My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the House of Lords (Members’ Taxation Status) Bill has consented to place her Prerogative and Interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
My Lords, I beg to move that this Bill be now read a second time. I thank the noble Baroness, Lady Royall, for that reassurance; it is quite a relief.
This is a short Bill and a short speech. It is so simple; if you sit in the British Parliament and vote on laws for the British people, you must pay full British taxes on all your income like the vast majority of your fellow citizens. You must not hide income or assets offshore behind a veil marked “non-resident” or “non-domiciled” for tax purposes. If you accept a peerage from the Queen for life, you must not sign a tax return saying that you do not intend to stay permanently in this country, as non-doms do.
If, like the noble Lord, Lord Laidlaw, you give cast-iron undertakings to the House of Lords Appointments Commission that you will immediately become resident for tax purposes in this country in order to get a peerage, and then flagrantly dishonour them, you have simply obtained a peerage under false pretences. Even if you eventually take leave of absence, as this gentleman has, the stain remains on this House because you can still change your mind and pop over from Monte Carlo to pick up your peerage again any time you fancy.
If anyone thinks I am being a little harsh, they should just read the annual report of the Appointments Commission which draws the Prime Minister’s attention to this scandal, and the record of the meeting and correspondence which they had with the noble Lord, Lord Laidlaw. I will quote a couple of sentences from a letter from the noble Lord, Lord Stevenson, the chairman, to the noble Lord, Lord Laidlaw. He said:
“You gave a commitment at our meeting of the 2 April 2004 not just to become tax resident in the UK but to become tax resident from 6 April 2004 and, indeed, informed us that you had already consulted with your tax advisors on this position. You … told me and my colleagues that you were going to your advisors straight after our meeting to arrange this”.
What a tragic scene that must have been. You come straight out of a meeting, get into the Rolls-Royce, say “PricewaterhouseCoopers, James” to the chauffeur and then suddenly have a terrible memory loss. Why on earth are you going to see your tax adviser? Obviously, you are feeling pretty ill so you go straight to the airport, get on the private jet and go back to Monte Carlo. Thank goodness the noble Lord’s memory returned a year later and he was able to remember to sell his business for £768 million. The effect of that was to cost the British taxpayer at least £50 million in capital gains tax that he would have had to pay if he had honoured his undertaking.
The noble Lord, Lord Laidlaw, is still resident in Monte Carlo four years on, and without a Bill like this there is nothing we can do about it. So it is high time we put our house in order to protect our integrity and our good name, and because the 60 million people we serve expect and deserve no less.
This is the third time I have introduced a Bill on these lines in this House. I thank noble Lords who supported me on my first two more basic Bills, and, in particular, the noble Lord, Lord Hunt of Kings Heath, in his brief and honourable absence from office after he resigned over the Iraq war. Those Bills did not progress and they only sought to ensure that new Peers were resident onshore in Britain for tax purposes.
This Bill—I must say that I have been bowled over by the determined enthusiasm for it from all around the Chamber—goes wider, and I very much hope that it will go through. I thank my noble friend Lord Goodhart—the finest international chancery lawyer money can buy—for his invaluable free advice. He has to speak at a conference in Holland today, but he has promised his help in Committee. I especially thank the noble Lord, Lord Strathclyde, for our helpful discussions, and I look forward to his speech today. I should also, for the record, confirm that I have not discussed this Bill with the Lord Speaker. It would not have been appropriate to do so, but I am very grateful to the Public Bill Office for its help and advice—errors and omissions are, of course, entirely my own.
I start by stating clearly in Clause 1 that Peers are,
“deemed to be resident, ordinarily resident and domiciled in the United Kingdom and in no other country for taxation purposes”.
I say that because it is possible to be partly resident here and partly resident overseas. That is something that I wish to leave no wiggle room on. I have avoided any need for Peers to make declarations about their tax status, annually or whenever, or for Her Majesty’s Revenue and Customs to reveal any details about current Peers’ individual tax affairs to the authorities of this House or to anyone else. Under subsection (4), the Lord Speaker would simply send the list of Peers’ names to the chairman of HMRC once the Bill becomes law and then notify HMRC three months later of any Peers who have to be taken off that list under the terms of subsection (5) because they have taken leave of absence for life. This is a new version of leave of absence but it is just what it says on the tin—irrevocable. That seems simpler to me than disqualifying Peers who will not pay full British taxes, but the result is, of course, the same, except that they get to keep their titles.
