National Insurance Contributions Bill

moved Amendment No. 39:"Page 15, line 29, at end insert—" ““(2)   Subject to subsection (3), this Act shall cease to have effect at the end of the period of two years beginning on the day on which it is passed. (3)   Subsection (2) shall not apply if, before the expiry of the period of two years, the Secretary of State provides by order made by statutory instrument that the Act shall continue in force. (4)   An order under subsection (3) may not be made unless a draft of the order has first been laid before and approved by resolution of each House of Parliament.”” The noble Baroness said: I know that the Committee will be glad to see that we are coming to the end of our Committee stage. I am glad to say that this is the last amendment that I intend to move. Amendment No. 39 inserts what is colloquially known as a ““sunset clause”” into Clause 9. It is not an absolute sunset clause, as it provides that the Bill will cease to have effect at the end of two years unless the Government have persuaded Parliament to agree to its extension by way of statutory instrument. I shall draw together a number of the issues that I have raised in Committee. First, the Bill has an unprecedented degree of retrospection. I have no problem with closing loopholes, such as those that will be closed when the draft regulations to match last year’s Finance Act are passed, but as I have outlined, I have concerns about the way in which retrospection can forever be backdated to 2 December 2004. The longer the Bill remains in force, the greater those concerns will be. As I outlined when I talked about a possible clearance mechanism, the danger exists that what is now seen as ordinary planning will be outlawed at some future date with retrospective effect extending back into periods when no abuse was perceived. So ending the Bill’s powers—or at least giving Parliament the opportunity to end them—is one way around that. Secondly, there is the issue of yield, which we debated in the context of the previous amendment. Parliament is buying this high degree of retrospection because it accepts the argument that the cost to the public purse potentially justifies it. If HMRC reports high yields, there will be little to worry about. But if the Bill in practice yields relatively little, Parliament might like the opportunity to revisit its earlier judgment on the cost/benefit equation. Thirdly, I said at Second Reading that we could not understand why the Government were introducing these powers of retrospection without waiting to see whether the disclosure regime introduced in 2004 did the job that it was intended to do. Indeed, the previous Pre-Budget Report announced that there would be a further tightening of the time limits. If the disclosure regime is effective, it should not be necessary to leave on the statute book this permanent power of retrospection. I believe that the 2 December 2004 Statement is the first to result in legislation that has created a state of permanent retrospection. Other laws have had specific retrospective effect but not generalised powers with no end date. I believe that it would be safer if some way were found to remove that power from the statute book once Parliament believes that it is no longer needed. My amendment would knock out the whole of the Bill. A further variant, which I may consider for Report, is to have a sunset clause for Clauses 1 to 6 but to leave the disclosure provisions in Clause 7. That would then leave the Government with the specific tools to counter avoidance in the future through the disclosure regime without the power of retrospection. Of course, if the disclosure regime is not a success, the Government may have to revisit the whole issue and return to a general anti-avoidance provision, which we touched on briefly this afternoon. However, that is not something we can pursue today. Those are the issues that I believe underline the need to see an end to the unending power as drafted in the Bill. I look forward to the Minister’s response. I beg to move.