scope in order to protect taxpayers, is not backed up by the important declaration process of Clause 3. As we have already debated, Clause 18 will allow many categories of information to be disclosed and so it is important to understand what kinds of person will be within the ambit of the clause.

I expect that the practice of the oath or declaration that we discussed on our first day in Grand Committee developed long before the Inland Revenue used outsiders to carry out its functions internally, and so it may well be that current practice has developed so that no declarations are made. However, if that is the case, I do not think we should regard that as conclusive because we have to look at the circumstances today, when we are considering whether the Bill contains the right safeguards for taxpayers.

Amendment No. 40 takes this further and proceeds on the basis that if people are going to have access to confidential information, they ought to be within the rules laid down by the clause and, more importantly, subject to the offence set out in Clause 19. The amendment seeks to probe whether the breadth of subsection (4) is adequate for the task.

The first leg of the amendment would insert new sub-paragraph (iiia) into subsection (4)(a) in order to make an explicit connection to the delegation provisions of Clause 14(1)(c), which we also discussed earlier. While it is possible that a person within Clause 14(1)(c) is covered by sub-paragraph (iii) as a person who is acting on behalf of the commissioners or an officer, I suggest that it is not absolutely crystal clear that there is a complete correlation between the persons covered in Clause 14(1)(b) and those covered in 18(4)(a)(iii). I suggest that the clause should be amended to put this beyond doubt by including a specific reference to Clause 14.

The second leg of the amendment inserts new sub-paragraph (iiib) into subsection (4)(a) in order to deal with the situation where a body corporate is acting on behalf of the commissioners or has been the subject of a Clause 14(1)(c) delegation—which we discussed when we considered Clause 14.

6.15 p.m.

As drafted, if a company is involved, the duty of confidentiality will apply to the company. I do not know whether it will apply to the company directors, but of potentially more significance are the employees of that company.

Let me be specific. At the moment there are two large IT contracts: the Cap Gemini contract in the Inland Revenue and the Fujitsu contract in Customs and Excise. If either of those bodies were acting on behalf of the Commissioners of Revenue and Customs, the corporate entities would be within the definitions of subsection (4) but their staff would appear not to be. Hundreds or even thousands of staff in those organisations are involved in the contracts, so the question of the position in relation to confidentiality arises. If they are not covered by Clauses 18 and 19, should they be? I beg to move.

There are two parts to the amendment. The purpose of the provisions that Amendment No. 39 would remove is to ensure that persons other than a commissioner or an officer of HM Revenue and Customs, but who are acting on behalf of the commissioners or are members of a committee—we have looked at Clause 14 already—would also be subject to the important duties of confidentiality under Clause 18. As I understand it, the noble Baroness's concern is to ensure that they are subject to that obligation rather than removed from it. which is what Amendment No. 39 would appear to do.

It is important—and it seems that we agree on this—that people who are not officers or commissioners but are carrying out the commissioners' work should be subject to the same obligation of confidentiality as provided by Clause 18. The noble Baroness asked why they should not sign the same solemn declaration. We take the view that the witness declaration, which was added in another place, has a certain symbolic quality and that is why it may be appropriate for staff to make it. But we do not think it necessary for non-executive directors, contractors or consultants to make such a declaration. It does not provide any actual additional legal safeguard because that is provided by Clauses 18 and 19 through the statutory duty and the criminal sanction. In any event, there are other ways to reinforce a duty of confidentiality if those dealing with these persons think it appropriate to do so. It is also right to say, as the noble Baroness recognises, that these groups are not at the moment required by statute to sign the Inland Revenue declaration.

It is certainly the intention that subsection (4)(a)(iii) should capture the categories of persons whom I understand Amendment No. 40 is designed to catch—that is to say, any other person to whom the commissioners have delegated a function, and the employees, direct and indirect, of those any other persons. That is the clear view of those behind me, so there is no need for an amendment to reach the position that the noble Baroness and I want to see.

