Commissioners for Revenue and Customs Bill

Public Bill Committee, 13 January 2005.

Standing Committee E

Commissioners for Revenue and Customs Bill

Dawn Primarolo (Labour, Bristol South)

On a point of order, Mr. Hurst. During our debate at the previous sitting on the taking of the oath by members of the new department, Her Majesty's Revenue and Customs, the hon. Members for Sevenoaks (Mr. Fallon) and for Chichester (Mr. Tyrie) were concerned that the old Inland Revenue oath was being superseded. I offered to consider the matter again. While I am convinced that the arrangements under the Bill reinforce measures and are better, I have taken note of their comments.

I give notice to the Committee that I propose to table a new clause on Report, requiring new employees on induction to take a declaration in front of a witness in addition to those matters that we have discussed. People presently employed by the two Departments are within the terms because they have already taken the oath and know the conditions, so it will not be necessary to ask them to take it again. I am grateful for your indulgence, Mr. Hurst, as I believe that it is important to let members of the Committee know the position. I shall write to them as soon as possible, because such matters will affect the Opposition's decisions about the Bill at a subsequent stage.

Alan Hurst (Labour, Braintree)

The Paymaster General will understand that what she has said is not a point of order.

Andrew Tyrie (Conservative, Chichester)

Further to that point of order, Mr. Hurst, we welcome the Paymaster General's announcement. We are grateful to her for having listened carefully to what was said at our previous sitting and we look forward to the new clause being tabled on Report.

John Burnett (Liberal Democrat, Torridge and West Devon)

Further to that point of order, Mr. Hurst. I am grateful to the Paymaster General for taking account of the arguments of Liberal Democrat Members in Tuesday's proceedings. We look forward to the new clause and hope that it will cover those people who will have access to sensitive taxpayer information, which includes not only new members of Her Majesty's Revenue and Customs, but others whom we shall be discussing later.

Michael Fallon (Conservative, Sevenoaks)

Further to that further point of order, Mr. Hurst. As the person who tabled the amendment concerning these matters, I am grateful to the Paymaster General for listening to what was said in Committee. We welcome the changes that she will be introducing as well as the strength of the duty of confidentiality. The combined package will be acceptable and I am grateful to the right hon. Lady for her speedy consideration. I hope that it sets a precedent for the rest of our proceedings in Committee.

Alan Hurst (Labour, Braintree)

Order. That concludes the gracious non-points of order. If members of the Committee have mobile phones or other devices, will they ensure that they are turned off?

Clause 18 - Wrongful disclosure

Clause 21 - Conduct of civil proceedings

Clause 22 - Rewards

Andrew Tyrie (Conservative, Chichester)

This very short clause, which looks relatively innocuous, is actually quite important. It concerns the payment of informers who assist the Revenue and Customs, the new department, in the performance of its services. It is of concern, and those concerns need to be given an airing.

Throughout our considerations, I have sought, whenever I could, to tell the Paymaster General the clauses that I intend to discuss at least 48 hours in advance. Unfortunately, on this occasion, because we were both downstairs considering the Child Benefit Bill, and what with one thing and another, I did not tell her office that I wished to discuss the clause until 8.30 am today. I hope she can say a little about it. Perhaps she will want to come back to me if she cannot answer further questions I may have.

This is a money clause, as I understand it; that is why it is printed in italics. It is therefore not amendable in the other place, so it is up to us to make sure that we are entirely happy with it. The payment of informers can easily lead to abuse. It is only a short distance from creating circumstances in which it may be alleged that agents provocateur had been paid.

There is always the danger of serious, unacceptable collusion between an informer, a prosecuting authority and Her Majesty's Revenue and Customs in trying to catch someone. The danger is that an informer and HMRC may become convinced that someone is guilty of a serious offence. A community of interest between them may be created, and they may end up harassing and persecuting someone in order to secure a conviction because they are absolutely sure that he or she is guilty. That person may not be guilty at all, or guilty of only a minor transgression, but will nonetheless be put through the wringer if there is abuse of the powers in the clause.

The issue of rewards has always been controversial, most seriously because it can lead to pure corruption and unacceptable collusion, whereby an HMRC official—I am not suggesting that this has gone on, but I am sure that the scope for it is always theoretically there—may himself be rewarded in some way for securing a reward for an informer. That would be serious.

It is well worth taking a close look at the clause, and I have a number of questions on it. First and most importantly, does it level up or level down the existing powers, which are slightly different from those in the legislation under which informers are permitted for the Revenue? I cite the relevant, short, passage from the Customs and Excise Management Act 1979:

''Subject to any directions of the Treasury as to amount, the Commissioners may at their discretion pay rewards in respect of any service which appears to them to merit reward rendered to them by any person in relation to any assigned matter.''

I ask Committee members to compare those words with those of clause 22 on page 11. The equivalent Inland Revenue Regulation Act 1890 reads slightly differently. Under section 32—''Power to reward informers''—it states:

''The Commissioners may at their discretion reward any person who informs them of any offence against any Act relating to inland revenue or assists in the recovery of any fine or penalty, provided that a reward exceeding fifty pounds shall not be paid in any case without the consent of the Treasury.''

The Treasury has to give explicit consent for such rewards, and I shall come on to that. The phrase in the explanatory notes suggests that the clause grants similar powers to the new body. If one looks carefully at those two sections, one sees that that is about as far as one can go. In fact, those two powers are really quite different.

We have had the same sort of problem with the issue of powers for HMRC generally. I shall not run through all the points again, but when we debated clauses 4 to 6 we discovered that although the intention was to amalgamate sets of powers for two different organisations in a manner that left no overall change, that was very difficult to do. That is also what we have found on this issue. The important difference is that in both the previous pieces of legislation there was a reference to Treasury oversight. In this Bill, Treasury oversight has disappeared altogether, as far as I can tell. It seems that we are creating a power to hand over very large sums without any limit from the Treasury.

I have concerns about that; everybody should until we have had more detail on how restraint may be imposed. The first obvious question is about who will vote for such sums to appear. Will the Treasury have any power of restraint whatsoever, even though that is not included in the Bill? Will the Treasury, even ex post, have the power to ask questions about whether the HMRC has exercised appropriately its powers under this clause? Again, we do not seem to have any information about how accountability for the clause will be exercised.

I have started to consider this issue in more detail in the past 48 hours, and have begun to come to the conclusion that—even with that reference to the Treasury being able, at least in principle, to withhold consent for Revenue rewards of more than £50 and to exercise some control on Customs—the existing arrangements, never mind the new arrangements, are inadequate. We in the public domain are not provided with the information on whether such powers are being exercised adequately.

Will the Paymaster General, at some point, supply me with a number of pieces of information about the exercise of the existing powers historically? Then we will have a mark in the sand for monitoring what might happen in the future. For example, how many claims have been made by informers on aggregate in any one year? How many claims have been paid on? How many claims have been paid on in full? Perhaps I could ask the Paymaster General for information on, say, the last three years. I do not want to make this an extraordinary task, but we may find that a particular year is disturbed by one particularly large payment for a special event. If we have a run of three years, we will get a feel for it. We can then work out from those numbers how much has been paid out on aggregate so we will know how many claims there have been, how much has been paid out and what proportion of those claims has been paid on aggregate.

I would also like some information—I realise this will not be that easy, but it should be possible to do—on the range of payments. Are they all a couple of hundred pounds for someone talking about some cigarettes that have come off the back of a lorry down the pub, or are these claims about very large cases? If we could have some idea of the range, and what proportion are in the order of nought to £500, £500 to £5,000 and so on. Of course, not knowing the numbers, I cannot possibly say what those ranges should be.

