HC Deb 13 February 2001 vol 363 cc244-86

[Relevant document: First Report of the joint committee on Tax simplification Bills,HC175.]

considered in committee.

Motion made, and Question put, That the committee of the whole House be discharged from considering the Bill.—[Dawn primarolo.]

The committee divided: Ayes 313, Noes 12.

Division No 120] [9.13 pm
Abbott, Ms Diane Clarke, Eric (Midlothian)
Adams, Mrs Irene (Paisley N) Clarke, Rt Hon Tom (Coatbridge)
Ainger, Nick Clelland, David
Ainsworth, Robert (Cov'try NE) Coffey, Ms Ann
Anderson, Rt Hon Donald (Swansea E) Cohen, Harry
Coleman, Iain
Anderson, Janet (Rossendale) Connarty, Michael
Armstrong, Rt Hon Ms Hilary Cook, Rt Hon Robin (Livingston)
Ashton, Joe Cooper, Yvette
Austin, John Corbyn, Jeremy
Bailey, Adrian Cotter, Brian
Baker, Norman Cousins, Jim
Ballard, Jackie Cox, Tom
Banks, Tony Cranston, Ross
Barnes, Harry Cryer, John (Hornchurch)
Barron, Kevin Cunningham, Rt Hon Dr Jack (Copeland)
Battle, John
Bayley, Hugh Cunningham, Jim (Cov'try S)
Beard, Nigel Dalyell, Tam
Beckett, Rt Hon Mrs Margaret Darvill, Keith
Begg, Miss Anne Davey, Valerie (Bristol W)
Beith, Rt Hon A J Davidson, Ian
Bell, Stuart (Middlesbrough) Davies, Rt Hon Denzil (Llanelli)
Benn, Hilary (Leeds C) Davis, Rt Hon Terry (B'ham Hodge H)
Benn, Rt Hon Tony (Chesterfield)
Benton, Joe Denham, Rt Hon John
Bermingham, Gerald Dobbin, Jim
Berry, Roger Dobson, Rt Hon Frank
Betts, Clive Donohoe, Brian H
Blackman, Liz Doran, Frank
Blears, Ms Hazel Dowd, Jim
Blizzard, Bob Drew, David
Bradley, Peter (The Wrekin) Eagle, Angela (Wallasey)
Bradshaw, Ben Eagle, Maria (L'pool Garston)
Brinton, Mrs Helen Efford, Clive
Brown, Rt Hon Nick (Newcastle E) Ellman, Mrs Louise
Brown, Russell (Dumfries) Ennis, Jeff
Browne, Desmond Etherington, Bill
Bruce, Malcolm (Gordon) Fearn, Ronnie
Buck, Ms Karen Field, Rt Hon Frank
Burden, Richard Fitzpatrick, Jim
Burgon, Colin Fitzsimons, Mrs Lorna
Burnett, John Flint, Caroline
Burstow, Paul Flynn, Paul
Butler, Mrs Christine Follett, Barbara
Caborn, Rt Hon Richard Foster, Rt Hon Derek
Campbell, Mrs Anne (C'bridge) Foster, Michael Jabez (Hastings)
Campbell, Rt Hon Menzies (NE Fife) Foulkes, George
Galbraith, Sam
Campbell-Savours, Dale Gapes, Mike
Cann, Jamie George, Andrew (St Ives)
Caplin, Ivor George, Rt Hon Bruce (Walsall S)
Caton, Martin Gerrard, Neil
Cawsey, Ian Gibson, Dr Ian
Chapman, Ben (Wirral S) Gidley, Sandra
Chaytor, David Gilroy, Mrs Linda
Clapham, Michael Godman, Dr Norman A
Clark, Rt Hon Dr David (S Shields) Godsiff, Roger
Clark, Paul (Gillingham) Goggins, Paul
Clarke, Charles (Norwich S) Golding, Mrs Llin
Gordon, Mrs Eileen McNulty, Tony
Griffiths, Jane (Reading E) Mactaggart, Fiona
Griffiths, Nigel (Edinburgh S) McWilliam, John
Griffiths, Win (Bridgend) Mahon, Mrs Alice
Grocott, Bruce Mallaber, Judy
Grogan, John Mandelson, Rt Hon Peter
Main, Peter Marshall, David (Shettleston)
Hall, Mike (Weaver Vale) Marshall, Jim (Leicester S)
Hamilton, Fabian (Leeds NE) Martlew, Eric
Hancock, Mike Maxton, John
Hanson, David Merron, Gillian
Harman, Rt Hon Ms Harriet Michael, Rt Hon Alun
Healey, John Michie, Bill (Shef'ld Heeley)
Heath, David (Somerton & Frome) Miller, Andrew
Henderson, Doug (Newcastle N) Moffatt, Laura
Henderson, Ivan (Harwich) Moore, Michael
Hendrick, Mark Moran, Ms Margaret
Hepburn, Stephen Morgan, Ms Julie (Cardiff N)
Heppell, John Morley, Elliot
Hesford, Stephen Morris, Rt Hon Ms Estelle (B'ham Yardley)
Hill, Keith
Hinchliffe, David Mullin, Chris
Hodge, Ms Margaret Murphy, Rt Hon Paul (Torfaen)
Hoey, Kate Naysmith, Dr Doug
Hood, Jimmy O'Brien, Bill (Normanton)
Hopkins, Kelvin O'Brien, Mike (N Warks)
Howells, Dr Kim O'Hara, Eddie
Hoyle, Lindsay Öpik, Lembit
Hughes, Kevin (Doncaster N) Organ, Mrs Diana
Humble, Mrs Joan Osborne, Ms Sandra
Hurst, Alan Pendry, Rt Hon Tom
Hutton, John Pickthall, Colin
Iddon, Dr Brian Pike, Peter L
Illsley, Eric Pond, Chris
Jackson, Helen (Hillsborough) Pope, Greg
Jamieson, David Pound, Stephen
Johnson, Alan (Hull W & Hessle) Powell, Sir Raymond
Jones, Rt Hon Barry (Alyn) Prentice, Ms Bridget (Lewisham E)
Jones, Mrs Fiona (Newark) Prentice, Gordon (Pendle)
Jones, Ms Jenny (Wolverh'ton SW) Primarolo, Dawn
Prosser, Gwyn
Jones, Dr Lynne (Selly Oak) Purchase, Ken
Jones, Martyn (Clwyd S) Quin, Rt Hon Ms Joyce
Jowell, Rt Hon Ms Tessa Quinn, Lawrie
Joyce, Eric Raynsford, Nick
Kaufman, Rt Hon Gerald Reed, Andrew (Loughborough)
Keen, Ann (Brentford & Isleworth) Rendel, David
Keetch, Paul Robertson, John (Glasgow Anniesland)
Kemp, Fraser
Kennedy, Jane (Wavertree) Roche, Mrs Barbara
Kidney, David Rooker, Rt Hon Jeff
Kilfoyle, Peter Rooney, Terry
Kirkwood, Archy Ross, Ernie (Dundee W)
Kumar, Dr Ashok Rowlands, Ted
Ladyman, Dr Stephen Ruane, Chris
Lammy, David Russell, Bob (Colchester)
Lawrence, Mrs Jackie Russell, Ms Christine (Chester)
Leslie, Christopher Ryan, Ms Joan
Levitt, Tom Salmond, Alex
Lewis, Ivan (Bury S) Salter, Martin
Liddell, Rt Hon Mrs Helen Sanders, Adrian
Linton, Martin Sarwar, Mohammad
Livsey, Richard Savidge, Malcolm
Lloyd, Tony (Manchester C) Sedgemore, Brian
Lock, David Sheldon, Rt Hon Robert
Love, Andrew Shipley, Ms Debra
McAvoy, Thomas Simpson, Alan (Nottingham S)
McDonagh, Siobhain Singh, Marsha
Macdonald, Calum Skinner, Dennis
McDonnell, John Smith, Rt Hon Andrew (Oxford E)
McFall, John Smith, Angela (Basildon)
McGuire, Mrs Anne Smith, Miss Geraldine (Morecambe & Lunesdale)
McIsaac, Shona
McKenna, Mrs Rosemary Smith, Jacqui (Redditch)
Mackinlay, Andrew Smith, John (Glamorgan)
McNamara, Kevin Smith, Llew (Blaenau Gwent)
Smith, Sir Robert (W Ab'd'ns) Turner, Dennis (Wolverh'ton SE)
Soley, Clive Turner, Dr Desmond (Kemptown)
Southworth, Ms Helen Turner, Neil (Wigan)
Spellar, John Twigg, Derek (Halton)
Squire, Ms Rachel Twigg, Stephen (Enfield)
Starkey, Dr Phyllis Tyler, Paul
Steinberg, Gerry Tynan, Bill
Stewart, David (Inverness E) Walley, Ms Joan
Stewart, Ian (Eccles) Ward, Ms claire
Stoate, Dr Howard Wareing, Robert N
Strang, Rt Hon Dr Gavin Watts, David
Straw, Rt Hon Jack White, Brian
Whitehead, Dr Alan
Stringer, Graham Williams, Rt Hon Alan (Swansea W)
Stuart Ms Gisela Williams, Alan W (E Carmarthen)
Sutcliffe, Gerry Williams, Mrs Betty (Conwy)
Taylor, Rt Hon Mrs Ann (Dewsbury) Winnick, David
Winterton, Ms Rosie (Doncaster C)
Taylor, David (NW Leics) Wood, Mike
Taylor, Matthew (Truro) Woodward, Shaun
Temple-Morris, Peter Woolas, Phil
Thomas, Simon (Ceredigion) Wray, James
Tipping, Paddy Wright, Tony (Cannock)
Tonge, Dr Jenny
Touhig, Don Tellers for the Ayes:
Trickett, Jon Mr. Ian Pearson and
Truswell, Paul Mr. Graham Allen.
Beggs, Roy Robinson, Peter (Belfast E)
Body, Sir Richard Ross, William (E Lond'y)
Bottomley, Peter (Worthing W) Smyth, Rev Martin (Belfast S)
Chope, Christopher Taylor, Rt Hon John D (Strangford)
Donaldson, Jeffrey
Hogg, Rt Hon Douglas Tellers for the Noes:
Hunter, Andrew Mr. Eric Forth and
Paisley, Rev Ian Mr. Gerald Howarth.

