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Water and Sewerage Services (PE423)
That brings us on to current petitions and responses to them. PE423 is from Mr Terry O'Donnell, who called on the Parliament to take the necessary steps to return water and sewerage services to unitary authority control throughout Scotland, to continue the water rates relief for churches and voluntary organisations in Scotland and to reject any proposals for fluoride to be added to the Scottish water supply.
Telecommunications Developments (Planning) (PE425)
We move on to PE425, from Anne-Marie Glashan. The petition calls on the Parliament to adopt the precautionary principle that the Transport and the Environment Committee recommended in its report on the planning procedures for telecommunications developments and which was also recommended by the Stewart report.
Civic Government (Scotland) Act 1982 (Obscene Material) (PE476)
PE476 is from Ms Catherine Harper and is on indecent displays in corner shops. It calls on the Parliament to take immediate steps to ensure that the provisions of the Civic Government (Scotland) Act 1982 in relation to the display of obscene material are fully and effectively enforced and to review the legislation to determine whether it is adequate or requires to be amended. We agreed to seek the views of several bodies, including the Scottish Executive, the Association of Chief Police Officers in Scotland, and the parliamentary cross-party groups on men's violence against women and survivors of sexual abuse. All those responses have come in. The Executive has set out in detail its response, as has the Association of Chief Police Officers in Scotland. We have also received the views of the two cross-party groups.
The danger of a definition is highlighted in the Executive's response. It states that, unless there is the flexibility of the current description of what is meant by pornography, the Crown could end up failing to have the right to prosecute. In other words, the present situation may be more flexible than it would be if a specific definition were produced.
On the other hand, the other three bodies that we consulted thought that there may be merit in considering a definition.
I do not think that it is beyond the wit of man to come up with a definition that is broad enough to take in material that someone would find offensive. There need to be guidelines, because it is obvious that the law as it stands is not working. That is because there is no definition. People are walking away from the matter because it is difficult. Guidance on the definition would be helpful.
I go along with Rhoda Grant's comments. The Executive's comment is that prosecutions can be brought when sufficient evidence exists. I go along with the suggested course of action of asking the relevant justice committee to examine the matter, but I would like the Executive to expand slightly by indicating how it defines the phrase "sufficient evidence".
It is hard to follow that suggestion. If we refer the petition to the relevant justice committee, we will have to close our consideration of it. It has been suggested that we could ask the Executive for the additional information, which we could pass on to the subject committee and the member for information. Would that be okay?
Yes, if it is all right with other members.
Justice 1 Committee (Membership) (PE483)
The next petition, which is from Mr Duncan Shields, is on behalf of Fathers Fighting Injustice. It calls for a review of the membership of the Justice 1 Committee. We dealt with the petition at a previous meeting, but Phil Gallie asked for further clarification on the number of items that had not been put on the Parliament's website as part of the Justice 1 Committee's inquiry on the regulation of the legal profession.
Although I agree with the proposed course of action, the number of responses that have not been put on the website amounts to more than 25 per cent of the total. I presume that the situation is being dealt with with some urgency.
The responses obviously have to be checked for defamation.
That underlines the responsibility of people who give evidence to ensure that any evidence that they give does not contain anything that could be defamatory. If the people concerned had made sure of that when they submitted their evidence, their evidence would have appeared on the website much more quickly. People should learn not to abuse the committee system and to ensure that their evidence is publishable.
That is a fair point. It has been pointed out to me that when we review our guidance on the submission of petitions, we should ensure that part of the guidance makes it explicit that no defamatory material should be included in petitions.
Political Process (Young People) (PE487)
PE487, which was submitted by Mr John Dick, called on the Parliament to take a range of steps to encourage young people in Scotland to become more engaged in the political process and in adult society. We agreed to seek the formal views of the Electoral Commission on the issues that the petitioner raised. The commission has written back to confirm that it took on responsibility for voter awareness on 1 July 2001. It has provided details of the campaign that it conducted in advance of the English local government elections this year and of the programme that it will conduct in advance of the Scottish and Welsh elections next year.
I go around many schools and I am impressed by the knowledge of the political process that young people have; many young people are way ahead of adults in that respect. We should acknowledge that children and young people have an interest in the political process. Some of the questions that they ask are much more difficult to answer than some that are asked by adults.
We have some wonderful visits from groups every day.
Okay. Do members agree to the proposed course of action?
We had hoped that Mr Derek Scott would be here for consideration of PE500, but he is not here yet. We could take a five-minute break or we could leave PE500 and move on to the rest of the agenda.
I have an observation to make. The first petition on the paper is from Alex and Margaret Dekker. Cathy Peattie has lodged a motion that highlights the issue that the petition raises. The petition is outstanding from the Parliament's first year of operation. It is taking a heck of a long time for something to come of it. It seems a bit discourteous to those who submitted the petition that we still have it on file. Furthermore, there does not seem to be any prospect of our bringing the matter to an imminent conclusion.