When the noble and learned Lord spoke earlier about confidentiality, he explained that the solemn declaration was one aspect of the safeguards offered to taxpayers, but that somehow it is not necessary for those involved in the new organisation who do not happen to be on the payroll. That could embrace many different people. So we find that fundamentally unsatisfactory as a response. What the noble and learned Lord has said does not satisfy the point made in Amendment No. 39.

We do not understand why potentially large numbers of people should not make some kind of solemn attestation about their understanding of confidentiality. If it is not the statutory declaration in Clause 3 it should be something else, but I have not heard the noble and learned Lord say that anything else is proposed. Yet we know that the practice has evolved over the years, in particular over the past decade, of having large numbers of people operating within both Customs and Excise and the Inland Revenue who are not direct staff. I am sure that the noble Lord, Lord Brooke, is only too aware of that.

These people will not have signed the statutory declaration and there does not appear to be anything else to seize their attention. They may come from a different basic culture than that of public service and it may be even more necessary to provide them with some form of declaration.

In the hope that it helps the noble Baroness, while I stand by what I said about the statutory declaration being considered very appropriate for those who are direct staff, it may not be so appropriate for others. However, I shall certainly take away the question put to me about alternative methods that could, when appropriate, be used to remind people of the obligation which we both agree will be imposed on them both in fact and in law under this statute. I shall take the issue away and consider it further.

Can I ask the noble Baroness whether she has raised this issue as a result of a real problem encountered in her experience? All these people are employed by Cap Gemini. Is there is a sense that they do not understand the obligations of confidentiality under which they work, and are there instances of them not honouring those obligations?

I am not sure that I can answer the question put to me by the noble Lord, Lord Newby, but the fact remains that if we are concerned about employees, we ought to be concerned about the very large numbers of other people who are now operating within the Inland Revenue—and of course they work with taxpayer data. By definition they are hired to process taxpayer data. The fact that such issues have not arisen so far should not be a barrier to thinking about whether they should be brought into this kind of arrangement. I say that because of the way that employment procedures have progressively changed as a result of contracting-out arrangements, public-private partnerships or whatever fancy term is used to describe these arrangements.

Perhaps I may turn to Amendment No. 40 on a point of clarification. The amendment was brought forward to be helpful and to ensure that we actually capture in Clause 18(4) all those whom we think ought to be brought within the duty of confidentiality and thus subject to the offence of breaching it by wrongful disclosure. It comes down to whether the words,
"a person acting on behalf of the Commissioners or an officer of Revenue and Customs".
completely and absolutely captures anyone to whom functions are delegated under Clause 14(1)(c), and beyond that any person employed by that person. We seek clarification that anyone brought into the Revenue under the delegation processes will automatically be acting on behalf of the Revenue.

My amendment was tabled to seek absolute clarity. If a function is delegated to someone under Clause 14(1)(c), that person must come within the statute, thus ensuring no lack of clarity.

The noble Baroness will see that I have a piece of paper, which I have read, that says:

"a person acting on behalf of HMRC will include individuals employed by companies acting for HMRC".
I say that because the noble Baroness has asked me again. I have just sought confirmation that that is what we are saying.

Well, when they are acting on behalf of the Revenue; obviously not if they are doing someone else's job.

I am grateful for the noble and learned Lord's assurances. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 40 not moved.]

Clause 18 agreed to.

Clause 19 agreed to.

Clause 20 [Public interest disclosure]:

moved Amendment No. 41:

Page 10, line 4, after first "the" insert "specific"
The noble Lord said: In moving Amendment No. 41, I shall speak also to Amendment No. 42.

We have already examined the generality of Clause 20. I trust that the Committee will recognise that the misgivings to which I have alluded, and which notwithstanding the powers of persuasion of the noble and learned Lord the Attorney-General remain substantially unalloyed, are equally applicable here. In particular, as I have made plain, I am anxious about the apparently unrestricted nature of the public interest exemption.

