house of lords delegated powers and regulatory reform 12th ... · delegated powers and regulatory...

HOUSE OF LORDS

Delegated Powers and Regulatory Reform Committee

12th Report of Session 2005–06

Violent Crime Reduction Bill

Council Tax (New Valuation Lists for England) Bill

National Insurance (Contributions) Bill

Lighter Evenings (Experiment) Bill [HL]

London Olympic Games and Paralympic

Games Bill – Government response

Immigration, Asylum and Nationality Bill – Government response

Ordered to be printed 18 January and published 19 January 2006

London : The Stationery Office Limited £price

HL Paper 102

The Select Committee on Delegated Powers and Regulatory Reform The Delegated Powers and Regulatory Reform Committee is appointed by the House of Lords in each session with the orders of reference “to report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate level of parliamentary scrutiny; to report on documents and draft orders laid before Parliament under the Regulatory Reform Act 2001; and to perform, in respect of such documents and orders and subordinate provisions orders laid under that Act, the functions performed in respect of other instruments by the Joint Committee on Statutory Instruments”.

Current Membership The Members of the Delegated Powers and Regulatory Reform Select Committee are:

Lord Brooke of Sutton Mandeville Lord Dahrendorf (Chairman) Baroness Gardner of Parkes Lord Garden Lord Harrison Lord McIntosh of Haringey Baroness Scott of Needham Market Lord Shaw of Northstead Lord Temple-Morris

Publications The Committee’s reports are published by The Stationery Office by Order of the House. All publications of the Committee are on the internet at http://www.parliament.uk/parliamentary_committees/dprr.cfm

General Information General information about the House of Lords and its Committees, including guidance to witnesses, details of current inquiries and forthcoming meetings is on the internet at http://www.parliament.uk/about_lords/about_lords.cfm

Contacts for the Delegated Powers and Regulatory Reform Committee If you have any queries regarding the Committee and its work, please contact the Clerk to the Delegated Powers and Regulatory Reform Committee, Delegated Legislation Office, House of Lords, London, SW1A 0PW. The telephone number is 020 7219 3103/3233. The fax number is 020 7219 2571. The Committee’s email address is [email protected]

Historical Note In February 1992, the Select Committee on the Work of the House, under the chairmanship of Lord Jellicoe, noted that “in recent years there has been considerable disquiet over the problem of wide and sometimes ill-defined order-making powers which give Ministers unlimited discretion” (Session 1991–92, HL Paper 35–I, para 133). The Jellicoe Committee recommended the establishment of a delegated powers scrutiny committee in the House of Lords which would, it suggested, “be well suited to the revising function of the House”. As a result, the Select Committee on the Scrutiny of Delegated Powers was appointed in the following session, initially as an experiment for a limited period. It was established as a sessional committee from the beginning of Session 1994–95. Also in Session 1994–95, following the passage of the Deregulation and Contracting Out Act 1994, the Committee was given the additional role of scrutinising deregulation proposals under that Act. As a result, the name of the committee was changed to the Select Committee on Delegated Powers and Deregulation. In April 2001, the Regulatory Reform Act 2001 was passed which expanded the application of the deregulation order-making power under the 1994 Act, and the Committee took on the scrutiny of regulatory reform proposals under the Act. With the passage of the 2001 Act, the Committee’s name was further amended to its present form, the Select Committee on Delegated Powers and Regulatory Reform.

Twelfth Report

VIOLENT CRIME REDUCTION BILL

1. This four-part bill deals in particular with alcohol-related violence and disorder, weapons, football-related disorder and sexual offences. The delegated powers in the bill are explained in a memorandum from the Home Office which is printed at Appendix 1 to this Report. There is an additional power at clause 20 (new section 147A(9) of the Licensing Act 2003).

Clause 12—Power to impose charges on licence holders in alcohol disorder zones

2. Clause 12 enables the Secretary of State, by regulations subject to negative procedure, to provide for a local authority to impose monthly charges on certain classes of licence holder and clubs whose premises are in an alcohol disorder zone. The power is explained in paragraphs 103 to 112 of the Explanatory Notes and in the memorandum from the Home Office. Both the rate of the charge and the purposes for which the money is to be used are left to the regulations, as are any provisions about appeals, consequences of non-payment, discounts and (so far as permitted by clause 12(6)) exemptions. In view of the fact that so many significant aspects are left to the regulations, we consider that they should be subject to affirmative procedure.

Clause 20—Offence of persistently selling alcohol to children

3. Clause 20 inserts a new section 147A into the Licensing Act 2003. The new section creates the offence of persistently selling alcohol to children (i.e. three times or more within a 3 month period from the same premises). New section 147A(8) sets the maximum fine at £10,000, but the Secretary of State is given a power by section 147A(9) to increase that figure, by order subject to negative procedure. There is no upper limit in the bill to the increase that may be effected. For that reason, we consider that this power should be subject to affirmative procedure, save where the increase is solely to take account of changes in the value of money.

COUNCIL TAX (NEW VALUATION LISTS FOR ENGLAND) BILL

4. This bill removes the requirement for a revaluation of domestic properties in England in April 2007 and then at least every 10 years, for the purposes of council tax. The background is well explained in the Explanatory Notes.

Clause 1(2)—Power to order the compilation of a new valuation list

5. There is one delegated power in the bill, that in new section 22B(1A) of the Local Government Finance Act 1992, inserted by clause 1(2) of the bill. It enables the Secretary of State by order subject to affirmative procedure in the House of Commons only to specify a year in which a new valuation list is compiled. A memorandum from the Office of the Deputy Prime Minister, printed at Appendix 2 to this Report, explains the power.

2 DELEGATED POWERS AND REGULATORY REFORM COMMITTEE

6. It is a question for the House, separate from any consideration of delegated powers, whether to accept the principle that there is to be no compulsory revaluation at any particular interval (clause 1(3) and (4)). Clause 1(2) contains the principle that there may be revaluation, but whether there shall be and, if so, its timing is for the Secretary of State. As a matter of delegated powers, this is not inappropriately wide. The affirmative procedure is also appropriate: it is the procedure to which orders under the current section 22B (which may provide for more frequent valuations than every 10 years) are subject.

7. The draft of the order must be laid before, and requires the approval of, the House of Commons only. This accords with all of the other affirmative powers under Part 1 of the 1992 Act, including powers added by the Local Government Act 1999. The privilege of the House of Commons extends to raising money by local, as well as national, taxation (except when it waives privilege) and revaluation feeds directly into the amount of tax raised.

8. There is nothing in the bill to which we wish to draw the attention of the House.

NATIONAL INSURANCE (CONTRIBUTIONS) BILL

9. This bill includes provisions about National Insurance Contributions (NICs) related to retrospective tax legislation, and provisions about the disclosure of arrangements to avoid NICs. The delegated powers in the bill are explained in a memorandum for the Committee from HM Revenue and Customs, which is printed at Appendix 3 to this Report. The powers are listed at paragraph 6 of, and Annex A to, the memorandum.

10. We find the provisions in the bill to be acceptable but have paid particular attentions to clauses 1–4 because the powers there delegated include power to make retrospective provision.