In future, the Revenue would make a one-off declaration to the Lord Speaker under subsection (7) that a new Peer is resident and domiciled in the United Kingdom for tax purposes within three months of their appointment. There will be no more Lord Laidlaws by law. As this represents a change in law since noble Lords were appointed to this place, it is only fair to give those who are not content to be taxed on that basis a once-and-for-all opportunity to opt out under subsection (2). By taking immediate and irrevocable leave of absence for life they retain their current tax status whatever it may be but they do have to make that choice. We cannot have an open-ended rolling opt-out. We cannot be pick-and-mix parliamentarians—British life Peers one moment, Monaco millionaires or Liechtenstein Lords the next. Of course, Peers may want to spend time abroad for health or family reasons, especially as they get older. But once you have accepted a peerage from the Queen for life and a seat in Parliament for life, you pay her full British taxes on all your income for life.
I would be happy to consider amendments to subsection (7)—if they can be made clear and workable—to deal with a potential problem for Peers, such as my noble friend Lord Ashdown of Norton-sub-Hamdon, who may be appointed to important full-time posts with international bodies. Whether it is Bosnia, Northern Ireland or Afghanistan, he is in great demand for international trouble shooting duties and I would hate to hinder his career, even if I dared. He has kindly explained to me that United Nations appointments still treat British subjects as resident in Britain for tax purposes but that does not apply to some other posts. Equally, it would have been wrong to require the noble Lord, Lord Robertson of Port Ellen, to take permanent leave of absence when he was Secretary-General of NATO, or even supposing we had in the House Lord Mandelson of Mischief as a European Commissioner. However, we need to be careful to define the type of international public bodies which would qualify; otherwise, we could leave gaping loopholes. For instance, we would not want to let people avoid the measure by going off to work for the Monaco millionaires’ benevolent society or the Belize institute for the prevention of money laundering. Even if Tony Blair finally deigned to join us, we would not want to accept as a qualifying international body the Silvio Berlusconi foundation for sunshine holidays for impoverished ex-Prime Ministers or the Bernie Ecclestone society for the propagation of tobacco advertising on racing cars. One could go on. If private businesses want to recruit Peers to work abroad, they can make the pay package attractive enough to cover the Peers’ British tax bill. I am not accepting any amendments on that one.
Clause 2 is technical to ensure that it is not overridden by the Income and Corporation Taxes Act 1988. Clause 3 gives Peers who may want to opt out fair notice of at least four months before the start of a tax year.
I wish to thank two other very important people before I sit down. The honourable Member for Pendle, Gordon Prentice, is promoting a Bill with the same aims as mine, which covers Members of the Commons, as it should. I thought it would be presumptuous for a Bill starting in this House to tell the Commons how to regulate their Members, but I trust that if my Bill is debated there they will amend it accordingly. Mr Prentice has kindly agreed to act as sponsor for this Bill in the Commons and I shall return the compliment if his Bill arrives here first. This is a Lib/Lab pincer movement on tax dodging but with wall-to-wall all-party support in both Houses.
I am proud also to have the support of a remarkable man, my truly noble old friend Lord Thomson of Monifieth. As the last ever chairman of the Honours Scrutiny Committee and a founder member of the Nolan committee, he has fought long and hard against corruption in public life. He has not been well lately but we look forward very much to hearing his wise words in Committee and to voting with him next month on the future of Europe.
This simple Bill sets out a simple principle, if you pass laws for British people, you pay taxes like British people, and a simple system for enforcing it. I ask noble Lords to support it whether, like me, you believe in a mainly elected House, or whether, like most noble Lords, you want to reform and build confidence in an appointed Chamber. Either way, it is high time we cleaned up our act on tax—pay up or pack up.
Moved, That the Bill be now read a second time.—(Lord Oakeshott of Seagrove Bay.)
My Lords, I thank the noble Lord for introducing this interesting short Bill, which I welcome. He discussed individual cases but, as he made clear, it is a matter of principle that if we are Members of this House and legislate on matters that affect our citizens who do not have the choice of whether to pay tax, we ought to pay tax like them. Whatever another place does, we have to clean up our act because we are under greater suspicion. The world out there thinks that we are very wealthy and that we are up to no good, especially when they see pictures of us in the newspapers prancing around in ermine robes. So I think it is very important that we should be even more careful in that respect than another place.