In the context of the amendment, the facility of the commissioners to issue instructions of both a specific and a general character in respect of permissible disclosure seems to me to enhance the breadth of the provision. The observation of the Joint Committee on Human Rights on this point is telling. It states:
"A general instruction that confidential information can be disclosed in the public interest is not a very satisfactory safeguard for Article 8 rights".
Indeed, I infer that part of the underlying purpose of the power to issue "general" instructions is to satisfy the requirement of "administrative convenience". As a general point here, at paragraph 1.17, the Joint Committee, in commenting on paragraph 12 of the Explanatory Notes, makes the entirely legitimate point that:
"Reliance on 'management controls"'—
rightly or wrongly, I interpret that as a euphemism for "administrative convenience"—
"to guarantee the appropriateness and proportionality of using personal information does not satisfy the requirement that interferences with the right to respect for private life must be 'in accordance with the law'".
Against that background, the amendment seeks to confine the commissioners to the issuance of specific instructions. I should perhaps add that I am rather more worried about the provision in the context of Clause 20 than Clause 21.

It goes without saying that the noble and learned Lord the Attorney-General would greatly assist if he were to elucidate how it is envisaged that the distinction between general and specific instructions would operate in practice, perhaps to the extent of furnishing the Committee with appropriate examples for both clauses. I beg to move.

I am not sure that, standing on my feet, I am going to he able to satisfy the noble Lord's request for specific examples or even general examples. However, I think and hope that I can reassure him of the intention behind these words.

The purpose of including the word "general" is to enable an ability to issue class instructions which would relate to a particular class as opposed to requiring, for example, an instruction in relation to a specific piece of information even though it is exactly the same sort as one where the principle and the precedent has been set. So a general instruction could apply to a number of disclosures. It does not mean that the instruction itself will be general. It is certainly not the intention that there should be completely open-ended instructions. Indeed, on Clause 20, I have already referred to the narrowness of the regulations.

But it would be very undesirable to limit in either case the disclosure to something which is specific in the sense that it relates only to one occasion. There could be occasions—there could quite likely be occasions— when it is necessary urgently to pass information because of an event that needs to be dealt with quickly. For example, if officers were to discover something that would immediately have an impact and could be very damaging to public health, it would be unsatisfactory if they could not act in accordance with a pre-existing general instruction that such information could be disclosed, but have to go back to seek authorisation for it. This might happen, for example, if they were working jointly with the police and immigration authorities at ports and airports, where they could come across something that needed to be dealt with urgently.

6.30 p.m.

Essentially, to confine this in either case only to specifics would be both undesirable and, I hope the noble Lord will agree, unnecessary. As long as the class is properly defined, thought through and compliant with the Human Rights Act, which it will need to be, there is no reason why it should not stand as an instruction relating to that class of information for the future. I hope the noble Lord finds that reassuring.

I am most grateful to the noble and learned Lord for his response, which is indeed helpful. I entirely take the point about the convenience of issuing a class instruction where a particular example turns out to be one of what is likely to be in the future a large number of other similar examples. It would be administratively convenient, therefore, to deal with that matter in one instruction.

I would add to that only that it would be inappropriate for a public authority to fetter its discretion in relation to a line of future cases. One would hope that despite the generality of an instruction it would not undermine the requirement for the officer, or whoever was responsible, to look at each individual case.

I think that I am satisfied. I am very grateful to the noble and learned Lord for his reply. I shall reflect on what he said. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 42 not moved.]

moved Amendment No. 43:

Page 10, line 5, after "specific)," insert—
"( ) after due consideration of whether, in all the particular circumstances of the case, disclosure is justified as being necessary and proportionate,"
The noble Lord said: The amendment provides that tests of necessity and proportionality should be applied where disclosures are made under the proposed public interest exemption. I hope that the noble and learned Lord the Attorney-General will consider this to be a wholly unexceptional and unobjectionable proposal. Indeed, as I am sure the noble and learned Lord recognises, it chimes with a specific suggestion of the Joint Commission on Human Rights, namely:
"In our view the Bill should contain an express requirement that, before any decision to disclose confidential information is made, a structured assessment of the proportionality of such disclosure in that individual's particular circumstances should always be made".
It may be that the noble and learned Lord might seek to persuade the Committee that the provision is unnecessary on the basis that, by virtue of Clause 22, such tests will occur as a matter of course. For ourselves, given the importance we all attach to the confidentiality of taxpayer information, we favour a "belt and braces" approach.