To be fair, the Justice 1 Committee was waiting for the publication of research evidence by the Department of Environment, Transport and the Regions, which took a long time to come through. The committee has now raised the recommendations in the research reports with the Lord Advocate and the Minister for Justice and awaits a response from the Executive.
That is a fair comment. In the meantime, will there be any correspondence between this committee and Mr and Mrs Dekker, to tell them why the petition is on hold? Perhaps we should update them on the progress that has been made. It has taken a long time.
One of the flaws in the current system is the fact that once we refer a petition to another committee, it becomes that committee's property and we have no further role in its progress, other than in checking that the committee responds. It would be for the Justice 1 Committee to keep Mr and Mrs Dekker informed. We could not do it.
Perhaps you could refresh my memory. Are the petitioners calling for a requirement to have a fatal accident inquiry in all cases of road traffic death?
That is one of a range of things that the petition calls for.
That makes a lot of sense. In my experience, one of the strange things about the discretion of procurators fiscal is that one sometimes thinks that there is bound to be a fatal accident inquiry in a case but there is not and, at other times, there is such an inquiry when one is not expecting it. It might be a good idea to have a rule about that.
The main thrust of the petition is that, although the Parliament has ruled that a sentence of up to 10 years can be passed for dangerous driving, the courts never do that—they leave it to the discretion of the procurators fiscal and the Crown, who almost never seek to use that power.
There is an unwritten law that if a death is caused by a bullet, there must be a fatal accident inquiry. However, I know of cases in which that has not happened. I am a great admirer of the Procurator Fiscal Service and I do not want to be thought to be attacking it. Nonetheless, a rule would be helpful in such matters.
Okay. If members have any further points on any of the current petitions, they should get in touch with the clerks during the recess.
Scottish Transport Group Pension Funds (PE500)
Mr Derek Scott is now here to speak to PE500, which was submitted by Mr Alex Anderson, on the subject of the Scottish Transport Group pension fund surplus. The Deputy Minister for Enterprise, Transport and Lifelong Learning came to the committee last week to answer questions on the petition. We agreed to ask Mr Scott, who has given evidence to the committee before, to return and respond to what the minister had to say. I welcome him to the committee. We are grateful that he has come back.
Thank you for waiting. I am sorry; I had to come through from Fife. I take it that nobody from the Inland Revenue is appearing before the committee today.
No detailed papers have been produced by the Inland Revenue, although it has indicated that if Scottish ministers were to raise with it the issue of exemptions to its policy on taxation, it would listen to what they had to say. However, it would not guarantee that it would change its position as a result. It would help us if you could respond to the various points that were made by the minister at last week's meeting and give us your perspective.
Just on that point, at last week's meeting, we asked the minister not only to take up the issue with the Treasury but to pursue the matter of the £50 million.
We dealt with a whole range of issues, all of which members will be free to raise when we come to open discussion. However, I want to give Mr Scott the chance to give us his initial response. Mr Scott's letter has been circulated, but as it arrived a little late, members may not have had the chance to read it. Perhaps Mr Scott would go over the points that he wishes to draw to the committee's attention before we move to general discussion.
Before we hear from Mr Scott, I want to clarify something. My understanding was that the committee agreed last week to ask the Inland Revenue to give evidence.
The Inland Revenue was asked.
What was its response?
The response was that it could not give evidence at such short notice.
Will the Inland Revenue give evidence at a future date?
That will depend entirely on what the committee decides today. In any case, let us hear Mr Scott's initial response, as that may help us to arrive at a decision.
Since I e-mailed my written response to the clerk on Sunday, I have had a reply to my previous e-mail, which was referred to at last week's meeting. The letter that I received is dated 18 June, but it was faxed to me only yesterday afternoon, at about the same time as I also received an e-mail copy. I was in London until late last night, so I have had only a short time to reflect on the contents of the letter. In fairness, the letter is from Sharon Wood, who is one of the civil servants who has been dealing with the matters that have been raised by the action committee for some time.
For the record, representatives of the Inland Revenue were invited to come along to give evidence, but said that they could not do so at short notice. In response to an inquiry by the clerk to the committee, Inland Revenue officials indicated that it may be possible to reconsider the taxation of the ex gratia payments that are to be made to the STG beneficiaries if they are asked to do so by Scottish ministers. However, it is important to emphasise that they also said that they could not guarantee a different decision. That is the official response of the Inland Revenue at this stage.
Thank you. That was helpful. Given that the ex gratia payment is not part of a pension scheme and is not a pension payment, have you any indication as to how it would be defined?