I wish to make one point on this short Bill, which I hope the noble Lord will consider. I believe that a sinner who repents should be given another chance. Therefore, rather than make these Peers take leave of absence for life, I think it should apply until such time as they affirm that they are UK taxpayers. That may be just a technical detail and the noble Lord will probably tell me that it has been covered in the arcane drafting. I have to say that after 17 years here I still do not understand any piece of legislation which I read. It appears to me that there is always something missing that I should know about. We should allow people to recant and come back, as and when they pay up, and give a lot of publicity to such people.
A further dimension is not covered by the Bill, and is not covered by UK law as far as I am aware. I am told that, in a Liechtenstein bank, there are 40 Peers who are obviously resorting to some fairly fancy stuff on tax evasion. I do not know what we do about people who have resorted to such fancy moves because they are in fact very much like noble Lords who live in Monaco or wherever. The next time round the noble Lord may think of another short Bill to sort that problem out.
My Lords, I warmly welcome the Bill of my noble friend Lord Oakeshott to disqualify from voting those Members of the House who take advantage of the special rules for non-domiciled individuals, which allow them to avoid paying tax on the majority of their income.
The non-domiciled people who are Members of this House are just the tip of the iceberg because there are about 115,000 individuals claiming non-domicile status in the UK, many of whom pay little or no UK tax.
I would like to argue in favour of reforming the whole tax system for non-domiciles, but unfortunately this House does not have the power to amend tax law. However, this Bill is a start, because I firmly believe that those who choose not to be subject to our taxes do not deserve a part in making our tax laws.
The British tax system is supposed to be based on fairness, and I hope that it will be. It is clearly unfair that a taxpayer can enjoy all the benefits of UK living, and yet at the same time substantially reduce his tax liability by claiming that the UK is not his domicile. While most of us in this House pay up to 40 per cent income tax, a few pay substantially less, merely by the accident of birth.
The non-domicile rule is only part of the manifest unfairness of our society’s tax system. At one extreme, we have very rich people living here yet paying virtually no tax, and very wealthy hedge fund managers earning millions yet paying just 18 per cent tax. But there are also millions of people earning just the minimum wage, yet paying 31 per cent tax on more than half of their income. There is nothing wrong with an 18 per cent tax rate, but not when the poorest are charged 31 per cent on the minimum wage. Even the Government’s regressive proposal for a fixed tax of £30,000 a year barely touches the wealthy non-domiciles.
There should be a public register of all those people who elect to be treated as non-domiciled. They are very privileged members of our society, in many cases with British nationality, living here permanently and yet able to avoid the 40 per cent tax rates paid by most of us here today. Several of those people have been awarded peerages, and others have received knighthoods, so they are very privileged people indeed. Here, I declare an interest. My father was born abroad, as were my wife and her parents, so my accountants advise me that we could claim to be taxed as non-domiciles. I am privileged to have a significant income, on which I pay a six-figure tax bill each year. I do not object to paying these taxes; although I could wish that they were much smaller. Nevertheless, if my wife and I were to be treated as non-domiciled, our tax bill would be reduced by 92 per cent. I have declined to claim these tax advantages, because I believe that I should not live in the UK, with all the advantages that that brings, without paying my share of the tax burden.
My Lords, I can sympathise with non-doms; they have a choice of paying almost nothing or paying 40 per cent on their world-wide income, giving up nearly half their income to the Inland Revenue. But what if that tax rate were lower? Lower taxes are possible, without cutting public expenditure. I have good news for all non-doms; on Tuesday 13 May an independent, non-party tax plan will be launched, which would allow all non-domiciles to pay tax on their world-wide income at just 20 per cent. Under that revenue-neutral tax plan, the 20 per cent rate would be available to all, rather than reserved for a privileged minority. Instead of the 31 per cent and 41 per cent rates that normal taxpayers will suffer from next month, everyone would enjoy a total rate of just 20 per cent.
The Government pride themselves on fairness. This Bill, in a small way, gives the Government an opportunity to redress a blatant inequity. Unfortunately, this House is unable to ensure that non-domiciles pay their fair share of tax, but it does send a signal. Although I am enthusiastic about the Bill, there is one point that I disagree with. I think that it should be amended to allow Peers to take permanent leave of absence at any time, not just in the three months after it is passed. Otherwise, someone who emigrates to Australia, for example, would remain subject to UK taxes as well as Australian taxes for the rest of their lives.