I fully understand that there is no way the Paymaster General will want to give me data on individual cases. That would indirectly lead to a breach of confidentiality, because someone who was paying attention, particularly the informer, would be able to work out quite a lot about the tax affairs of the person on whom he or she had informed. I certainly do not want to ask for the information to be presented in a way that could lead to such a breach. The questions I have asked, however, should enable that information to be collected. Because the Treasury has to be consulted in each case, and we know that from existing legislation, this information must be in the Treasury somewhere.

Dawn Primarolo indicated assent.

Andrew Tyrie (Conservative, Chichester)

The Paymaster General confirms that. I am surprised that this information has never found its way into the public domain. I think that sooner or later somebody will start asking for this stuff under the Freedom of Information Act 2000, but I do not think we need to go down that road. It is possible that one of the questions I have asked, for some reason that I do not know, is an unreasonable one. If it is, the Paymaster General will explain that to us and I am sure we will want to accept her explanation.

Armed with that information, we will then have a baseline for working out what will happen with the new Department. It would be helpful if the Minister was prepared to commit to publishing these figures annually in a similar form—we are only talking about four or five numbers—so that people can get a feel for what is going on in the field of rewards and payments for informants.

I have a couple of further points on the clause. I understand that there is an Inland Revenue manual on informers, setting out guidelines on how informers should be treated by staff. This is an eminently sensible idea. I do not think most of it is in the public domain. I ask the Paymaster General to look extremely carefully at whether that does need to be kept secret. I realise that small parts of it need to be kept secret, but I wonder whether large chunks of that document could be put into the public domain, in order to satisfy and allay public concerns about informers. Again, if we do not put it into the public domain, it is just the sort of thing which can be the subject of a Freedom of Information investigation; a fishing expedition. I think we can avoid that by putting it into the public domain now.

I have one final point to make. I have in front me the interesting research document on informers and the current practice. It largely governs how the police operate in that area. The Regulation of Investigatory Powers Act 2000 is this Government's piece of legislation. It was brought in days before the October 2000 deadline for the Human Rights Act 1998 because it was felt that it needed to be on the statute books before the Human Rights Act started to trample over this territory. I am not an expert on whether the legislation working well. My information about that is confined to that one piece of rather sophisticated research that has been done by academics, and I am not going to rehearse the points that have been made.

However, what is happening in the police field is obviously extremely relevant to the way in which HMRC will operate. In that regard, in order to allay public concerns with respect to the legislation that governs the police, the Government have put the covert human intelligence sources code of practice into the public domain. I have it with me and I looked at it last night. I could allude to some interesting questions in relation to the clause. I know that the Minister might not have all the answers to the questions that I have asked, so rather than ask some more now, I will leave it there for a moment.

The crucial point is that the code, because it is established under the Regulation of Investigatory Powers Act, is effectively statutory guidance. I presume that the Inland Revenue manual will become an HMRC manual—perhaps the Minister will tell me whether that is the case—and it will presumably amalgamate guidelines that also apply to Customs and Excise. My last question to the Minister is whether that composite manual—whether it is called the code of practice or not, which does not really matter—will also acquire the quasi-statutory status that I understand the code of practice enjoys. I will stop there for the time being.

John Burnett (Liberal Democrat, Torridge and West Devon)

We also have concerns about the particularly wide nature of the clause and we look forward to getting further details.

I want to highlight a couple of points. When things go seriously wrong and power is abused, sometimes the public and Parliament get a rigorous examination of the abuse of powers when those matters come into the public domain; I hope that they always would do.

We have had the advantage of the excellent report in July 2003 of the hon. Mr. Justice Butterfield into the London City Bond cases. In those cases, there was criticism by the trial judge of the role of the national investigation service and other branches of Customs and Excise. It is worth our paying considerable attention to the report. These matters have been debated in the House, and I suspect that that will continue.

Opposition Members are anxious to receive further information, such as knowledge of what safeguards will be in place. We would have liked those safeguards to be included in the Bill. We know the dangers surrounding the use of agents provocateurs; unreliability, difficulty with regard to evidence and openness to corruption. We want to know who monitors these practices and authorises these payments. How often does it happen? How much is paid? What is the competence and level of authority of those who sanction these practices and payments?

Before Report and Third Reading, we want proper safeguards to be in place in what is a very wide clause. We want to ensure that opportunities for collusion are nil, and that someone who is independent monitors this system. Does the adjudicator or ombudsman get a look in? Will the Independent Police Complaints Commission have authority to look into these matters and monitor whether they are done in accordance with the law and with scrupulous integrity?

There will be much more to be said on this clause when we have further information about it.

David Heathcoat-Amory (Conservative, Wells)

I support the comments of the hon. Member for Torridge and West Devon (Mr. Burnett), as well as those of my hon. Friend the Member for Chichester, on this very clear clause.

The Revenue department has made these payments for many years. It is proper in principle for it to pay rewards and inducements on occasion, provided that the system is properly accountable and controlled.

The Paymaster General suggested that previous practices will be carried forward, but I am not sure that that quite takes the trick here. That is partly because a new Bill should be an opportunity to provide a clearer and more precise statutory authority for practices of this nature; there is now a chance to take a look at previous practices without having explicit parliamentary authority. The other reason is that the clause appears to be even shorter and more general than the current statutory basis, which means that we are going in the wrong direction by reducing the clarity and detail.

There is Treasury involvement in these payments, but I have to say that when I was a Treasury Minister I do not recall authorising payments by Customs and Excise; certainly not on anything like an individual basis. I would be interested if the Paymaster General said what the Treasury involvement amounts to in what can be large payments. Will that be done in aggregate?

We are talking about public money and it is a function of Parliament to devote money to Departments for clear purposes on behalf of taxpayers. I agree with the questions asked by my hon. Friend the Member for Chichester. Our attitude towards the clause, both here and in court, will be guided by what the Paymaster General can tell us, because the background is not wholly reassuring.

As the hon. Member for Torridge and West Devon said, there have been a number of high-profile cases in the past, particularly involving Customs and Excise, where court cases had to be abandoned at least partly because of the use of informers in controversial circumstances. The courts quite rightly look carefully at prosecution cases where the Government are running informers who may be claiming immunities in return for their evidence. If informers are being paid, or if they have been induced at an earlier stage, to behave in certain ways and to give certain evidence, that is naturally of great concern to the courts. It does not automatically invalidate the prosecution, but it means that both the courts and the House ought to look carefully at the propriety of those payments, who authorises them and the general question of accountability.

There is also the question of foreign involvement, because much of the work of the Customs and Excise, particularly, is not simply involved with revenue raising in this country; it is also about countering smuggling and always has been. Indeed, the historic powers granted to that department arose from its efforts against smuggling, particularly in the west country, where we make cider. In my constituency 300 years ago a customs official tried to put an end to the widespread smuggling and evasion of duty and was pinned to a tree by his ears by the local manufacturers as a warning. That was how they regarded the question of enforcement. Doubtless, that led at the time to greater powers being given to the department, which is why when people visit Customs and Excise they see the ancient cutlasses and weapons used in countering illegality.

The history of that department, however, is rather different to the more recent history of the Inland Revenue. As my hon. Friend the Member for Chichester mentioned, we would like to know whether the powers under the Bill for the payment of informers were modelled on the Customs experience or that of the Inland Revenue, because we are now consolidating them in a single clause.

I look forward to the Paymaster General giving some extensive information about the authorisation and extent of these payments. If she is not able to provide that today, I hope that she will at least promise it, particularly as it relates to foreign payments, because we could be interfering in the administrative and criminal justice systems of foreign countries. Just as we would be careful about allowing foreign Governments to pay British citizens in this country for the provision of information to other countries, so that must apply in reverse. The question of such payments, which is inadequately dealt with in the Bill and the explanatory notes, needs considerable elaboration before we are satisfied.

