Thank you, Mr. Speaker. We are back to business as usual this morning. Will the Leader of the House give us the business for next week?

The business for next week will be as follows:

Monday 31 October—Second Reading of the Terrorism (Northern Ireland) Bill.

Tuesday 1 November—Second Reading of European Union (Accessions) Bill.

The House will be asked to approve motions on the House of Commons Commission; Parliamentary Contributory Pension Fund; House of Commons Members' Fund and Public Accounts Commission.

Wednesday 2 November—Consideration in Committee of the Terrorism Bill.

Thursday 3 November—Continuation of Consideration in Committee of the Terrorism Bill.

Friday 4 November—The House will not be sitting.

The provisional business for the following week will be:

Monday 7 November—Second Reading of the Council Tax (New Valuation Lists for England) Bill.

Tuesday 8 November—Consideration in Committee of the Electoral Administration Bill.

Wednesday 9 November—Report Stage of the Terrorism Bill.

Thursday 10 November—Third Reading of the Terrorism Bill.

Friday 11 November—Private Members' Bills.

Yesterday the Home Office indicated that it was considering a new "three strikes and you're out" system for supermarkets suspected of selling drinks to under-age drinkers. You have told Ministers on many occasions, Mr. Speaker, that new policy initiatives should be announced in the House, not through the media. Once again, the first we heard of that announcement was through the media. Why?

When will a Foreign Office Minister come to the House to brief us about the Government's response to the very worrying comments made about Israel yesterday by the Iranian President? I am sure the Leader of the House shares my great concern about what was said.

Following yesterday's revelations from the Secretary of State for Work and Pensions, may we have an urgent statement from a Minister in that Department? In particular, the House needs more details about the discussions that have taken place with DNA Bioscience about possible future work with the Child Support Agency. May we also be told what steps are being taken to ensure that no conflict of interest can possibly arise over the substantial shareholding in the company held by the Secretary of State's family, which may increase substantially in value if the company succeeds in winning business from the CSA?

Given the difficulties that both the Secretary of State and the Prime Minister's wife are experiencing, may we also have an urgent statement from the Prime Minister about the proposal to create a referee for the ministerial code? Had such a person been in post, the current embarrassment over these difficulties might have been avoided. The Leader of the House will be aware that the Committee on Standards in Public Life made such a recommendation to the Government, which the Prime Minister initially accepted, but nothing has happened since then. In the summer the Committee strongly criticised the Government's failure to act. Will the Government please explain that failure to the House?

Finally, there have been reports this week of turmoil in the Cabinet—in particular the suggestion that the Secretary of State for Health and the Secretary of State for Culture, Media and Sport squared up to each other in the battle over smoking in public places. Would it be sensible for the Leader of the House to ask the Administration Committee to investigate whether Ministers in such a position should be offered anger management counselling to ensure that the strong emotions that clearly exist in the Cabinet do not lead to someone getting hurt?

The hon. Gentleman previously had a distinguished career in the media. I would not seek to advise him about the things that he chooses to believe or not to believe, but his previous career has probably given him a predisposition towards believing what he reads in the newspapers. I caution him against that. I realise that his training may have prepared him to do that—

So it is true, then!

I am simply giving the gentlest advice to the hon. Member for Epsom and Ewell (Chris Grayling).

On supermarkets, I would not judge that that was a policy initiative. I hope that all hon. Members would recognise that it is a matter of enforcing the existing law. The convention, to which Ministers adhere, has always been that new policy announcements should be made on the Floor of the House. We are simply ensuring that the law, which has existed for a long time, is properly enforced. I hope the hon. Gentleman and other hon. Members will join me in welcoming that.

On Iran, that is a very disturbing development. I want the House to know that my right hon. Friend the Foreign Secretary has instructed that the Iranian chargé-d'affaires be summoned to the Foreign Office, where he will be told in no uncertain terms of the displeasure that the Government feel about those statements. I have seen some details of the speech, which I thought was thoroughly sickening. Not only this country, but other countries will be protesting about it.

I assure the House that it is my understanding that my right hon. Friend the Secretary of State for Work and Pensions has satisfied all the relevant rules relating to his position and that of his family. The hon. Gentleman raised the question of the Prime Minister's wife. I am sorry he did that. He received a letter earlier this year from the Minister without Portfolio, my right hon. Friend the Member for Makerfield (Mr. McCartney), who speaks on behalf of the Cabinet Office. Nothing new has occurred since then. There is no change in the position from what was set out in that letter.

In my opening remarks I dealt sufficiently with the hon. Gentleman's final point.

May we have a debate on the prospects for this winter? Several hon. Members have mentioned possible problems with energy supply, so may I approach the matter from a slightly different position? If predictions of a severe winter are correct, many elderly people will be at risk. We know that when the average winter temperature last fell below 4° C, in 1995, 40,000 pensioners, sadly, lost their lives. Any money that goes to pensioners is always welcome, but 10 times more is spent on winter fuel payments than on the fuel poverty insulation scheme. We know that a third of pensioner households still lack adequate heating or insulation, so would it not be better to invest a little more in making pensioners' houses warmer not just this year, but every year?

May we have a debate on the tax credit system? The Paymaster General appears to be startlingly ignorant about what is going on in her Department. She appeared before the Treasury Sub-Committee yesterday, and when she was asked by my hon. Friend the Member for Solihull (Lorely Burt) about the ombudsman's finding of "systemic maladministration", she said:

"I don't know what she means".

Every other hon. Member knows what the ombudsman means because of the people who come to our surgeries, so surely it is time that we had another debate on the subject.

May we have a debate on conflict resolution? I hear what the Leader of the House says about the point made by the hon. Member for Epsom and Ewell (Chris Grayling), but it seems that some decisions in Cabinet take an unconscionably long time to sort out. I am sure that we could find better ways of resolving disputes so that the House can get on with its business.

I anticipate that the question of energy supplies will be important. I made it clear yesterday in a different capacity—I suspect that is the right expression—that the Government keep the matter closely in mind. We have planned and prepared. I do not know whether this is the hon. Gentleman's intention, but it would not be especially helpful to debate the prospects for the weather this winter. I assure him, however, as I assure the House, that we have appropriate contingency measures in hand.

May I draw the hon. Gentleman's attention to an observation made by Matthew Farrow, the CBI's head of environment policy? He said as recently as 20 October:

"We don't see any situation in which households will be affected or even small businesses."

It is clear that even the CBI, representing British business, realises that we have the matter properly in hand. We must take weather warnings seriously, but we must not talk up a crisis unnecessarily. I emphasise the fact that we have the matter fully in hand.

I accept that all right hon. and hon. Members regularly receive representations about problems with the tax credits system, but I suspect that my right hon. Friend the Paymaster General was making it clear that the problem was not systemic—that is my experience, at any rate. There are a number of cases in which problems arise—generally, in my experience, as a result of significant changes to the circumstances of the people involved. Computer systems must be able to keep track of those changes and respond to them promptly, and I know that the matter is being addressed in the Treasury.

On decisions in Cabinet, I do not know whether the hon. Gentleman is offering his assistance to resolve these very difficult questions—I think that he will have to wait some time yet.