It is well known that income tax was introduced to finance the Napoleonic Wars, but it has continued despite our victory at Waterloo and Napoleon’s death. Similarly, the non-domicile rule was introduced to encourage wealthy colonials to retire to the UK, leaving their Indian or African income tax-free. Like Napoleon, the British Empire—perhaps sadly—is no more, and it is time that the tax exemption ended too. Therefore, with just that one reservation, I strongly support my noble friend’s Bill.
My Lords, I, too, support the Bill, for the simple reason that it cannot be right that Members of Your Lordships’ House do not pay tax in the United Kingdom. I hope that the Government will either adopt the Bill or give it a fair wind.
This House is unelected. Unlike the Commons, most of us who have the privilege of being here have never come under the scrutiny that is part and parcel of standing for election; it is hard to imagine that an electorate would choose as their Member of Parliament a person who did not pay tax like the people who he or she seeks to represent. We in this House play a very important role in the governance of this nation; we scrutinise legislation, we amend legislation and at times we create it. We are able to delay the will of the House of Commons, because it is our role to take the long view, to say “hold on” if we feel that the Government have rushed to legislate inappropriately. In our bicameral system, we have a serious constitutional function. Therefore, the honour that has been bestowed on us is of a different order from any other honour. It is not like having a knighthood or being a dame, and it is unfortunate that those who are British-born who have those honours might not pay tax.
We in this House have been given a special power as well as privilege. It is an affront to the people of Britain who work hard and pay their taxes that those who govern should consider themselves too grand to contribute through the tax system to the commonwealth of this nation. Part of the social contract in any democracy worth the name is that we all contribute financially to the running of our society. The very notion that some of the fortunate rich of our nation should secrete their wealth in offshore accounts or maintain that their primary home is elsewhere, but still feel that they can justify legislating for the rest of us, is unacceptable to me and to most of the citizens of this country.
I congratulate the noble Lord, Lord Oakeshott. The message that he brings to this House, and that we should endorse, is that tax dodgers do not have a place in our legislature. If you do not pay your taxes, vacate your seat and let someone who does pay their taxes fill it. The old slogan was, “No taxation without representation”; the new slogan has to be, “No representation without taxation”.
My Lords, this is a small Bill about a large subject. I recall when I first came into this House being sharply corrected from the Conservative Benches about the important distinction between tax avoidance, which was quite acceptable, and tax evasion; and reflecting in the days afterwards that the line between tax avoidance and tax evasion is often a very flexible one. Those whose wives live in Monaco but who do their business in Britain, and those who fly from Monaco to Britain on a Tuesday morning and go back on a Thursday evening, are very much playing the line between avoidance and evasion.
There has been quite an astonishing campaign in the Financial Times and elsewhere over the past few weeks to protect the interests of our non-domiciled minority. I have done a little research into the origins of the non-dom rule. It seems to me, if I may say so to my noble friend Lord Jacobs, that here we are talking about not just those few rich people in Africa, or the few in India, but mainly the West Indian sugar planters. Their slaves had just been taken away, and they were being compensated for that appalling theft of property by being given taxation privileges in return. That is not one of the most glorious developments in British history. What is now being defended is a deep historical anomaly.
There is a wider question about tax evasion and tax responsibility that we all need to address in this country. Martin Woolf in the Financial Times last Friday quoted Leonora Helmsley, who famously said:
“Only little people pay taxes”.
We cannot have a society in which the rich, the successful, businessmen, bankers and corporations manage successfully to avoid paying their fair share of taxes and I am appalled to see how many people think that they are entitled to avoid paying taxes while making profits out of our economy. So I strongly support the Bill.
Citizenship is another issue that we are debating. The Government wish to emphasise that citizenship is a matter of rights and responsibilities. One of our responsibilities as citizens is to contribute to the maintenance and development of a civilised society. Tax is what you pay as your contribution to the maintenance of a civilised society. We in this House have political privileges and political responsibilities. Among those is to set an example to adhere to appropriate standards. Very evident among those standards is paying our fair share of taxation.
I note that when I was discussing my moderate wealth the other week, I was offered an Isle of Man scheme, a Jersey scheme and various other schemes. All of us are in some way being compromised by the way in which the offshore world operates. I very much hope that my party and others will look much more sharply in the next few months at the whole offshore world and how it relates to the onshore world. I include Switzerland, as a large country, in the offshore world—not just Liechtenstein, Monaco, the Channel Islands, Bermuda and elsewhere.
