---

Legislative and Regulatory Reform Bill

I hope that I can help on the points that have been raised. I understand the thrust of the amendment, which is probing. At the moment, the clause prevents an order from imposing or increasing taxation. It is not the intention that orders should be used to remove taxes or lower tax rates. Under the amendment, orders could not remove or alter taxation. I note this amendment and assure noble Lords that the Government agree that orders under Part 1 should not be able to remove taxes or lower tax rates, which is why we are keen to have this discussion today. We will consider carefully options for making it explicit in the Bill that orders cannot remove taxes or reduce tax rates. However, it is important to get the detail right. In particular, it is important that we do not inadvertently rule out being able to deliver a merger of regulators which would reduce or remove burdens on the regulated by reducing the multiple inspections of regulated firms, for example. If we are transferring regulatory functions from one regulator to another, it will often be necessary also to make provision relating to the transfer of assets and liabilities. It will also often be necessary to make associated provision relating to the tax treatment of those transfers—and only those transfers. Noble Lords may wish to refer to the example of Schedule 10 to the Railways Act 2005. As I say, it is not the intention that orders should remove taxes or lower tax rates, but it is important that any amendment to Clause 6 does not rule out the possibility of such mergers. When an order under Clause 1 is considered appropriate by Parliament and its committees to deliver such a merger for the purpose of removing or reducing burdens, it is important that the order can also make the necessary provision varying the incidence of taxation in that particular case. On the basis of that explanation, I hope that the noble Lord will be satisfied. He asked, too, about the definition of taxation. For these purposes, taxation is the compulsory levying of money for state revenue, either nationally or locally, when the levy is not a fee or charge to recover the costs of supply in a specific service to which the fee or charge relates. Fines are not taxation; they are penalties for unlawful activities. It should be noted that there are precedents for using the term ““taxation”” as it is used in this Bill. For the purposes of Clause 6 it is important that, to prevent the imposition or increase of any tax, the meaning of taxation is not restricted to any particular taxes and is not narrowly defined. I hope that the use of that precedent in that way will reassure noble Lords. With the thrust of what we are trying to achieve, we shall need to bring something back to meet the narrow circumstances that I outlined, with the need to have some tax provisions, possibly associated with mergers of regulators.