My right hon. Friend will be aware of the considerable interest, especially among Labour Members, in many of the provisions in the new education White Paper. He will also be aware of Labour Members' great enthusiasm for the White Paper's prominence to the concept of fair admissions. Does he accept, however, that the concept requires further clarification, especially regarding the role of selection by ability and by interviewing children? Will he find time for a debate on the concept of fair admissions so that we can clarify the matter in the near future?

My hon. Friend is right to address this vital part of the White Paper. It is clear from my reading of the White Paper that it is permissive, in the sense that it does not provide a prescription for every part of the country. It allows parents much more say in the way in which their local school is managed and operated and in the various principles upon which it operates.

My right hon. Friend the Secretary of State for Education and Skills is describing a way of raising standards across the country but not necessarily saying that every structure for every part of the country will be identical. That is important because there are clear differences in the way in which children attend schools in London compared with other parts of the country. It is right that we find a way of ensuring higher standards that is consistent with what my hon. Friend says about fair funding and fair admissions.

The Leader of the House will be aware of the ongoing interest in the operation of the sub judice rule, not least in the light of the tragic events in London in July. No doubt the right hon. Gentleman will be aware that the right hon. Member for Southampton, Itchen (Mr. Denham), who chairs the Home Affairs Committee, has requested that the Procedure Committee look again at the sub judice rule.

The Procedure Committee produced an excellent report on the sub judice rule in the previous Parliament. Will the Leader of the House please arrange for an early debate on it so that the Procedure Committee, in the light of the Government's response, can further consider the sub judice rule?

I am sure that that excellent report was the result of the excellent chairmanship of the Procedure Committee at the time. I hope that the hon. Gentleman is not in any way casting doubt on the quality of that report in his suggestion about the need for further consideration. This is an important subject and I recognise that it is one that concerns right hon. and hon. Members. However, it is one that has to be approached with a degree of sensitivity. We cannot have unbridled commentary on current court cases. If that were to happen, judges and potential jurors would be placed in some difficulty. There has to be a balance. I thought that the previous report was a very good one. If there is serious concern that it did not go sufficiently far in addressing problems raised by Members, that is something that we should look at again.

Will my right hon. Friend allow a debate on early-day motion 880 on the construction company, AMEC?

[That this House condemns the decision taken by AMEC to close its Adlington site; recognises that the company was established in Adlington by Leonard Fairclough 120 years ago and its subsequent success has been based on the loyal and highly skilled workforce in Adlington; expresses surprise at the decision given that brand new office facilities have only recently been built at Adlington only to find that in a short period of time they are abandoning the site; and calls on the management to repay this loyalty, review this decision and maintain their site in Adlington, helping to support the local economy.]

AMEC has been based in the village of Adlington in the Chorley constituency for 120 years. The different generations of families who have worked for the company made it very profitable. Indeed, it is one of the largest construction service companies in the world. We found out yesterday that it is willing to close its base in Adlington, where more than 200 jobs are based. That is the way in which the company is responding to the loyalty of the work force. There is no compassion in the company. It is only right to have a debate on the company, and on the chairman in particular.

My hon. Friend is right to raise an important issue for his constituency. I well understand why he makes the point. It is important that companies fully recognise the effect of their decisions on communities. My hon. Friend has made his point extremely effectively.

May we have an early statement from the Secretary of State for Health to explain the shambles surrounding the Government's policy on smoking? We have seen a breakdown of collective Cabinet responsibility and of the normal confidentiality that surrounds Cabinet discussions. Do we not need a statement so that it can be explained why a Scottish Labour Member—the Secretary of State for Defence, whose constituents will benefit from a totally smoke-free environment in public places—has used his influence to impose on my constituents a less healthy option?

This is a difficult issue. No one is pretending that these issues cannot be resolved sensibly. The issue is one of balancing the freedom of individuals not to suffer unwarranted exposure to cigarette smoke against the interests of not turning those people who want to smoke into pariahs in our society. That was put extremely well by the shadow Leader of the House when he made that observation, and it indicates that all political parties have their debates on this question. I should have thought that the right hon. Member for North-West Hampshire (Sir George Young) would welcome the fact that there was such public discussion of these issues.

I regularly receive complaints that, in fact, such issues are decided behind locked doors and that there is no possibility of having that kind of public discussion. Indeed, I congratulate the Conservative party on the various approaches it takes to the issue. In Wales, the Conservative health spokesman supported the ban on smoking in public places; in Scotland, the Conservative health spokesman opposed the ban. However, those positions are models of clarity compared with that of the shadow Health Secretary, who said in a speech last month that the Conservatives would replace the Government's plans

"either with the provision for a self-regulated approach, or a full statutory ban on smoking in public places."

So it appears that, in this country, the Conservative party's official position is both for and against a ban.

Does my right hon. Friend recall the feeling in the House on 7 July, when the mass murders took place? May we have a statement on whether the Criminal Injuries Compensation Authority will increase the compensation? I hope that the compensation will increase, but it is possible that any such increase will not apply retrospectively to the victims of the mass murderers of 7 July. Does my right hon. Friend recognise the point, which some hon. Members have repeatedly raised in the House, that it is only right that those who have suffered the most terrible injuries—the loss of one or both legs, arms and so on—should be properly compensated? They should be able to live the rest of their lives with every form of medical and financial support so that they can have a life after what occurred. I hope that such a statement will be made in the very near future. There is great concern on this issue.

My hon. Friend has been assiduous in raising this issue and I congratulate him on continuing to do so. He raised it with my right hon. Friend the Prime Minister, who made clear our determination to ensure that early payments are made and to look again at the whole question of criminal compensation cases. My hon. Friend is absolutely right: it is important not only that we provide proper, speedy and effective compensation, particularly to the victims of terrorism such as that which took place on 7 July this year, but to recognise that there are many victims of crime who deserve fair compensation as a result of their injuries.

The Leader of the House may be aware of the crisis in NHS dentistry in north Wales. This month, a surgery in Colwyn Bay closed its doors to NHS patients, leaving 7,000 of my constituents without access to an NHS dentist. In the whole county of Conway, there are now no NHS dental surgeries that accept new adult patients. Given that the collapse of the dental service amounts to a serious breach of the Welsh Assembly Government's statutory obligations on health care, will the right hon. Gentleman arrange for the Attorney-General to make a statement to the House on whether proceedings should be instituted against the Assembly, pursuant to schedule 8 of the Government of Wales Act 1998?

Hon. Members raised the issue of dentistry on a number of occasions during business questions in recent weeks, so I conducted some research. The hon. Gentleman will forgive me if I state the obvious: the training of dentists takes a number of years. There appears to have been a significant cut in the training of dentists under the last Conservative Government, who significantly reduced the number of places available, and it has inevitably taken some time to improve the number of dentists, simply because of the length of the training that is required. About 1,000 new, trained dentists are now available across the country. Obviously, we will continue to expand the number of places to ensure that that provision is available generally in the whole of the United Kingdom.