Dawn Primarolo (Labour, Bristol South)

I am grateful for the way in which the hon. Member for Chichester raised questions on this subject. I agree with his starting point, which was the danger of a community of interest and of reinforcing behaviours. As he rightly said, that can be a problem for the police, because this is a very delicate area. I also agree that these subjects would make any Minister nervous. The right hon. Member for Wells (Mr. Heathcoat-Amory) will know that the Gestalt cases, for instance, are investigations into cases that started back in the 1990s.

I will try to answer the points raised by all hon. Gentlemen where I can. I say ''where I can'' because, as the hon. Member for Chichester rightly flagged up, this moves into sensitive areas of identification of taxpayers. I need to be extremely cautious in what I say here, and some of the information is not information that a Minister would be privy to.

Let us be quite clear; Ministers are not told whether or not there are informants, whether or not they are running and whether or not anything has been paid by way of a reward. That is quite rightly at the discretion of the commissioners with regard to cases. I shall try and answer this by giving the context, and information, within which these decisions are taken and where the checks and balances are. I think that is what the hon. Member for Chichester particularly wants to get to. I can give him some of the information he asks for. I am not sure I can give him all of it on his questions of how much and when, but I will make as much progress as I can.

First, the clause does not confer any new powers, but does consolidate the existing powers to pay rewards. There are no set amounts as to what has been paid in the past or may be paid in the future. This depends on the quality of the information, and the criteria for that remain unchanged. The Bill uses the Customs wording of ''rewards for meritorious service''. Treasury consent is not required for HMRC, because the legislation has gone closer to Customs than to the Inland Revenue process, because Customs has oversight by the National Audit Office, and these matters are scrutinised regularly. In fact, the Customs and Excise rewards system was subjected to a National Audit Office inspection in 2002–2003. During this inspection, no adverse comments were made about the management, or the rationale used in relation to the calculation of the rewards examined.

The hon. Gentleman quite rightly goes on to say, ''What about manuals, or criteria and guidelines?'' The Inland Revenue manuals are published as part of open government, but some sections are kept back because they would assist the wrongdoer; the point that the hon. Members for Chichester and for Torridge and West Devon and the right hon. Member for Wells made.

The new department will inherit ring-fenced codes, one for the former Inland Revenue matters and one for the former Customs matters. Those are available. Full new guidance would only be needed if the powers were aligned. We had a debate about powers, after which the hon. Member for Chichester issued a press release. This is a matter, I think he would agree, for the review of powers and considering these issues as sensitively as possible.

Andrew Tyrie (Conservative, Chichester)

I am glad the Minister reads my press releases.

Dawn Primarolo (Labour, Bristol South)

I read the article. The information is out there, the codes are out where they can be, published as part of open government and ring-fenced by the arrangements here. That will continue.

The hon. Gentleman also asked whether details had been drawn up for operating the system of rewards, and whether they could be published.

The hon. Gentleman also asked whether details had been drawn up for operating the system of rewards, and whether they could be published. There is a slight problem with that, which he touched on. I cannot publish the details because to do so would enable the recipients of rewards to work out how much tax had been collected, which would breach taxpayer confidentiality. Such tensions are constant in this matter. Those rules could also be used to manufacture information so that a higher payment is made when that is not warranted. The use of informants will be subject to external scrutiny. The National Audit Office will scrutinise the payments, and it will have something to say.

John Burnett (Liberal Democrat, Torridge and West Devon)

For the whole department?

Dawn Primarolo (Labour, Bristol South)

Indeed. The next question is about the procedures. That external scrutiny is addressed in clause 23. Its aim is to ensure that procedures are in line with the very best practices for law enforcement, which the hon. Member for Torridge and West Devon rightly referred to. Despite the difficulty and greyness of this area, we seek to maintain the checks and balances and to reach for the best standard, as we also seek to do with regard to the prosecution service, which we will discuss later.

I can give the amounts that are involved. In the two-year period of 2003–04, Customs paid nearly £1 million.

Andrew Tyrie (Conservative, Chichester)

Two years, or one?

Dawn Primarolo (Labour, Bristol South)

Two. Inland Revenue paid less than £20,000 per annum. I apologise; I may have misled the hon. Gentleman. I am talking about one year only; the sums of £1 million and £20,000 apply to the single financial year of 2003–04.

The reason for that difference in amounts is the different nature of the fraud criminal offence being pursued; the right hon. Member for Wells touched on that. There is a difference between drug smuggling, where Customs and Excise would be involved, and what is called tax cheating, on which the Inland Revenue would work.

I do not have the figures to hand to answer the question about the amounts over three years. However, I am prepared to take advice on whether I can give the amounts for more than one year without allowing people to start drawing comparisons. I am not referring to Members of Parliament of course, as they are fully entitled to do that. I will get the relevant figures, and write to the hon. Gentleman with that information.

On the question of how many were paid in full and how many paid per case and range, will the hon. Gentleman forgive me if I say that I would like to take advice on whether I can put that information into the public domain? I will get back to him on that. I understand why he would like that information, but I need to be clear that I will not be giving out information to people who will be able to make comparisons.

Andrew Tyrie (Conservative, Chichester)

The Paymaster General says that she will take advice on whether she can give that information. Is she referring to some legal bar or administrative obstacle, or to a purely practical problem? Bearing in mind that she now has the ability to do so, because the numbers are collected in the Treasury, will she consider whether such information should still be available once the Act comes into force? I ask because the Treasury will then no longer have the automatic statutory right to see the amounts and to approve cases. Even though the amounts have not come before Ministers, they are clearly somewhere, because that is what the Bill requires.

Dawn Primarolo (Labour, Bristol South)

I was coming to that point. I am trying to be as helpful to the Committee as I can without inadvertently stepping into a delicate area. I am keen to ensure that I give all the information possible to the Committee. By ''advice'', I meant that I would like to speak to my officials about the boundaries.

My next point is about whether the amounts could be reported. Clearly, we would not do that on an individual basis. That cannot be done, and is not done now. There are global anonymised reports, but those are not released, either, at the moment. However, the total budget is reported to the National Audit Office. It is in the department's votes.

I am neutral on this matter; I would like to take it back with me and see what can be done about it. I think that the point is important and, as regards access to information, I would like to be as helpful as possible to the hon. Gentleman on this matter and others. I am prepared to reflect on the benefits of some sort of globalised, anonymised figure, although I did not have any plans to do so, as long as I do not step into that sensitive and highly delicate area. By ''globalised'' I do not mean the world, of course; I mean the aggregate figures for the department.

The hon. Member for Torridge and West Devon raised a point about Butterfield and the investigations. Butterfield considered the question of rewards and made no recommendations. That takes us back to the NAO point, because of course there is no greater check on Government and how its departments spend taxpayers' money than the National Audit Office and the Comptroller and Auditor General, which are powerful and important. It is scrutinised carefully for exactly the reasons that hon. Members have touched on today.

The hon. Member for Torridge and West Devon went on to ask about criteria and the level of authority. I think that that is covered in what is already published, but I will check, and I am certainly prepared to write to members of the Committee so that they are quite clear about the level of authority and how it operates.

The right hon. Member for Wells made a number of important points, reinforcing the issues raised by the hon. Members for Torridge and West Devon and for Chichester. The right hon. Gentleman made it clear that this is an issue on which Parliament should be properly informed where appropriate, but that the departments need to be able to engage in this activity at their discretion.

None the less, there must be strong checks and balances. I hope that I have demonstrated that. First, there is the NAO. The Customs practice of reporting and being scrutinised by the NAO is in the Bill. Secondly, clause 23 deals with the external scrutiny of the actual handling. The payment of rewards is dealt with in clause 22, and external scrutiny of the handling—via, I think, the Revenue and Customs Prosecutions Office, but I will come back to the Committee on that—is in clause 23. The criteria and handling of that are as laid out in the codes. [Interruption.] I am sorry, it is Her Majesty's inspectorate of constabulary, not RCPO, that supervises. That ties back into the point that the hon. Member for Chichester was making about police standards and high standards.

