Finance Bill: Penalties for errors
During a debate about penalties imposed for incorrect tax returns, Brooks Newmark raises concerns at the use of a so-called Henry VIII clause in a money Bill which essentially enables legislation to be amended or repealed without Parliamentary scrutiny.
Mr. Newmark: First, let me make the same observation that I made last night: it is a pity that once again not a single Labour Back Bencher is present to support the Government's proposed legislation. That is disappointing, not least because I enjoy a good debate.
As my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) is a solicitor, I am sure he is far better placed than me to scrutinise the Government's use of the Henry VIII powers in clause 117, and he does so through his amendments Nos. 3A and 4A. I am grateful to him for his thoughtful explanation of the amendments. Nevertheless, the name that has been given to the powers is an evocative one that summons all the images of unaccountable government that we could ever need. The Government's use of such powers should be of interest, and ultimately of some concern, to each and every Member, because of their impact on our ability to exercise effective scrutiny and hold the Government to account. Crucially, the matter should also be of concern to Members in another place; indeed, I believe it already is. The fact that these powers crop up in a money Bill will exclude them from further scrutiny in another place, particularly by the Delegated Powers and Regulatory Reform Committee, whose Members take a special interest in these matters. That is the key point I take from my hon. Friend's arguments.
I note that there are some specific requirements relating to the scrutiny of such powers which do not, by default, apply to the passage of the Finance Bill because it is concerned with supply. Indeed, the DPRRC's guidance for Departments on the role and requirements of the Committee lays those requirements down clearly, including the submission of a memorandum that is required to justify the necessity of the power in some depth. I understand the general situation regarding the right of another place to scrutinise and delay Bills that Mr. Speaker has certified as money Bills under the Parliament Act, and perhaps it follows that another place cannot delegate scrutiny powers that it does not itself enjoy to one of its own Committees. However, I question the general principle that another place should not be able to scrutinise delegated powers that are to be exercised under the Finance Bill simply because it deals with supply. The other place's right to scrutinise this Bill may well be truncated by the Parliament Act, but it is not entirely removed.
The scrutiny of the sort of powers that appear in clause 117 has attracted considerable attention. The Delegated Powers and Regulatory Reform Committee looked in depth at the issue of the Henry VIII powers in its third special report of 2002-03, upon which its departmental guidance draws. One of the report's striking conclusions was on standard wording for Henry VIII powers. The Committee shied away from recommending the use of standard wording, because on the advice of parliamentary counsel, its concern was that any standard wording would need to be as broad as possible if it was successfully to catch all potential situations. The concern was thus that Departments would automatically grant themselves powers for which they had no need and would justify the decision to do so by dint of the standard form of words.
A letter from the parliamentary counsel to the Committee gave the draftsman's perspective in some detail, but the germane point was that draftsmen should always refer to the specific needs of any particular Bill when framing Henry VIII powers. Typical terms might include "incidental", "supplemental", "consequential" and "transitional", as appropriate. However, clause 117(4) contains not only the words "incidental", "supplemental", "consequential" and "transitional", but the words "transitory or saving". Furthermore, subsection (6) seems to widen the scope of the powers further still. I am no draftsman, but it seems to me that the power is framed as widely as it could possibly be. Is the Minister confident that that is necessary, and can she justify that necessity to the Committee?
My second main concern is the sheer potential breadth of operation of the powers in practice, given that they can amend not only the Act that will implement them, but every Act that it in turn amends. I have not yet gone through the Bill to see how many other Acts it will amend, given its length, but I suspect that the list will be very long indeed. Can the Minister confirm whether the proposed powers under the clause will give the Treasury the right to amend any part of any other Act that this Bill itself happens to amend, without further recourse to Parliament?
During the Delegated Powers and Regulatory Reform Committee inquiry into Henry VIII powers, questions were raised as to what level of parliamentary scrutiny over them is appropriate. The parliamentary counsel's opinion was:
"The question is one of policy for ministers."
As this is a policy matter and not one of drafting, can the Minister therefore justify why the powers, as they stand, provide only for the negative procedure, instead of the affirmative procedure, despite appearing to be drafted as widely as they could have been?
A third concern is derived from the Delegated Powers and Regulatory Reform Committee's 2002 special report findings. The report states that
"we are persuaded that the Government should, in the Explanatory Notes accompanying any new bill...offer an explanation of the reasons why a particular form of wording has been adopted in each case."
I am sure that the hon. Member for Wolverhampton, South-West (Rob Marris), who is an assiduous user of explanatory notes, would concur. The report specifies any new Bill and does not exempt money Bills, yet the explanatory notes on clause 117 are very brief indeed-brevity is not apparent elsewhere in the 1,148 pages, so I am a little puzzled. The notes do nothing beyond paraphrase the subsections to which they refer, and that seems explicitly to contravene the recommendation that I just cited. Perhaps the Treasury believes that because this Bill does not fall formally within the Committee's remit, its guidance does not apply to it. I would be interested to hear whether that is the case, as I am sure would the Committee.
Given that the staff of the Delegated Powers and Regulatory Reform Committee confirm that they cannot examine the Finance Bill, and given that there seems to be no explanation for that in the Standing Orders of the House beyond the supply exemption, is it not time for the Government and for Parliament to re-examine this issue? The Delegated Powers and Regulatory Reform Committee has no equivalent in the House of Commons and, as such, it could be said to be exercising its functions on behalf of Parliament as a whole, rather than just on behalf of another place. The Committee is very widely respected in both Houses for its thorough and timely work, as was emphasised in its rapid handling of the Banking (Special Provisions) Act 2008, for which I am sure the Chancellor was grateful.
The Government have at least three options in responding to what is undoubtedly a legitimate concern. First, they could simply extend that Committee's remit, so as to allow it scrutiny of the very wide powers in this Bill and future money Bills, notwithstanding the limitations implicit in the Parliament Act. Secondly, even if the powers really are necessary and expedient, the Government could still remove the clause and schedule 40 from this Bill and reintroduce them in a future non-money Bill, which would be subject to proper scrutiny in another place. Finally, the Government should accept our amendments Nos. 3A and 4A and remove the powers altogether. Their doing nothing would contravene the Prime Minister's reaffirmation of his respect for the House and for Parliament as a whole.