Clauses 1 to 4—Provision in consequence of retrospective tax legislation

11. Clauses 1 to 4 are aimed at preventing avoidance of liability to pay NICs by means of schemes involving remuneration of employees. They relate to the Government’s similar action against avoidance of tax. This is explained in paragraph 3 of the Explanatory Notes. Specific action against tax avoidance can be taken each year in the Finance Bill, and was taken last year (by Schedule 2 to the Finance (No. 2) Act 2005, which took effect retrospectively from 2nd December 2004). Paragraph 8 of the memorandum explains that changes to NICs are outside the scope of the annual Finance Bill; and that, in the absence of the powers taken by the bill, provisions for NICs corresponding to those for tax could not be made retrospectively without a bill on each occasion that a related tax change was made.

12. New section 4B of the Social Security Contributions and Benefits Act 1992 (inserted by clause 1) enables existing powers (which are normally subject to negative procedure) about calculating earnings to make retrospective provision (but, where they do, the affirmative procedure will apply). If the House accepts the principle of retrospection, the powers should, in the Committee’s view, nevertheless be closely circumscribed. We consider that

DELEGATED POWERS AND REGULATORY REFORM COMMITTEE 3

the powers in the bill are sufficiently circumscribed and are appropriate. In particular:

(a) the power applies only where a provision of the Income Tax Acts relating to employment income is given retrospective effect and the Treasury considers it appropriate to make the regulations to reflect (wholly or partly) the retrospective tax provision;

(b) the NIC regulations may have retrospective effect only if it appears to the Treasury to be expedient to make them retrospective in consequence of the retrospective tax provision. Combined with (a), this in effect ensures that the NIC regulations cannot be retrospective to any greater extent that the tax provision;

(c) there is a cut-off point of 2nd December 2004 before which retrospective provision may not be made; and

(d) the draft of the regulations must be laid before Parliament within 12 months of the relevant tax change, thus limiting the period of retrospection.

13. New section 4C enables regulations (subject to affirmative procedure) to make provision in consequence of retrospective provisions made in relation to earnings for NIC purposes under section 4B. The regulations under section 4C may themselves be retrospective (section 4C(4)). The purposes are listed in section 4C(2) and include contributions, contributory benefits and statutory payments (such as sick pay and maternity pay). There is power to add both to the list of purposes in section 4C(2) and the list of statutory payments (section 4C(11)), in each case by regulations subject to affirmative procedure. Clause 4C(7) prevents regulations under section 4C (amongst other provisions) from removing or reducing entitlement to contributory benefit, contribution-based jobseeker’s allowance and statutory payments (though they may presumably have the effect of increasing entitlement e.g. where additional contributions have been made payable by the retrospective provisions). We consider this acceptable.

14. Clause 3 is about Class 1A Contributions, which are paid on benefits in kind. The power is one to make provision for purposes of the law relating to Class 1A Contributions, as a consequence of relevant retrospective tax provisions. The regulations may themselves have a retrospective effect. As we would expect, the power is subject to affirmative procedure. It is expressly provided that the regulations cannot impose or increase liability for Class 1A Contributions (because, as is explained at paragraph 12 of the Memorandum, this is achieved already by the existing section 10 of the 1992 Act). As with clause 1, if the House accepts the principle of retrospectivity, then clause 3 is acceptable.

15. Clauses 2 and 4 make provision for Northern Ireland which is in all material respects the same as clauses 1 and 3.

LIGHTER EVENINGS (EXPERIMENT) BILL [HL]

16. This private member’s bill (if brought fully into force) advances time by one hour throughout the United Kingdom. The bill, if passed, will expire at 2 a.m. on 25 October 2009.


17. The only delegated powers in the bill relate to commencement (clause 5(2)). Though the bill is to come into force in England on 29 October 2006, its coming into force is left to be appointed for Wales, Scotland and Northern Ireland, thus raising the possibility of the time being different (for up to three years) in different parts of the United Kingdom.

18. The commencement power in Scotland and Northern Ireland (when the Assembly is not suspended) is given not to the Scottish Ministers or a Northern Ireland Department but to the Scottish Parliament and the Northern Ireland Assembly themselves, bodies charged with making primary legislation of their own within devolved areas. This novel provision reflects the fact (brought out helpfully by the Explanatory Notes) that whether the provisions will be brought into force at all for Scotland and Northern Ireland is something on which the policy decision is expected to be taken by the relevant national Parliament or Assembly. In accordance with the usual constitutional arrangements, leaving the policy decision on an experimental period to them could be achieved by ensuring (without doing any more) that the subject matter of this bill is a devolved matter (to the extent that it is not already). But, so far as we are aware, it would be unprecedented for the Scottish Parliament or the Northern Ireland Assembly to be given powers to commence an Act of the United Kingdom Parliament and we draw this to the attention of the House.

LONDON OLYMPIC GAMES AND PARALYMPIC GAMES BILL – GOVERNMENT RESPONSE

19. The Committee reported on this bill in our 11th Report of this Session (HL Paper 95). The Government have responded to our Report by way of a letter from Lord Davies of Oldham, Lords Spokesman for the Department for Culture, Media and Sport, to the Chairman. The letter is printed at Appendix 4 to this Report.

IMMIGRATION, ASYLUM AND NATIONALITY BILL – GOVERNMENT RESPONSE

20. The Committee reported on this bill in our 10th Report of this Session (HL Paper 87). The Government have responded to our Report by way of a letter from Mr Tony McNulty, MP, Minister of State at the Home Office, to the Clerk. The letter is printed at Appendix 5 to this Report.


APPENDIX 1: VIOLENT CRIME REDUCTION BILL

Memorandum by the Home Office

Introduction

The Bill is in four Parts: Part 1 contains provisions relating to alcohol-related violence and disorder. Part 2 contains provisions about weapons. Part 3 contains miscellaneous provisions. Part 4 contains general provisions.

PART 1: ALCOHOL-RELATED VIOLENCE AND DISORDER

Chapter 1: Drinking banning orders

Clause 10(5): Power to provide that additional persons may prosecute breaches of drinking banning orders etc.

Power conferred on: Secretary of State

Power exercisable by: Order made by statutory instrument

Parliamentary procedure: Negative resolution

Clause 10(5) provides that the Secretary of State may by order provide that persons of a description specified by order may bring proceedings for breach of a drinking banning order or interim order. An order may limit the range of cases or circumstances in which the person may bring proceedings. The power complements, and is consequential upon, the power in clause 11(3) to extend the range of persons who may apply for drinking banning orders or interim orders. The powers are very similar to those found in relation to anti-social behaviour orders under Part 1 of Chapter 1 of the Crime and Disorder Act 1998. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 11(3): Power to extend the definition of relevant authority for the purposes of Chapter 1




Clause 11(3) enables the Secretary of State to extend the definition of relevant authority for the purposes of Chapter 1 of the Bill. This would allow the range of persons able to apply for a drinking banning order or interim order to be expanded to include, for example, registered social landlords or housing action trusts. An order made under this provision may by virtue of clause 11(5) and (6) make provision for different cases, contain exemptions and exceptions, contain incidental and supplemental provisions and modify the definitions of “appropriate persons” and “relevant persons” contained in clause 11(1). The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.


Chapter 2: Alcohol Disorder Zones

Clause 12: Power to make provision for the imposition of charges in alcohol disorder zones


Power exercisable by: Regulations made by statutory instrument


Clause 12(1) enables the Secretary of State to make regulations for the imposition of charges on persons holding premises certificates or club premises certificates authorising the supply of alcohol. Such charges would be payable to the local authority for the area.