John Burnett (Liberal Democrat, Torridge and West Devon)

Will the Paymaster General give way?

Dawn Primarolo (Labour, Bristol South)

If I may just clarify my point first, because I made a mistake, and we need to make sure that the record is correct. The external scrutiny is by Her Majesty's inspectorate of constabulary and that is the right place for it to be done. We are trying to anchor it in at that point. I have nearly concluded, but I will briefly take one intervention.

John Burnett (Liberal Democrat, Torridge and West Devon)

Briefly, I agree that the National Audit Office scrutiny is the sort of sanction that Liberal Democrat Members look for, but I have not quite understood whether the NAO audits all of the payments each year or whether every now and again it makes an audit on an as-and-when basis.

Dawn Primarolo (Labour, Bristol South)

The NAO audits the departments every year, in order for the accounts to be presented to Parliament. As I understand it, what happened in 2003–04 was a specific revisiting of the root and branch consideration. I do not think that that would necessarily be done annually. It was, so to speak, a random check; I should not say that, because I do not know whether it was.

The NAO undertakes its duties as it thinks appropriate, in order to report to Parliament that all the money is accounted for. I am not exactly sure why in that year the NAO decided specifically to examine those issues to which we are referring, over and above the normal audit. It would be free to do so every year if it wants, but that would be a matter for it in considering the accounts. Such examination is not required by the Bill and would not be required by any action of the departments. That is a matter for the NAO to decide.

I have concluded my remarks, Mr. Hurst, and I sincerely hope that I have given as much information as is helpful to the hon. Member for Chichester. If there are any points that he still wants clarified, I would be happy to listen and I am sure that he would be gracious enough to allow me to write to him and to other members of the Committee to fill in the gaps, should there be any.

Andrew Tyrie (Conservative, Chichester)

I am very grateful to the Minister for having listened carefully to what I said and for her attempt to answer as many questions as she could, more or less on the hoof. I am not one of those who thinks that Ministers should carry great wodges of highly detailed information in their head and by some miracle be able to parrot from it on demand. It is far more sensible to ask for information and get it in written form, so that others may also take a look at it. That is what 21st century scrutiny should be all about. I shall not prolong the point, but it leads me to wonder whether this Standing Committee procedure that we have for the scrutiny of Bills is remotely adequate for the kind of legislation that we deal with these days. We need something much more sophisticated, as almost every other country has decided.

Alan Hurst (Labour, Braintree)

Order. I think that the hon. Gentleman knows that he is straying outside the confines of the clause.

Andrew Tyrie (Conservative, Chichester)

Yah. I could not possibly disagree with that. I never do disagree with you, Mr. Hurst, and I certainly do not disagree with you, even privately, on that one.

I am grateful to the Minister for agreeing to come back to me and to other Committee members by letter on some of the further detailed questions that I asked. Would it be possible for her to do so well before Report? I have become a bit concerned even about our existing level of transparency. It seems to hark back, to some degree, to an earlier era—decades ago—when there was far less access to information generally; I am talking about the existing rules as laid down in statute. Therefore, I would not be entirely happy anyway and we have an opportunity to look anew.

My concern is also raised by the fact that at least in theory the Treasury was in a position to poke around a little now and again if it so wanted, and if something particularly egregious appeared, to alert Ministers to it. That is often the function of a spending control Department and is legitimate: it often starts with money and leads to a consideration of other, broader issues, which is how it should function. I expect that is partly why those clauses were in the original legislation.

I am concerned that the reference to the Treasury has now been removed. I asked for information from the Paymaster General before Report, because if she feels unable to give me the level of basic transparency that is required I might want to return to this issue then. Perhaps she could, in her letter, also deal explicitly with the kind of arrangement that she thinks can be put in place to ensure that there is the maximum level of transparency that is consistent with the efficiency of a reward-and-informer system. We need such a system, it is right that there should be one and it is crucial that we have something in place, given how the Bill is drafted.

The Paymaster General referred to the level of scrutiny that already exists and in doing so made my point. I do not think that she was having a go at me—far from it—and I am not having a go at her now. However, she talked about the external scrutiny by Her Majesty's inspectorate of constabulary and the National Audit Office reports. The NAO will do a general audit, but that will not remotely go into the detail of the questions that I have raised. The hon. Member for Torridge and West Devon was right to draw that point out in an intervention.

If the NAO thinks that there is something egregious, it can launch a value for money study, which may uncover all sorts of things, but those are ad hoc and periodic studies, not annual reports and reviews. The Paymaster General has just described two or three different avenues by which there will be some scrutiny. Perhaps those should be brought together. However, there is no statutory basis for that and it would be wonderful if she came forward with her own amendment on Report that achieved that and put us back, broadly, where we were. The Treasury should have a role and there should be some statutory commitment to a level of transparency higher than that which we have at the moment. Such a process will enable the different levels and types of scrutiny that already exist to be drawn together. I look forward to her letter and will take it from there.

John Burnett (Liberal Democrat, Torridge and West Devon)

This has been another constructive debate. I agree with what the hon. Member for Chichester said in a measured way. I am grateful to the Paymaster General, who always considers questions conscientiously and does her best to reply—and it is not an easy job. Those of us who have never had the good fortune to be on the Government Benches can only wonder what it is like.

Dawn Primarolo (Labour, Bristol South)

And never will.

John Burnett (Liberal Democrat, Torridge and West Devon)

Et tu, Brute? It is unkind of the right hon. Lady to say that.

Dawn Primarolo (Labour, Bristol South)

I understand that the hon. Gentleman is leaving the House, so he has not got much time if he wants to cross the Floor.

John Burnett (Liberal Democrat, Torridge and West Devon)

You never know; it could be 18 months.

Andrew Tyrie (Conservative, Chichester)

That is enough generosity.

John Burnett (Liberal Democrat, Torridge and West Devon)

Perhaps the Paymaster General will look again at the scrutiny by the National Audit Office. Such is the sensitivity of the payments that they are open to possible corruption, so whenever they are made they should always be audited annually by the NAO. That was the thrust of my earlier intervention. I hope that the Paymaster General will consider the matter; we shall no doubt return to it on Report. I am grateful for her commitment to write to me about the level of authority and competence of the individual who will sanction the payments in the new Inland Revenue and Customs department.

Question put and agreed to.

Clause 22 ordered to stand part of the Bill.

Clause 23 - Inspection: England and Wales

John Burnett (Liberal Democrat, Torridge and West Devon)

On a point of order, Mr. Hurst. May I make a general comment on clause 23?

Alan Hurst (Labour, Braintree)

Not now, but the hon. Gentleman may in a moment.

Question proposed, That the clause, as amended, stand part of the Bill.

John Burnett (Liberal Democrat, Torridge and West Devon)

I have had a chance to look at the draft statutory instrument. Will the Paymaster General give an outline of how the inspections will work and the interrelation between Her Majesty's inspectorate and the Independent Police Complaints Commission? Presumably, we are considering general inspections into the functions of the Revenue and Customs department, and there will be no duplication of function between the inspectorate and the IPCC. I also look forward to hearing from the Paymaster General about whether there will be an annual report—in the public domain and open to scrutiny—on the inspections. Presumably, there will be.

If wrongful practices are unearthed during the inspections, to whom in the police service or the IPCC will the inspectorate report them? I am concerned that there is duplication in this clause and the subsequent clause—possibly triplication in the subsequent clause.

Will the Economic Secretary respond to this debate?

The Economic Secretary to the Treasury (John Healey) indicated assent.

