Finance Bill

My Lords, I am grateful to my noble friend. I do not need to repeat his remarks except to say that we have high ambitions to restore the link with earnings and thereby end the period when pensioners were dealt with so unfairly—which, of course, coincided with the initial decision made by the other side. The noble Lord, Lord Vallance, will recognise that I was caught in the embarrassing position when opening the debate of having to comment on his report before he had had the chance to deploy his case. I understand that he did not think the comments that I made about the report met the full force of the criticism. On issues of consultation, it is clear from what one can see in their representations on domicile taxation that witnesses were unhappy and would rather have been left with the old system. But the old system framework was riddled with loopholes. Although the Treasury could always carry out more consultation—in fact, it is carrying out more consultation than it has ever done in the past—people who want to defend an older system that has loopholes are not going to express their enormous enthusiasm when the Government are concerned to introduce a system that plugs some of the gaps. We regret that the debate we have had on these issues overlooked the fact that the £2,000 limit equates to capital overseas investment of around £40,000. Those are fairly substantial sums. If we raised the limit, as was suggested, to £6,000 at the basic rate, it would mean that people with £120,000 could afford to leave that money overseas and continue to enjoy this generous remittance basis and a tax-free personal allowance in addition. The Treasury had a case against that position and I would venture that, however much consultation took place on the issue, some are likely to be unassuaged. The noble Lords, Lord Higgins and Lord Northbrook, raised the issue of Equitable Life. We all recognise that Equitable Life raises significant problems, not only in terms of resources but in the responsibility of the Government vis-à-vis policy holders and their losses. We will take our time but we have indicated that we will respond to this issue by October. It will be a statement of the greatest significance and, much as this House is greatly respected in the Treasury, I feel that the Chancellor of the Exchequer or a senior member of the Cabinet is likely to make the announcement rather than a noble Lord from this Dispatch Box. The noble Lord, Lord Higgins, also raised the issue of how taxation bodies can be respected when they are criticised for not having their accounts signed off. That largely applies to one area of work that the National Audit Office has criticised. It is critical of the Government with regard to expenditure but it was also critical of the system that the previous Government had in place when they were in office. It took a decade of steady pressure from this Government to get error and fraud in social security—the noble Lord, Lord Higgins, is well versed in this—down to 5 per cent from the 13 per cent which obtained under the previous Administration. I understand the chiding from the noble Lord but I hope he will put that in perspective and recognise that this expenditure is very difficult to control.