May we have an early debate about setting up a joint committee of the House and the US Congress to investigate very serious allegations against an hon. Member, to whom, of course, I have sent a note informing him that I would raise this matter today? Of course I cannot comment on those allegations. The hon. Member for Bethnal Green and Bow (Mr. Galloway) employs very expensive libel lawyers to stop any press investigation into his role as Lord Haw-Haw for one of the worst tyrants in world history who is responsible for killing more Muslims than anyone else in the history of that great religion. Surely, we need a joint Congress and Commons committee of inquiry to settle the truth once and for all, because if any of the allegations of financial receipts—the financial trade is vital—in this report are true, not just the hon. Member's reputation but that of the House is at stake if it does not deal with it. I ask my right hon. Friend to contact his opposite number in the US Congress, set up that committee and clear up this matter once and for all.

rose—

Where is Galloway?

Order. Remarks like that are not helpful. The right hon. Member for Rotherham (Mr. MacShane) asked a question that was within order, but the hon. Gentleman is out of order by shouting, "Where is Galloway?" That is totally out of order.

My right hon. Friend has more than made his point given the content of his question. Obviously, the House should take the matter seriously, but I remind him that we had a brief discussion at the start of business questions about the sub judice rule, and as I understand that the matter is being referred to the appropriate legal authorities in the United States for their consideration I had best leave his words to speak for themselves.

The Chancellor likes to lecture Opposition Members about the economy's productivity and efficiency under his stewardship. Will the Leader of the House please take a lesson from the Chancellor in organising his Department so that he can inform the House of what hours we are likely to sit and over what period two or three months hence?

The hon. Gentleman will be aware that the sitting hours of the House has been a vexed question for a number years and that we are currently operating a compromise arrangement for hours of work. I hope that he would agree that, whatever our personal views of the present arrangements, we ought to allow that compromise to continue for some time. If he was referring to the wider question of the calendar and sitting dates for Parliament, I assure him that I will put him out of his misery quite soon.

Will the Leader of the House consider making time available for a debate on the contribution of senior citizens to our national life? In particular, will he consider the idea of marking a specific date in the calendar as senior citizens awareness day? A very strong campaign for that is based in Bilston in my constituency, led by the redoubtable campaigner, Tom Larkin. I am sure that that idea would receive wide support from all parties in the House, and I ask him to give serious consideration to it.

I certainly congratulate my hon. Friend's constituent. I have had the privilege of visiting Bilston from time to time and I know just how strong and effective that community is. I also understand from him how effective that community is in supporting its senior citizens. I am sure that the idea can be given serious consideration.

Last week, there was a call to hold a debate on trade justice to coincidence with the mass lobby of Parliament on Wednesday next week. Predictably, looking at today's business statement, there is no such space for any such debate. Does the Leader of the House agree that the House should be responsive to our constituents' concerns, especially when they are prepared to come to the House in such vast numbers? Will he do all that he can to persuade the Secretary of State for Trade and Industry to come to the House at least to make a statement on the Government's intentions in that respect?

We are not divided over that issue. The Government strongly support trade justice. Ministers at the Department of Trade and Industry and other Ministers involved in international negotiations have put the case very forcefully. Indeed, it is fair to say that the Government have led the way in arguing, not only in those international discussions but domestically, that it is important that we develop those principles. If the hon. Gentleman were being fair, instead of implying criticism of my right hon. Friend the Secretary of State for Trade and Industry, he would congratulate him.

Will the Leader of the House find time for not only a statement but a full debate in the House on Iran to discuss the implications of the President of Iran's appalling statement recently and the response of the president of the Iranian resistance, who said:

"I again declare that a third option, namely democratic change through the Iranian people and resistance, is the only serious option in dealing with the Mullah's unbridled dictatorship, which is not only the enemy of the Iranian people, but also the enemy of peace, democracy and humanity."

It is time that we had the opportunity to debate in the full and in the round on the Floor of the House the potential of those who are committed to democratic change indigenously within the region.

My hon. Friend makes a good point. I have already indicated to the House the Government's serious concern about the statement made by the new Iranian President. Other aspects of what is happening in Iran at present are causing the Government considerable anxiety. I certainly recognise that this is a matter that the House will want to consider in more detail at a later date.

Does the Leader of the House recall from his time as Secretary of State for Defence the settlement announced in 2000 of claims for the British internees in the far east under the Japanese, and the award of £10,000 for each of them? Five years later the Government stand condemned by the parliamentary ombudsman for retrospectively excluding about 700 people who suffered in that way. May we have a statement on the Floor of the House from the Minister with responsibility for veterans about the derisory offer of £500 compensation to those people affected, instead of him continuing to shelter—it saddens me to say this—behind what have so far been two written ministerial statements?

The hon. Gentleman has followed these matters with great care, and I heard supporting voices from the Opposition Benches, but I was very proud of what the Government did in providing compensation to far eastern prisoners of war. My father served in the far east and I recognise that that was a particularly brutal and nasty aspect of conflict that affected many people. It is necessary that these decisions are subject to rules, and I assure him that a great deal of thought and care was given to drawing them up. This was a matter not of looking at the cost, but of trying to ensure that the rules were fair. The hon. Gentleman referred to 700 people. I hope that he will take it from me that drawing in another group will not necessarily solve the problem to which he refers, because by adjusting the rules to take account of a further group, another larger group may well become eligible. These matters have also been subject to litigation. I assure him that my right hon. Friend the Secretary of State for Defence and other relevant Ministers look at these issues with as much compassion and sensitivity as possible. Bearing in mind that no previous Government had taken such a decision, we brought forward the scheme because we felt that the country owed a debt of honour to those people who suffered in that way in the course of the second world war. But it is not possible simply to provide an unlimited scheme. The scheme has to be subject to certain rules, and those rules necessarily unfortunately exclude some people from participation.

I, too, would like to ask my right hon. Friend for a debate on fair trade, but I should like to ask for it from a positive perspective, because it could be used to encourage local authorities to become fair trade councils. Local authorities could encourage events such as those that are taking place in my constituency on Saturday, where a house has been turned into a fair trade shop in which Fairtrade goods will be sold, so that the communities are encouraged to buy those products. I congratulate Lesley Wilson, who has championed the cause in my constituency.

I am extremely grateful to my hon. Friend for putting the matter in such a positive way. This is something that the Government take extremely seriously, and I know that it is also taken seriously by a number of local authorities throughout the country. I am delighted that her local authority and people in her constituency are promoting the event on Saturday.

I do not know whether the Leader of the House is aware that some major international decisions on space matters are due shortly, namely on global monitoring for environment and security, Galileo and Aurora, all of which affect several Departments of State and research councils. In addition, at the European Space Agency's ministerial council in December, important decisions will be made on the level of UK participation in those European flagship programmes. Will the Leader of the House give some serious thought to whether we can have a debate in Government time on space matters so that we can probe the Government on their intentions for UK participation and highlight some of the first-class science that is being carried out by British firms and research establishments?

I congratulate the hon. Lady on raising these important issues, not least by giving such emphasis to science, which is sometimes neglected in our discussions in the House and in the country, despite the fact that we have some of the world's leading scientists and some of the best research on these questions. I am always intrigued by the range of my responsibilities. I am delighted that they extend into space, and I shall certainly encourage my colleagues to ensure that the House is kept fully informed of the way in which those particular issues develop in the course of the British presidency.