Clause 12(2) enables the Secretary of State to require the local authority to use the charges for the purposes specified or determined in the regulations. The purposes will be linked to enforcement action in respect of the premises or to other activity aimed at providing a benefit to the premises or its customers. The rates of charges must be such as to enable appropriate funds to be made available to the local authority. The power at clause 12(2) is also exercisable in respect of sums received by local authorities in accordance with action plans drawn up under clause 13 (see clause 13(7)).

By virtue of clause 12(4) the regulations may fix different rates for different types of property or local authority. The power is in wide terms to enable banding of properties by, say, capacity or rateable value.

Clause 12(5) to (7) allows the local authority to grant discounts from the charges and requires them to exempt premises whose principal use is not the sale or supply of alcohol and where the availability of alcohol is not a main reason for people entering or remaining on the premises. This will enable restaurants, hotels, gyms, theatres and cinemas for example to be exempt from the charges.

Clause 12(8) enables the regulations to make provision about the payment, collection and enforcement of charges, the determination of questions about liability for the charges and appeals. Clause 12(9) allows interest to be charged on overdue charges and provides for the suspension of premises licences and club premises certificates.

As the enabling powers are tightly focused, notwithstanding the fact that these regulations will contain much detail relating to alcohol disorder zones, the Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 14(6): Power to make provision in relation to the procedure for designating alcohol disorder zones




Clause 14(6) enables the Secretary of State to make regulations supplementing the provisions of clauses 13 and 14 of the Bill in relation to the designation of alcohol disorder zones. The regulations will cover matters such as the publication of the action plan and a requirement to consider representations made as part of the designation process. There is a similar power in section 13 of the Criminal Justice and Police Act 2001 in relation to Designated Public Place Orders and, as there, the Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.


Clause 16: Guidance about designation of alcohol disorder zones


Power exercisable by: Guidance

Parliamentary procedure: None

Clause 16(1) requires the Secretary of State to issue guidance about the designation of alcohol disorder zones. Before issuing or revising any guidance the Secretary of State is obliged to consult widely (clause 16(3)) and the Department considers there to be no need for formal Parliamentary scrutiny of the guidance.

Chapter 3: Other provisions

Clause 18: Power of the police to require review of premises licences




Clause 18 inserts new sections 53A to 53C into the Licensing Act 2003. Section 53A enables a chief officer of police to apply for an expedited review of a premises licence in circumstances where a certificate that the premises are believed to be associated with serious crime or serious disorder or both has been given.

Section 53A(3) requires the Secretary of State to make regulations governing the detailed procedure to be followed on a review. These regulations are likely to follow the model already in place for reviews under section 51 of the Licensing Act 2003 and, as there, the Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 21: Closure notice for persistently selling alcohol to children




Clause 21 inserts new sections 169A and 169B into the Licensing Act 2003. Section 169A enables a police officer of police to give a closure notice in respect of premises where there have been persistent sales of alcohol to children. The form of the closure notice must be prescribed by regulations (new section 169A(3)(a)) and the Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

PART 2: WEAPONS ETC.

Clause 30(3)(h) and (5)(h): Restriction on sale and purchase of primers




Clause 30 imposes restrictions on the persons who can be sold or buy cap-type primers designed for use in metallic ammunition for a firearm, and on the persons who can be sold


or buy empty cartridge cases incorporating such primers. Subsections (3) and (5) set out the categories of person who may lawfully be sold and buy such primers and cases, and paragraph (h) of each of those subsections allows the Secretary of State to authorise further categories of person through regulations. Consideration will be given to whether these powers will be used to allow some re-enactors and others to purchase primers and cases if they do not have a firearms certificate and if commercially-made blanks are not available for their firearms. Regulations made under this provision may by virtue of subsection (10) make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 32: Manufacture, import and sale of realistic imitation firearms




Clause 32 makes it an offence to manufacture, sell or import a realistic imitation firearm. A number of specific defences are provided in clause 33, and the scope of the offence is further narrowed by the definition of “realistic imitation firearm” in clause 34. Clause 32(3) allows the Secretary of State by regulations to provide for additional exceptions, exemptions and defences from the offence. Regulations made under this provision may by virtue of subsections (4) and (6) frame an exception, exemption or defence by reference to an approval or consent (which may be given in relation to particular cases or to descriptions of cases, and which may be given by a person specified or described in the regulations) and may make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. It is considered appropriate for the Bill to include such a power so that if it emerges that any legitimate use of realistic imitation firearms is not covered by one of the existing defences or exceptions, and so manufacture etc for that use is criminalised by clause 32, then it will be possible to make provision to make an exception for that use. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 33: Specific defences applying to the offence under section 32




As stated above, clause 33 sets out specific defences to the offence of manufacturing, importing or selling realistic imitation firearms. One such defence, set out in subsection (2)(e), arises if the person charged shows that his conduct was for the purpose only of making the imitation firearm in question available for the purpose of historical re-enactments organised and held by persons specified or described for the purposes of this section by regulations made by the Secretary of State. A definition of “historical re-enactment” is set out in subsection (6) but it is considered appropriate to include this power to ensure that the defence is available only for bona fide organised re-enactments, rather than any person who claims he is re-enacting an event or illustrating conduct from the past. Regulations made under this provision may by virtue of subsection (5) make provision for different cases, contain exemptions and exceptions, and contain incidental,


supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 34: Meaning of “realistic imitation firearm”




As stated above, clause 34 defines “realistic imitation firearm” for the purposes of the offences in clause 32. Subsection (3)(b) provides that an imitation is to be regarded as distinguishable from a real firearm – and hence is not a realistic imitation firearm – if its size, shape or principal colour is unrealistic for a real firearm. Subsection (4) provides that the Secretary of State may specify in regulations the maximum dimensions of a realistic imitation firearm and the colours which are to be regarded as unrealistic for a real firearm. The effect of such regulations will be that a person can be reassured that they are not committing the offence under clause 32 if they manufacture, import or sell an imitation firearm which is smaller than those dimensions, or if its principal colour is one specified in the regulations. If the dimensions of an imitation firearm are greater than those specified, or its principal colour is not one of those specified, it may or may not be regarded as a realistic imitation firearm, depending on the outcome of the application of the test in clause 34(1). It is intended that regulations will specify that imitations are to be regarded as unrealistic if their dimensions are very small – probably no more than 38mm in height and 70mm in length – and to specify bright colours by reference to British Standard numbers. Regulations made under this provision may by virtue of subsection (5) make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Clause 35: Specification for imitation firearms




This clause enables the Secretary of State to make regulations requiring imitation firearms to conform to specifications which are either set out in the regulations or are approved as set out in regulations. It will be an offence to manufacture or import an imitation which does not so conform, or to modify an existing firearm or imitation firearm so that it becomes an imitation firearm which does not so conform. For the avoidance of doubt, this clause will catch a wider category of imitations than the “realistic imitation firearms” which are the subject of clause 32. It is intended to exercise this power to introduce tough manufacturing standards which ensure that imitation firearms cannot be converted to fire live ammunition. By virtue of subsection (5) the regulations may also specify or set out a mechanism for determining persons who can certify an imitation as conforming to those standards. Under subsection (7) the regulations make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.