Question accordingly agreed to.

Order for third Reading read.

9.25 pm
The Paymaster General (Dawn Primarolo)

I beg to move, That the Bill be now read the Third time.

Mr. Douglas Hogg (Sleaford and North Hykeham)

On a point of order, Madam Deputy Speaker. Before we proceed to consideration of the Bill on Third Reading, will you advise the House whether it is possible to determine how long the Committee sat? I have the report and I cannot identify for how many hours the Committee considered a Bill of many hundreds of clauses.

Madam Deputy Speaker (Mrs. Sylvia Heal)

That is not a matter for the Chair. We shall now proceed with Third Reading.

Dawn Primarolo

I am pleased to open the debate. The Bill differs in several ways from Finance Bills and most other Bills that deal with tax. It is the first Bill to come out of the project that is rewriting the United Kingdom direct tax code. It is also the first Bill to have been scrutinised by the Joint Committee on Tax Simplification Bills.

The Bill commands widespread support within the House and from businesses, tax practitioners and others. I do not claim that as a first. Other Bills may well have received equal support. Rather more may have deserved it. However, as a simple matter of observation, the Bill has united people in support of a proposition that is neither contentious nor complex. Put simply, it is that tax legislation should be clearer and easier to understand.

It may help if I start by describing formally what the Bill does. With minor changes, it rewrites legislation about capital allowances. Broadly speaking, capital allowances are given to businesses that incur capital expenditure on assets that they use in their business. On the basis of estimates for 2000–01, capital allowances are worth more than £18 billion. They affect most businesses in one way or another. This is an important piece of legislation by any standards.

The Bill is not about the substance of those allowances. That was decided in past Finance Acts. Equally, it will be for future Finance Bills to make any substantial changes. The Bill's purpose is rather to make legislation clearer and easier to use. It is the first product of the Inland Revenue's tax law rewrite project. That project was set up in 1996 by the right hon. and learned Member for Rushcliffe (Mr. Clarke). Its remit is to rewrite all or most of the United Kingdom's direct tax legislation.

I apologise if everyone in the Chamber already appreciates the point, but I must emphasise that the process of putting legislation into clearer and more modern shape and language does not include changing tax policies. The project is not about that, and never was. Proposals for changing policy will continue to be dealt with in the usual way, through Finance Bills.

It was recognised from the outset, however, that some minor changes might be helpful to improve legislation. Examples are legislation to replace extra-statutory concessions, bridging gaps in legislation, and clarifying grey areas of legislation. The Bill covers 66 such points, to which the project drew attention as possible changes in the law.

The 66 changes, and the Bill more generally, were scrutinised by the Joint Committee on Tax Simplification Bills. The Committee concluded that the changes were indeed of only minor significance. The Committee's first report also commended the Bill as a welcome clarification of the existing law". Perhaps 1 may be permitted to say a few words about that process, as this is the first tax simplification Bill, about which a few Members have previously expressed concerns, especially on Second Reading. The procedure was recommended for tax simplification Bills by the Select Committee on Procedure in January 1997. It concluded that a new procedure was appropriate for tax simplification Bills, given that they are akin to, but different from, consolidation Bills. That led to Standing Order No. 60, passed in March 1997, which provides for tax simplification Bills to be referred after Second Reading to a Joint Committee of both Houses.

