Better scrutiny of Finance Bill needed, says Tyrie

Finance Bills should be subject to more rigorous scrutiny, particularly tax measures, according to the chairman of the Treasury Select Committee Andrew Tyrie

In a letter to the CIOT ahead of a conference next week on ways to make tax policy better, Tyrie set out a number of suggestions. They include introducing a minimum of six and preferably as many as ten sessions of oral evidence, pointing out that most government bills starting in the Commons have between two and four sessions of oral evidence, and the finance bill is more complex and important than most.

Tyrie said: ‘It is astonishing that, alone among committees formed to look at each piece of legislation, the finance bill committee does not take evidence from those best informed about the subject, before beginning its detailed line-by-line consideration. This should be put right. 

‘Parliament needs more ammunition. Henceforth, the finance bill committee should begin by holding several oral hearings with tax experts. 

‘If well organised, these can help flag up serious shortcomings in the legislation at the start, well before line-by-line scrutiny starts, giving the government time to remedy defects. And, instead of clutching their heads in despair each time they see the latest finance bill, tax experts will acquire a duty to make sure crucial points are made in these sessions.’

Tyrie also argues that expertise among Parliamentary staff in support of scrutiny of the annual finance bills ‘is thin on the ground at the moment’. He suggests the committee should have access to professional

Parliamentary draftsmen, saying that over time a cadre of clerks could also be built up who have acquired greater expertise in economic, financial, tax and statistical issues than is currently the case.

In his letter Tyrie advocates a return to the tax consultation tracker, which was originally introduced as part of the new approach to tax policy making in 2010, but which he says has suffered since from the Treasury making changes to its format.

‘There is merit to returning to the old tax tracker. It recorded tax measures in one place. And it gave the lifecycle of each tax measure, including: links to relevant documents, the stages of the consultation and/or legislative process that it has gone through and who is responsible. If it were also to include a note of the proposed legislative vehicle(s) for a given measure, and the Budget in which it was announced, it would provide a single repository of all the tax measures that have been announced, stating their current status and the next steps,’ he wrote.

Tyrie’s final point is that the Commons does not do enough in the way of post-legislative scrutiny of tax measures, not least because of the exclusion of finance acts from the constitution committee's 2004 recommendation that most acts should normally be subject to review within three years of their commencement, or six years of their enactment.

‘Dumping poor quality tax legislation on to the statute book on a quiet day in committee should no longer be an option for the government.  None of these proposals require changes to House of Commons procedure. All could improve scrutiny. The result should be a better tax system.’ Tyrie said.

Tyrie’s letter forms part of material prepared ahead of an event next week organised by CIOT, the Institute for Fiscal Studies (IFS) and the Institute for Government (IFG) for their report on ‘Better Budgets: Making Tax Policy Better’.

The event is on January 16 and details are here.

Tyrie’s letter is here.

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