John Burnett (Liberal Democrat, Torridge and West Devon)

I beg his pardon. I look forward to hearing from him a general outline of how the inspections will happen and a response to the other matters that I have raised about the clause.

John Healey (Labour, Wentworth)

I should say to the hon. Gentleman that clause 23 deals with the arrangements for Her Majesty's inspectors of constabulary; clause 24 deals with those for the IPCC. I can reassure the hon. Gentleman that there will not be a duplication of the areas and activities. The remits in relation to the police are clear and separate, and they will also be so for Her Majesty's inspectors of constabulary. I hope he will take confidence from the discussion of these two clauses.

Clause 23 will allow the remit of Her Majesty's inspectorate of constabulary, the HMIC, to be extended to cover Her Majesty's Revenue and Customs. So the HMIC will scrutinise how the HMRC complies with laws, rules and procedures of the criminal justice system. It therefore establishes the HMRC with a higher level of independent external scrutiny than its predecessor departments. To this extent, it more than satisfies the recommendation of the Butterfield report, to which the hon. Gentleman referred as an excellent report earlier today, that Customs looks at ways to introduce greater external scrutiny into its criminal investigations work.

This will ensure a high level of assurance to Ministers and the public that the HMRC is using its powers properly and professionally. These external scrutiny arrangements will mirror those in place for other enforcement agencies, and those planned for the Serious and Organised Crime Agency, ensuring that all of Customs' former law enforcement work will be covered in the same way.

The clause allows for regulations to establish arrangements between the HMRC and the HMIC that are similar to arrangements between the HMIC and the police. A draft of these regulations was produced earlier this week, as the hon. Gentleman said, which I hope will help the Committee in its deliberations. It includes the ability for Ministers to require an inspection, as members of the Committee will see, and provides for reports to be made and published.

John Burnett (Liberal Democrat, Torridge and West Devon)

Does the Minister envisage an annual inspection? Or does he envisage an inspection every few years or so?

John Healey (Labour, Wentworth)

I do not anticipate how the HMIC will decide, in discussion with HMRC, to conduct its activities. If the hon. Gentleman looks at the draft regulations, he will see the range of potential matters that the HMIC may consider. I expect that the HMIC, where it looks at any HMRC activities, will make reference to those in its annual report.

The HMIC will not cover the full range of HMRC activities. It will be focused on those areas involved in law enforcement, where its expertise in the field of policing is most relevant. The HMIC is therefore specifically excluded by our proposals from duplicating the work of the National Audit Office. That does not preclude the HMIC and the NAO from working together where necessary and sensible, but it ensures that there will be no duplication of effort—the general concern that the hon. Gentleman was raising.

I hope all sides of the Committee will see this as a significant and valuable strengthening of the external scrutiny arrangements for the new HMRC.

Question put and agreed to.

Clause 23, as amended, ordered to stand part of the Bill.

Clause 24 - Complaints and misconduct: England and Wales

John Burnett (Liberal Democrat, Torridge and West Devon)

We have a policy document on clause 24 and it is a little thin. My first question to the Economic Secretary is when will we get the draft regulations? I hope that we get them in good time to debate them on Wednesday week.

I draw the attention of the Committee and the Minister to the problem of duplication and triplication. Here, we are dealing with power for the Independent Police Complaints Commission, but there is also an adjudicator and an ombudsman. It is not clear where the demarcation lines are drawn in respect of who does what in the three organisations, two of which are already functioning, and the IPCC that will rightly be drawn into the area. I welcomed the Bill on Second Reading. I said that it would go a long way towards answering the impossible question of who guards the guardians themselves. Although I did not get back to the Minister on the previous clause, I might want to say something about it on Report.

I should be grateful if the Minister could give us some information about the last point in the policy document ''Her Majesty's Revenue and Customs—Policy for Arrangements with the Independent Police Complaints Commission'', paragraph 33 of which, headed ''Transfer of Resources'', states:

''There may be a need for HMRC resources to be seconded to the IPCC to assist with investigations. There will also need to be a mechanism for payments/transfer of resources from HMRC to IPCC.''

Obviously, there will be more work for the IPCC and I welcome hearing from the Economic Secretary about the level of resources that the Treasury intends to commit to the matter. I appreciate that the IPCC is an independent body and that it would be for it to decide how to manage the new role but, as I said on Second Reading, do the Government envisage a separate department within the IPCC to deal with such an important function that is rightly being given to it under the clause? I look forward to hearing from the Economic Secretary about the issues that I have raised.

John Healey (Labour, Wentworth)

I shall certainly pick up on the issues that the hon. Gentleman has raised. Before referring to the specifics, it may help the Committee if I explain that the clause will allow the remit of the Independent Police Complaints Commission to be extended to cover the HMRC. The IPCC will examine the HMRC complaint handling procedures and will undertake or supervise investigations into allegations of criminal conduct or gross misconduct. The clause will allow the IPCC to investigate incidents of death or serious injury. It will fully justify the Butterfield report's recommendations that HM Customs looks at ways in which to introduce greater external scrutiny to its criminal investigation work. It will establish the HMRC with a higher level of independent external scrutiny than its predecessor departments.

I hope that members of the Committee will agree that such a provision will give a high level of assurance to Ministers and the public that the new department will be using its powers properly and professionally. The external scrutiny arrangements mirror those that are in place for other law enforcement agencies and those that are planned for the new Serious and Organised Crime Agency. They will ensure that all Customs former law enforcement work will be covered in the same way.

Clause 24 allows regulations to establish arrangements between the HMRC and the IPCC that are similar to the arrangements that the IPCC has in place with the police. It includes the provision for IPCC investigators to be given powers of an officer of Revenue and Customs in order to investigate assigned matters should that be necessary. It also allows the HMRC to transfer resources to the IPCC to cover the cost of inspections. I envisage that the bulk of the resources required for this part of the new IPCC role will be transferred from Customs—and, in future, from the HMRC. The large part of the work that the IPCC will do is not new, because it is already carried out internally by the HMRC.

John Burnett (Liberal Democrat, Torridge and West Devon)

Will the hon. Gentleman give way?

John Healey (Labour, Wentworth)

Let me just finish. The detailed procedures for transferring those resources are still to be finalised, but I do not anticipate at this point that significant sums will be involved.

John Burnett (Liberal Democrat, Torridge and West Devon)

Actually, I should have waited before asking to intervene, as I think that I have now got the gist of the matter I was going to raise. Has the level of resources been agreed with the IPCC?

John Healey (Labour, Wentworth)

The hon. Gentleman is right: I covered the point in anticipation of his intervention. The detailed arrangements are being hammered out; the final settlement has not yet been agreed, but it is being worked on.

I now turn to the hon. Gentleman's specific questions about the regulations and about concerns to do with demarcation and duplication. I do not accept that the policy document that we published at the beginning of this week is thin; it is seven pages long and is intended to be helpful to the Committee. We were not in a position to publish the relevant draft regulations for the debate on clause 24, but we wanted to give as clear an indication of their breadth as possible. We anticipate that the Bill will reach the Report stage on 26 January, and the Paymaster General and I will ensure that the draft regulations are published before then so that Committee members have time to examine them.

The detail of these arrangements is still being discussed. Their proposed scope is set out in the policy document and covered by paragraphs 4 to 8. I hope that I can give the hon. Gentleman the reassurance he is looking for on demarcation and duplication by explaining the key points of those paragraphs. The IPCC will focus on areas where the HMRC exercises coercive, police-like powers. It will focus on the most serious allegations or incidents, such as deaths in custody, serious corruption or serious sexual offences. It will be able to investigate all HMRC officers, but it will not deal with matters relating to the direction or control of the HMRC, and it will not look at matters relating to the maladministration of taxpayers' affairs. That will continue to be done by the parliamentary ombudsman and the adjudicator's office.