A Joint Committee of the two Houses is by no means unprecedented. It is established practice for consolidation Bills, including Bills which, since 1949, may include minor changes in law. Nor is it unprecedented for a Joint Committee to consider a Bill relating to tax. I understand the principle that concerned the Members who on Second Reading expressed doubt about aspects of that process. However, as the Procedure Committee noted in 1997, the 1952 Customs and Excise Bill was committed to a Joint Committee, without qualms and to good effect. In 1997, the Procedure Committee did not consider any constitutional objection to be well founded.

That procedure has worked well in practice with the Capital Allowances Bill. The Joint Committee benefited from the expertise and experience of the several noble Lords, and also had the benefit of hearing evidence from Mr. Adam Broke. I should like to place on record the thanks of the Committee and the House for the time that he spent with the Committee. He is an eminent tax practitioner in his own right and a past president of the Chartered Institute of Taxation. He is also a member of the project's steering and consultative committees, and as such, could assist the Committee with the extensive consultation procedure that preceded the Bill. The Joint Committee's consideration of the Bill has also, I suggest, fully answered the concerns expressed by Opposition Members on Second Reading. The Committee took evidence in public and scrutinised the Bill—and undertook that very much as a joint exercise.

Other fears expressed by Opposition Members proved to be equally unfounded. All members of the Committee took part in the scrutiny of the Bill and the examination of witnesses, demonstrating their knowledge and understanding of the issues. The Joint Committee's report confirms and reinforces the comments made previously by businesses, professionals and others.

For example, the Institute of Directors commented in August: the Bill is a magnificent achievement. It will sweep away not just the Capital Allowances Act 1990, but many other bits of legislation scattered through Finance Acts. The tax faculty of the Institute of Chartered Accountants in England and Wales similarly welcomed the Bill. It commented: the quality of the draft reflects the enormous amount of work undertaken by the Revenue in consultation with organisations such as ours. The Law Society similarly said in evidence to the Joint Committee: we welcome the publication of the Capital Allowances Bill. We believe that it does represent a significant improvement upon the existing legislation.

The Bill has also met with support from both sides of the House. In the course of Second Reading, I acknowledged the contribution of the right hon. and learned Member for Rushcliffe and the right hon. Member for Fylde (Mr. Jack) in setting up the rewrite project. They have both now participated in the first-fruits of the project, the former as Chairman of the Joint Committee and the latter as a current member of the project's steering committee. With such a broad basis of agreement on what is, as I have said, not a controversial proposition, the Bill comes from the Joint Committee with no amendments.

That is why we have proceeded directly to Third Reading. This process was provided for in Standing Order No. 60 in March 1997. The Bill is a significant demonstration of the commitment not just of the Government, but of the House, to make tax legislation clearer and easier to understand. It will help business, other taxpayers and those who advise them. I commend it to the House.

Madam Deputy Speaker

I remind the House that the Bill, as its long title states, is a Bill To restate, with minor changes, certain enactments relating to capital allowances. I hope that hon. Members who are called to speak will bear that limited purpose in mind, and will not seek to broaden the debate to cover general issues of taxation or budgetary policy.

Mr. Eric Forth (Bromley and Chislehurst)

On a point of order, Madam Deputy Speaker. I seek your guidance. The Order Paper states that the first report of the Joint Committee is relevant, so presumably that means that we will be able to refer to that report in the debate.

Madam Deputy Speaker

Indeed you may.

Mr. Forth

Oh, excellent.

9.36 pm
Mr. Richard Ottaway (Croydon, South)

I join the Minister in congratulating all those who have been involved in the tax rewrite project—Mr. Adam Broke and all the officials who worked on the project, and the hon. Lady's officials in the Treasury.

We welcome the Bill. To restate the law on capital allowances is a tremendous feat, which has involved an unbelievable number of man-hours. The House should recognise what an important step the Bill is in making law simpler and easier to understand.

I used the phrases "restate the law" and "making law simpler", but as you pointed out, Madam Deputy Speaker, the Bill is a restatement, not a simplification. The point is raised in the report, and I have no doubt that my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) will refer to it.

The Minister quoted Mr. Richard Baron, who wrote in Accountancy Age that the Bill was "a magnificent achievement". That remark represents recognition by practitioners of tax law that the Bill is worth praising. Mr. Baron went on: It will sweep away not just the Capital Allowances Act 1990, but many other bits of legislation scattered through Finance Acts. The table of repeals is four pages long. He continued: Moreover, the Act is not too long. One big fear of the Project was that using plain English would mean using far more words than old-style tangled and condensed drafting. It has not happened. If we leave out consequential amendments and transitional provisions, we have a Bill of only 254 pages, well-spaced and in decent sized print. That is recognition that the project has achieved its objective.

Mr. Hogg

My hon. Friend says that the Bill is simple, and in one sense it may be. We are being asked to accept that it is but a simplification of existing law. Will my hon. Friend tell the House why he thinks that three sittings were sufficient for the Committee to satisfy itself that a Bill of some 332 pages was but a simplification of existing law?

Mr. Ottaway

I was trying to emphasise that the Bill was not a simplification, but a restatement. I will come in a moment to the question of sittings. I was a minority of one on the Committee who believed that we should have taken more independent external advice.

That was the first lime that we had gone through the procedure. We sat as a Joint Committee on Tax Simplification Bills with Members of the other place, but this House had a majority. That was a new procedure, so I want to dwell on it for a moment.

I shall make three points about the operation of the Select Committee on Procedure and the Joint Committee. The Procedure Committee gave the Joint Committee the task of reporting to the House any problems that might arise.

My first point concerns the Joint Committee's composition, which the House debated at length. We became a bit caught up in guerrilla warfare, and its membership was debated in some detail. The other place nominated six of its Members, two of whom were members of the original tax law rewrite committee. Their input was extremely helpful. They have served Parliament and this country with distinction in their parliamentary careers and their integrity is beyond doubt, but 1 question whether their membership of the Committee was appropriate. As they were members of the original tax law rewrite committee, I am concerned about whether they had a conflict of interest in respect of the Joint Committee. I believe that it is irregular for those who oversaw the original drafting subsequently to be in a position to opine upon its effectiveness. I am not saying that it was improper for members of the original tax law rewrite committee to participate in the Joint Committee proceedings, but I am not at ease with that arrangement.