Meanwhile, this Bill takes us one small step in the right direction by saying that in this House—a central institution in the British political system—we should be clear that we set an example and we accept appropriate standards.
My Lords, I wish to speak briefly in the gap. A few days ago I received a phone call from the Times in which I was asked whether my tax affairs were handled in Liechtenstein. I said, “You must be joking. Why do you ask?”. “Ah”, the caller said, “we know that many of you are, and that many of you attend meetings with people from Liechtenstein”. I said, “Ah, well. It so happens that members of the All-Party Group on Switzerland, of which I am an officer and vice-chairman, do have occasional discussions”—
My Lords, you see—you can get paranoid about this. Paranoia is quite a healthy phenomenon, I find.
I said that we in the all-party group had on a couple of occasions met people from Liechtenstein, and this question came up. So I would like to make two points. One is that it is too easy for newspapers—in this case the infamous Murdoch press—to damage people’s reputations unnecessarily; but, secondly, it is essential to give support across Europe to initiatives like that of Angela Merkel, which is connected with the tax status of some German citizens, because this is increasingly an international problem. It is epitomised by the “blackmail” tactics that a number of noble Lords have implied, without using that word, which is: “If you don’t give us what we want here, we will go somewhere else”.
Of course a huge number of issues are swirling around here—the tax treatment of multinational companies is among them—but the great majority of this House would support Angela Merkel’s initiative on Liechtenstein. I very much support what is suggested in the Bill and it could not cover everything under the sun, but this is very much part of a bigger question. I welcome the progress being made in intergovernmental discussions about this in Europe. It is not an EU competence to do something about it, but I thought that it would be a useful opportunity to bring in that clarification.
My Lords, it will not have escaped the House’s notice that this is the third House of Lords Bill from the Liberal Democrats in just three months—a “here we go again” moment, if there ever were one. I am beginning to wonder whether the Liberal Democrats have anything else to do other than dream up greater blueprints for your Lordships’ House. Perhaps it is more rewarding than deciding how you can break your promise to the electorate over a referendum without getting egg on your face.
If I judge the mood of the House correctly in all the debates we have had on this great subject, it is that the House would like less legislation rather than agitating for more. We know that there is to be a major government White Paper before the summer. There is some impatience in the House, as demonstrated yesterday at Question Time, that papers prepared for the group have not been shared with the House—something to which I would not have objected. It is important that the White Paper be published as soon as it is ready so that the House can be brought into considerations about what is, after all, its own future.
I hope that the Minister will forgive me for saying that I expect that there will be proposals relating to tax residence in that White Paper. We agree that there should be legislation in that area, but these matters would be better discussed in the context of government plans than of a Private Member’s Bill. A fully reformed directly elected senate is the way forward. But here we are—we have another Lib Dem Bill and we must look at it. Let me repeat at once that I have no particular difficulty with the principle of the Bill but, as has already been mentioned, there is another Bill on this subject already before Parliament—Mr Gordon Prentice’s Disqualification from Parliament (Taxation Status) Bill. Although the noble Lord, Lord Oakeshott, is always swift to jump on a bandwagon, it is not really convenient for Parliament to have two Bills dealing with the same subject, as we have also had lately from the Liberal Democrats, with the Bills of the noble Lords, Lord Avebury and Lord Steel, which also have their defects in drafting.
The Prentice Bill has one incomparable advantage. It extends the same disqualification provision to the House of Commons. That surely is the right approach. I cannot for the life of me imagine why the noble Lord excludes MPs from his Bill, unless he is not so much interested in the principle as in making a political point. We all read the press. Why should the Bill not extend to the Scottish Parliament and the Welsh and Northern Ireland Assemblies? Those details can be examined in Committee. The noble Lord may have a very good reason for not doing so. I do not know, but we will find out. I suspect that we really know what this is about: he is having a bit of a go at a couple of noble Lords on our Benches. Doubtless he has a couple of noble Lords on the government Benches in mind as well.
I do not want to go far into personalities. My noble friend Lord Ashcroft can well take care of himself. Every political donation he has made has been found to be in accordance with the law. That is not something you can say about the Liberal Democrats. My noble friend Lord Laidlaw has rightly and honourably taken Leave of Absence from this House while his tax affairs are clarified—exactly what this Bill asks for. There is a good old rule of courtesy here that one does not refer to a fellow Peer who cannot reply. The noble Lord, Lord Oakeshott, seems to have a detailed knowledge of the tax affairs of my noble friend Lord Laidlaw. I hope the noble Lord will confirm that he simply plucked them from the air this morning.