Will my right hon. Friend organise an early debate on the future of the special steels industry, which would allow an opportunity for Sheffield Members to raise the worrying announcement this week from Outokumpu, a large steel producer in my constituency, of 700 redundancies? I want to seek assurances that the Department of Trade and Industry and Yorkshire Forward will use every possible endeavours, first to save what jobs and production capacity we can, secondly to ensure the future of the remaining 800 jobs, and finally to give every assistance to those workers who do lose their jobs to find alternative work and to obtain the necessary retraining.

My hon. Friend is absolutely right to raise that disturbing development. I was aware of that prospective announcement, and it is a matter that I know will cause grave concern in and around Sheffield, which has such a great heritage, particularly in the special steels industry. I am well aware that the matter will cause great anxiety to families and people in Sheffield, and it is important that they are supported. I can assure my hon. Friend that my right hon. Friend the Secretary of State for Trade and Industry will provide appropriate support and assistance to those who may be affected by the announcement. The Government certainly take the matter seriously.

May we have an early debate in Government time on the Government's plans for post-primary education in Northern Ireland and the Government's attack on Ulster's fine grammar schools? Such a debate would provide an opportunity for the Government to correct what the Secretary of State for Education and Skills said earlier at Question Time when she said that this had the support of, and had originated in, the Northern Ireland Assembly. That is not the case, because the Assembly did not have the opportunity to vote on the matter, and the people of Northern Ireland have made it clear, through a household survey of the entire Province, that they reject the Government's plans. May we have an early debate so that the Government can be tackled on the issue?

I am slightly disappointed in the approach taken by the hon. Gentleman to education matters in Northern Ireland, not least because my right hon. Friend the Secretary of State for Northern Ireland recently announced a specific fund to help the education and training of young people and students in Northern Ireland, amounting to some £45 million in the next financial year, rising to £55 million thereafter. That demonstrates the determination of my right hon. Friend and the Government to ensure that Northern Ireland benefits from higher standards of education and training across that part of this country.

As I take it that the Leader of the House will not afford a debate on education changes in Northern Ireland, will he afford a debate in Government time on the Government's proposals for the review of public administration? We want to debate not just the question of the future shake up of local government, but the implications for the picture of inequality that already exists in Northern Ireland as a result of the distribution of Government jobs, newly created jobs, employment and long-term unemployment, which all show a deep and graphic disparity, as demonstrated on maps produced by the Equality Commission for Northern Ireland. In the context of such a debate, we will be able to question what the Government are doing with jobs that were previously decentralised to my constituency and that are now under threat, and the implications of the electronic human resources contract being let by the Northern Ireland civil service, which again seems to be going the way of the centralised Belfast approach, and will add to the phenomenon of inequality that in my part of Northern Ireland is becoming known as the Hain drain.

I am grateful to the hon. Gentleman for setting out his concerns in such detail. I am not sure that I will be able to do justice to the full range of issues that he raised, but let me restate the determination of my right hon. Friend the Secretary of State for Northern Ireland in the form of funding for several initiatives in Northern Ireland. He is demonstrating that he takes very seriously the issues that the hon. Gentleman raises.

Let me emphasise to all right hon. and hon. Members the opportunities afforded by Westminster Hall. There are not always sufficient requests for debates there, and several of the matters that have been raised, including that raised by the hon. Member for Foyle (Mark Durkan), may be suitable subjects for debate in that forum.

The Leader of the House may recall that on 20 July I asked the Prime Minister to look again at the issue of prescription charges for cystic fibrosis sufferers. The Leader of the House will know that those people are affected by an historical anomaly that means that they do not get free prescriptions. Will he arrange for an urgent debate on the plight of vulnerable people? Given, too, the threat facing Alzheimer's sufferers in respect of drug treatment and the Government's failure adequately to address the issue of the early diagnosis of autism in children, a picture is emerging—I am sorry to have to say this—of a heartless Government who are insensitive to the needs of the most vulnerable Britons.

I simply do not accept the hon. Gentleman's charge. The Government have shown themselves to be remarkably sensitive to the importance of allowing the prescription even of drugs that have not yet entirely completed the licensing process, to use a recent illustration, because of widespread public concern and the need to ensure that effective drugs are brought into use as soon as possible. I am in no way diminishing the importance of the issues that the hon. Gentleman raises, but they would be a suitable subject for debate in Westminster Hall, which gives right hon. and hon. Members an opportunity to debate such important matters.

Will my right hon. Friend arrange for the Transport Secretary to come to the House to make a statement on navigational standards on the Thames? If he is a driver, my right hon. Friend will know that Battersea bridge is closed to motorists as a result of the 10th strike in 10 years, yet it remains perfectly legal to drive a barge in the Port of London without any training and without a licence. Apart from the current incident, which is still being investigated, all those bridge strikes have involved misjudgement or miscalculation by the person navigating the barge.

I know that that is a very important issue not only for my hon. Friend's constituents but for Londoners generally. He is right to draw attention to the question of training and skills for those who drive—I am not sure that "drive" is the right word—barges. It appears that the new boat master's licence for inland waterways, which will become law during 2006, will extend competency requirements to freight-carrying vessels in categorised waters. It is obviously an important issue that needs addressing.

Does the Leader of the House ascribe the recent discord in the Cabinet on smoking to the fact that we have a fag-end Prime Minister? Will he call on the Prime Minister to set an early resignation date so that cohesion and some form of leadership can be restored?

Order. That is certainly not the business of the House.

The answer to the question is no.

May I press the case for an early statement on the Government's position on smoking in public places? The figures are well known and very alarming. Passive smoking kills 30 people every day and kills two employed people every working day. The figures are very alarming and we should acknowledge them. We are told in the press that the Government believe that a partial ban is feasible and a total ban is not easily policed. Those arguments should be expressed on the Floor of the House so that all hon. Members have the opportunity to hear them and, frankly, to dispute them.

I have already made it clear that these are difficult issues that require a balance to be struck. When making such judgments, it is always the case that the place where the line is drawn will provoke different reactions from different parts of the community. It is therefore the Government's job, after proper and serious debate, to reach a conclusion. That conclusion has been reached. I remind my hon. Friend, in the politest way possible, that the judgment has been reached on the basis of the manifesto on which she and I were elected and that we argued before the country as a reason for voting for us. It is therefore a proper basis on which to proceed.

The Leader of the House will be aware that this week in the House of Lords the Racial and Religious Hatred Bill was amended in a very major sense by a large majority with all-party support. May I have an assurance that that amendment will be accepted when the Bill returns to the Commons? If not, may we have a guarantee of extra time to debate the amendment, which has a clear majority in the country and should have a clear majority in this House as well?

The Government were obviously extremely disappointed by the vote in the House of Lords. It is important that the majority view of the House of Commons should prevail, although I recognise that in such matters it is equally important that there should be a degree of consensus. My right hon. Friend the Home Secretary will be looking to achieve a consensus on the basis, we hope, of agreement in the House of Lords; otherwise, we will have to look at the matter afresh.

The Leader of the House will be aware of the Home Office's intention to outlaw the possession of violent internet pornography, as demanded by Liz Longhurst, the campaigning mother from Reading whose daughter was brutally murdered by a man obsessed with internet images of rape, torture and necrophilia, and who was recently awarded the Pride of Reading prize for her inspiring work. Can the Leader of the House tell us when these matters will be brought before Parliament?