Secondly, I turn to me point made by my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) in his intervention. All the witnesses who gave evidence to the Joint Committee had participated in the tax rewrite project. The quality of their answers was flawless; they gave evidence just as the Committee wanted it and they answered every question simply and to the best of their ability—but they were not independent. No independent witness could consider the Bill and the rewrite, and say simply, "Yes, I think that these people have got it right." As virtually the only Opposition Member who served on the Committee, I might have faced the task of sitting down and spending several weeks analysing the Bill against the original law. Indeed, it took a number of officials on the tax rewrite committee several years to rewrite the proposals. I had to make a decision.

Dawn Primarolo

appreciate the hon. Gentleman's point, but I offered him direct access to officials without ministerial supervision. If he felt that he would require such assistance to consider the Bill and to recognise the issues that it raised, he could have taken that offer up, but he declined it. Similarly, Opposition Front Benchers have direct access to officials without ministerial presence or knowledge for assistance in considering the technical detail of double taxation treaties.

Mr. Ottaway

I must confess that I do not recall that offer, but if the Paymaster General says that it was made, that is fine. However, she is missing the point. The Joint Committee should have had the advice of an independent witness.

Mr. Hogg


Mr. Kenneth Clarke (Rushcliffe)


Mr. Ottaway

I give way first to my right hon. and learned Friend the Member for Rushcliffe.

Mr. Clarke

Does my hon. Friend acknowledge that the Joint Committee would undoubtedly have called and heard any witness that he wanted to appear before it, had he named such a person? Can he name the independent witness from whom he wanted to hear, bearing in mind the five years of consultation and the circulation of exposure drafts to every conceivable professional and representative body? The Bill received the support of those bodies, and we heard no particular dissent from them.

Mr. Ottaway

As my right hon. and learned Friend knows, he and I disagree on that point. I did not propose a name because it was obvious that I was in a minority position, but I suggest that a partner from a leading firm of City solicitors would have made a perfectly adequate witness. If I had believed that my right hon. and learned Friend, as Chairman of the Committee, agreed with such a proposal, I would have dug out a name.

Mr. Hogg

My hon. Friend knows that it is standard for a Select Committee to have advisers who can advise on the subject before it and on the questions to be asked. Did the Committee receive any independent advice about the content of the Bill or the questions to be asked of witnesses?

Mr. Ottaway

I shall answer that question with some care. If I simply said no, that would imply a slur on the witnesses. They gave evidence with absolute integrity, but they were part of the tax rewrite project. No witness was not part of it.

Mr. Hogg

There was no independent advice?

Mr. Ottaway

That is correct.

Mr. John Redwood (Wokingham)

I am grateful to my hon. Friend for all his efforts. I found it odd that the Joint Committee held only three brief sittings. The minutes record long declarations of interest; I remind hon. Members that I have declared mine in the Register. It appears that no amendment was moved and that none of the 581 clauses or four schedules was believed to be defective. Did the Committee consider all 581 clauses, and was it satisfied that none added to or subtracted from existing law?

Mr. Ottaway

The Committee considered the 60-odd minor changes in sequence. An amendment was moved, but the Committee did not accept it.

Mr. Eric Forth (Bromley and Chislehurst)

On page 47 of the minutes of the Joint Committee for 31 January, the Chairman is recorded as saying: can Members of the Committee indicate if they agree that we should make no amendment whatever? (Members indicated by a show of hands)". If I understand that correctly, the Committee agreed early in its proceedings that it would make no amendments. What sort of scrutiny does that suggest?

Mr. Ottaway

My right hon. Friend should not read lack of diligence into that. The Committee had every opportunity to consider amendments; it took the changes en bloc and quizzed the witnesses, and an amendment was tabled.

The Paymaster General said that the Committee scrutinised the Bill. I would not have used such a phrase. It had an opportunity to scrutinise the Bill, if it chose to do that. However, I have no idea whether the Bill reproduces the sense of the original draft measure. I am reliably informed that it does. I accept the word of those who gave evidence that it did, but unless I had given up several weeks of my time, I would not have had the opportunity to compare the current measure with the original drafting.

Dawn Primarolo

I am disappointed to hear the hon. Gentleman's comments at the Dispatch Box, because he did not make them in Committee. He had every opportunity to scrutinise the Bill. He claims that we did not have independent advisers, yet he did not propose anyone. He said that we did not have the right witnesses, but again, he did not suggest anyone. Now, having agreed to the report, which had unanimous support, he claims that he did not know what he was doing. Perhaps he should think carefully about serving on such a Committee in future.

Mr. Ottaway

The Paymaster General knows that that is a complete distortion of events. At the first sitting of the Joint Committee, I clearly and repeatedly made the point that I have made this evening. The minutes show that.

Mr. David Ruffley (Bury St. Edmunds)

Will my hon. Friend give way?

Mr. Ottaway

I shall do so shortly. The Paymaster General should not claim that I am misrepresenting things. If I had believed that she agreed with the proposal that I made, I could have produced the name of a suitable witness in no time.

Dawn Primarolo

The hon. Gentleman did not ask me.

Mr. Ottaway

The Minister says that I did not ask her. The minutes of evidence make it clear what happened, and what debates took place. I am sorry if she was not listening at the time.

Mr. Ruffley

I wish to make a helpful intervention. I think that my hon. Friend said a few moments ago that the Joint Committee agreed minor changes. As we know, the purpose of the Bill is to preserve the effect of existing law, subject to any minor changes that might be desirable. How many minor changes were there, and was the Committee satisfied that they were minor?

Mr. Ottaway

I believe that there were 66. The Committee was advised that they were minor, and it accepted that recommendation. The point that I am making is clear, and I hope that the Procedure Committee will consider the matter.

A further point concerns the scope of the Committee. We took the Bill as it was. However, it was not clear who had decided the format. The Institute of Chartered Accountants of Scotland made the important point that it agreed with the Bill but recommended that the new legislation should be accompanied by overviews, explanatory notes and signposts. It argued that self-assessment legislation meant that the taxpayer had a right to understand tax law.

The institute's report states: As a matter of principle it is our view that tax law should be capable of being understood by an intelligent taxpayer who is prepared to devote a reasonable amount of time to the task. Unfortunately, in many areas of tax law, so timid is the work of rewriting that an intelligent taxpayer would need a long period of study to understand with any degree of certainty what his tax liability is and how particular legislation affects him. It continues: We are aware that a Parliamentary working party has considered the format of bills and acts generally and it has reported to, and obtained the approval of both Houses for proposals which reject many of the suggestions of the Project Team, including three-part numbering, cross-references and signposts at the end of sections, a larger typeface and overviews and notes. We recommend that these issues are revisited and we hope that overviews, explanatory notes and signposts will be used.

I have to confess that I cannot recall being consulted about the format of the Bill. I hope that the Minister will clarify how the format was decided, and tell us whether she agrees with the suggestion that those issues be revisited.