I have listened with some amusement here and outside the Chamber to the indignation of the noble Lord, Lord Oakeshott, about foreigners and tax exiles playing a part in our national affairs. After all, he lists among his top recreations in Dods supporting Arsenal Football Club. There is nothing wrong with that, but you do not find too many Englishmen there. I do not think that Monsieur Wenger was born in the Holloway Road, and I wonder what the taxation arrangements of some of those celebrity players are. Are they all 100 per cent taxed onshore at the highest UK marginal rate? I am sure the noble Lord will assure us that they are.
Of course, the noble Lord has a serious point when it comes to legislating, but he can overegg it a bit. I have listened to what he has said in the past:
“Foreign millionaires should not be waved through immigration controls just by flashing their bank statements”.
Who was the target there? It was Roman Abramovich. I bet that pleased them up at the Emirates. He has also referred to,
“creeping corruption, alongside the shameless sleaze of cash for Labour peerages. New Labour trumpets the need for transparency and diversity. It doesn't work that way when they hand out jobs to their own Peers”.
Who was the poor target there? It was none other than the noble Baroness, Lady Dean of Thornton-le-Fylde. The noble Lord would sometimes do well to get a sense of proportion before hyperbole runs away with him.
That said, I have made my position clear. If you are a UK legislator, you should pay UK tax. The broad principles must be right. However, the noble Lord, Lord Oakeshott, appears to argue you should pay only UK tax rates, which gives rise to other questions to which I shall return in a moment. No doubt he will clarify that later on or in Committee. There are many issues that we will need to look at before the Bill is passed into law. I for one would not go along with the draconian lifetime exclusion that he proposes. What sort of natural justice is that? Is it a new Liberal Democrat doctrine that once guilty, your guilt can never be forgiven or absolved?
What would happen if a distinguished businessman who was a Member of this House, someone like the late Lord Trotman or the noble Lord, Lord Browne of Madingley, were offered a contract for a period overseas? Should they be forbidden from ever again sitting in your Lordships’ House if they paid tax abroad? Is it a sense that no one who has ever benefited from non-UK tax rates should ever be allowed to sit here? That seems to be the purport of the Bill.
What about all those who have worked for United Nations organisations or the EU and who have paid tax or had an adjustment that is not at the full UK rate? I believe that Mr Clegg, the Liberal Democrat leader, used to be an EU employee and indeed an MEP. Did he ever receive pay at less than the UK marginal tax rate? What would happen if a Member of your Lordships’ House was sent abroad for some years to serve as a UN high representative or to work in the EU? Could he accept such a job only at the full UK marginal rate? What if a Prime Minister wanted to make a Minister of someone who has served in the United Nations or the EU, or for a great institution or a global business based overseas? Could he become a Member of your Lordships’ House before giving a full statement of his tax affairs? I do not know. Indeed, you can argue it both ways, but these are clearly tax-related details that will need to be discussed and probed in Committee.
In his opening speech, the noble Lord rightly already conceded the point about some Members of the House working overseas, but what a pity that he did not think of it before he came in this morning. I do not agree with the noble Lord, Lord Pearson of Rannoch, who has argued that those who have benefited, and still benefit, or are under obligations to international organisations—I think we all know whom he is talking about—should not speak on matters related to their former employees. However, some clearly see this as an abuse and will no doubt raise the matter in Committee.
There is also the question of the handling of unacceptable overseas donations. Take the case of 5th Avenue Partners, whose offshore donation to the Liberal Democrats was the largest ever refused by the Electoral Commission. The noble Lord, Lord Oakeshott, has long been a Liberal Democrat Treasury spokesman. Did he not sniff at that offshore money? Did he not demand inquiries in numerous press releases that the money should be returned? And if not, why not? Also, should those involved in procuring such a donation to a UK political party be able to legislate in our Parliament?
Once you start down this road, there are all too difficult issues and many stones to overturn, so we on this side of the House will give positive consideration to legislation that may be proposed by the Government on this subject. We will look at improving the Prentice Bill if it reaches your Lordships’ House, but we will not play bit parts in a Bill designed as a prop for press releases by the noble Lord, who has already filled pages on Google before even explaining his Bill to your Lordships at Second Reading. There is much in the kernel of the Bill that I suspect we could all agree on, but it needs to be carefully worked out and, I submit, agreed cross-party before we put the matter into law. It may be that the alleged abuses are felt to be so great that this cannot wait for government legislation, but I cannot help feeling that this flawed Bill is not the right way to go about it.