I said in my written submission that this area is currently under the Inland Revenue's microscope. The practice over the years has been for the £30,000 tax-free exemption to be applied to a lot of things. I assume that the compensation paid to the 27 Scottish Transport Group executives to buy them out of a lifetime BUPA promise was not taxed. My experience as an accountant in recent years is that the Inland Revenue is increasingly seeking to tax ex gratia payments generally because it is rather frustrated at the number of times that executives in particular—I am not singling out STG executives, but referring to company executives throughout the United Kingdom—have been using the £30,000 exemption to take additional money from companies and dress it up as an ex gratia payment.
Is there any guidance on other ex gratia payments and how they would be taxed?
Guidance is obtained by explaining the circumstances of the individual payments to the Inland Revenue, which will give a ruling in writing. That explanation can be requested by the minister or by individuals. I think that it can be done by individuals now in anticipation of receiving the payment. Because of Sharon Wood's letter, I feel confident about taking up the cases of some of the individual pensioners who wrote informally—I did not draft the letter—to their Inland Revenue inspectors asking a general question to which they got a general reply, which is what I expected.
I do not think that the situation will have arisen previously in which ex gratia payments from a pension scheme are not pension payments. Do you think that the Inland Revenue might look favourably at this case, given that it would have to examine the situation as a new case altogether?
I do not have the experience to answer that. What is clear to me in this case is that the payment is coming from Her Majesty's Treasury. This is an unusual payment because the Treasury has some relationship with the Inland Revenue and that needs to be explored. I am used to taking up the case of a private employer who has made a payment to an individual or a group of individuals. The Inland Revenue looks at the facts of such cases. In this case, the Treasury is making the ex gratia payment.
Fergus Ewing and Sylvia Jackson want to speak. I would like members to stay on this issue. I do not want to jump backwards and forwards between different issues. We are dealing just now with the nature of the ex gratia payments and the question whether the Inland Revenue should tax them. If you have other questions, leave them for later. Are there any questions on this subject?
Last week, I raised with the minister my concern that widows and widowers of members of the Scottish Bus Group pension scheme would receive only 50 per cent of the payment that their partner would have received had he or she survived. The minister gave an undertaking that he would review that so that the widows and widowers could receive the whole payment. I hope that he will take into account in his review the fact that many of those people would have survived—and did survive until recently—and would have received the money had it not been for the gross delay in winding up the scheme.
That is correct. If the payment is an ex gratia payment that is not being made as if under the rules of the scheme, that argument falls by the wayside.
Thank you. That was extremely helpful. I have another technical issue that arose from the advice that you have given us, which has been confirmed by the Executive, that the payments to be made are not pension scheme payments. To put it as simply as possible, is it the case that people who worked for the Scottish bus companies will have to pay tax on the payment that they get, but those people who worked for the English bus companies did not have to pay tax on the payments that they received?
I dispute the former because we are now talking about a payment from HM Treasury, and clearly none of the people worked for the Treasury. I am struggling to see the employer relationship between HM Treasury and the recipients of the ex gratia payments.
However, from the point of view of those in Scotland who worked for the Scottish companies—there may have been many English people who worked for the Scottish companies—unless the Inland Revenue makes some sort of deal or concession, the Scottish pensioners will be taxed whereas the English pensioners were not.
The Scottish pensioners have been told—this point is based on responses from the Inland Revenue to individual pensioners—that because they were members of the employer's pension scheme, they have to pay tax on the ex gratia payment. The current situation is that the payment will come from the Treasury, which was not the employer or former employer of any of the individuals. I see a new line of inquiry opening up because the ex gratia payment is not coming from the Scottish Transport Group. The Inland Revenue might have a position on that—I have not asked the question so I do not know the answer.
I am a little unclear about the negotiations between the minister and the Treasury or Inland Revenue. From what you told us of what the Inland Revenue said, convener, it appears that it will consider the tax element if it has an indication that it should do so from the Scottish ministers—I think that that is how you put it.
Mr Scott cannot answer those questions. We have so much information that our problem is how to bring it together—
That is what I was trying to do.
We should do that so that we can find out how the committee can be of assistance.
Can I, as an accountant, put some numbers on that issue? I am concerned about whether £124 million or £126 million is on the table. The basic rate of income tax that must be deducted under pay as you earn is 22 per cent. If 22 per cent tax were applied to those figures, we would be back down to a figure that is under £100 million, which is the amount that we were offered in December 2000. Until now, we thought that we were getting somewhere because we seemed to be getting at least some of the investment return that has been earned on those moneys. The December 2000 figure was based on a March 2000 pension scheme figure. We are very grateful for the reduction in tax on pension surplus from 40 per cent to 35 per cent, but because of double taxation, we will end up with a settlement that is no better—it is actually slightly worse—than the settlement that we were offered in December 2000.