I congratulate my hon. Friend's constituent. I have seen reference to her campaign in the media. I recognise that this is an important subject and one that all parents are concerned about, and I hope that she continues and is successful.

Will the Leader of the House consider making time for an urgent and full debate on the education White Paper, which was brought to the House with a statement this week? I ask because there is obvious confusion and great unhappiness among Members on both sides of the House, and such a debate would give us all the opportunity to air our concerns fully.

Given that we have already had this week a very long and detailed statement together with a very long and detailed opportunity for right hon. and hon. Members to question my right hon. Friend the Secretary of State for Education and Skills, I am surprised that hon. Members are complaining within a matter of 48 hours. I suggest some detailed reading of the White Paper, as an opportunity for further debate and discussion will undoubtedly arise at some stage in the future.

On a point of order, Mr. Speaker. During business questions, the Leader of the House, in response—a very careful response—to the right hon. Member for Rotherham (Mr. MacShane), gave what I think was an inadvertent impression that the sub judice rules apply to cases that may or may not be brought before jurisdictions other than our own. Can you confirm that that is not the case and that we are free to comment on cases that are before foreign courts?

It does apply to the UK jurisdiction. I urge the House to be very careful when any attack is made on an hon. Member. We know the conventions of the House when we are dealing with these matters.

On a point of order, Mr. Speaker. In the light of the growing scandal of the arbitrary and unsafe removal of failed asylum seekers to Zimbabwe, Somalia and Sudan, to name but three countries where returnees are at risk of imprisonment, torture, death or a grisly combination of all three, have you received any indication from a member of the Government that Ministers intend to make a statement about the systems that they will put in place and the painstaking efforts they will make to ensure that individuals are not returned to countries whose Governments cannot or will not guarantee their safety?

I think that perhaps the hon. Gentleman is asking a failed business question. It is not a matter for the Chair.

BILL PRESENTED

Health

Ms Secretary Hewitt presented a Bill to make provision for the prohibition of smoking in certain premises, places and vehicles; to make provision in relation to the prevention and control of health care associated infections; to make provision in relation to the management and use of controlled drugs; to make provision in relation to the supervision of certain dealings with medicinal products and the running of pharmacy premises, and about orders under the Medicines Act 1968 and orders amending that Act under the Health Act 1999; to make further provision about the National Health Service in England and Wales and about the recovery of National Health Service costs; to make provision for the establishment and functions of the Appointments Commission; to make further provision about the exercise of social care training functions; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. Explanatory notes to be printed [Bill 69].

I beg to move, That the Bill be now read a Second time.

At the time of the pre-Budget report on 2 December 2004, I made a statement to the House that outlined how, despite the best efforts of successive Governments since 1994, we continued to be presented with ever more complex and contrived arrangements designed to avoid income tax and national insurance on the rewards from employment. I made it clear that we intended to close down such activity permanently.

In my statement, I recalled that earlier attempts at such avoidance took the form of paying bonuses and salaries in gold bullion, diamonds and fine wine. When those routes were closed, employers started to pay bonuses through ever more sophisticated financial instruments and securities to reduce the amount of national insurance that they had to pay, to avoid their obligation to operate pay-as-you-earn and to reduce employees' tax bills.

The tax avoidance disclosure rules that were introduced in the Finance Act 2004 brought to light many—more than 100—examples of such schemes that had been devised or marketed by promoters. That showed that a significant minority of employers and their advisers were continuing to devise, operate and market ever more contrived avoidance schemes to disguise what is, in effect, remuneration. Without prompt and decisive action, there was a genuine possibility of tax and national insurance contributions avoidance schemes continuing, to the detriment of the Exchequer and the many employers and employees—the majority—who pay their fair share of tax and national insurance.

I gave notice of our intention to deal with any similar arrangements that emerged in future that were designed to frustrate our intention that employers and employees should pay their fair share of tax and national insurance on the rewards from employment. When we become aware of arrangements that attempt to frustrate that intention, we will introduce legislation to close them down and, when necessary, with effect from 2 December 2004.

Does the Paymaster General accept that one of the problems is the complication of the tax system since 1997? It means that it is inevitably in the interests of employers and some employees that income should not be regarded as such but regarded as capital for lower taxation. How many of the 100 schemes that she mentioned are straightforwardly designed to turn what might be described as income, and therefore in a somewhat grey area, into capital that is thus subject to a capital gains tax levy, which is generated at a lower level?

The hon. Gentleman may know the answer from discussions during the proceedings on the Finance Act 2005. However, let me provide a short list of the sort of schemes that have been operating in relation to bonuses that are payment for employment. In 1991, such schemes used unit trusts to shield bonuses and the previous Government closed them down. In 1993, gold bullion and tradeable commodities were used and subsequently closed down. However, the schemes returned in 1994, using diamonds and fine wine. They were closed down but another type of scheme returned again in 1995 with grants of options in third-party companies. In 1996, own-company share awards and options were offered.

All those schemes reveal a systematic and continued attempt to use contrived schemes for payment for employment, which should come within the PAYE system. The issue is whether tax and national insurance are paid on the relevant forms of income. The Bill tries to provide for that. I hope that, as I go through the provisions, the hon. Gentleman will be satisfied that the measure is specifically targeted and that it includes the necessary safeguards to ensure that. I hope that he will agree that the Bill is a proportionate and relevant way to tackle the problem.

The Paymaster General has made a good case for dealing with some contrived schemes that operated for over a decade, but I suspect that the previous Government closed them all down. However, given the complexity of the tax system, which creates an obvious incentive in a grey area to characterise what might have been described as income in the past as capital because of the lower tax rates, how many of the 100 schemes that were being marketed on 2 December 2004 are straightforward rather than the extreme contrivances that we all agree should have been closed down?

My advice is that they are all contrived schemes of the same convoluted nature as their predecessors. The hon. Gentleman spoke of complexity, and overcoming that has been a frustrating problem for hon. Members, especially those of us who serve on Finance Bill Committees, and for those who have to implement the legislation. To close down a complex and sophisticated scheme, we need a sophisticated and complex measure. Our measures make a clear and unambiguous statement: do not undertake contrived schemes. They will be closed down whenever they are identified. Closure could be backdated to the December 2004 statement.

Am I right that we are not discussing peanuts? Without the Bill, the schemes would cost Her Majesty's Revenue and Customs approximately £240 million. That is not small beer.

Indeed, it is not an insignificant amount of money and it should have been paid. The vast majority of taxpayers pay, but non-payment has direct effects not only on the tax collected but on the money that goes into the national insurance fund.

In 2004, I gave notice of our intention to deal with any future arrangements that were designed to frustrate our intention that employers and employees should pay their fair share of tax and national insurance on their rewards for employment. When we become aware of such arrangements, we will introduce legislation to close them down and, I repeat, when necessary, with effect from 2 December 2004.

If some people think that the Government's resolve has weakened, my statement stands today as strongly as it did on 2 December 2004. We are closely examining what has happened since that date. I want employers and their advisers to be in no doubt. If they continue to avoid their responsibilities, or are thinking of doing so in future, we will not hesitate to introduce further legislation to close down their schemes.