Mr. John Bercow (Buckingham)

My hon. Friend rightly said that tax law should be readily comprehensible to an intelligent layman, and provided quotations to that effect. Does he agree that the Bill should be readily comprehensible to an intelligent outsider attending to our proceedings? Will he therefore do the House the favour of summarising in a sentence its purpose and effect?

Mr. Ottaway

I do not think that the Bill is incomprehensible. As I said, I think that it is a big improvement, although it would be inappropriate for this moment to pass without pointing out that there are those who think that it could be improved further, and that three-part numbering would be an improvement in the eyes of many.

The report discusses changing the name of the Joint Committee to illustrate a change from a Committee of simplification to a Committee that rewrites. It proposes that the Committee should be renamed the Joint Committee on tax law rewrite Bills. It is important to make the distinction between a rewrite and a simplification. There is no doubt that simplification of the law is required, and many commentators have said at some length that tax law needs improving. I recommend to those who have not had an opportunity to read it—I know that the Minister has—a paper produced by the Institute of Chartered Accountants in England and Wales, entitled "Towards a better tax system", which suggests how the famous, or infamous, 1R35 law could be simplified and improved.

We are now embarked on the first step of an important project—the rewriting of tax law. However, unless future Finance Acts are drafted in the rewritten style, we shall forever be going backwards: it will be two steps back and one step forward. I hope the Minister will confirm that future Acts will be so written, because otherwise it will be like painting the Forth bridge when it is rusting faster than it is being painted.

There is only one way in which what I want can be achieved. As I said on Second Reading, if resources for the tax rewrite project are increased and more staff are available, it will be possible to introduce the rewritten legislation faster than lax law is being made.

Despite what I have said, I believe that this is a successful project. It is an important step forward, and we wish the Bill a fair wind.

9.56 pm
Mr. Kenneth Clarke (Rushcliffe)

I am delighted that my hon. Friend the Member for Croydon, South (Mr. Ottaway) reached that conclusion, because I, too, support a Bill that I consider to represent the successful outcome of a long process pursued by the House and by successive Governments.

As Chancellor of the Exchequer, I was responsible for the launch of the tax re write project. I got my just deserts a few years later, when I was persuaded by the usual channels that I should therefore take on the obligations of chairing a Joint Committee on tax simplification. As it happened, it proved to be a reasonable undertaking; there was general satisfaction that the tax rewrite project team had done its work properly. The Committee reported its satisfaction with the Bill, and said that it did not think that any matters needed to be drawn to the House's attention.

I rarely speak in support of the Minister, but I congratulate the Government on continuing the project on a truly bipartisan basis. It has taken a long time for this conclusion to be reached, but, as my hon. Friend the Member for Croydon, South says, there is no difference between the two sides on the desirability of making the House's intentions, and the policy that we decide on tax, as comprehensible as possible to the intelligent layman outside. That is the whole point of the undertaking.

My hon. Friend pointed out that "Joint Committee on Tax Simplification Bills" was probably a misnomer. My hon. Friend the Member for Buckingham (Mr. Bercow) asked what the "intelligent layman" would think. I see no way in which we could produce a clear and easy read on tax policy—particularly on capital allowances—for the normal educated layman.

This is a highly specialised subject. When I first announced the details of the project, in my 1996 Budget, I said that the task on which we were embarking was rather like that of turning "War and Peace" into lucid Swahili. Indeed, that would doubtless be an easy project compared with this: simplifying tax law involves addressing a more specialised audience.

Although the process has fulfilled a useful purpose, I readily acknowledge the importance of discussing it properly on Third Reading. After all, we are embarked on a novel procedure, and we must ensure that we do not remove from the House as a whole its responsibility—its sole responsibility—fo making the final judgment on tax policy and the burden of taxation as it falls on individuals and companies throughout the economy.

Mr. Hogg

What worries many Members is the possibility that substantive changes to law have occurred, rather than mere rewriting. What reassurance can my right hon. and learned Friend give that the Committee and all its members were satisfied that no substantive change in the law had been made?

It being Ten o 'clock, the debate stood adjourned.

Motion made, and question proposed, pursuant to Standing Order No. 15 (Exempted business), That, at this day's sitting, the Capita' Allowances Bill may be proceeded with, though opposed, until any hour.—[Mr. Pearson.]

Question put:—

The House proceeded to a Division.

Mr. Speaker

I ask the Serjeant at Arms to investigate the delay in the No Lobby.

The House having divided: Ayes 309, Noes 33.