To return to the recurrent theme of my amendments, what matters is that the regime is not only robust but also seen to be robust. Indeed, I am tempted to suppose that in many ways the Government are of the same view. As the Explanatory Notes observe, a fundamental purpose for the inclusion of Clause 22, even though it is not strictly speaking necessary, is that it puts the issue of whether the Data Protection Act applies "beyond any possible doubt". In other words, the Government accept the value of a "belt and braces" approach in that particular regard.

Quite apart from that, it is my hope that the amendment stretches beyond the DPA to the Human Rights Act, although I am uncertain as to what extent that is effectively reflected in the text. As I have already said, I very much hope that the noble and learned Lord will feel able to accept the amendment. I beg to move.

In the short observations that the noble Lord has made, he has anticipated correctly my answer. It is not necessary precisely because the requirements of the Human Rights Act and the Data Protection Act will continue to apply. as Clause 22 makes clear. The short answer is that it is not necessary to put in the Bill that which is required in any event by those other Acts which continue to apply.

I am not wholly surprised at the noble and learned Lord's response. I am somewhat disappointed that he will not express it in the Bill, but I am glad to have his undertaking on the record in Hansard. In those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 44:

Page 10, line 19, leave out paragraphs (e) and (f).
The noble Lord said: This clause also seems to be too widely drawn. To permit disclosure in the public interest to,
"operate by reference to— …
(e) any other factor, or
(f) a combination of factors,
is, in my respectful submission, unacceptably broad.

The noble and learned Lord the Attorney-General may well be able to give the Committee some examples of what it is anticipated will form the substance of "other factors". I would welcome that in order to be able to understand what the limits of the provision may or may not be.

Of course, it is entirely possible that I have misconstrued the text and that some measure of restriction is applied to paragraphs (e) and (f) from elsewhere. No doubt, the noble and learned Lord will advise the Committee if that is the case. Nevertheless, I would hope that the noble and learned Lord understands the disquiet that this excessively relaxed drafting inspires. I beg to move.

I think that the amendment would have the opposite effect to that which the noble Lord wants. This is about limitations or restrictions that can be placed in the regulations. It is prefaced by the words,

"provision limiting or restricting the disclosures that may be made".
Paragraphs (e) and (f) provide additional methods for restricting the limitation that can be imposed.

For example, the provision might limit the disclosure to an officer of the Special Branch. That would be caught by,
"(d) the person or class of person to whom disclosure is made".
You could go further, as long as we leave paragraphs (e) and (f), to say, for example, "but only in connection with a transport matter" or "only in connection with an immigration matter". So it provides an additional ability to specify restriction on disclosure, a further constraint on disclosure, rather than widening it out.

When the noble Lord reflects on that, I hope that he will see that he is better off with the provisions in rather than out.

With the assistance of some helpful tuition from the noble and learned Lord the Attorney-General, I think that I see what he means. If, on mature reflection after the Committee, I continue to take that view, I will not only withdraw the amendment, but I will also not reintroduce it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

moved Amendment No. 45:

Page 10, line 28, leave out subsection (6).
The noble Lord said: By now the Committee will probably say that it is only too well versed as to our discomfiture with Clause 20. Be that as it may, we are dealing here with a matter about which my honourable friend in another place, Mr Andrew Tyrie, has said:
"It is vital that nothing in the Bill threatens taxpayer confidentiality. If people do not have confidence in the Revenue department, they will not share information and the tax yield will suffer".—[Official Report, Commons, 8/12/04; col. 1188.]
I am sure that none of us dissent from that sentiment. Against that, to repeat, the Joint Committee on Human Rights has in turn observed:
"The kinds of purposes for which public interest disclosure is permitted are not therefore defined on the face of the Bill, but left to be specified in regulations made by the Treasury. Moreover the regulation-making power is extremely wide".
That creates a dilemma. I acknowledge that under subsection (6), the relevant regulations would be subject to the affirmative procedure. But, as we all agree, this is a hugely sensitive area that if got wrong could have very damaging consequences to the integrity of the tax base. Moreover, as we all know, the opportunity to correct any deficiencies or infelicities that might be exposed by the due process of scrutiny of secondary legislation, be it affirmative or negative, is all but non-existent.

In terms, therefore, both the Government and Parliament could be trapped into having to accept imperfectly drafted regulations, which could have the inadvertent effect of undermining public trust in the confidentiality of taxpayer information and thereby having a knock-on effect on the tax base-purely and simply because, given the sort of time constraints that could well apply, there would be no other alternative.

In reflecting on a resolution of that dilemma, I happened to cast my eye over the text of the Identity Cards Bill and a potential solution suggested itself. The making of regulations at subsection (6), rather than being affirmative, could be made subject to the super-affirmative procedure espoused in that Bill. Accordingly, in the new clause, I have sought to transpose the appropriate text from the Identity Cards Bill and superimpose it on to this Bill as a substitute for subsection (6).

In a sense, I would express this in terms of extending an olive branch to the Government. We still favour the deletion of Clause 20 in its entirety. My impression is that, on behalf of the Government, the noble and learned Lord the Attorney-General still favours its retention in full. That being so, the new clause has the potential virtue of requiring us both to move closer to each other's position in the hope that we might be able to meet somewhere in the middle. I beg to move.

I have considerable sympathy with this amendment. The system of considering statutory instruments in Parliament is little short of farcical. We spend a considerable amount of time with statutory instruments before us. The noble Baroness and I had that pleasure earlier this week.

In this House, a Minister reads out, often, a long, identical speech to that made in another place. We then ask one or two desultory questions, otherwise we feel that our presence cannot be justified even to ourselves. The Minister, hopefully, answers. If he cannot, he or she offers to write and at least we feel that we have served some purpose.

The truth is that we have served no purpose whatever in scrutinising the regulations because they are unamendable. If they are unamendable, the value of scrutiny is almost totally negated. I therefore consider that the words in subsection (2)(c) of the new clause to be inserted after Clause 20, which state,
"either with or without modifications",
is the key point in the proposal. I am pleased that some good might be coming of the Identity Cards Bill. I hope that this form of dealing with secondary legislation becomes the norm. As I say, I think that the current form is farcical and gives the appearance that Parliament is scrutinising something and can have an effect on something, which in reality it cannot.

6.45 p.m.

I should like to say a few words as the noble Lord and I often speak to statutory instruments. I believe that his comments were promoted in particular by the fact that we have started to discuss statutory instruments in Grand Committee, which makes them feel even less purposeful. Although I know that the noble and learned Lord will refer to my approbatory remarks in relation to affirmative procedures as compared with negative procedures, I believe that affirmative procedures are better than negative procedures because negative procedures require you to spot that a statutory instrument is already in effect or about to come into effect and to pray against it in order to bring attention to the matter.

My approval of affirmative procedures is only relative to the negative procedure. I share the view of the noble Lord, Lord Newby, that because statutory instruments are unamendable, we go through some kind of ritual dance in relation to them and they are not sufficiently substantive, which is why I support my noble friend's amendment.

I wish to make three points. The first is that I most certainly do stand by the proposition that Clause 20 is necessary, valuable and important. Not to have Clause 20 would mean that the people of this country, and other peoples too, might be deprived of the possibility that, through an appropriate and proportionate disclosure of information, crime, or the consequence of crime, might be prevented, or public health might be advanced. Those are all very proper European Convention on Human Rights reasons for disclosure of information and therefore I most certainly stand by the proposition that Clause 20 is necessary.