As a first step towards demonstrating our commitment to taking action, schedule 2 to the Finance (No. 2) Act 2005 was introduced to strengthen the income tax rules dealing with employment-related securities back to 2 December 2004. The Government had already published a draft technical note alongside the pre-Budget report last year, explaining our proposals, followed by draft legislation in February 2005. Interested parties have therefore had an extensive period in which to scrutinise and comment on the detail of the provisions, which were then fully debated during the Committee stage of that Act.

The Bill before us is the second legislative step that demonstrates our commitment to taking action against avoidance. It is key to achieving the Government's objectives of fairness and opportunity by ensuring that all pay their fair share of tax and national insurance. It is also an essential element in building a serious and credible deterrent against future avoidance.

As the tax disclosure provisions have demonstrated, and as we and the previous Conservative Government have discovered, it is not always possible to anticipate the range and complexity of those extremely contrived arrangements. The Government intend to close down such avoidance schemes permanently. The Bill will ensure that the Government can deal with any arrangements designed to frustrate their intentions. That will ensure that the tax and national insurance that should rightly be paid on rewards for employment are paid. There is no annual equivalent of the Finance Bill for national insurance, so the Bill provides the necessary powers to apply national insurance to payments from such schemes.

When the Government become aware of arrangements that attempt to avoid national insurance contributions as well as tax, we will introduce regulations to close them down, where necessary from 2 December 2004. This action will not affect the vast majority of employers and employees, who organise their affairs in a straightforward and transparent way. In particular, genuine employee share schemes and share option plans will not be affected.

The Bill provides for a power to make regulations in respect of national insurance that reflect backdated tax changes that take effect on or after 2 December 2004 and which may be outside the scope of existing national insurance legislation. The power will allow for national insurance liability to be charged starting from 2 December 2004, if necessary.

The Bill is needed to extend existing regulation-making powers and to make it possible to impose a national insurance charge on disguised remuneration that is capable of taking effect from 2 December 2004, where necessary. Currently, a national insurance liability can usually be charged only from the date on which the national insurance regulations are made, except in limited circumstances in which the regulations can be backdated to the beginning of the tax year in which the regulations are made. This is in contrast to tax, where liability can, if the legislation so provides, be applied retrospectively to the date of an announcement made before the legislation receives Royal Assent.

Provisions in the Bill also allow for consequential changes for the purposes of contributions, contributory benefits and statutory payments where appropriate. For instance, a national insurance charge might be levied back to 2 December 2004 to align with the start date of anti-avoidance tax measures. In such a case, the provisions of the Bill, and the regulations made under the powers in the Bill, would ensure that those contributions would count for the purposes of contributory benefit and statutory payments.

The Bill also provides a power to extend the avoidance arrangement disclosure rules to national insurance that currently apply to income tax. Finally, it provides a power to prevent the use of national insurance contribution elections and agreements over shares and securities that have been targeted by backdated national insurance regulations made under the Bill. This will mean that employers cannot pass on to their employees their own national insurance liabilities that they have tried to avoid.

Significantly, the Government have ensured that the Bill contains important safeguards to ensure that regulations made under it take full account of human rights considerations. This is in addition to the Government's existing duty to make regulations that are compatible with the European convention on human rights. Furthermore, the power to make regulations altering liability is restricted to reflect, so far as is possible, employment remuneration measures in tax legislation—normally Finance Acts—and is intended to be used only to reflect tax anti-avoidance measures. So when such regulations are made, the House will already have had the chance to consider any relevant human rights issues on backdated tax legislation during the passage of the relevant Finance Bill or other legislation.

The Bill also includes a specific provision to ensure that when, for instance, as part of a package of anti-avoidance measures there is exceptionally a reduction of national insurance liability for past periods, any existing or future benefit entitlement will not be affected.

We will publish the draft regulations a minimum of 12 weeks before they are made, so that employers and their representatives will have an opportunity to comment on the technical content of any proposed national insurance changes. Once the Bill has received Royal Assent, any national insurance legislation will have to be laid within 12 months of the corresponding retrospective tax legislation. Furthermore, to ensure that there is adequate parliamentary scrutiny when regulations are made, such regulations will be subject to the affirmative resolution procedure.

The powers in the Bill will be used, in the first instance, to make regulations to reflect the employment-related securities anti-avoidance provisions included in schedule 2 to the Finance (No. 2) Act 2005, which received Royal Assent in July 2005, but which took effect from 2 December 2004.

In conclusion, the Bill is important and necessary to ensure fairness. It will not affect the vast majority of employers, who do not seek to avoid their tax and national insurance liabilities through avoidance schemes. However, I have explained how, unfortunately, a small minority continue to try to avoid their obligations, at substantial cost to all other taxpayers. The Bill is therefore an appropriate, proportionate and effective response to national insurance avoidance, and I commend it to the House.

It is self-evident that there are few subjects of debate more likely to empty the Chamber than national insurance contributions.

In an age in which consecutive Finance Acts create and then abolish new-fangled tax instruments, national insurance contributions have proved remarkably resilient. We are now in the 58th year since their coming into force as part of the welfare state establishment that followed world war two. Back in 1948, all those at work except married women paid the princely weekly sum of 4s 11d—that is 24.5p for all those Members of the House younger than me—in a flat-rate compulsory contribution. How times have changed! The only thing that is flat about national insurance today is the spin in which the Government find themselves when trying to raise as much money as possible in their frantic attempt to balance their books. I said in Committee in June during the passage of the Finance Bill in June that,

"for our part, it is difficult to avoid the conclusion that many of the anti-avoidance proposals are driven by an increasingly desperate Treasury desire to fill its revenue black hole without regard to the damaging effect that it will have on the development of start-up ventures, and, indeed, some bona fide remuneration schemes."—[Official Report, Standing Committee B, 21 June 2005; c. 43.]

The Finance (No. 2) Act 2005 made a number of amendments to the Income Tax (Earnings and Pensions) Act 2003, with the aim of closing down schemes to avoid income tax using employment-related securities. Those amendments have retrospective effect, as the Paymaster General rightly pointed out, going back to 2 December 2004. It is not currently possible to extend retrospective income tax provisions to national insurance contributions, because liability for NICs can be charged, as the Paymaster General mentioned, only from the date on which NICs regulations are made, except in limited circumstances in which the regulations can be backdated to the beginning of the tax year.

The Bill's stated purpose is to align national insurance legislation with income tax legislation, which will allow tax liability to be applied back to the date of the announcement. As the Paymaster General pointed out, the Bill also contains provisions to restrict employers' ability to pass on any secondary NICs liability to employees and extends the existing tax disclosure rules to NICs. I shall come to aspects of that in a moment, if I may.

There is, however, a good reason for existing NICs legislation not allowing regulations to take such retrospective effect. In my view, only in the rarest of circumstances should the Government contemplate either retroactive or retrospective legislation. I fear that the Bill's effect will be to institutionalise retrospection. We shall certainly need to explore that in far greater detail in Committee.

