National Insurance Contributions Bill

My hon. Friend is right. I did him a disservice in attributing the use of that quote to my hon. Friend the Member for Ludlow. It is good that we have relatively new Members of the House who are so familiar with that great work, ““The Wealth of Nations””. That augurs well for liberty and freedom as issues that will be debated much more fully in the House. I am glad my hon. Friend the Member for Braintree (Mr. Newmark) is present today to develop the argument that he started articulating in Committee. We are discussing not a practical matter, but an issue of supreme principle and importance. There are practical consequences of Governments legislating by fiat, and there are times when, as a Member of Parliament, one might wish that the law could be retrospective. For example, I have a constituency case where somebody is arguing bitterly that a single prostitute living above a shop should be deemed to be running a brothel. Unfortunately, the law says that in order for it to be a brothel, there must be more than one prostitute operating. My constituent would be delighted if the Government introduced legislation making it retrospectively criminal to be doing what that individual is doing, but those of us who believe in the rule of law and the principle of parliamentary legislation would not support such retrospection, even if it was thought to be expedient. I am sure there are people who would say that such legislation was expedient, but I do not believe we should allow that. It is true—this is the point that the Paymaster General made—that there are precedents for retrospection. They go back to the time of the second world war, but during the 1970s, under the Labour Government of the day, the then Chancellor, Denis Healey, now Lord Healey, brought in rules to deal with tax avoidance. Retrospection was a controversial issue at the time and the debate about that resulted in the development of the Rees rules. Those were drawn up by Lord Rees, who at the time was shadow Chief Secretary to the Treasury and went on to be Chief Secretary to the Treasury and an important member of the Government of my noble Friend Lady Thatcher. Mr. Rees, as he was in those days, argued that retrospective legislation should be subject to four conditions. First, the warning given in the House of Commons"““must be precise in form. A mere suggestion that there are vague schemes of tax avoidance that must be counted should not suffice. Secondly, the problem at which the warning has been directed should immediately be referred to a committee””." He referred to one that he understood existed, made up of members of the Inland Revenue and the accountancy and legal professions."““Thirdly, if the committee can hit on appropriate legislative provision, the draft clause . . . should immediately be published in advance of the Finance Bill so that those who are likely to be in the field of fire will have a second clear intimation of what to expect. Fourthly, such a clause must, without fail, be introduced in the following Finance Bill . . . I believe there may be situations in which””" that approach"““is the only solution if we are to counter avoidance of the sophistication and scale which we understand has been current of late. But if a Government are to adopt that remedy, it must be on””" that basis. The Paymaster General cannot suggest that there are no precedents for retrospection, because there are precedents for retrospection with safeguards, and I tabled amendment No. 16 because those safeguards have not been met in this particular case. The statement by the Paymaster General on 2 December 2004 was not the subject of immediate consultation with the relevant professions, and it was not the subject of a clause in the next Finance Bill. I agree that that is true of the tax provisions, but they are a separate issue, because we are discussing provisions relating to national insurance contributions. I thought it telling that the regulatory impact assessment states:"““As this is a measure directed at tax avoidance, consultation was not appropriate before the publication of the Bill. The proposal is to apply to NICs the existing rules for disclosure of tax schemes. These rules were the subject of detailed discussions with the accountancy and legal professions, and other businesses during 2004””."