Secondly, we are talking here about parliamentary scrutiny. Everything that I have said up to now supports the proposition that we believe that there should be parliamentary scrutiny of these regulations, which is why subsection (6) requires that they should be the subject of affirmative resolution.

I am reluctant at this time on a Thursday to embark either on an explanation of why the provisions in the Identity Cards Bill are there for a particular reason having regard to the nature of that proposed legislation, or to have a general debate on how this House approaches statutory instruments. Given the comment of the noble Lord, Lord Newby, that all that statutory instruments in this House do is, as it were, provide an opportunity to ask a few desultory questions, I am slightly tempted to say that all this amendment does is to provide the opportunity to ask a few desultory questions twice. It simply puts forward proposals not for a single resolution but for things to happen twice.

It is not my amendment, but I may have misread it. I believe it states that each House has to approve the proposals,

"either with or without modifications: and the draft regulations give effect to the proposals so far as approved by both Houses".
Therefore, the regulations, when they came for approval, would reflect the amendments that both Houses had made to them.

I understand the point that the noble Lord, Lord Newby, is making. Perhaps I should not have tried to make my main point by making rather a cheap point at his expense. I withdraw that. The important point regarding that issue is that we are not talking about changing the constitutional arrangements as between this House and another place.

I suggest that the most important point is the following. This is precisely the kind of area on which we look to the Delegated Powers and Regulatory Reform Committee to advise us. The conclusion of that committee in its ninth report published on 21 February is,
"that the affirmative procedure provides an appropriate level of parliamentary scrutiny for proposals to add to circumstances in which disclosure may be made".
I agree with those findings and invite the Committee to do so as well. There is a risk in the approach that has been proposed in this amendment that it would compromise the ability of HMRC to react quickly to emerging issues where a disclosure would clearly be in the public interest by requiring this two-stage approach.

Despite what noble Lords have said, I have little doubt that the provision for affirmative resolution provides a comprehensive opportunity for scrutiny of the proposals. It will be open for those regulations to be rejected if noble Lords are not satisfied with them. Therefore, I invite the noble Lord to withdraw his amendment.

I am most grateful to the noble and learned Lord the Attorney-General for his reply. In the last sentence or two of his reply the noble and learned Lord suggested that one consequence of the process of affirmative resolution might be that your Lordships' House would reject a proposal by the Government. If the noble and learned Lord is saying that that would be an appropriate constitutional act for the House to take, I am much reassured by his approach to my amendment. If, however, the House would subsequently be criticised for taking such a decision on the ground that it was exceeding its constitutional powers, that would profoundly undermine the logic of what the noble and learned Lord said.

Therefore, I shall take it that, in the context of this Bill at any rate, the powers of your Lordships' House to scrutinise delegated legislation legitimately include the constitutional right to say no without subsequently being attacked by the Government for behaving unconstitutionally. In those circumstances, I am not surprised that the noble and learned Lord—

Before the noble Lord withdraws his amendment, he is too good a lawyer to know that silence does not constitute consent. He knows too well that on this side of the House we repeatedly say that it is wrong for those on the opposite side of the House to seek to throw out statutory instruments, but it still happens. Nothing that I have said is in any way intended to change the position that we take about the respective relationship between this House and another place. Let us remember that the other place most certainly is in a position—whatever we may think that this House should do—to reject regulations if it thinks that they are inappropriate. I venture to suggest that scrutiny is possible in another place too.

If I may say so, in current political parlance I believe that the noble and learned Lord has just shot his own fox—something which is in conformity with a recent statute. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I believe that I shall now move Amendment No. 46 but I hope the House will forgive me as my papers are in a very temporary state of disarray.