Clause 38: Sale etc. of knives and other weapons



Parliamentary procedure: Affirmative resolution

Subsections (3) and (4) of this clause amend section 141 of the Criminal Justice Act 1988 (offensive weapons). Those amendments include the insertion of a subsection (11D) into that section. This provides that the Secretary of State may by order provide for exceptions and exemptions from the offence of manufacturing, selling, hiring or lending a weapon specified in the Criminal Justice Act 1988 (Offensive Weapons) Order 1988 (as amended), and from the prohibition on the importation of such a weapon. An order under subsection (11D) may also provide that it is to be a defence in proceedings for such an offence or for an offence under section 50(2) or (3) of the Customs and Excise Management Act 1979 (penalty for improper importation of goods) to show matters specified or described in the order. It is intended that the order may be used in respect of weapons which are not currently listed in the 1988 order but which may be added to it in the future, and for which there may be legitimate uses. For example, if samurai swords or machetes were to be added to the list, there might be a case for exempting them in relation to legitimate martial arts or agricultural use. The Department considers the affirmative resolution procedure to provide the appropriate level of Parliamentary scrutiny, as the 1988 order was itself subject to that procedure, and this will enable any future additions to that order and any defences prescribed under subsection (11D) to be contained in the same statutory instrument.

PART 4: GENERAL

Clause 56(2): Commencement power

Power conferred on: Secretary of State and National Assembly for Wales


Parliamentary procedure: None

Clause 56(2) is the standard power to bring provisions of the Bill into force by commencement order. It is conferred on the Secretary of State except in relation to clause 40 so far as it relates to Wales when it is conferred on the National Assembly for Wales. As usual with the commencement orders, they are not subject to any parliamentary procedure. Parliament has approved the principle of the provisions to be commenced by enacting them; commencement by order enables the provisions to be brought into force at a convenient time.

Schedule 1: Weapons, etc.: corresponding provisions for Northern Ireland

Paragraph 5: Northern Ireland: manufacture, import and sale of realistic imitation firearms




Schedule 1 to the Bill extends to Northern Ireland only. Paragraph 5(1) of that Schedule makes it an offence to manufacture, sell or import a realistic imitation firearm. A number of specific defences are provided in paragraph 6, and the scope of the offence is further


narrowed by the definition of “realistic imitation firearm” in paragraph 7. Paragraph 5(3) allows the Secretary of State by regulations to provide for additional exceptions, exemptions and defences from the offence. Regulations made under this provision may by virtue of paragraph 5(4) and (6) frame an exception, exemption or defence by reference to an approval or consent (which may be given in relation to particular cases or to descriptions of cases, and which may be given by a person specified or described in the regulations) and may make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. It is considered appropriate for the Bill to include such a power so that if it emerges that any legitimate use of realistic imitation firearms is not covered by one of the existing defences or exceptions, and so manufacture etc for that use is criminalised by paragraph 5(1), then it will be possible to make provision to make an exception for that use. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Paragraph 6: Northern Ireland: manufacture, import and sale of realistic imitation firearms: historical re-enactments




As stated above, paragraph 6(2) sets out specific defences to the offence of manufacturing, importing or selling realistic imitation firearms. One such defence, set out in sub-paragraph (2)(e), arises if the person charged shows that his conduct was for the purpose only of making the imitation firearm in question available for the purpose of historical re-enactments organised and held by persons specified or described for the purposes of this section by regulations made by the Secretary of State. A definition of “historical re-enactment” is set out in sub-paragraph (6) but it is considered appropriate to include this power to ensure that the defence is available only for bona fide organised re-enactments, rather than any person who claims he is re-enacting an event or illustrating conduct from the past. Regulations made under this provision may by virtue of sub-paragraph (5) make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Paragraph 7: Northern Ireland: manufacture, import and sale of realistic imitation firearms: definition of “realistic imitation firearm”




As stated above, paragraph 7 defines “realistic imitation firearm” for the purposes of the offences in paragraph 5. Paragraph 7(3)(b) provides that an imitation is to be regarded as distinguishable from a real firearm – and hence is not a realistic imitation firearm – if its size, shape or principal colour is unrealistic for a real firearm. Sub-paragraph (4) provides that the Secretary of State may specify in regulations the maximum dimensions of a realistic imitation firearm and the colours which are to be regarded as unrealistic for a real firearm. The effect of such regulations will be that a person can be reassured that they are not committing the offences under paragraph 5 if they manufacture, import or sell an imitation firearm which is smaller than those dimensions, or if its principal colour is one


specified in the regulations. If the dimensions of an imitation firearm are greater than those specified, or its principal colour is not one of those specified, it may or may not be regarded as a realistic imitation firearm, depending on the outcome of the application of the test in paragraph 7(1). It is intended that regulations will specify that imitations are to be regarded as unrealistic if their dimensions are very small – probably no more than 38mm in height and 70mm in length – and to specify bright colours by reference to British Standard numbers. Regulations made under this provision may by virtue of paragraph 7(6) make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Paragraph 8: Northern Ireland: specification for imitation firearms




This paragraph enables the Secretary of State to make regulations requiring imitation firearms to conform to specifications which are either set out in the regulations or are approved as set out in regulations. It will be an offence to manufacture or import an imitation which does not so conform, or to modify an existing firearm or imitation firearm so that it becomes an imitation firearm which does not so conform. For the avoidance of doubt, this paragraph will catch a wider category of imitations than the “realistic imitation firearms” which are the subject of paragraph 5. It is intended to exercise this power to introduce tough manufacturing standards which ensure that imitation firearms cannot be converted to fire live ammunition. By virtue of paragraph 8(4) the regulations may also specify or set out a mechanism for determining persons who can certify an imitation as conforming to those standards. Under sub-paragraph (6) the regulations make provision for different cases, contain exemptions and exceptions, and contain incidental, supplemental, consequential and transitional provisions. The Department considers the negative resolution procedure to provide the appropriate level of Parliamentary scrutiny.

Paragraph 12(3): Northern Ireland: sale etc. of knives and other weapons



Parliamentary procedure: Affirmative resolution

Sub-paragraphs (2) and (3) of this paragraph amend section 141 of the Criminal Justice Act 1988 (offensive weapons) insofar as it applies to Northern Ireland. Those amendments include the insertion of a subsection (11C) into that section. This provides that the Secretary of State may by order provide for exceptions and exemptions from the offence of manufacturing, selling, hiring or lending a weapon specified in the Criminal Justice Act 1988 (Offensive Weapons) Order 1988 (as amended), and from the prohibition on the importation of such a weapon. An order under subsection (11C) may also provide that it is to be a defence in proceedings for such an offence or for an offence under section 50(2) or (3) of the Customs and Excise Management Act 1979 (penalty for improper importation of goods) to show matters specified or described in the order. It is intended that the order may be used in respect of weapons which are not currently listed in the 1988 order but which may be added to it in the future, and for which there may be legitimate uses. For example, if samurai swords or machetes were to be added to the list,


there might be a case for exempting them in relation to legitimate martial arts or agricultural use. The Department considers the affirmative resolution procedure to provide the appropriate level of Parliamentary scrutiny, as the 1988 order was itself subject to that procedure, and this will enable any future additions to that order and any defences prescribed under subsection (11C) to be contained in the same statutory instrument.

15 November 2005


APPENDIX 2: COUNCIL TAX (NEW VALUATION LISTS FOR ENGLAND) BILL

Memorandum by the Office of the Deputy Prime Minister

Introduction

1. The Council Tax (New Valuation Lists for England) Bill was brought from the House of Commons on 1 December 2005. This memorandum identifies the delegated power in the Bill, describes the purpose and proposed use of that power and explains the choice of the particular form of Parliamentary control over it.