I hope that that has reassured the hon. Gentleman and that, as with clause 23, all Committee members will support this clause. It provides a significant and valuable strengthening of the external scrutiny arrangements for the new department.

Question put and agreed to.

Clause 24 ordered to stand part of the Bill.

Clause 25 - Confidentiality, &c. Amendment made: No. 56, in clause 25, page 13, line 2, after 'Constabulary', insert 'or the Scottish inspectors'.—[Dawn Primarolo.]

John Healey (Labour, Wentworth)

Members have rightly taken the issue of confidentiality very seriously. I want to explain how the operation of clause 25 relates to the responsibilities given to the HMIC and the IPCC, which we have just discussed.

Andrew Tyrie (Conservative, Chichester)

Briefly.

John Healey (Labour, Wentworth)

I will do so briefly, but it is important to have it clearly on the record, because the HMIC and the IPCC will carry out inspections and investigations of the HMRC and during their work they will need access to sensitive or customer-confidential information. Disclosure of information to the HMIC and the IPCC is covered in clause 17 and was discussed at some length earlier in Committee. Clause 25, however, restricts the use of such information to inspections or investigations of the HMRC, prohibiting further disclosure without the consent of the commissioners. It also establishes unauthorised disclosure as a criminal offence.

HMIC will inspect areas of work within HMRC relating to the rules and procedures of the criminal justice system. It is not envisaged that HMIC will routinely focus on specific incidents, but in some cases it may do so and need access to confidential information. Even when that happens, HMIC will not usually need to refer to any specific confidential or sensitive information in its reports. For that reason we specified that it may not disclose any information without the consent of the commissioners.

The IPCC will, as we have discussed, investigate allegations of criminal conduct or gross misconduct against HMRC officers and in some cases that will require access to confidential information. The IPCC has procedures for keeping complainants informed during investigations and producing reports on its findings, as the hon. Gentleman knows.

The IPCC provisions for disclosure during investigations into the police are restricted in regulations made by the Home Secretary and currently restrict disclosure of information during the course of an investigation, for example in the interests of national security or to prevent crime. We will add to those restrictions in regulations to protect confidential HMRC information. However, positive and qualified provision ensures that we do not limit the IPCC's established role to investigate serious allegations and provide assurance to the public about its handling of such matters.

The provision ensures that HMIC and IPCC staff will be subject to the same restrictions and penalties regarding disclosure of information as HMRC staff.

John Burnett (Liberal Democrat, Torridge and West Devon)

I am grateful to the Economic Secretary for that explanation, but can he assure the Committee of something? Clauses 23, 24 and 25 are useful and important and add to transparency—and I hope that they will make taxpayers even more convinced than hitherto that the actions of the Revenue and Customs are under scrutiny. As we have said before, it is important that we have a just and equitable tax system, or else it is deeply corrosive of morale and makes collecting tax even more difficult. I hope that the Economic Secretary can confirm that if the IPCC needs and requests sensitive information in the course of an investigation, it will get it and there will be no inhibitions on that.

I appreciate that members of the IPCC who deal with such matters will have to sign the relevant oath and other confidentiality agreements. That is right and proper. However, they need the tools to do the job and I hope that no obstacles at all will impede them in their task.

John Healey (Labour, Wentworth)

The hon. Gentleman and I share the concern to see the greatest possible confidence in the work of the HMRC and the greatest possible degree of transparency, without compromising the responsibilities and functions of the department.

During discussions of clause 17 we debated at some length the disclosure of information to the IPCC and HMIC. We intend the external scrutiny bodies to have open access to the work of HMRC. That is an important principle that helps to reassure Ministers and the public that the bodies are providing the level of scrutiny of HMRC that we are setting them up to provide under the Bill. I hope that the provisions of clause 17 and the general reassurances that my right hon. Friend the Paymaster General and I have given the hon. Gentleman this morning will convince him of that.

Clause 25 deals with the other side of the issue: any disclosure of confidential information that the two bodies may need to undertake, the grounds on which they may do so and the limits that it is right to put on them.

Question put and agreed to.

Clause 25, as amended, ordered to stand part of the Bill.

Clause 26 - Impersonation

John Healey (Labour, Wentworth)

I rise because it may be useful if, before the Committee looks at clauses 26, 27 and 28, I say a few words about the general principles that underline the clause and the other offences. [Interruption.] I do so because I regard this as an important part of the Bill. It is at least as important as the question of rewards, which we rightly discussed at length earlier.

Andrew Tyrie (Conservative, Chichester)

We have only two and a half hours left for scrutiny of the Bill, and we Opposition Members want to raise a number of important points that arise later in the Bill. We have already discussed this informally, and we have made it clear that we will not contest the clauses. I find it perplexing that the Economic Secretary should want to read material on to the record when he could perfectly well publish it.

Alan Hurst (Labour, Braintree)

Order. I am not entirely certain whether that is an intervention or a point of order, but it is a matter for Members to decide when they wish to speak, provided that it is in order in terms of the Bill.

John Healey (Labour, Wentworth)

Thank you, Mr. Hurst. The hon. Gentleman will be aware that, at present, Customs and Excise and the Revenue have different provisions and penalties for the offences of impersonating, obstructing, and assaulting an officer. In a single integrated department, there is no justification for treating one group of staff differently from another. Accordingly, clauses 26, 27 and 28 propose common consolidated provisions across the whole of HMRC. I hope that that general and brief introduction to this set of clauses is helpful to the Committee.

Question put and agreed to.

Clause 26 ordered to stand part of the Bill.

Clauses 27 and 28 ordered to stand part of the Bill.

Clause 29 - Power of arrest

Clause 30 - The Revenue and Customs Prosecutions Office

Andrew Tyrie (Conservative, Chichester)

I rise very briefly, because at least one of my hon. Friends will develop the arguments about this part of the Bill in much more detail. As everyone can see, the clause and those that immediately follow it are about the creation of the new prosecution authority, and that is an important aspect of the Bill. Fortunately, it is also, in most respects, not particularly contentious. It arises out of recommendations in the Butterfield review, which concluded that the existing arrangements for prosecution were appalling in some respects. The report was extremely critical. I shall read only one passage; there are so many that I could go on for half an afternoon. It stated:

''The issues I identify include the absence of a strategic approach to excise diversion frauds; poor communications; serious deficiencies in the handling of informants; and failure to comply with disclosure obligations.''

An independent authority is being created; the prosecuting authority will be answerable to the Attorney-General, and we strongly welcome that. Some issues of transparency and accountability arise and I shall raise them in an amendment to schedule 3. I have one or two other remarks to make, either on schedule 3 or, probably, on clause 31, but beyond that I think that I shall leave the matter to one or two of the lawyers in the Room.

John Burnett (Liberal Democrat, Torridge and West Devon)

As someone who exhorted the Government for many years to bring the prosecution authority of the Inland Revenue and Customs and Excise under the aegis of the Attorney-General I support the clause and the following clauses, with one or two caveats. I should like some further information.

Presumably the Economic Secretary can assure us that the Revenue and Customs Prosecutions Office will be subject to the usual inspection regime under the Crown Prosecution Service inspectorate. Will he say a few words to the Committee also about the hierarchy of authority? The Director of Revenue and Customs Prosecutions will be appointed by—and presumably responsible to—the Attorney-General. What role, if any, will the Director of Public Prosecutions have in relation to the functions of the body? I suspect that it will be entirely independent of the DPP.

Will the Economic Secretary also ensure that the department will be housed in an area entirely separate from the mainstream Revenue and Customs officials? That is a point that I raised on Second Reading. Will he also say a few words about staff seconded from mainstream Revenue and Customs to the prosecutions office? Independence must palpably happen: it must be de facto independence.