The substantive clauses will put in place the intention of the Paymaster General's statement of 2 December 2004. Recognising the difficulty of anticipating the ingenuity and inventiveness of the avoidance industry, she gave notice of the Government's intention to deal with any arrangements that emerge that are

"designed to frustrate our intention that employers and employees should pay the proper amount of tax and NICs on the rewards of employment."

She continued:

"Where we become aware of arrangements which attempt to frustrate this intention we will introduce legislation to close them down, where necessary from today."

As we gathered from the previous exchanges, it is clear that there may be 100 such contrivance schemes. We need to understand whether some of those are in many ways bone fide remuneration schemes, and indeed whether their closure might be detrimental to the very start-up operations that I think all of us in the House agree are the lifeblood of the economy.

The key issue, however, is whether the importance of protecting tax revenues outweighs the need for certainty in commercial forward planning, because the threat of retrospection came as a great surprise to many tax professionals, as it falls foul of one of the great canons of taxation—that of certainty.

Arguably, retrospection is also unconstitutional, and if not it should be regarded as acceptable only when couched in unambiguous terms. The Government's admirably comprehensive explanatory notes make much of what they regard as the position under the Human Rights Act 1998. In spite of the characteristically robust protestations of human rights compatibility from the Chancellor of the Exchequer, his is a position of an interested party, for the reasons I have set out. These measures will obviously bring in more money—perhaps as much as £240 million during this year and years to come.

The Chancellor and the Treasury need that money to keep flowing in, and it strikes me that several experts in this novel but complex field of human rights take a different view on compatibility. No one disputes that it is the Government's duty and responsibility to devise policy, but equally Parliament must retain effective control over how that policy is implemented by legislation.

In spite of the Paymaster General's suggestion that this power is relatively limited—the words of comfort about the affirmative procedure were positive—Parliament will undertake only cursory scrutiny, because the Bill is designed to enable Her Majesty's Revenue and Customs to backdate to December 2004 all those NICs to which the Finance (No. 2) Act 2005 changes apply.

We must consider some of the practical effect—my hon. Friend the Member for West Suffolk (Mr. Spring), the shadow Paymaster General, will mention some such examples later—and remember that NICs come from both the employer and employee. Are the Government seriously suggesting that erstwhile employers of someone who has died after December 2004, or perhaps of a former employee who has been fired in acrimonious circumstances, should have disputed NICs clawed back? This has all the makings of another farce on the lines—although, I accept, not to the same degree—of the tax credits fiasco. How much contingency has the Paymaster General made for writing off sums that can neither be claimed nor easily traced?

It gets worse, because by the time the Bill has made it through Parliament, no doubt the new year—2006—will be upon us. Unravelling NICs arrangements, which by then would already be over a year old, will also most likely have knock-on implications for the disclosed employer company profits in previous tax years. That may have a crucial impact, especially if the tax avoidance in question is considered widespread within a particular industry sector.

First, does the hon. Gentleman agree that if the legislation's effect is to deter people from even bothering to devise schemes that seek not to pay the tax and national insurance that should have been paid—I sincerely hope it is—it will have done precisely what it aims to do, and all the things he is talking about, which no doubt we will explore in Committee, will not happen?

Secondly, does the hon. Gentleman think that the general taxpayer, and the Government representing the general taxpayer, are also entitled to certainty about revenues? This is employment pay, so it should be subject to pay-as-you-earn and national insurance.

Let me answer the second point first, if I may. On the certainty issue, in any one year we do not know how many people will be in the employment market, as we have gathered from the constantly changing growth figures that have been published since the autumn review last year. For that reason, there will never be complete certainty for any Government at any time. What we are looking for here is commercial certainty. Surely it is the entitlement of individuals and companies to have that level of certainty. After all, tax is not a voluntary regime; it is imposed by a Government on their people. Such an imposition gives any Government of any day great power. The certainty that is therefore required is commercial certainty for those who could suffer from a tax.

On the Paymaster General's first point, our concern is the law of unintended consequences. We never quite know how things will unravel. I am not looking necessarily to stand up for those tax advisers and employee benefits remuneration people whose ingenuity allows new schemes to be developed at any one time; but equally, it is not the duty either of an employee or an employer, or of a company, to maximise the tax paid. They are quite entitled, where they can, to find what might be regarded as loopholes. It is obviously the Treasury's job, where there are unintended loopholes, to close those for the future.

I am grateful to the hon. Gentleman for giving way again. To pick him up on maximising the tax paid, it is the job of the House and the Government to ensure that legislation that the House has passed on tax and national insurance being paid on certain types of income at a certain rate actually happens. That is the issue here, not whether people are entitled to plan for tax. How does the House ensure that the legislation already passed is honoured? That is a fair point.

I am intrigued by the tense the Paymaster General uses. She refers to legislation that the House "has passed". Our concern is not with legislation where there is a clear intention from the Government. The issue here is retrospection. That is our great anxiety. Where legislation has been passed, and there is clarity and certainty, that is fine, but the point of the Bill is to sweep back as far as 2 December 2004.

I am following the hon. Gentleman's remarks closely. First, perhaps he can explain how the retrospection for NICs will be different from that which we already have for tax. Secondly, may I point out to him that not many people on minimum wage in my constituency have been getting paid in platinum sponges or any such device? I would expect most people, if not all, who will be caught by this legislation to have had specialist tax advice, quite possibly through their employer. That specialist tax adviser should have told them that anything after 2 December 2004 is at risk. If the tax adviser failed to do so, he or she is at risk in respect of negligence.

Unfortunately, my constituency contains the City of London, where gold bullion, fine wine and all these contrivance schemes possibly began. It might be different in Wolverhampton. I look forward to visiting the hon. Gentleman's constituency at some point—perhaps in the near future on a ministerial visit, I hope, when Conservative Members are on the other side of the House.—[Laughter.] That might take a little time.

On the hon. Gentleman's serious point, we are concerned about retrospection, particularly in relation to national insurance, because of the potential double whammy for many employers. While one can entirely understand the protection given to employees, which we will discuss later or in Committee, one of the great differences between the national insurance contributions regime and the regime under the Finance Act for income tax is that employers run the risk of not only paying their own 12.8 per cent. but their employees' national insurance part. They might be able to go back and sue their tax adviser, but that might not be a practical solution. While we still have grave concerns about retrospection, which were articulated in the Finance Bill Committee, equally we want to articulate those now and consider the other ways in which the legislation applies.

Let me continue on the path towards the end of this Second Reading. As I mentioned a moment or two ago, the tax avoidance in question might be widespread in particular industry sectors. What would happen if the company concerned has been sold in the meantime, benefiting from what it will eventually become clear are vastly inflated profits?

The sheer uncertainty and potential for unfairness outweigh the benefits of this innovative attempt to deal with the avoidance problem that the Treasury understandably seeks to tackle. Given the Paymaster General's broad-brush assertion in her statement of 2 December, how can we be sure that the scope of these retrospective powers will only be used sparingly? Ultimately, the crux of the question is: who judges whether something is to be regarded as unacceptable avoidance?

Most of the Bill's provisions have retrospective effect. The Government are becoming increasingly open about passing such provisions. Previously, such provisions were only described as retroactive, whereas now the word "retrospective" is openly used in the Bill. While most of the Bill's provisions cannot take effect before 2 December 2004, the effect of sections 5 and 6 is potentially unlimited, as any past agreements and joint elections to transfer secondary liability to national insurance contributions to employees can be disapplied. Under those elections, employees were able to pass the national insurance cost risk to employees without limit as to when the election was entered into.