Summary and background

2. The Council Tax (New Valuation Lists for England) Bill contains 2 clauses:

• Clause 1 makes provision for the Secretary of State to specify by order, for England, the year in which any new council tax valuation list shall be compiled (that is to say, the year in which a revaluation shall take place). The compilation of any new list will always fall on 1 April in any specified year. This replaces the requirement in England for council tax revaluation to take place on 1 April 2007 and thereafter at ten yearly intervals – or at shorter intervals, if specified by the Secretary of State.

• Clauses 2 provides for the short title of the Bill and for its extent.

3. The Bill does not affect the provisions for the revaluation of domestic properties in Wales for council tax purposes. In Wales, council tax revaluation took place on 1 April 2005. The requirement to revalue on the 10th anniversary of the previous revaluation (or, if earlier, on a date specified by order by the National Assembly for Wales) is not affected by the present proposals.

Clause 1: Dates on which new valuation lists must be compiled for England

4. Clause 1 amends section 22B of the Local Government Finance Act 1992 (“LGFA 1992”) by making provision for the Secretary of State to specify by order, for England, the year in which each new council tax valuation list shall be compiled.

5. The purpose of this power is to give flexibility in the timing of the first revaluation and any further future revaluations. Sir Michael Lyons, commissioned by the Deputy Prime Minister and the Chancellor of the Exchequer, is conducting an independent inquiry into local government funding including the reform of the council tax system. The inquiry was due to report at the end of 2005 but his remit was extended in September 2005 so that the inquiry can consider issues relating to the role of local government and councils’ accountability to service users. The inquiry is now due to report at the end of 2006.

6. In the light of the wider context of reform which is now being considered by the inquiry, Ministers concluded that it was necessary to postpone the council tax revaluation which was due to take place in 2007 so that the first revaluation in England can take full account of the further work of the Lyons Inquiry and be integrated with any other possible funding reforms. The date of further future revaluations will also be set by the Secretary of State by order so that appropriate dates can be determined in the light of circumstances.

7. Clause 1(5) of the Bill amends section 22B(11) of the LGFA 1992 to require orders made under the new power to be approved by the House of Commons. It is considered that changing the timing of the first council tax revaluation, which would otherwise have been required to be done by primary legislation, and setting subsequent dates for


revaluations are decisions of sufficient political importance that orders made under the new power should be subject to the affirmative resolution procedure in the House of Commons. The Secretary of State’s existing power by order to specify shorter intervals between revaluations in England is subject to approval by the House of Commons (see section 22B(3)(a) and (11) of the LGFA 1992). The other critical decisions in respect of council tax revaluation relate to the substitution, by order, of different valuation bands and/or different ratios between valuation bands for those set out for England in section 5(1) of the LGFA 1992. An order substituting new council tax bands or new ratios between them, for England, is required to be made by affirmative resolution of the House of Commons under section 5(5) of the LGFA 1992. We thought that decisions about the years in which revaluation should take place were decisions of similar importance, justifying the affirmative resolution procedure.

29 November 2005


APPENDIX 3: NATIONAL INSURANCE (CONTRIBUTIONS) BILL

Memorandum by HM Treasury

Introduction

This Bill takes forward the Paymaster General’s Pre-Budget Report 2004 announcement of 2 December 2004 that the Government would be prepared to act against avoidance of tax and National Insurance Contributions (NICs) involving employee remuneration. The Bill confers powers to make regulations in respect of NICs, to enable retrospective changes to be made to NICs legislation to reflect retrospective changes made to the tax regime. The powers allow for NICs liability to be charged back to 2 December 2004, if necessary. They will be used in the first instance to reflect the employment-related securities anti-avoidance provisions included in Schedule 2 to the Finance (No.2) Act 2005, which received Royal Assent in July 2005 but took effect from 2nd December 2004.

1. The primary purposes of the measures in this Bill are:

• to enable existing powers to make NICs regulations to be exercised with retrospective effect, so as to make provision which reflects the whole or part of a retrospective tax provision relating to employment income. It is intended that this provision will be used to impose retrospectively NICs liabilities to mirror, as far as possible, retrospective anti-avoidance tax measures in Finance Bills;

• to confer power to make changes to the law relating to contributions, contributory benefits and statutory payments which are consequential on the power to make such retrospective provision;

• to provide a power to extend to NICs the disclosure rules relating to tax avoidance; and

• to prevent NICs elections and agreements being used by employers to recover, or pass on the liability for, secondary NICs on certain security-based employment income which is brought into NICs liability retrospectively by reason of the exercise of the powers conferred by clause 1 or 2.

2. The Bill contains 7 substantive clauses. Clauses 1, 3 and 5 make provision for Great Britain and clauses 2, 4 and 6 make corresponding provisions for Northern Ireland. Clause 7 makes provision for Great Britain and Northern Ireland.

Territorial Coverage

3. There is a separate body of social security legislation applying to Northern Ireland. But, consistent with the principle of parity in relation to social security under section 87 Northern Ireland Act 1998, it is contemplated that there will be co-ordination between the two systems with a view to securing a single system of social security for the United Kingdom. Clauses 2, 4 and 6 mirror for Northern Ireland the provision made in clauses 1, 3 and 5 for Great Britain. Clause 7 extends to Great Britain and Northern Ireland. Legislation on NICs is an excepted matter for the purposes of Northern Ireland. Excepted matters are set out in Schedule 2 to the Northern Ireland Act 1998 and are the matters that remain the responsibility of the UK Parliament.

4. With effect from 2 December 1999, responsibility for devolved matters in Northern Ireland transferred to the Northern Ireland Assembly and its Executive Committee of Ministers. The legislation relating to contributory benefits and the legislation relating to statutory payments are transferred matters for the purposes of Northern Ireland and so fall


within the responsibility of the devolved administration. Transferred matters are all matters that are not excepted or reserved under respectively Schedule 2 or 3 of the Northern Ireland Act 1998. As the Northern Ireland Assembly is currently suspended, primary legislation relating to transferred matters will normally be made by Order in Council.

5. In relation to the Scottish devolution settlement, the subject matter of the provisions are reserved matters for the UK Parliament by virtue of Paragraph F1 (Social Security Schemes) of Part 2 of Schedule 5 to the Scotland Act 1998.

Overview of delegated Powers

6. The powers are listed in tabular form at Annex A. There are delegated powers at –

• clause 1, in new sections 4B(2), 4C(1) and (2)(f) and section 4C(11)(b) of the Social Security Contributions and Benefits Act 1992 (CBA 1992);

• clause 2, in new sections 4B(2), 4C(1) and (2)(f) and section 4C(11)(b) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (CB(NI)A 1992);

• clause 3, in new section 10ZC(1) of the CBA 1992;

• clause 4, in new section 10ZC(1) of the CB(NI)A 1992

• clause 7, in new section 132A(1) and (4) of the Social Security Administration Act 1992 (SSAA 1992).

7. New section 4B of the CBA 1992 and the CB(NI) 1992 enables specified existing powers under those Acts to be exercised retrospectively, so as to enable NICs regulations to be given retrospective effect where such provision is considered appropriate to reflect retrospective changes made to tax legislation. The NICs regulations can, if necessary, have retrospective effect back to 2 December 2004. The power allows regulations to be made to remove or introduce a NICs liability retrospectively.

