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House of Lords (Members’ Taxation Status) Bill [HL]

My Lords, I beg to move that this Bill be now read a second time. I thank the noble Baroness, Lady Royall, for that reassurance; it is quite a relief. This is a short Bill and a short speech. It is so simple; if you sit in the British Parliament and vote on laws for the British people, you must pay full British taxes on all your income like the vast majority of your fellow citizens. You must not hide income or assets offshore behind a veil marked ““non-resident”” or ““non-domiciled”” for tax purposes. If you accept a peerage from the Queen for life, you must not sign a tax return saying that you do not intend to stay permanently in this country, as non-doms do. If, like the noble Lord, Lord Laidlaw, you give cast-iron undertakings to the House of Lords Appointments Commission that you will immediately become resident for tax purposes in this country in order to get a peerage, and then flagrantly dishonour them, you have simply obtained a peerage under false pretences. Even if you eventually take leave of absence, as this gentleman has, the stain remains on this House because you can still change your mind and pop over from Monte Carlo to pick up your peerage again any time you fancy. If anyone thinks I am being a little harsh, they should just read the annual report of the Appointments Commission which draws the Prime Minister’s attention to this scandal, and the record of the meeting and correspondence which they had with the noble Lord, Lord Laidlaw. I will quote a couple of sentences from a letter from the noble Lord, Lord Stevenson, the chairman, to the noble Lord, Lord Laidlaw. He said: "““You gave a commitment at our meeting of the 2 April 2004 not just to become tax resident in the UK but to become tax resident from 6 April 2004 and, indeed, informed us that you had already consulted with your tax advisors on this position. You … told me and my colleagues that you were going to your advisors straight after our meeting to arrange this””." What a tragic scene that must have been. You come straight out of a meeting, get into the Rolls-Royce, say ““PricewaterhouseCoopers, James”” to the chauffeur and then suddenly have a terrible memory loss. Why on earth are you going to see your tax adviser? Obviously, you are feeling pretty ill so you go straight to the airport, get on the private jet and go back to Monte Carlo. Thank goodness the noble Lord’s memory returned a year later and he was able to remember to sell his business for £768 million. The effect of that was to cost the British taxpayer at least £50 million in capital gains tax that he would have had to pay if he had honoured his undertaking. The noble Lord, Lord Laidlaw, is still resident in Monte Carlo four years on, and without a Bill like this there is nothing we can do about it. So it is high time we put our house in order to protect our integrity and our good name, and because the 60 million people we serve expect and deserve no less. This is the third time I have introduced a Bill on these lines in this House. I thank noble Lords who supported me on my first two more basic Bills, and, in particular, the noble Lord, Lord Hunt of Kings Heath, in his brief and honourable absence from office after he resigned over the Iraq war. Those Bills did not progress and they only sought to ensure that new Peers were resident onshore in Britain for tax purposes. This Bill—I must say that I have been bowled over by the determined enthusiasm for it from all around the Chamber—goes wider, and I very much hope that it will go through. I thank my noble friend Lord Goodhart—the finest international chancery lawyer money can buy—for his invaluable free advice. He has to speak at a conference in Holland today, but he has promised his help in Committee. I especially thank the noble Lord, Lord Strathclyde, for our helpful discussions, and I look forward to his speech today. I should also, for the record, confirm that I have not discussed this Bill with the Lord Speaker. It would not have appropriate to do so, but I am very grateful to the Public Bill Office for its help and advice—errors and omissions are, of course, entirely my own. I start by staging clearly in Clause 1 that Peers are, "““deemed to be resident, ordinarily resident and domiciled in the United Kingdom and in no other country for taxation purposes””." I say that because it is possible to be partly resident here and partly resident overseas. That is something that I wish to leave no wiggle room on. I have avoided any need for Peers to make declarations about their tax status, annually or whenever, or for Her Majesty’s Revenue and Customs to reveal any details about current Peers’ individual tax affairs to the authorities of this House or to anyone else. Under subsection (4), the Lord Speaker would simply send the list of Peers’ names to the chairman of HMRC once the Bill becomes law and then notify HMRC three months later