Finally, I want to say a word about sufficient resources. I mentioned the Butterfield report earlier, and it contained trenchant criticism of certain practices. That is of course one of the reasons for the formation of a separate prosecutions office, independent under the Attorney-General. It is no good its being separate and independent if it is emasculated by having insufficient personnel and plant and machinery with which to do its work.

David Ruffley (Conservative, Bury St Edmunds)

I rise briefly to raise a question about the appointment of the director. That would appear to be in the gift of the Attorney-General. Subsection (1) of the clause reads:

''The Attorney General shall appoint an individual as Director of Revenue and Customs Prosecutions.''

That is important. What are the mechanisms or procedures by which the Attorney-General will interview prospective candidates either now or in the future? What is the nature of the transparency of the selection and appointment procedure? That is thrown into relief by an article in this morning's Times. The headline reads, ''Crony taunts return with job for friend of Falconer''. It lists—it is almost a Venn diagram—the legal links, tracing all the friendships of members, relatives or friends of the current Administration.

The new story this morning is that Sir Mark Potter, a former pupil master of Lord Falconer, has been appointed—

Alan Hurst (Labour, Braintree)

Order. That will not do. The hon. Gentleman should restrict himself to the terms of the particular clause.

David Ruffley (Conservative, Bury St Edmunds)

I do not wish to try your patience, Mr. Hurst, but the question whether the Attorney-General will make appointments in a clear, transparent and accountable way is the issue. The clause tells us that the Attorney-General will make the appointment.

To quote the article, there is ''disbelief'' among judges at the appointment of Sir Mark Potter and:

''Sir Mark also served as pupil master to Lord Goldsmith, the Attorney-General.''

The appointment follows the rampant cronyism of Kenneth Macdonald, QC, a barrister from the—

John Burnett (Liberal Democrat, Torridge and West Devon)

I think that that is a most unfortunate comment. We had that discussion last summer or the summer before. The appointment of the Director of Public Prosecutions was almost universally welcomed, and I hope that the hon. Gentleman will reconsider those points.

David Ruffley (Conservative, Bury St Edmunds)

I think that the hon. Gentleman should calm down. The appointment of Sir Mark Potter has been described as having

''caused disbelief among senior judges''.

I will go further, if it will help the hon. Gentleman.

''Lawyers said that it was unprecedented for a''—

Alan Hurst (Labour, Braintree)

Order. I appreciate that the hon. Gentleman is vastly enjoying himself, as is the hon. Member for Torridge and West Devon. If the hon. Gentleman is doing this by way of an analogy, he remains in order. He must make it pertinent to the debate.

David Ruffley (Conservative, Bury St Edmunds)

I am indeed arguing by analogy. As regards the appointment announced this morning:

''Lawyers said that it was unprecedented for a non-family judge—Lord Justice Potter comes from the Queen's Bench Division—to be promoted to the top post.''

That is a matter of fact. It is causing disbelief, it is unprecedented, and I think that as this article shows, there is a huge question about the nature of legal appointments made by the Government at this time. Those are specific examples.

Michael Fallon (Conservative, Sevenoaks)

Is my hon. Friend implying that, with reference to the clause, a judge from the family division could be appointed as the Director of Revenue and Customs Prosecutions not because he was qualified to deal with Revenue and Customs work, but because he happened to be a crony of the Lord Chancellor?

David Ruffley (Conservative, Bury St Edmunds)

My hon. Friend anticipates me brilliantly. That is the very point at issue. We have a case this morning where there is disbelief, and the hon. Member for Torridge and West Devon might want to try to intervene and ask whether he thinks that that is an improper remark. He is sitting in his place.

The fact remains that my hon. Friend the Member for Sevenoaks makes a pertinent point. If unprecedented and unfathomable appointments can be made—unprecedented is how the legal community are describing the appointment—could it not be the case that equally unfathomable and perverse appointments could be made by the Attorney-General pursuant to subsection (1)—[Interruption.] If the hon. Member for Harwich (Mr. Henderson) wants to chunter away from a sedentary position, he is very welcome to do so, but if he wants to intervene, he should stand up and do so. He is sitting in his place.

Alan Hurst (Labour, Braintree)

Order.

Mrs. Helen Clark (Peterborough) (Lab) rose—

David Ruffley (Conservative, Bury St Edmunds)

Chuntering away is all very well. The hon. Lady can intervene if she wishes to do so.

Alan Hurst (Labour, Braintree)

Order. It is a matter for the Chairman to decide who is chuntering and who is not.

David Ruffley (Conservative, Bury St Edmunds)

I withdraw the word ''chuntering.''

Michael Fallon (Conservative, Sevenoaks)

On a point of order, Mr. Hurst. Surely it is preferable to the conduct of the Committee that Members on the Government Benches at least chunter away rather than remain entirely silent, as they have been so far.

Alan Hurst (Labour, Braintree)

That is a point of observation, as the hon. Gentleman knows, not a point of order.

David Ruffley (Conservative, Bury St Edmunds)

I conclude by asking the Minister a very specific question. What procedures will be put in place so that we can properly understand the basis on which this or any future Attorney-General will make appointments to the post of Director of Revenue and Customs Prosecutions? Will that information be made available, and what steps will the Government take to allay obvious public concern, as well as the concern of the Opposition and of the legal community, which was expressed this morning, about the most recent example of cronyism?

John Healey (Labour, Wentworth)

This has been a useful little debate—in some parts—because, as members of the Committee will recognise, this is a significant new arrangement to create the office of the Director of Revenue and Customs Prosecutions. The appointment will be made by the Attorney-General. I shall talk in a moment about the appointment of the current director of the Customs and Excise Prosecutions Office.

The clause provides the Attorney-General, and through him the director, with the power to appoint staff. Most significantly, the department will be separate and completely independent of the HMRC. The functions of the director and his staff, and the lines of accountability for the decisions taken by the RCPO, are set out in the following clauses. The creation of the department follows the report of Mr. Justice Butterfield in July 2003. In December 2003, the Attorney-General and I accepted the recommendation that a new independent prosecuting authority should be created to conduct all the prosecutions for Customs and Excise. Primary legislation was clearly required for such a move, which is what the Bill provides. However, given that there will be only one department, it made no sense to have anything other than a single prosecuting office for the appropriate cases of the new HMRC. The new RCPO will therefore also prosecute cases for the Inland Revenue.

On the point made by the hon. Member for Bury St. Edmunds (Mr. Ruffley)—the only point to which I want to respond—the director of the Customs and Excise Prosecutions Office has been appointed by the Attorney-General. He will be the first director of the RCPO, and is a distinguished lawyer who gives me, my right hon. Friend the Secretary of State and others the greatest confidence that the Customs and Excise prosecutions office and the new RCPO will be in good hands.

Mr. Ruffley rose—

John Healey (Labour, Wentworth)

I will finish my point, because it is very important that the hon. Gentleman understands the process for this appointment, which was precisely his question and the territory on which he was making much wider insinuations.

This was an independent appointment made by an independent appointments board, which was set up to appoint David Green. The board interviewed all the suitable candidates for the position, and recommended what it regarded as the most suitable candidate to the Attorney-General, who accepted its recommendation. The RCPO director will be a civil servant. Such an appointments procedure is well established, widely used, and entirely appropriate for such an appointment. I do not believe that the sort of insinuations that the hon. Member for Bury St. Edmunds was making in his contribution are properly founded or well placed.

David Ruffley (Conservative, Bury St Edmunds)

I was driving at what any future Attorney-General might make as an appointment—the principle—as opposed to the instant case of the designated director, whose background and antecedents are not known to me. I was talking about the principle of how the appointments are made and what appointments might be made in the future.

John Healey (Labour, Wentworth)

Let me make it clear to the hon. Gentleman that the approach that we have taken with the appointment of David Green is entirely well established, proper and principled and it will be followed by the Government in relation to such appointments in the future. If there is a change of Government—the hon. Gentleman might have been anticipating such a change—I obviously cannot give any reassurances about such circumstances.