8. The kinds of changes which will need to be made can already be made prospectively using delegated powers under the existing legislation. Section 4B allows these changes to be made retrospectively. This extension of existing powers made by new section 4B is considered appropriate because, in the absence of this provision, primary legislation would be required every time a retrospective tax provision was introduced which the Government wanted to reflect for NICs. Changes to NICs are not within the scope of the annual Finance Bill, so separate primary legislation would be required. This would lead to a delay in the collection of any backdated NICs liability, pending the necessary primary legislation being prepared and passed by Parliament. Enabling the provision to be made by regulations allows the Government to respond quickly and effectively to avoidance schemes. Regulations made by virtue of section 4B are subject to affirmative resolution procedure in Parliament, thus ensuring Parliamentary oversight and scrutiny.

9. New section 4C of the CBA 1992 and the CB (NI) A 1992 enables provision to be made for the collection and recovery of any retrospective NICs liability arising by virtue of the new section 4B. It also enables provision to be made dealing with any consequential effects on statutory payments, contributory benefits and contributions to pension schemes. Regulations made under this section will include the detailed machinery provisions of when and how employers will pay any NICs that become payable under the regulations made by virtue of new section 4B. It is expected that these machinery provisions will generally mirror the existing machinery provisions which are set out in regulations. So it is considered appropriate to also deal with the new machinery provision in regulations. The delegated powers relating to consequential changes to statutory payments, contributory benefits and pension contributions allow the Government


sufficient flexibility to amend the complex raft of existing legislation to take account of retrospective NICs liabilities arising by virtue of regulations under section 4B.

10. The powers conferred by new section 4C(2)(f) provide flexibility to expand the range of purposes for which consequential provision may be made. This will enable provision to be made quickly dealing with unforeseen consequential issues that may arise where regulations are made by virtue of section 4B.

11. In section 4C(11), paragraph (b) of the definition of “statutory payment” enables the Treasury to prescribe by regulations other payments which are to be regarded as “statutory payments” for the purposes of section 4C.

12. New section 10ZC enables regulations to be made in consequence of retrospective tax legislation, if this appears to the Treasury to be expedient for any purpose of the law relating to Class 1A contributions. Such regulations cannot have effect earlier than 2nd December 2004. The regulations cannot impose or increase Class 1A NICs liability retrospectively. (Such a power is not required because retrospective tax provisions have an automatic knock-on effect on Class 1A liability by virtue of the existing section 10 of the CBA 1992.)

13. The section 10ZC powers have been taken on precautionary basis in case, in future, schemes which seek to avoid tax and Class 1A NICs are closed down retrospectively by tax legislation. Because the Government is unable to anticipate precisely what form possible avoidance in the field of Class 1A NICs might take, or to foresee precisely what consequential changes might be required as a result, it is thought desirable to use delegated legislation to retain flexibility in this area. Also, in a similar way to the regulations under new section 4C of the CBA 1992 and the CB (NI) A 1992, legislation providing when and how any resultant Class 1A liability resulting from retrospective tax legislation is paid or reported is likely to reflect existing machinery regulations. Again, it seems sensible for these further machinery provision also to be in regulations.

14. The purpose of the power at new section 132A is to allow for the tax disclosure rules, to the extent they apply to income tax, to be extended to NICs and for provision made in relation to NICs to continue to mirror the tax rules if those rules are changed. In the absence of delegated powers, primary NICs legislation would be needed to mirror changes to income tax disclosure rules. As provision relating to NICs is outside the scope of a Finance Bill, separate primary legislation would be required. It is in the interest of those required to comply with the disclosure provisions that the law relating to tax and NICs is kept aligned. If separate primary legislation were needed for NICs this would be likely to result in a period when the two regimes were not aligned. By conferring power to make the changes by delegated legislation this eventuality can be avoided.

Parliamentary Scrutiny

15. The Bill includes a power that will enable regulations to be made which can be effective from 2nd December 2004, if necessary. This is a proportionate response to deal with what are regarded as contrived tax and NICs avoidance schemes. The Bill will enable HMRC to react quickly to any new avoidance and will deter future avoidance. Without powers to introduce retrospective NICs legislation through regulations it would be necessary to have a NICs Bill every time there was a retrospective tax measure which the Government wanted to reflect retrospectively for NICs purposes.

16. Regulations will be made by statutory instrument under the affirmative resolution procedure, except for certain regulations made under clause 7 (s132A(1) SSA 1992) which are subject to the negative resolution procedure.

17. The main powers in sections 4B and 4C are tempered by the fact that the regulations to be made under these new powers have to go through the affirmative resolution


procedure and can only be used to reflect, in whole or in part, retrospective tax provisions. These tax provisions will already have been debated when the relevant Finance Bill proceeded through Parliament.

18. By virtue of the amendments made by clauses 1(2)(b) and 2(2)(b), regulations made by virtue of section 4B(2) must be laid no later than 12 months after the date upon which the corresponding tax provision was passed. In a case where the corresponding tax legislation was passed before this Bill, the period is 12 months from the passing of the Bill. Accordingly, the period during which the retrospective regulations can be made is limited.

19. Regulations under section 4C(2)(f) or (11) are also subject to affirmative resolution procedure, which is regarded as appropriate given that the effect of these regulations is to expand the purposes for which provision may be made under section 4C(1).

20. Clause 7 (s132A(1) of SSAA 1992) allows for regulations to be made requiring the disclosure of information in relation to NICs avoidance schemes. The scope of the power is restricted to applying to NICs, or making provision for NICs corresponding to, the income tax disclosure provisions (with or without modifications).

21. In relation to disclosure regulations made under new section 132A(1), the Government considers the negative resolution procedure is appropriate. If new section 132A is adopted, Parliament will have already taken a decision to extend the income tax disclosure rules to NICs and it is not apparent what the added value would be in having an affirmative resolution debate on the same point. The regulations themselves are expected to be technical in nature, applying the income tax disclosure rules with only such minor modifications and adaptations as are necessary to make them fit with the NICs system. The negative procedure would seem to afford Parliament sufficient scrutiny in such circumstances.

22. S132A(4) provides that regulations may also amend s132A(3) to the extent necessary to keep the definitions of notifiable NICs schemes in line with the parallel definitions in tax legislation. This power would be used if the tax provisions were to be amended subsequent to s132A(4) coming into force.

23. Any regulations made under the power in s132A(4) will be subject to the affirmative resolution procedure. Here it is appropriate for Parliament to scrutinise the changes under the affirmative procedure as the regulations can change the scope of certain regulation-making powers in the Bill itself, albeit only to make changes analogous to those made for tax.

Draft Regulations

24. Draft regulations showing how the powers are to be used have been made available to members of the House of Commons Standing Committee that scrutinised the Bill, and will be available for its passage through the House of Lords. These are attached to the Memorandum at Annex B and cover:–

• Draft Regulations to mirror the tax position in Schedule 2 to the Finance (No. 2) Act 2005; and

• Draft Regulations on disclosure of contribution avoidance arrangements.

25. Regulations on collection of the backdated liability and consequential changes relating to statutory payments and contributory benefits will also be drafted.

26. Clauses 5 and 6 do not introduce any new regulation making powers, but for the sake of completeness consequential amendments being made to existing regulations have been included at Annex C.