My Lords, we have already had two debates on reform of your Lordships’ House this week and I am glad that we have an opportunity for another debate this afternoon. Pace my noble friend Lord Lea, my own tax affairs are handled by HMRC in unit 89 in an industrial lot in south Wales.
The remit of the Ministry of Justice has gone much wider than the old Lord Chancellor’s Department. I must say that I had not envisaged having to discuss in detail the tax policy of Her Majesty’s Government, and I am sure that, likewise, Her Majesty’s Treasury was not prepared for me to do so. However, I see that we can look forward to many happy hours of discussion in Committee on the matters raised.
The issue raised by the noble Lord, Lord Oakeshott, is very important. As the noble Lord, Lord Strathclyde, suggested, we are in the middle of a serious approach to substantive reform of your Lordships’ House. We are making good progress in the cross-party group, and that good progress is helped by the ability of all Members to express themselves freely. I say to the noble Lord, Lord Strathclyde, that we have decided not to release the minutes of the cross-party group meetings, which of course was the basis on which noble Lords accepted the invitation to serve on that group. As we have said previously, we expect to be able to produce a White Paper before the Summer Recess. This matter would fall to be included within any substantial reform of your Lordships’ House and it deserves serious consideration of itself.
I say at the start that we agree with the principle enunciated by the noble Lord, Lord Oakeshott, that, in order to vote on this country’s laws, legislators must pay tax on exactly the same basis as the overwhelming majority of straightforward British taxpayers. Paying tax is an important way in which Members of both Houses demonstrate their connection with, and commitment to, our country. I have always made it clear that that is my position and that of the Government. As noble Lords have mentioned, the Government have already responded in the other place to the Bill introduced by my honourable friend Mr Gordon Prentice. On that occasion, we said that we supported the intention behind Mr Prentice’s Bill but that we could not support it as it stands for a number of practical and technical reasons. We believe that it could have serious consequences for citizens of the Irish Republic who might want to stand for the Northern Ireland Assembly and for some people who might want to stand for the European Parliament. However, we will consider the details of that Bill if it succeeds in going into Committee in the other place.
On the Bill put forward by the noble Lord, Lord Oakeshott, we support the “no representation without taxation” principle; we support the intentions behind the Bill, and would not seek to oppose the Bill’s progress in your Lordships’ House because it is not appropriate for the Government so to do. However, at this stage, we do not consider the Bill, as it stands, to be an appropriate vehicle to support.
The question of non-domiciles has been raised by the noble Lord, Lord Jacobs. As noble Lords will know, in the Budget earlier this week, the Government gave a commitment that the personal tax rules on resident and domiciled status will not be revisited until at least the end of the next Parliament but the Bill would make changes in that area. I know that the noble Lord, Lord Jacobs, wishes to use the Bill as a platform on which to debate the tax system for non-domiciles in general, which is fair enough. All I would say to him is that we believe that the changes announced in the Pre-Budget Report, and confirmed in the Budget, strike the right balance between ensuring that the UK remains an attractive place for workers with skills and ensuring that rules that apply to people from abroad operate fairly. It is so essential to get that balance between fairness and competitiveness for this country right.
Other matters in the Bill need very serious consideration. The Bill would deem Members of your Lordships’ House to be ordinary residents and domiciled in the UK and in no other country for taxation purposes. The noble Lord, Lord Oakeshott, will be aware that following the changes on resident and domiciled status announced in the Pre-Budget Report, the Government consulted on how changes would be implemented and on whether further changes would be introduced. One of those options for further changes involved deeming a particular group—those who have been resident in the UK for 17 or more of the past 20 years—to be UK domiciled. After consultation, the Government rejected that option. We would have to think very carefully indeed about an approach which involved deeming another group as UK domiciled.
There is also an issue about the effect that the Bill might have in relation to international tax agreements. A further issue—this has already been raised by other noble Lords—is Members of your Lordships’ House working extensively abroad at various international institutions. By the very nature and membership of your Lordships’ House, that is inevitable and indeed is to be commended. Your Lordships have gained from the experience that such Members bring when they return to debate matters in the House. That also has to be attended to.