The Bill's retrospective effect necessarily causes uncertainty for UK business. Businesses must be able to plan their activities and cost base in a stable framework. That will be difficult if the Treasury has the power to pass new tax provisions with the retrospective effect to which we have referred. The Government justify their approach by pointing out that the new provisions will not affect the

"overwhelming majority of employers and employees"

who

"pay their fair share of tax and NICs".

Only a small minority, however, have unreasonably

"sought to use sophisticated and complex tax avoidance schemes to pass more of a burden onto the rest of us".

Businesses that have attempted to reduce their liability to pay national insurance contributions in accordance with existing legislation are therefore being vilified as antisocial.

Ideally, we need Her Majesty's Revenue and Customs to set out its thinking on the principles guiding its intended implementation of this policy announcement. During consideration of the Finance (No.2) Act 2005, we called repeatedly for more attention to be paid to the pre-clearance procedure. The spectre of retrospection, and with it uncertainty, makes a pre-clearance process ever more important; otherwise, the Treasury seems to be relying on making any such schemes of arrangement so commercially unattractive that the need for retrospective legislation will be rendered redundant. That is more or less the nub of what the Paymaster General said in our exchanges a few minutes or go.

That is not a sensible way to run commercial business. We need to encourage dynamism, flair and innovation. Sometimes, such innovation will get it wrong, but closing down these schemes will apply to flair and innovation throughout our commercial world. A heavily regulated economy in every way will not be good news for this country. Flair and innovation are qualities not just of our tax advisers but of many inventors and people throughout industry. That has been one of the great strengths of this country over the past 300 or 400 years, and is one of the reasons why we are such an important trading nation. The worry with this sort of proposal is that it stifles those two important facets.

We understand that the first use of powers in this area will be to amend the national insurance contributions regulations in parallel with the changes imposed in the employee securities element of the Finance Act 2005. That is unobjectionable, but there is a more fundamental question: now that national insurance involves only a notional contributory element, is it not time that the rules surrounding NICs are changed entirely to work alongside those of income tax?

The Bill highlights once again the problem of having two taxes that basically cover earnings. Let us face it: the only reason for having NICs and income tax is to uphold the fiction that the basic rate of tax is 22 per cent., when it is really 33 per cent. That is an expensive fiction that costs businesses millions of pounds in administration each and every year. Perhaps things have now got to the point where it is necessary to consider a single stand-alone income tax with a basic rate of 33 per cent. and an employers' portion of 12.8 per cent.

Again, I am following the hon. Gentleman's comments closely. He was taking about the risk of stifling innovation. Is he really suggesting that the self-employed, who currently pay, I think, £2.10 per week in class 2 contributions, would be rolled into a kind of super-income tax along with everybody else if his proposal to get rid of NICs were introduced? That might well stifle innovation in our economy, which has been a strength for 400 years.

It is a good attempt from Wolverhampton, but I was simply putting forward a broad idea that we need to give some thought to simplifying our taxation system. The contributory element of national insurance is fairly meaningless to a large extent.

Will my hon. Friend also recognise that NICs are not paid by those who are over retirement age? His proposal would increase the taxation of those who had income in retirement.

If I am not incorrect, my hon. Friend is some 63 years old. I was his Whip at one time. I suspect that his observation might contain the smallest element of self-interest. I take on board his points, although given the great hopes for the Turner review, if the retirement age increases he might be chasing a particular dragon while he is still below that age. I will certainly have him in mind when it comes to the national insurance aspects of the question.

My hon. Friend must also recognise that I represent a rather large number of pensioners in Bournemouth, West.

I have little doubt that my hon. Friend is younger than the average age of most of his constituents.

To reinforce the point, the House might want to know that my grandmother lives in Bournemouth. I have a serious point, however. How does the hon. Gentleman square the proposal that he has just made on the nature of taxation with the fact that his party has just established a commission, under the chairmanship of Lord Forsyth, with a very clear remit to explore the barmy possibility of a flat tax?

The Economic Secretary knows that it is not a specific proposal. I was floating an idea, which is part and parcel of exactly what we are trying to achieve with the flat tax commission: simplifying the whole taxation system, which is a long overdue goal. In many ways, clause 1 seems to be worded with that sort of change in mind. In summing up, I hope that the Economic Secretary can confirm the Treasury's intention and indicate how such a process might be managed.

I want to touch on three other aspects. First, there is the regulatory impact assessment in which the Government attempted to assess the Bill's potential impact. They concluded that the combined impact of the measures

"will not affect small businesses disproportionately."

However, it should be remembered that small businesses are most dependent on attracting quality personnel, and therefore need to be able to offer tax-efficient employee incentive schemes. As the Government have already announced, the powers in the new Bill will be used first and foremost to tackle NIC avoidance through employment-related schemes. It is suggested that that will disproportionately affect businesses that the Government originally intended to promote by introducing tax-efficient employee incentive schemes. The position is made worse by the fact that employers cannot share any new unexpected liability to NICs with their employees.

Secondly, there is the issue of disclosure, which the Paymaster General mentioned. Clause 7 suggests that the regime for NICs and income tax will be similar. It would be useful to hear from the Treasury how it will work alongside taxation specialists to ensure a smoothly operating system. Twelve weeks seems a relatively short period, given the importance of the work that must be done, and the differences between this regime and the income tax regime introduced in the Finance (No. 2) Act 2005. Naturally all sides would like as long a lead-in time frame as is practical.

Much hinges in the future implementation of the intentions set out in this enabling legislation on regulation-making powers. The Bill brings NICs into the world of tax avoidance disclosure, and opens the way to retrospection. However, its operation, achieved by specific regulations that are highly technical and complex, will not be subject to full parliamentary scrutiny. Let us be honest: without significant outside expert help, there is little headway that any Opposition spokesman can forge even in Second Reading debates such as this. However, if such technical legislation with its retrospective element is brought in only via regulation, even when it is approved by statutory instrument, we run a real risk of adding to the statute book a series of poorly thought-through laws. My biggest worry is that that will result in employers and employees alike running the risk of being deprived of their property in an arbitrary manner.

We are debating what could be described as one side of the Treasury coin, the other side being the Finance Act.

I am not sure whether this is an ironic coincidence, but in the early 1990s I worked for a major firm of accountants. One of the directors had a particular claim to fame: within two hours of the Budget statement, he had worked out how to get around the proposed anti-avoidance measures. That scenario has continued for at least 15 years.

I realise that the hon. Member for Cities of London and Westminster (Mr. Field) has a particular constituency angle to take, but why should hard-working lower-paid people in my constituency and other constituencies in north Staffordshire have to pay their tax and national insurance while those who can afford extremely competent tax specialists to advise them get around the legislation? Where is the fairness in that?

Does my hon. Friend agree that while the Bill is commendable in seeking to reduce avoidance, it is odd that the Government should at the same time be introducing self-invested pension plans that give huge concessions to very rich people, which people in north Staffordshire and north-west Leicestershire can only dream about?