27. All draft regulations at Annexes B and C have been published on the HMRC website.


Clauses

Clause 1 – Power to make provision in consequence of retrospective tax legislation: Great Britain

28. Subsection (1) provides for new sections 4B and 4C to be inserted after section 4A of the CBA 1992.

Section 4B – Earnings: power to make retrospective provision in consequence of retrospective tax legislation

29. Subsection (1) provides for section 4B to apply where there has been retrospective tax legislation, relating to those Parts of ITEPA 2003, dealing with employment income. The Treasury must also consider it appropriate to make regulations by virtue of section 4B for the purpose of reflecting in whole or in part the provision made by the retrospective tax provision.

30. Subsection (2) provides that where section 4B applies regulations may be made under various existing powers (the “relevant powers”) so as to have retrospective effect. This can only be done if it appears to the Treasury to be expedient in consequence of the retrospective tax provision for the regulations to have that effect.

31. Subsection (3) specifies the “relevant powers”. They are the powers in sections 3, 4(6) and 4A of the CBA 1992.

32. Subsection (4) ensures that tax provisions which were made before this Bill is passed also trigger the power to make retrospective provision conferred by subsection (2).

33. Subsection (5) limits how far back the NICs changes can be backdated. It provides that regulations cannot take effect earlier than 2nd December 2004. That was the date of the Paymaster General’s announcement on tax and NICs avoidance.

34. Subsection (6) provides that regulations made retrospectively, by virtue of the extension of the powers at sections 3, 4(6) and 4A of the CBA 1992, will be able to affect payments of earnings made to or for the benefit of employees prior to the date when the regulations are made.

35. Subsection (7) defines “relevant contributions legislation”, “the relevant time” and “the revised earnings”.

36. Subsections (8), (9) and (10) provide that, where regulations that are made by virtue of subsection (2) have the effect described in subsection (6), the contributions legislation is to be applied to the revised earnings figure. Accordingly, liability is to be re-determined by reference to the revised earnings or amount of those earnings, as if the revised position applied at the time.

37. Subsection (11) provides that subsections (7) to (10), which provide for liability to be re-determined, are to be subject to any exceptions which are specifically provided for.

38. Subsection (12) sets the scope of the power in relation to other provisions in the CBA 1992 and other enactments.

39. Subsection (13) defines “contributions legislation”.

Section 4C – Power to make provision in consequence of provision made by or by virtue of section 4B(2)

40. Subsection (1) enables the Treasury to make regulations which it considers expedient for any of the purpose mentioned in subsection (2) as a consequence of provision made by or by virtue of using the powers in section 4B(2). Where the changes apply to contributory benefits, occupational pensions, personal pensions, Statutory Sick Pay, Statutory


Maternity Pay or Maternity Allowance concurrence will be required from the Secretary of State for Work and Pensions. Where the changes apply to Statutory Adoption Pay or Statutory Paternity Pay concurrence will be required from the Secretary of State for Trade and Industry.

41. Subsection (2) identifies the purposes for which it may be necessary to make regulations where earnings are re-determined. Subsection (2)(f) also allows for additional purposes to be prescribed in future by the Treasury with the concurrence of the Secretary of State.

42. Subsection (3)(a) provides that consequential changes may be made to primary and secondary legislation, including legislation passed or made on or after the day on which this Bill receives Royal Assent.

43. Subsection (3)(b) enables regulations under section 4C to make provision by applying primary or secondary legislation (with or without modifications).

44. Subsection (4) provides that any consequential regulations cannot have effect earlier than 2nd December 2004, which was the date of the Paymaster General’s announcement on tax and NICs avoidance.

45. Subsection (5) lists examples of matters which may be affected retrospectively under section 4C(1) powers. This list is not exhaustive.

46. Subsection (6) provides that where matters specified under subsection (5) have already been determined, regulations can be made under section 4C(1) allowing for re-determination of these matters. It is not the intention to re-determine matters generally but the nature of organised avoidance is such that those seeking to avoid might try to manipulate the processes for determining matters. Regulations will provide the flexibility to re-determine only where appropriate.

47. Subsection (7) ensures that the operative provisions do not operate to remove past or future entitlement to contributory benefit, contribution-based jobseeker’s allowance or statutory payments or to reduce the amount of such payments.

48. Subsection (8) defines the operative provisions for the purposes of subsection (7).

49. Subsection (9) ensures that other powers conferred by the CBA 1992, or any other enactment are not affected by this new power.

50. Subsection (10) ensures that the modification by the Treasury of any secondary legislation under the new section 4C does not prejudice any existing power which the person who made the original legislation has to amend or revoke it.

51. Subsection (11) provides the meaning for “commencement day”, “enactment” and “statutory payment”.

52. Subsection (2) of the clause amends section 176 of the CBA 1992.

• Paragraph (a) inserts references to section 4B(2) and 4C into section 176(1)(a), so as to provide that regulations under section 4B(2) or 4C are subject to the affirmative resolution procedure. Such regulations will, therefore, have to be laid before, and approved by a resolution of, each House of Parliament. This will safeguard against any improper use of these powers, particularly in relation to retrospective liability.

• Paragraph (b) inserts section176 (2A), (2B) and (2C). Subsections (2A) and (2B) provide that regulations made by virtue of section 4B(2) must be laid before Parliament within 12 months of the corresponding tax provision being passed. Where the corresponding tax provision was passed or made before Royal Assent of this Bill, the regulations must be laid within 12 months of


Royal Assent of the Bill. Subsection (2C) defines terms used in subsection (2B).

Clause 2

53. Clause 2 replicates the changes made by clause 1 for the purposes of the CB (NI) A 1992 except that in relation to new section 4C whereas the requirement in CBA 1992 is that the regulations be made with the concurrence of the Secretary of State, in CB(NI)A 1992, it is the concurrence of each of the Northern Ireland departments responsible for any of the matters to which the regulations relate whose concurrence is required.

Clause 3

54. Clause 3 inserts new section 10ZC after 10ZB of the CBA 1992.

Section 10ZC

55. Subsection (1) enables regulations to be made for the purposes of the law relating to Class 1A NICs in consequence of any relevant retrospective tax provision which has been passed or made or which may be passed or made in the future.

56. Subsection (2) defines “relevant retrospective tax provision” as a provision which affects the amount of general earnings chargeable to income tax under the employment income Parts of the Income Tax (Employment and Pensions) Act 2003.

57. Subsection (3) allows for the tax provisions that trigger the use of the power in subsection (1) to have been made before or after the commencement day of this Bill.

58. Subsection (4) makes it clear that the regulations can make provision modifying existing enactments (including future enactments) and applying existing enactments with or without modifications. The nature of contrived avoidance is such that without the ability to make consequential changes, those seeking to avoid might successfully circumvent the legislation and so frustrate the will of Parliament.

59. Subsection (5) provides that the new regulations made under these powers cannot go back earlier than 2nd December 2004, which was the date of the Paymaster General’s announcement on tax and NICs avoidance.

60. Subsection (6) allows for cases that have already been decided before regulations have been made under subsection (1) to be reviewed and amended where necessary.

61. Subsection (7) ensures that regulations made under this Act may not themselves impose a liability to Class 1A contributions or increase an existing liability.

62. Subsection (8) ensures that any liability to Class 1A NICs arising by virtue of any retrospective tax legislation, and any other powers conferred by the CBA 1992 or any other enactment, are not affected by this new power.

63. Subsection (9) ensures that the modification of any secondary legislation under the new section 10ZC by the Treasury does not prejudice any existing power which the person who made the original legislation has to amend or revoke it.