I want to be clear that the £50 million that the Treasury said that it would keep is part of the December 2000 agreement. Was that £50 million to cover taxation?
No.
Are you saying that the money for taxation is in addition to the £50 million, which the Treasury will keep, and that the Treasury will tax the payments that are made to the pensioners?
There are two elements to the tax: corporation tax and income tax on individual pensioners.
Is the £50 million for corporation tax?
The £50 million is a surplus, after employer's tax has been paid. It is money that the Treasury—
Therefore, the Treasury gets money for corporation tax, it taxes the payments that are made to the pensioners and it gets £50 million out of the surplus.
Yes.
I will follow up with Mr Scott a good question that Sylvia Jackson raised at last week's meeting. Our briefing paper says:
I did not speak to the Inland Revenue, but I understand that it would be prepared to discuss the exemptions, if ministers raised the issue. The situation is becoming extremely urgent. The committee will not meet again until after the recess. The minister's meeting with the Inland Revenue will take place over the summer. All that we can do is seek to influence the minister's position in that meeting by adopting a series of recommendations.
I suggest that we continue to pursue the possibility of a direct meeting between the minister and his advisers, on one side of the table, and the Scottish Transport Group pensioners action committee and its advisers, on the other side.
I thought that I just suggested that as the first recommendation that the committee should make. The matter is detailed and complex and must be resolved round a table by people who know what they are speaking about. Unless any committee member has a different opinion, I suggest that our first recommendation should be that the minister arranges a meeting between himself and his advisers, and the Scottish Transport Group pensioners and their advisers, to discuss his negotiating position with the Inland Revenue. Is that agreed?
I want to clarify some matters with Derek Scott before he finishes his evidence. Do paragraphs 3 and 5 in the e-mail that he sent to Scottish ministers on 9 June remain relevant? We have established that the ex gratia payments will come not from the pension fund, but from the Treasury. Paragraph 3 of that e-mail says:
Sharon Wood has answered that point. Her letter says:
Despite the reply that you received from Sharon Wood—which, unfortunately, I have not seen—are there still options to be explored, such that the payments that are to be made to the pensioners might be tax free?
Yes, but the Inland Revenue exemption for pensions mis-selling is specific—it is for people who are mis-sold private personal pensions. We are not dealing with private personal pensions; we are dealing with an occupational scheme. I drew an analogy about the timing being similar to the timing in which the changes were made to the detriment of the members we are representing today. Interestingly, that was an example where the Inland Revenue conceded that such compensation should be tax free.
I am trying to find a way to bring this topic to a conclusion, because we have already agreed that the minister and his advisers should meet the pensioners and their advisers. We can make a number of other recommendations. First, we can recommend that this committee believes that the minister should seek to renegotiate the £50 million that has been agreed with the Treasury to be redistributed to the pensioners as part of the settlement. Do members agree?
Secondly, we could recommend Fergus Ewing's point that widowers and widows should be treated equally in the final settlement. Is that acceptable to the committee?
Thirdly, we could recommend that the payments should be tax free, because they are non-pension ex gratia payments, and it is open to the Inland Revenue to rule that they should be exempt from tax.
Could you also recommend that the minister should negotiate based on all the evidence that has been given to the Public Petitions Committee?
I was just saying that. Since the Inland Revenue has indicated to the committee that it would be prepared to renegotiate the issues if it was asked to do so by Scottish ministers, we are recommending that Scottish ministers should seek those renegotiations. Have I missed any points?
Could we emphasise that we would like the meeting between the pensioners and the minister to take place first, because they are the people who know the details?
Absolutely. That meeting must happen before the minister speaks to the Inland Revenue or anybody else.
And should happen as soon as possible.
And should include their adviser.
Yes.
Perhaps we could ask the minister to remind his counterpart Gordon Brown of Mr Brown's remarks in an article in the Daily Record on 12 October 1989. He asked who would receive the surplus of the pension scheme, and stated:
We cannot write the minister's brief for him; the points that he makes are entirely up to him. However, I forgot to say that I am concerned about the minister's position that the payments will be suspended if the pensioners take legal action. Derek Scott's evidence suggests that that was not the case with the National Bus Company. Even though there was a legal challenge, payments continued to be made.
The legal action started in 1995 and was concluded in October 2001. The interim payments began in August 2000. However, I suppose that that decision was made because the legal action was proceeding in a particular way. Even though the case had not reached a final determination, the authorising parties were sufficiently confident about the outcome to start making interim payments, which were given first to pensioners in greatest need. Although that is not a totally compelling precedent, it serves as an example of how the process did not come to a dead halt just because the case was going through the courts.
The petitioners would have the committee's full support if they pursued that issue with the minister at their meeting.
I just want to thank the committee for all its help.
Thank you. I also want to thank Mr Scott for helping us through a very technical and difficult subject.
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