of any Peers who have to be taken off that list under the terms of subsection (5) because they have taken leave of absence for life. This is a new version of leave of absence but it is just what it says on the tin—irrevocable. That seems simpler to me than disqualifying Peers who will not pay full British taxes, but the result is, of course, the same, except that they get to keep their titles. In future, the Revenue would make a one-off declaration to the Lord Speaker under subsection (7) that a new Peer is resident and domiciled in the United Kingdom for tax purposes within three months of their appointment. There will be no more Lord Laidlaws by law. As this represents a change in law since noble Lords were appointed to this place, it is only fair to give those who are not content to be taxed on that basis a once-and-for-all opportunity to opt out under subsection (2). By taking immediate and irrevocable leave of absence for life they retain their current tax status whatever it may be but they do have to make that choice. We cannot have an open-ended rolling opt-out. We cannot be pick-and-mix parliamentarians—British life Peers one moment, Monaco millionaires or Liechtenstein Lords the next. Of course, Peers may want to spend time abroad for health or family reasons, especially as they get older. But once you have accepted a peerage from the Queen for life and a seat in Parliament for life, you pay her full British taxes on all your income for life. I would be happy to consider amendments to subsection (7)—if they can be made clear and workable—to deal with a potential problem for Peers, such as my noble friend Lord Ashdown of Norton-sub-Hamdon, who may be appointed to important full-time posts with international bodies. Whether it is Bosnia, Northern Ireland or Afghanistan, he is in great demand for international trouble shooting duties and I would hate to hinder his career, even if I dared. He has kindly explained to me that United Nations appointments still treat British subjects as resident in Britain for tax purposes but that does not apply to some other posts. Equally, it would have been wrong to require the noble Lord, Lord Robertson of Port Ellen, to take permanent leave of absence when he was Secretary-General of NATO, or even supposing we had in the House Lord Mandelson of Mischief as a European Commissioner. However, we need to be careful to define the type of international public bodies which would qualify; otherwise, we could leave gaping loopholes. For instance, we would not want to let people avoid the measure by going off to work for the Monaco millionaires’ benevolent society or the Belize institute for the prevention of money laundering. Even if Tony Blair finally deigned to join us, we would not want to accept as a qualifying international body the Silvio Berlusconi foundation for sunshine holidays for impoverished ex-Prime Ministers or the Bernie Ecclestone society for the propagation of tobacco advertising on racing cars. One could go on. If private businesses want to recruit Peers to work abroad, they can make the pay package attractive enough to cover the Peers’ British tax bill. I am not accepting any amendments on that one. Clause 2 is technical to ensure that it is not overridden by the Income and Corporation Taxes Act 1988. Clause 3 gives Peers who may want to opt out fair notice of at least four months before the start of a tax year. I wish to thank two other very important people before I sit down. The honourable Member for Pendle, Gordon Prentice, is promoting a Bill with the same aims as mine, which covers Members of the Commons, as it should. I thought it would be presumptuous for a Bill starting in this House to tell the Commons how to regulate their Members, but I trust that if my Bill is debated there they will amend it accordingly. Mr Prentice has kindly agreed to act as sponsor for this Bill in the Commons and I shall return the compliment if his Bill arrives here first. This is a Lib/Lab pincer movement on tax dodging but with wall-to-wall all-party support in both Houses. I am proud also to have the support of a remarkable man, my truly noble old friend Lord Thomson of Monifieth. As the last ever chairman of the Honours Scrutiny Committee and a founder member of the Nolan committee, he has fought long and hard against corruption in public life. He has not been well lately but we look forward very much to hearing his wise words in Committee and to voting with him next month on the future of Europe. This simple Bill sets out a simple principle, if you pass laws for British people, you pay taxes like British people, and a simple system for enforcing it. I ask noble Lords to support it whether, like me, you believe in a mainly elected House, or whether, like most noble Lords, you want to reform and build confidence in an appointed Chamber. Either way, it is high time we cleaned up our act on tax—pay up or pack up. Moved, That the Bill be now read a second time.—(Lord Oakeshott of Seagrove Bay.)