1. It has been the practice of Treasury Committees
in previous Parliaments to report on the Budget before Second
Reading of the Finance Bill. This year the Budget fell on 23 March,
just two weeks before the House rises for the Easter recess. We
decided to report before the Easter recess in order to ensure
publication before Second Reading. This required taking evidence
from our first witnesses the day following the Budget, with a
deadline for written evidence of 25 March and the final oral evidence
hearing on 29 March.
2. As announced in the Government's consultation
document Tax Policy Making: A New Approach,
many of the tax measures outlined in the Budget had previously
been put out to consultation and published as part of a draft
Finance Bill. As part of our commitment to take a more active
role in scrutinising tax policy, we have sought expert advice
from the Institute of Chartered Accountants, England and Wales
(ICAEW) on the measures in the draft Finance Bill. Their views
are published alongside the written evidence for this report.
We have also invited accountancy professional bodies to submit
more considered memoranda on the extent to which the provisions
of the Finance Bill meet the criteria set out in our recent report:
Principles of tax policy.
We expect to publish this material in time for Committee Stage
of the Bill. We hope that that this will assist our colleagues
in scrutinising the Finance Bill when it comes before the House.
3. There is one other matter we wish to draw to colleagues'
attention. Currently the Government has between four and seven
months to pass the Finance Bill before the resolutions allowing
taxes to be collected on a temporary basis run out. This will
be standardised by Clause 88 of the Finance Bill (published on
31 March) to seven months in all cases. There needs to be some
amendment to the Provisional Collection of Taxes Act 1968 to make
provision for Finance Bills to be carried over, given that Sessions
are to run from one May to another. There
may well be good reasons why the Finance Bill also contains provisions
extending the period for which all Budget Resolutions have statutory
effect to seven months, but we recommend that our colleagues on
the Finance Bill seek a full explanation for this change.
4. It has been
noticeable over many years under successive Governments that measures
appear to have been trailed, sometimes accurately, sometimes in
a way designed to place them in the most favourable light. Whether
particular press reports are leaks or briefings or merely press
speculation, we have no view, but we deprecate both leaks, and
any advance briefing. Such activities are corrosive of good government.
We will return to this issue at future autumn statements and budgets.
5. Our programme of oral evidence was as follows:
Economists and interested parties
Simon Hayes, Chief UK Economist, Barclays Capital;
Roger Bootle, Managing Director, Capital Economics;
Gillian Guy, Chief Executive, Citizens Advice;
Stuart Green, Chief UK Economist, HSBC;
Paul Johnson, Director, Institute for Fiscal Studies;
Jonathan Portes, Director; and
Professor Ray Barrell, Director of Macroeconomic
Research and Forecasting, Taxation, National Institute of Economic
and Social Research; and
Matthew Sinclair, Director of Policy, TaxPayers'
Frank Haskew, Director, Tax Faculty, Institute of
Chartered Accountants in England and Wales;
Robin Williamson, Technical Director, Low Incomes
Tax Reform Group; and
John Whiting, Director, Office of Tax Simplification,
and Tax Policy Director, Chartered Institute of Taxation.
Office for Budget Responsibility
Robert Chote, Chairman;
Graham Parker, Member; and
Professor Stephen Nickell, Member, Budget Responsibility
Rt Hon George Osborne MP, Chancellor of the Exchequer;
Sir Nicholas Macpherson, Permanent Secretary;
Dave Ramsden, Chief Economic Adviser;
Edward Troup, Managing Director, Budget, Tax and
Mark Bowman, Director, Budget and Tax; and
Peter Schofield, Director, Enterprise and Growth
6. We are very grateful to all our witnesses and
those who submitted written evidence. Their flexibility in fitting
in with the very tight timescale for this inquiry is much appreciated.
1 HM Treasury, Tax Policy Making: A New Approach,
June 2010 Back
Available on the Committee's website at www.parliament.uk/treascom Back
HC (2010-11) 753 Back
Currently, the resolutions allowing the provisional collection
of taxes cease to have statutory effect if Parliament is prorogued.
Clause 88 also stipulates that resolutions permitting the collection
of taxes shall continue to have effect for seven months. This
is a considerable extension on the historic limits for such resolutions.
At the outset, Governments had four months for the passage of
the Finance Bill. The original text of the Provisional Collection
of Taxes Act 1968 has been amended, so that a resolution passed
in November or December does not expire until 5 May the following
year (a maximum of seven months), but currently resolutions passed
in February or March expire on 5 August (a maximum of six months)
and all other resolutions expire at the end of four months after
they are passed. Back