64. Subsection (10) defines “the commencement day” of this Bill as the day the Bill is turned into an Act following Royal Assent.

Clause 4

65. Clause 4 replicates the provisions of clause 3 in respect of the CB (NI) A 1992.


Clause 7 – Disclosure of contributions avoidance arrangements

66. Subsection (1) and (2) insert a new section 132A – Disclosure of contributions avoidance arrangements - into the SSAA 1992.

Section 132A

67. Subsection (1) provides that the Treasury may make regulations requiring, or relating to the disclosure of information in relation to “notifiable contribution arrangements” or “notifiable contribution proposals”.

68. Subsection (2) restricts the scope of the power provided by subsection (1). The regulations can only operate by applying to NICs (with or without modification), or making provision for NICs corresponding to, primary or secondary legislation relating to the disclosure of information in relation to income tax avoidance arrangements. Those provisions include any provisions that come into force on or after the day this Bill is enacted.

69. Subsection (3) defines “notifiable contribution arrangements” and “notifiable contribution proposals”. In essence, these are arrangements, or proposals for arrangements, whose use might be expected to obtain a NICs advantage as one of the main benefits of using those arrangements.

70. Subsection (4) provides a power enabling the Treasury to amend subsection (3) by regulation if, after the passing of this Bill, any of the provisions relating the disclosure of income tax avoidance arrangements are amended in such a way that the definitions in subsection (3) no longer mirror the relevant tax provisions. The scope of the power is limited to amending the definitions in subsection (3) so as to make changes analogous to those made to the relevant tax provisions.

71. Subsection (5) defines some of the terms used in subsection (4).

72. Subsection (6) ensures that regulations made under section 132A cannot require any person to disclose information which is protected by legal professional privilege. This provision mirrors the equivalent provision applying to the disclosure information in relation to income tax arrangements (section 314 FA 2004).

73. Subsection (7) defines “advantage”, “arrangements”, “contribution” and “tax avoidance arrangements”.

74. Subsection (3) of the clause provides that regulations made under the power contained in subsection (4) of the new section 132A SSSA 1992 will be subject to the affirmative resolution procedure.

75. Subsection (4) of the clause extends the scope of the new section 132A to Northern Ireland as well as Great Britain.

Conclusion

76. As set out above the Government believes the need to make provision under regulation-making powers in this Bill and the provisions for Parliamentary scrutiny have been carefully considered and are justifiable and proportionate in terms of the policy aims of the Bill. The power to make changes to Class 1 NICs liability retrospectively are not unfettered, as regulations made under it must take effect on or after 2nd December 2004 and reflect in whole or in part income tax measures. The new powers will act as a strong deterrent against NICs avoidance schemes and arrangements. The new regulation-making powers deal with contentious issues, but the Government believes that they are appropriate. The affirmative resolution procedures will enable Parliament to scrutinise the


exercise of regulation-making powers that are capable of creating NICs liabilities retrospectively.


APPENDIX 4: LONDON OLYMPIC GAMES AND PARALYMPIC GAMES BILL – GOVERNMENT RESPONSE

Letter from Lord Davies of Oldham, Lords Spokesman for the Department for Culture, Media and Sport, to the Chairman

I was most grateful for your consideration of the London Olympic Games and Paralympic Games Bill, and for the Report of the Delegated Powers and Regulatory Reform Committee published on 14 December. I welcome the Committee’s conclusion that the powers are delegated appropriately and would like to address the Committee’s points on clauses 9, 19 and 25.

Clause 9 – dissolution of Olympic Delivery Authority

I can reassure the Committee that the order to dissolve the ODA will attract the procedure in section 6 of the Statutory Instruments Act 1946 (cannot be made if disapproved within 40 days).

Clause 19 – Advertising and clause 25 – Street trading

I note the Committee’ s comments about the regulations provided for in clauses 19 and 25 and am pleased that the Committee agrees the powers are appropriately delegated.

As the Committee points out, the regulations for advertising and street trading will have significant effects. There are likely to be a number of individuals and groups with interests in both sets of regulations. On the face of the bill we decided not to attempt to define exhaustive lists of all those to consult, as it would not be possible to ensure all persons were included.

During the bill’s passage through the Commons we gave assurances that the advertising industry, and others who might be affected, will be consulted when making the regulations, even though they are not specified on the face of the bill.

I note the Committee’s comments that under the hybrid instrument procedure, those whose private interests are affected by regulations would be automatically entitled to petition against the regulations. In light of this, I will make a further, specific commitment that those whose private interests are affected will be consulted.

I am grateful for the Committee’s consideration of the bill.

I am copying this letter to Peers due to speak at Second Reading and Members of the Commons Standing Committee. A copy will also be deposited in the House Library.

15 December 2005


APPENDIX 5: IMMIGRATION, ASYLUM AND NATIONALITY BILL – GOVERNMENT RESPONSE

Letter from Mr Tony McNulty MP, Minister of State at the Home Office

The Government has considered the views of the Delegated Powers and Regulatory Reform Committee in relation to the powers in clause 48 and clause 15 of the Immigration, Asylum and Nationality Bill.

Clause 48

The Committee has drawn clause to the attention of the House and said that the House may wish to retain an element of control over the information and documents to be submitted, and procedures to be followed in making an immigration claim.

Procedures to be followed

Clause 48 is drafted to allow the Secretary of State sufficient flexibility in prescribing procedures to respond to customer demand. We do, however, acknowledge that application procedures will not be subject to the same regular change as application forms, and that the Immigration Rules will allow sufficient flexibility to make changes as and when necessary. The Government, therefore, intends to introduce an amendment at Report Stage making clear that any specified procedures required of applicants will be set out in the Immigration Rules and may not be prescribed administratively.

Information and documents

The Government does not propose to amend the clause in relation to requiring the submission of specified information or documents by administrative means. We envisage that the only information and documents we will request are those which are necessary to evidence the requirements in the Rules. The requirements to be satisfied in order to qualify for leave to remain will be set out in the Immigration Rules, e.g. place of employment, enrolment at a recognised place of study, etc. Parliament will have a measure of control over these requirements. The prescribed application form will then say what information and documents will count as proof of the requirements (e.g. tax document or P60 as proof of employment). We consider that the specific information or documents we ask for to evidence requirements in the Rules is a largely administrative matter, and that Parliament has sufficient control over this through its power to scrutinise the requirements set out in the Immigration Rules.

Furthermore, the consequences of not providing specified information or documents are not envisaged to be sufficiently serious to merit a higher level of Parliamentary scrutiny. Within the application form any documents requested will count as a standard for the application. Not adhering to that standard will not necessarily lead to automatic refusal or invalidation providing an alternative confirmation is provided. Where a document is inherent to the category in which the application is made this will, as now, be stated in the Rules (e.g. leave to remain as a work-permit holder requires the applicant to be the holder of a valid work-permit).

Illegal working provisions

The Delegated Powers and Regulatory Reform Committee also recommended that the orders made under clause 15(2) should be subject to affirmative procedure. This power enables the Secretary of State to prescribe the maximum amount that may be imposed by way of a civil penalty on an employer of an illegal migrant worker. We have said that we


envisage the maximum level of penalty being £2000 per illegal worker, subject to the outcome of public consultation on the civil penalty scheme before commencement of these provisions. We have accepted the Committee’s recommendation to make the power subject to the affirmative rather than the negative resolution procedure and have tabled an amendment to clause 20 to that effect.

22 December 2005

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