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

My Lords, we have already had two debates on reform of your Lordships’ House this week and I am glad that we have an opportunity for another debate this afternoon. Pace my noble friend Lord Lee, my own tax affairs are handled by HMRC in unit 89 in an industrial lot in south Wales. The remit of the Ministry of Justice has gone much wider than the old Lord Chancellor’s Department. I must say that I had not envisaged having to discuss in detail the tax policy of Her Majesty’s Government, and I am sure that, likewise, Her Majesty’s Treasury was not prepared for me to do so. However, I see that we can look forward to many happy hours of discussion in Committee on the matters raised. The issue raised by the noble Lord, Lord Oakeshott, is very important. As the noble Lord, Lord Strathclyde, suggested, we are in the middle of a serious approach to substantive reform of your Lordships’ House. We are making good progress in the cross-party group, and that good progress is helped by the ability of all Members to express themselves freely. I say to the noble Lord, Lord Strathclyde, that we have decided not to release the minutes of the cross-party group meetings, which of course was the basis on which noble Lords accepted the invitation to serve on that group. As we have said previously, we expect to be able to produce a White Paper before the Summer Recess. This matter would fall to be included within any substantial reform of your Lordships’ House and it deserves serious consideration of itself. I say at the start that we agree with the principle enunciated by the noble Lord, Lord Oakeshott, that, in order to vote on this country’s laws, legislators must pay tax on exactly the same basis as the overwhelming majority of straightforward British taxpayers. Paying tax is an important way in which Members of both Houses demonstrate their connection with, and commitment to, our country. I have always made it clear that that is my position and that of the Government. As noble Lords have mentioned, the Government have already responded in the other place to the Bill introduced by my honourable friend Mr Gordon Prentice. On that occasion, we said that we supported the intention behind Mr Prentice’s Bill but that we could not support it as it stands for a number of practical and technical reasons. We believe that it could have serious consequences for citizens of the Irish Republic who might want to stand for the Northern Ireland Assembly and for some people who might want to stand for the European Parliament. However, we will consider the details of that Bill if it succeeds in going into Committee in the other place. On the Bill put forward by the noble Lord, Lord Oakeshott, we support the ““no representation without taxation”” principle; we support the intentions behind the Bill, and would not seek to oppose the Bill’s progress in your Lordships’ House because it is not appropriate for the Government so to do. However, at this stage, we do not consider the Bill, as it stands, to be an appropriate vehicle to support. The question of non-domiciles has been raised by the noble Lord, Lord Jacobs. As noble Lords will know, in the Budget earlier this week, the Government gave a commitment that the personal tax rules on resident and domiciled status will not be revisited until at least the end of the next Parliament but the Bill would make changes in that area. I know that the noble Lord, Lord Jacobs, wishes to use the Bill as a platform on which to debate the tax system for non-domiciles in general, which is fair enough. All I would say to him is that we believe that the changes announced in the Pre-Budget Report, and confirmed in the Budget, strike the right balance between ensuring that the UK remains an attractive place for workers with skills and ensuring that rules that apply to people from abroad operate fairly. It is so essential to get that balance between fairness and competitiveness for this country right. Other matters in the Bill need very serious consideration. The Bill would deem Members of your Lordships’ House to be ordinary residents and domiciled in the UK and in no other country for taxation purposes. The noble Lord, Lord Oakeshott, will be aware that following the changes on resident and domiciled status announced in the Pre-Budget Report, the Government consulted on how changes would be implemented and on whether further changes would be introduced. One of those options for further changes involved deeming a particular group—those who have been resident in the UK for 17 or more of the past 20 years—to be UK domiciled. After consultation, the Government rejected that option. We would have to think very carefully indeed about an approach which involved deeming another group as UK domiciled. There is also an issue about the effect that the Bill might have in relation to international tax agreements. A further issue—this has already been raised by other noble Lords—is Members of your Lordships’ House working extensively abroad at various international institutions. By the very nature and membership of your Lordships’ House, that is inevitable and indeed is to be commended. Your Lordships have gained from the experience that such members bring when they return to debate matters in the House. That also has to be attended to. I thought my noble friend Lord Desai raised a number of interesting points, which I am sure the noble Lord, Lord Oakeshott, will be ever anxious to respond to. I hope there is no doubt in noble Lords’ minds that we believe that this is a matter that needs to be addressed. There is no question about that. Of course, we shall look with interest at the progress of the Bill put forward by my honourable friend Mr Gordon Prentice in the other place, but I look forward to debating this Bill in Committee. The noble Lord, Lord Oakeshott, will know of our general support for the principle concerning representation and taxation, but I point out the reservations that we have about the nature of the Bill as he presents it to the House.