Division No. 121] [10 pm
Abbott, Ms Diane Coffey, Ms Ann
Adams, Mrs Irene (Paisley N) Cohen, Harry
Ainger, Nick Coleman, Iain
Ainsworth, Robert (Cov'try NE) Connaly, Michael
Allen, Graham Cooper, Yvette
Anderson, Rt Hon Donald (Swansea E) Corbyn, Jeremy
Cotter, Brian
Anderson, Janet (Rossendale) Cousins, Jim
Armstrong, Rt Hon Ms Hilary Cox, Tom
Atkins, Charlotte Cranston, Ross
Austin, John Crausby, David
Bailey, Adrian Cryer, John (Hornchurch)
Baker, Norman Cummings, John
Banks, Tony Cunningham, Rt Hon Dr Jack (Copeland)
Barnes, Harry
Barron, Kevin Cunningham, Jim (Cov'try S)
Battle, John Dalyell Tarn
Bayley, Hugh Darvill, Keith
Beard, Nigel Davey, Valerie (Bristol W)
Begg, Miss Anne Davidson, Ian
Beith, Rt Hon A J Davies, Fit Hon Denzil (Llanelli)
Bell, Stuart (Middlesbrough) Davis, Rt Hon Terry (B'ham Hodge H)
Benn, Hilary (Leeds C)
Benn, Rt Hon Tony (Chesterfield) Denham, Rt Hon John
Bennett, Andrew F Dobbin, Jim
Benton, Joe Dobson, Rt Hon Frank
Bermingham, Gerald Donohoe, Brian H
Berry, Roger Doran, Frank
Betts, Clive Drew, David
Blackman, Liz Eagle, Angela (Wallasey)
Blears, Ms Hazel Eagle, Maria (L'pool Garston)
Blizzard, Bob Efford, Clive
Boateng, Rt Hon Paul Ellman, Mrs Louise
Bradley, Peter (The Wrekin) Ennis, Jeff
Breed, Colin Etherington, Bill
Brinton, Mrs Helen Field, Rt Hon Frank
Brown, Russell (Dumfries) Fitzpatrick, Jim
Browne, Desmond Fitzsimons, Mrs Lorna
Buck, Ms Karen Flint, Caroline
Burden, Richard Flynn, Paul
Burgon, Colin Follett, Barbara
Burnett, John Foster Fit Hon Derek
Butler, Mrs Christine Foster Michael Jabez (Hastings)
Campbell, Mrs Anne (C'bridge) Foulkes, George
Campbell, Rt Hon Menzies (NE Fife) Galbraith, Sam
Gapes, Mike
Campbell-Savours, Dale George, Andrew (St Ives)
Cann, Jamie George, Rt Hon Bruce (Walsall S)
Cawsey, Ian Gerrard, Neil
Chapman, Ben (Wirral S) Gibson, Dr Ian
Chaytor, David Gidley, Sandra
Clapham, Michael Gilroy, Mrs Linda
Clark, Rt Hon Dr David (S Shields) Godman, Dr Norman A
Clark, Paul (Gillingham) Godstiff, Roger
Clarke, Charles (Norwich S) Goggins, Paul
Clarke, Eric (Midlothian) Goldirg, Mrs Llin
Clarke, Rt Hon Tom (Coatbridge) Gordon, Mrs Eileen
Clelland, David Griffiths, Jane (Reading E)
Griffiths, Nigel (Edinburgh S) Mactaggart, Fiona
Griffiths, Win (Bridgend) McWilliam, John
Grocott, Bruce Mahon, Mrs Alice
Grogan, John Mallaber, Judy
Main, Peter Mandelson, Rt Hon Peter
Hall, Mike (Weaver Vale) Marsden, Gordon (Blackpool S)
Hamilton, Fabian (Leeds NE) Marshall, David (Shettleston)
Hancock, Mike Marshall, Jim (Leicester S)
Hanson, David Martlew, Eric
Harman, Rt Hon Ms Harriet Maxton, John
Harris, Dr Evan Merron, Gillian
Harvey, Nick Michael, Rt Hon Alun
Healey, John Michie, Bill (Shef'ld Heeley)
Heath, David (Somerton & Frome) Miller, Andrew
Henderson, Doug (Newcastle N) Moffatt, Laura
Henderson, Ivan (Harwich) Moore, Michael
Hendrick, Mark Moran, Ms Margaret
Hepburn, Stephen Morgan, Ms Julie (Cardiff N)
Heppell, John Morley, Elliot
Hesford, Stephen Morris, Rt Hon Ms Estelle (B'ham Yardley)
Hill, Keith
Hinchliffe, David Mullin, Chris
Hodge, Ms Margaret Murphy, Denis (Wansbeck)
Hoey, Kate Murphy, Rt Hon Paul (Torfaen)
Hood, Jimmy Naysmith, Dr Doug
Hopkins, Kelvin O'Brien, Bill (Normanton)
Howells, Dr Kim O'Brien, Mike (N Warks)
Hoyle, Lindsay O'Hara, Eddie
Hughes, Kevin (Doncaster N) Olner, Bill
Humble, Mrs Joan O'Neill, Martin
Hurst, Alan Öpik, Lembit
Hutton, John Organ, Mrs Diana
Iddon, Dr Brian Osborne, Ms Sandra
Illsley, Eric Pearson, Ian
Jackson, Helen (Hillsborough) Pickthall, Colin
Jamieson, David Pike, Peter L
Jenkins, Brian Pond, Chris
Johnson, Alan (Hull W & Hessle) Pope, Greg
Jones, Rt Hon Barry (Alyn) Pound, Stephen
Jones, Mrs Fiona (Newark) Prentice, Ms Bridget (Lewisham E)
Jones, Ms Jenny (Wolverh'ton SW) Prentice, Gordon (Pendle)
Primarolo, Dawn
Jones, Dr Lynne (Selly Oak) Prosser, Gwyn
Jones, Martyn (Clwyd S) Purchase, Ken
Jowell, Rt Hon Ms Tessa Quin, Rt Hon Ms Joyce
Joyce, Eric Quinn, Lawrie
Kaufman, Rt Hon Gerald Raynsford, Nick
Keen, Ann (Brentford & Isleworth) Rendel, David
Keetch, Paul Robertson, John (Glasgow Anniesland)
Kemp, Fraser
Kennedy, Jane (Wavertree) Roche, Mrs Barbara
Kidney, David Rooker, Rt Hon Jeff
Kilfoyle, Peter Rooney, Terry
Kirkwood, Archy Ross, Emie (Dundee W)
Kumar, Dr Ashok Rowlands, Ted
Ladyman, Dr Stephen Ruane, Chris
Lammy, David Russell, Bob (Colchester)
Lawrence, Mrs Jackie Russell, Ms Christine (Chester)
Leslie, Christopher Ryan, Ms Joan
Levitt, Tom Salmond, Alex
Lewis, Ivan (Bury S) Salter, Martin
Liddell, Rt Hon Mrs Helen Sanders, Adrian
Linton, Martin Sarwar, Mohammad
Lloyd, Tony (Manchester C) Savidge, Malcolm
Lock, David Sheldon, Rt Hon Robert
Love, Andrew Shipley, Ms Debra
McAvoy, Thomas Simpson, Alan (Nottingham S)
McDonagh, Siobhain Singh, Marsha
Macdonald, Calum Skinner, Dennis
McDonnell, John Smith, Rt Hon Andrew (Oxford E)
McFall, John Smith, Angela (Basildon)
McGuire, Mrs Anne Smith, Miss Geraldine (Morecambe & Lunesdale)
McIsaac, Shona
McKenna, Mrs Rosemary Smith, Jacqui (Redditch)
Mackinlay, Andrew Smith, John (Glamorgan)
McNulty, Tony Smith, Llew (Blaenau Gwent)
Soley, Clive Turner, Dr Desmond (Kemptown)
Southworth, Ms Helen Turner, Neil (Wigan)
Spellar, John Twigg, Derek (Halton)
Squire, Ms Rachel Twigg, Stephen (Enfield)
Starkey, Dr Phyllis Tyler, Paul
Steinberg, Gerry Tynan, Bill
Stewart, David (Inverness E) Walley, Ms Joan
Stewart, Ian (Eccles) Ward, Ms claire
Stoate, Dr Howard Wareing, Robert N
Strang, Rt Hon Dr Gavin Watts, David
Straw, Rt Hon Jack Webb, Steve
Stringer, Graham White, Brian
Stuart, Ms Gisela Whitehead, Dr Alan
Williams, Alan W (E Carmarthen)
Stunnel, Andrew Williams, Mrs Betty (Conwy)
Sutcliffe, Gerry Willis, Phil
Taylor, Rt Hon Mrs Ann (Dewsbury) Winnick, David
Winterton, Ms Rosie (Doncaster C)
Taylor, David (NW Leics) Wood, Mike
Taylor, Matthew (Truro) Woodward, Shaun
Temple-Morris, Peter Woolas, Phil
Thomas, Gareth R (Harrow W) Wray, James
Thomas, Simon (Ceredigion) Wright, Tony (Cannock)
Tipping, Paddy
Trickett, Jon Tellers for the Ayes:
Truswell, Paul Mr. Don Touhig and
Turner, Dennis (Wolverh'ton SE) Mr. Jim Dowd.
Ballard, Jackie Lidington, David
Beggs, Roy Luff, Peter
Bercow, John Maclean, Rt Hon David
Clarke, Rt Hon Kenneth (Rushcliffe) McLoughlin, Patrick
Ottaway, Richard
Clifton-Brown, Geoffrey Paisley, Rev Ian
Collins, Tim Redwood, Rt Hon John
Cran, James Robinson, Peter (Belfast E)
Day, Stephen Ross, William (E Lond'y)
Donaldson, Jeffrey Ruffley, David
Fearn, Ronnie Simpson, Keith (Mid-Norfolk)
Gray, James Smith, Sir Robert (W Ab'd'ns)
Hayes, John Soames, Nicholas
Heald, Oliver Spicer, Sir Michael
Hogg, Rt Hon Douglas Steen, Anthony
Hunter, Andrew Taylor, Rt Hon John D (Strangford)
Johnson Smith, Rt Hon Sir Geoffrey
Tellers for the Noes:
Leigh, Edward Mr. Eric Forth and
Lewis, Dr Julian (New Forest E) Mr. Christopher Chope.