The hon. Member for Torridge and West Devon made some serious and specific points. I am glad that the Government have his support for the clause. I will address his point about resources first. A sum of £1.5 million has been set aside by Customs to cover the transfer of the Customs prosecution function to an independent prosecution authority over two years. A sum of slightly more than £330,000 has been set aside by the Inland Revenue for a similar purpose.

On staffing, the director of the RCPO will appoint all those who will prosecute HMRC cases. When the Bill comes into force, RCPO staff will be identified from among former Customs and former Inland Revenue staff and will be advised that the director has then appointed them to the RCPO. No prosecutors will remain in HMRC. However, for a limited period—probably about two years—those RCPO staff who were Customs or Revenue employees previously will be eligible to apply for posts within HMRC. That will be on the same basis as HMRC staff. The purpose of that is to provide the opportunity for those staff who wished to remain in their previous department to transfer back. That is entirely in line with Cabinet Office guidelines and procedures. There will not be a reciprocal arrangement for HMRC staff moving into the RCPO. After that period, there will be no special arrangements for appointing staff between the RCPO and HMRC. That means that all applications and all appointments will be on the same basis as those between Government Departments generally.

The hon. Gentleman asked about secondments. There may be a limited number of secondments or loans of staff between RCPO and HMRC, perhaps to meet particular individual development needs. Again, that will be on the same basis as secondments or loans between Government Departments generally.

On locations, RCPO staff will be based in two locations: New Kings Beam house in London, and Ralli quays in Manchester. Both of them are large Government offices, and RCPO staff will share the buildings with other Government staff, including those from HMRC. RCPO staff will be housed in specific sections of the buildings, separately from HMRC and from employees of other Departments.

On the hon. Gentleman's other two points, I can confirm that the director of RCPO and the RCPO will be separate and independent from the Director of Public Prosecutions. Clause 37 will give him precisely the answer that he is looking for to his question about the inspectorate.

Question put and agreed to.

Clause 30 ordered to stand part of the Bill.

Schedule 3 - Revenue and Customs Prosecutions Office

Alan Hurst (Labour, Braintree)

With this it will be convenient to discuss amendment No. 81, in schedule 3, page 30, line 30, at end insert

', and

(c) statistics analysing the range and outcomes of prosecutions undertaken by the Director.'.

Andrew Tyrie (Conservative, Chichester)

I shall be extremely brief as I know that other hon. Members have something to say about the schedule. My amendment is a probing one and it is appropriate to have such an amendment. Perhaps the Minister will want to get back to me in writing, but it is important that we establish what the controls will be on the operation of the new RCPO and, in particular, what sort of reporting of its activities we will have. What measures of success will we create and have as targets for the RCPO, and how will they be published? Schedule 3 offers the prospect of annual reports. I hope that we can go further for so powerful an institution in the early years and that the Minister will say that at an early stage after it has been going for a few years we will have an opportunity to assess whether we have got things right. I hope that he will offer me some reassurances on that. I shall not go into more detail now, because we do not have a great deal of time and other hon. Members want to speak.

John Burnett (Liberal Democrat, Torridge and West Devon)

I will not speak for long. I support the thrust of the proposal and I hope that, on reflection, the Minister will consider it as appropriate to be incorporated. Of course, the statistics would have to be properly anonymised, because there will be failed prosecutions as well as successful ones.

David Ruffley (Conservative, Bury St Edmunds)

Are there any public service agreement targets, or will there be a variant of the Government's target setting for prosecutions? Might it be better to use the word ''statistics'' in amendment No. 99? That would provide some specificity, which is sadly lacking in that amendment, which is woolly to say the least.

John Healey (Labour, Wentworth)

I pay tribute to the hon. Member for Chichester for tabling amendment No. 81. In many ways, the Paymaster General and I agree that, in the interests of open government and promotion of better public scrutiny, key statistics on prosecutions are a good thing and should be published. We tabled amendment No. 99 because we think that the wording is slightly better, but it catches what the hon. Gentleman intends with amendment No. 81 and I hope that he will accept it. We always intended that the RCPO should in its annual report set out statistics detailing the prosecutions that it undertook and the outcomes of prosecutions completed during the previous financial year. Similar statistics are now routinely published by Customs and the Revenue in their annual reports. I suggest to the hon. Members for Chichester and for Torridge and West Devon that if that set of prosecution statistics does not cover their points, perhaps they will want to raise them again, but we publish such data quite fully in other annual reports at present and we intend to do so for the RCPO.

I say to the hon. Member for Bury St. Edmunds that public service agreements are published. I would have expected him, as a former member of the Treasury Committee, to know that and to know what the public service agreements in place for Customs and the Inland Revenue are, but the short answer to his question is no.

Andrew Tyrie (Conservative, Chichester)

I am grateful for the Minister's remarks. On the basis of his assurance that amendment No. 99 fulfils everything that is intended in amendment No. 81, I shall not press amendment No. 81. I should be grateful though—I am sorry to trouble the officials with this—if the Minister would have drafted for him a letter clarifying that. I shall not trouble the Committee in detail now, but the amendments look slightly different and it would help if I could have an explanation as to why they would have exactly the same effect, which is what the Minister has claimed. I have a couple of additional quick points to make.

John Healey (Labour, Wentworth)

The hon. Gentleman is right; the amendments are not the same. Ours is better, and I will happily explain that to him in writing.

Andrew Tyrie (Conservative, Chichester)

We operate with somewhat diminished resources. The Minister will understand that we do not claim always to be equipped to do the kind of drafting work that a Government can.

The Minister did not answer my more broadly based points. I am not sure that the reporting standards more widely are adequate for a new institution; we need some sort of commitment to a more broadly based examination of how the department has got on after a year or two. I would be grateful if the Minister considered that.

My last point is highly controversial; we have had a big row about it. I am not in any way challenging the appointment that caused such controversy in the Room a moment ago. However, the Minister and the Government need to recognise that public confidence in and respect for the appointments processes has been tarnished and damaged by, to say the least, some pretty unusual appointments and ways of appointing in many areas of Government—there are special advisers, a large number of peerages and allegations of cronyism all over Whitehall. If the Minister has to defend so vigorously an appointment that should have been unexceptional, perhaps he should consider not the specific criticisms, but the broadly based approach taken by the Government.

John Burnett (Liberal Democrat, Torridge and West Devon)

Like most Committee members, I have some idea of how such appointments are made. It might help us if we got a letter from the Economic Secretary detailing the independent system of appointments that is pursued by the Attorney-General.

Amendment agreed to.

Schedule 3, as amended, agreed to.

Clause 31 - Functions

Andrew Tyrie (Conservative, Chichester)

I have one concern only. I have already said that we welcome the creation of the RCPO. However, that does not mean that a number of concerns have not been left lying around, and one of those relates to this clause. One of the big concerns expressed to me in submissions—I have but one of several in my hand—has been about the coercive powers that may be exercised by the new body.

Is it correct that some of the RCPO's coercive powers will be contained henceforth in the Serious Organised Crime and Police Bill as a consequence of the way in which the legislation is drafted? If that is the case, are we not in danger of leaving under the aegis of that Bill some pretty wide powers that may be too broad?

For example, the Law Society believes that the range of offences to which the coercive investigative powers will apply has become far too wide. It has alerted me to clause 55(1)(d) of that Bill, which would allow coercive investigation of an offence of fraudulent evasion of VAT whatever sum was involved in the alleged offence. Would it not be sensible to have some threshold value below which the powers would not apply so that those draconian powers—and they are draconian—are used proportionately and limited to offences involving serious crime only?

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till Tuesday 18 January at twenty-five minutes past Nine o'clock.