I thought my noble friend Lord Desai raised a number of interesting points, which I am sure the noble Lord, Lord Oakeshott, will be ever anxious to respond to.
I hope there is no doubt in noble Lords’ minds that we believe that this is a matter that needs to be addressed. There is no question about that. Of course, we shall look with interest at the progress of the Bill put forward by my honourable friend Mr Gordon Prentice in the other place, but I look forward to debating this Bill in Committee. The noble Lord, Lord Oakeshott, will know of our general support for the principle concerning representation and taxation, but I point out the reservations that we have about the nature of the Bill as he presents it to the House.
My Lords, I thank all Members who have supported me in this debate. On the support from the noble Lord, Lord Strathclyde, I think Lenin once said that communists support social democrats as a rope supports a hanging man and we have now seen how Conservatives support Liberal Democrats. I do not want to go into too much detail, as I welcome the fact that he is on record as supporting the principles of the Bill.
I have a couple of specific points. In regard to the noble Lord, Lord Laidlaw, I have been quoting from the House of Lords Appointments Commission, which was set up by this House, and that has been very clearly stated by him. I think we shall return to this matter. There is no defence against what the very clear documents of the Appointments Commission show. I did not pluck the calculation of the tax liability of the noble Lord, Lord Laidlaw, out of the air; it is an easy calculation. He built up a business from almost nothing to £768 million and sold it. That will almost all be profit and the minimum tax rate of capital gains in this country is 10 per cent, so it is probably more likely to be £60 million to £70 million. However, £50 million is a very modest figure, which accountants have looked at. It is not plucked out of the air; it is carefully calculated.
On Arsenal Football Club and others, there is a big difference. Emmanuel Adebayor is not sitting in this House passing laws for other people. I would be delighted to take him on. Arsène Wenger would actually be a very good Lord, but there is a complete difference. The noble Lord might like to know that, had the Labour Government had the courage to go into the euro and lead a campaign for it, Arsène Wenger was lined up to play a leading part in that campaign.
Briefly, I thank the Minister for giving further publicity to the occasional quotes I have been able to get into the newspapers. Clearly, generating public support for measures like this is very important. However, I hope that I did not detect a hint of jealousy, as he sits Googling away in the small hours, in his remarks.
The noble Lords, Lord Strathclyde, Lord Desai and Lord Jacobs, raised whether I was being too hard in the Bill on whether the decision should be irrevocable or people could move abroad later. There is a genuine question of principle here. As noble Lords heard, I had a view that if your take a Peerage from the Queen for life, you should pay taxes in Britain for life, whether you move away or not. However, I accept that there are alternative views. I am sure that we can look at that in Committee, but I would not want to make it too easy for people to pop on and off shore when they are Members of the British Parliament.
I thank the noble Lord, Lord Desai, for his point about the great majority in this country who do not have any choice about what tax they pay. The noble Baroness, Lady Kennedy of The Shaws, was her usual immensely clear and penetrating self. The view that this is just an affront to the people of the country sums up the principle very well. I obviously thank my noble friend Lord Wallace for his excellent work on tax justice and trying to get the message across, even in the Financial Times, that it is not right that only “little people” should pay taxes. I have always thought that a powerful phrase.
I thank the noble Lord, Lord Jacobs, for his encouragement and support throughout. If my son was not sitting in the Gallery, I might say that I also pay a six-figure tax bill, but I obviously hope that he is not listening. The noble Lord, Lord Jacobs, has proved that he has the choice, and chooses, because he is a British legislator, to pay his tax fully here. That is an example that we should all follow.
I am very much with the noble Lord, Lord Lea of Crondall, in supporting the initiative of Angela Merkel. I am glad that, following that, our Government have started to take serious action to investigate Liechtenstein bank accounts.
Finally, I thank the Minister for his remarks. He and the Government need to be a little careful about the argument that they cannot do anything about non-doms because they have said that there will be no change for the next two elections. If he thinks about it, he might rather be encouraging us to help the Conservatives get into power next time on that basis, so it is not a particularly good argument. I do not see why the status of Members of this House should be covered by a general undertaking like that.
On the Prentice Bill, I am working shoulder to shoulder with him; we are very much operating together. I had two Bills before; there is no question of anyone copying anyone else. Gordon Prentice told me yesterday that he believes that it is likely that this Bill will make more rapid progress than his, but we are very much both on the same page. With that, I thank all noble Lords who have spoken for their support.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at 1 pm.