Question accordingly agreed to.

Question again proposed, That the Bill be now read the Third time.

10.14 pm
Mr. Kenneth Clarke

I have just cast my vote in protest against the Government's insistence that the Bill be debated at this late hour. I regret that the House's family-friendly policies do not extend to those of us who are interested in the rewrite of tax law.

I was about to answer an intervention made by my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg), who asked whether we had addressed the changes. I shall return to the matter a little later in my speech, but I want to make it clear that, although the Joint Committee scrutinised the Bill as a whole—that was our task—we concentrated on two particular issues. The first was whether the drafting was an improvement on the drafting of the existing law—whether it clarified the meaning of the law to an intelligent user of the measure. Secondly, we addressed ourselves to the changes to tax law that were, on the instructions of the House, intended to be only minor and necessary for the clarification of that law. As the report of the Joint Committee makes clear, we were indeed so satisfied—

Mr. Ruffley


Mr. Clarke

Before my hon. Friend starts to press me on the details—he probably wants to make an urgent point on dredging allowances in his own contribution—I should like to make a little progress. Before we deal with the details and with the comments on procedure made by my hon. Friend the Member for Croydon, South, I want to explain the purpose of the legislation and the task that the House asked the Join: Committee to undertake when it embarked on that entirely novel procedure.

The purpose of the legislation was to make tax law in this country more user-friendly. I shall not dwell on the origins of the process, but they go back to 1995—a time when Finance Bills were getting longer and longer, and complaints from Members of the House about the incomprehensibility of the legislation were getting louder and louder—

Mr. Bercow

On a point of order, Mr. Speaker. My right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) is delivering an intriguing message, which is, or should be, of interest to all right hon. and hon. Members, but there is such a hubbub that I fear many of them are missing it, will you rule?

Mr. Speaker

I eau hear the right hon. and learned Gentleman. As long as the Speaker can hear, that is fine.

Mr. Clarke

Thank you, Mr. Speaker. Hon. Members at the Bar are making the quietest hubbub that I have heard for a long time No doubt their attention will be drawn when my hon. Friend the Member for Buckingham speaks—[HON. MEMBERS: "We cannot wait."]

Like my right hon. Friend the Member for North-West Hampshire (Sir G. Young), the then Financial Secretary, and junior Treasury Ministers, I was particularly impressed by the fact that complaints about the length and incomprehensibility of Finance Bills were received not only from Members of the House but from accountants, tax lawyers and users of the legislation. They, too, said that they did not understand its drafting.

There is a fond belief that lawyers and accountants welcome complications in the law because that makes for litigation and disputes and thus a higher income for members of their professions. However, that is not my experience of the best practitioners. Hon. Members will find that the best practitioners in accountancy, at the tax Bar and generally among tax lawyers, welcome the chance to be able to advise their clients clearly about the effects of changes in tax law and about the intentions of Parliament.

By the mid-1990s, we had reached the stage of being in danger of expressing ourselves in a way that was quite incomprehensible and that caused considerable confusion for users of the legislation. When we set up the tax law rewrite project, with the aim of making the law clearer and easier to use for those who needed to do so, it received a general welcome. I shall not repeat the tributes that were made, although I am grateful to those who took up the cudgels.

It was easy to set the process in motion, but I pay a special tribute to my noble Friend Lord Howe of Aberavon, who became an enthusiast for the project, based largely on his experience as a former Chancellor of the Exchequer. He took on the chairmanship of the steering committee and helped to devise the procedure that the House now follows to enable the simplification to be delivered by means of a reasonable process. The procedure is based on a precedent established for a 1952 Customs and Excise measure, but we found that it had been adequately refined. I also pay tribute to the director of the project team, Mr. Neil Munro, and to his team, who put years of effort into the production of the project.

When we started the tax law rewrite project, we underestimated how long it would take. I fear that I am on record somewhere as stating that the entire Inland Revenue law would be rewritten in five years so that we could start to deal with a comprehensive body of law. More than five years later, all we have is the Capital Allowances Bill. There is far more to come; capital allowances represent the first discrete block of provisions on which the tax law project team has worked.

That leads me to deal with the process in a way that answers the understandable concerns of my hon. Friend the Member for Croydon, South, who served on the Committee. He is a Treasury Front-Bench spokesman, and I pay tribute to him for the diligence with which he persisted in scrutinising the Bill. As he says, he was sometimes in a minority of one, but I hope that he accepts that he was treated with considerable courtesy and respect when he suggested how we should handle such matters.

My hon. Friend was in a minority of one, which shows that he was unable to persuade me that we needed to take expert evidence; nor was he able to persuade any Member of either House from any party that we needed to do so. However, that is not to say that he did not maintain a very stout argument to that effect and occupied a considerable time during our first sitting's informal and unreported proceedings—[HON. MEMBERS: "Oh."] I, too, was concerned about the fact that the proceedings were unreported. We had a discussion about that and we were enjoined to follow Select Committee. procedures.

I have never been a member of a Select Committee, although I have often been a witness before one. I am told that Select Committees frequently debate matters in private, without the presence of Hansard, and throw their proceedings open to the public when witnesses appear. The Committee persuaded me that we should follow that procedure. I can say only that, in private, my hon. Friend the Member for Croydon, South did indeed argue at some length about whether we should have an independent outside witness, but for several reasons, he was unable to persuade any of us that that was necessary.

