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Tribunals, Courts and Enforcement Bill [Lords]

My hon. Friend makes a good point about the potential cost of appeals if the persons hearing the cases in the first instance are less expert. That is a truism across the board. I acknowledge the statement by the hon. Member for North-West Norfolk that his amendment is concerned with the structure. We are confident that tax appeal modernisation is an important part of the tribunal reforms. We intend such appeals to fall within the new tribunal system. The Liberal Democrat amendment is about compensation. My hon. Friend the Under Secretary met with the clerks yesterday to listen to their arguments. It has been the view of the Government that no compensation is appropriate, and nothing was put forward in those discussions that changed the Government’s mind on the matter. The clerks are not salaried, as the hon. Member for North Southwark and Bermondsey suggested: they are fee-paid office holders—[Interruption.] I must have misheard the hon. Gentleman. There is no expectation attached to that status of compensation if the office is abolished. Clerks handle their workload in their own way: they are not directed by the Department. Some clerks do a lot of work and either manages that work alongside being a practicing solicitor or as their sole activity. But most clerks earn very little. The average remuneration is under £5,000. Only 10 out of 356 divisions generate more than £20,000 in fees for the clerk. The exact breakdown of that fee will vary from clerk to clerk, but a fee of £20,000 equates to approximately 60 hours of hearing time a year. For the vast majority, our reforms represent not a loss of their livelihood, but merely the loss of one source of income for their firm. Reform of the tax appeals system has been on the agenda for many years. The clerks have known for two years that the present system was likely to be abolished. It will not be abolished until April 2009 and they have had, and continue to have, ample time to look for alternative sources of income. Firms have to do this all the time, of course. Furthermore and importantly, appeal numbers have been declining since self-assessment for income tax was introduced. It is unreasonable to suggest that there can be a legitimate expectation that the present level of income from that work would have continued had the system not been abolished. The existing compensation scheme is in the context of a continuing general commissioner system and not its abolition. If the system were continuing and there were to be a merger of divisions and a choice had to be made as to which of a number of clerks would be clerk of the merged division, it would be reasonable to compensate those who lost the opportunity to carry on. But where the whole system is to be abolished it would be an inappropriate use of public money to compensate all those individuals who happen to be earning fees from the scheme at the time. We have looked carefully at the examples of compensation schemes cited by the clerks in support of their case, but we are advised that none of them constitutes a legal precedent. Nor is there any breach of the Human Rights Act, although no one has today suggested that that is the case. The Government have already agreed to top up fees if the workload in the final year is higher than the preceding year. It now looks likely that the nature of the work in the last year will require some additional duties of the clerks, to assist in transition from old to new system. My officials are considering the details of a final-year scheme that will take full account of those additional duties and ensure that clerks are fully and properly remunerated for all that they do up to the end of the scheme. The Government cannot accept an amendment that would set back our plans for tax appeal modernisation, which is what the Conservatives’ amendment would do. We also remain unconvinced by the arguments put in favour of compensation. I hope my few words about looking at the final year will have cheered the hon. Member for North Southwark and Bermondsey (Simon Hughes) a little. The Under-Secretary of State for Justice has said that he hopes to recover the good will of the clerks, but we remain unconvinced about the amendment and cannot accept them.