I was going to suggest that what I believe Clause 20 does—I am sorry. I thought that we were discussing the clause stand part debate. I was going to move that the clause stand part of the Bill, but we have discussed it already.

moved Amendment No. 46:

Page 10, line 32, leave out subsections (7) to (9).
The noble Lord said: I shall now move Amendment No. 46. This amendment deals with a somewhat different, albeit related point, to the previous grouping. The Explanatory Notes helpfully explain at paragraph 126:
"Subsections (7) to (9) set out transitional arrangements for the first regulations to be affirmed after coming into force".
I do not know whether this approach is standard practice. Perhaps the noble and learned Lord can tell us how often it has been used previously. It seems to us to invite Parliament to accept a fait accompli without proper scrutiny. Indeed, as I read the provision, the initial regulations could come into force in circumstances where Parliament will not even have had sight of them.

Moreover, while I recognise that subsequent regulations would be subject to the affirmative procedure, in the scheme of things these would flow naturally from their original incarnation. There is a risk, therefore, that any anomalies or infelicities in them would be perpetuated ad infinitum on the basis that their usage had already been established. In effect Parliament is being asked to accept a severely limited, indeed, almost non-existent, form of scrutiny for the initial regulations. Why is that so?

I suppose I can see why the Government might like this solution. The management of the process towards an integrated HMRC is full of pitfalls, not least a potential hiatus in the application in law of relevant secondary legislation. However, based on the assumption that I have accurately identified the Government's concerns, there is an eminently sensible solution.

As I have already intimated, the Joint Committee on Human Rights is just as worried as we are about this. Its proposition at paragraph 1.24 of its report is unequivocal; namely, "the definitions"; that is to say, of justifications for public interest disclosures,
"which have been left to regulations should be on the face of the Bill".
As the noble and learned Lord the Attorney-General will not be surprised to hear, I agree. To my judgment not only would that obviate the need for subsections (7) to (9), but also it would serve to clarify the boundaries within which the Government envisage that the public interest exemption would operate. In passing, I add that it would also attend to the difficulties surrounding subsection (6) that we dealt with in the previous grouping. I beg to move.

The purpose behind this provision which is, as the noble Lord says, a special arrangement, is to permit the first set of regulations to come into force when made, but to lapse if not approved by Parliament within 28 days. The consequence of the amendment, if accepted, would be that that first set of regulations could not come into force until they had been approved by Parliament. That would create a gap between the coming into force of the new body and the existence of regulations.

As I have already said, the existing commissioners are currently able to make public interest disclosures, but those disclosures which take place in future—that is, after the Bill comes into force—would take place under the regulations in Clause 20. So there would be a gap unless we had the special arrangement. That is the significance behind it. Parliament will catch up very quickly with deciding whether the regulations are acceptable.

I am told that there is an example of this first use arrangement in paragraph 26 of Schedule 2 to the Financial Services and Markets Act 2000. I have not looked at it myself, but I do not doubt the information with which I am provided. I hope that helps to answer the noble Lord's question.

I am most grateful to the noble and learned Lord for confirming what I had suspected. It was just that I wanted him to address himself specifically to the proposition of the Joint Committee on Human Rights at paragraph 1.24 of its report, to which I referred.

That is really something that we have debated already. I suggested that the procedure in Clause 20 for regulations is an appropriate one. The Joint Committee states in paragraph 1.24 that it wrote to the Government asking what kind of purposes are envisaged as justifying disclosure in the public interest. I have not seen what its response has been since the Government responded to that request and provided a copy of the draft regulations.

In other words the noble and learned Lord is saying it might well be possible that the committee is now satisfied.

I am most grateful to the noble and learned Lord for that. In those circumstances I shall make investigations about what the committee's reaction has been and meanwhile I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 20 agreed to.

[Amendment No. 47 not moved.]

I suggest this may be a convenient moment for the Committee to adjourn and to continue consideration of the remaining few groupings on Wednesday 2 March at 3.30 p.m.

The Committee stands adjourned until Wednesday at 3.30 p.m.

The Committee adjourned at one minute past seven o'clock.