National Insurance Contributions Bill

moved Amendment No. 1:"Page 1, line 17, leave out ““appears to the Treasury to be expedient,”” and insert ““is reasonable,””" The noble Baroness said: In moving Amendment No. 1, I shall speak to the other amendments in this group. This is the first amendment of our Committee and I should like to say a few words about the amendments that I have tabled. I said at Second Reading that we support the Bill in principle. Nothing in the amendments that I have tabled is intended to resile from that position, though I apologise in advance if some of the drafting appears to give a different impression. I did, however, raise a number of issues at Second Reading and gave notice that I would want to probe them further in Committee. I am mindful that the equivalent legislation so far as it affects income tax has already been passed by another place and that this Bill is in some senses a tail-end Charlie in that it deals only with national insurance. But, of course, as we discussed at Second Reading, national insurance is not much removed from a tax and certainly is viewed that way by employers, if not all employees. However, as a result of your Lordships’ inability to look at the equivalent tax provisions, we were not able to look at the Finance Act last year in detail. So this is the first opportunity that we in this House have had to debate the provisions in detail. It is too good an opportunity to miss. One of the themes of the amendments is to probe the retrospection allowed for in the Bill. The amendments in this group affect Clauses 1 to 4, which allow the Treasury to make regulations that have retrospective effect when it appears to it to be expedient. My amendments are in two forms. Those such as Amendment No. 2 replace the criterion that the Treasury must apply from ““expedient”” to ““reasonable””. There are wider reaching amendments, such as Amendment No. 1, which seeks to insert an objective test of reasonableness and not one determined by the Treasury. At Second Reading my noble friend Lord Skelmersdale asked the Minister to comment on the word ““expedient”” but the Minister refused to do so. He said that it would depend on the individual circumstances. I am sure that is what his civil servants told him to say. I suggest that he was being a little disingenuous with the House because the word ““expedient”” has a pretty clear dictionary definition, which doubtless the Minister’s officials did not want him to spell out. I can tell the Committee that ““expedient”” means something that is advantageous or advisable on practical rather than moral grounds. That is the definition in the Oxford English Dictionary. So ““expedient”” would allow the Treasury to bring forward retrospective regulations with no moral foundation. I do not believe that our tax code should enshrine that. When I say ““tax code””, I include the national insurance code. I am aware that the word ““expedient”” has occasionally been used in the past but perhaps the Minister could say how widespread its use is, when it was last used and in what circumstances. My honourable friends in another place researched the legal meaning of the term ““expedient””. They found case law in both New Zealand and Canada. For example, in a New Zealand case which concerned the New Zealand criminal justice Act of 1985, it was found that the term ““expedient”” as it was used in that Act set a lower threshold than necessary. If ““expedient”” in this Bill means something less than necessary, we are entitled to look to the Minister to provide a clear explanation. If we contrast the word ““expedient””, which is in the Bill, with the word ““reasonable””, which is in my amendment, we can see that what I am proposing—to use a dictionary definition—is fair and sensible or appropriate. I suggest that those words deserve a place in legislation that is trying to impose a burden on taxpayers or national insurance payers, especially where it is to have retrospective effect. What is fair and sensible or appropriate can clearly take into account all the things that the Treasury wants us to take into account when considering the kind of avoidance schemes outlined in your Lordships’ House and another place. Indeed, I am sure that we would all conclude that it was fair and sensible or appropriate to stop those schemes. However, I have a concern about enshrining in law a concept that does not have a moral base. We may not be able to think of something today that would not offend us on reasonableness grounds but would on moral grounds, and we may have no concerns about the moral compass of the Treasury today. However, we should not underestimate the possibility that a Treasury of the future might have an agenda that ought to be constrained by a concept of reasonableness. Of the two formulations, I of course prefer the one that seeks an objective test, but reasonableness is the most important thing to achieve. I beg to move.