In my opinion, the main reason w as the very nature of the process that had been used for the previous five years. We often talk about the desirability of consulting on proposed legislation. I do not think that any measure before the House has been consulted on as copiously as the Bill. For five years, the steer ng committee and the consultative committee have conducted a long process of consulting every interested body in the country.

All the professional bodies, any practitioner who wanted to make representation,; and any interested business man were given the opportunity to respond to suggestions on how the law might be simplified. Indeed, several draft Bills were given wider exposure and issued for consultation. They were commented on and the comments were responded to by the project team. The process was meant to be consensual and bipartisan, so the project team embarked on no serious controversy if any outside body was prepared to start to get into a ditch to resist any proposal.

Mr. Hogg

My right hon. and learned Friend is being very generous with his time in giving way again. He has told the House that the Committee pursued practices adopted by Select Committees. He will know that Select Committees usually—perhaps always—receive advice from their advisers. In this case, why was it not thought appropriate for the Committee to have advisers to give an independent view?

Mr. Clarke

I am aware that that is the usual practice, but I do not think that there is any requirement to have an independent adviser. When I was a Minister, I was known to complain that I faced Select Committees that appeared to allow their entire reports to be written by their supposedly independent advisers. I am sure that the Minister does not agree with that at all. That practice was not always wholly desirable, but we considered it because my hon. Friend the Member for Croydon, South pressed us to do so.

The problem is that it would have been extremely difficult to find an outside practitioner who had not participated in the consultation process or had not had the opportunity to do so. The list of the bodies that were consulted and the committees formed by the Law Society and chartered accountancy bodies was so copious that almost every interested practitioner had plenty of time to participate. We would have had to comb the country to find someone who had not had a hand in the process.

Our only option would have been to find someone who had no interest in the subject, but who was welcome to receive the substantial fees that would, no doubt, have been required to enable a new lawyer or accountant to get up to speed on five years of work and every feature of the capital allowances tax law so that he was in a position to give us advice. My hon. Friend the Member for Croydon, South will recall that it was argued that. any decent practitioner—if we could find one who was new to the process—would require months to get up to speed with the process that had ground everything exceedingly small for the previous five years, although I would not have begrudged that person those substantial fees.

Mr. John Burnett (Torridge and West Devon)

Does the right hon. and learned Gentleman agree that it would have been beneficial if individuals had given evidence to the Joint Committee? They might have been consultees, but at least they would not have been members of one of the committees.

Mr. Clarke

I am not aware of anyone knocking on our door to give evidence. Any such request passed me by. The evidence showed that every relevant professional body that I had ever heard of gave universal approval for the process and the Bill. We could have put an advertisement in a few national newspapers asking whether anyone wanted to protest, but that would not have been sensible. The main pressure on the Committee was to get on with delivering the desirable simplification. It was not supposed to devise a new procedure for Parliament which would introduce months of parliamentary delay while we tried to process a Bill that was widely welcomed by practically everyone with a serious interest in the subject.

My hon. Friend the Member for Croydon, South commented on the Committee's membership. We always have that discussion. He said that some people should not have been on the steering or the consultative committee. It is not the greatest advertisement for the House if we devise rules that disqualify just about every Member of either House of Parliament who has a detailed knowledge of the subject under discussion from serving on a Committee. I have the greatest respect for the Chamber and hon. Members, but it is not teeming with people who have immense expertise in the subject of capital allowances. A fresh body would not have produced the level of scrutiny that the House is entitled to expect.

There was a reasonably good spread of expertise around the Committee Room. Some members could not claim professional expertise, but they were well known and respected. For example, the hon. Member for Bassetlaw (Mr. Ashton) is renowned for his independence and refusal to be rolled over by an establishment stitch-up.

Mr. Ruffley

We have all been enjoying my right hon. and learned Friend's speech. He will have heard that 66 minor changes were made. What were the thought processes of the Committee members when they were deciding whether a change was minor or substantive? A substantive change could not, of course, have been accepted.

Mr. Clarke

That was a key consideration, but before I deal with it, I shall dispose of the other main objective, which was to ensure that the drafting was improved. We sampled the drafting of the existing tax legislation, which is scattered over the past 10 years, and compared it with the redrafts. It is not possible to make the tax law of this country read like Enid Blyton. With the greatest respect, the Chancellor does nothing but complicate the tax law with every Budget that he produces. It will never be a simple matter. However, I congratulate Dr. Helen Caldwell and her colleagues from the parliamentary draftsman's office on the immense improvement that they have made to the wording of the legislation.

When the project was proposed, I was slightly hostile towards the parliamentary draftsman's office. Years of experience as a Minister meant that I had encountered draft legislation that I wanted to present to the House, but it was not expressed as clearly as I had wished. I developed something of an antipathy towards the drafting style of some of the people who produced that legislation. I began to believe that nobody in the parliamentary draftsman's office was familiar with the English language any more. Once, I asked outside lawyers to try to improve the drafting, and if they had charged a little less, they might have made progress.

I shall retract all those prejudices against the parliamentary draftsman's office if they can produce people like the team who worked on this Bill, who have undoubtedly transformed and greatly clarified the way in which the law is expressed. They have done a great service to all those who will use the law. That was the first matter on which we had to satisfy ourselves. We looked at the existing law and compared it with the new text until we were satisfied that this was the dramatic rewrite in plain English which had been hoped for when the project was started.

I can reassure my lion. Friend that the second, even more important, point for me was whether the changes fitted within the definition "minor and necessary". It is a given that any changes in tax policy by any Government are subject to the control of the whole House and should go through the normal procedures of a Finance Bill. My hon. Friend the Member for Croydon, South is not the only one who was suspicious of any suggestion that the Government might be slipping through subtle changes that might enable them to win a battle in the courts or to clarify a doubt in favour of the Inland Revenue, without the tedium of having to go through parliamentary scrutiny of a Budget speech and a Finance Bill Committee. We addressed ourselves to that point.

The 66 changes are of close particularity. My test for determining whether a change is a policy change that ought to be brought to the attention of the whole House is whether it alters the burden of taxation. Would a taxpayer who might have been capable of arguing that he was not liable to a tax burden find himself disadvantaged by being made subject to that burden by a tax simplification measure? The whole Committee concerned itself with that, and our report demonstrates that we are satisfied on that point. It is true that we examined some changes in more detail than others, but a clear principle applied throughout. Where the law had been changed, it usually amounted to a non-statutory concession, previously made by the Inland Revenue, now being incorporated into the law so as to place beyond doubt the non-liability of taxpayers for something that might previously have been argued as applying to them.

The Inland Revenue, led by a former Treasury colleague of mine, Robin Willis, and his team, had thought up rather ingenious arguments that might be made to alter the burden of taxation. As far as we could tell, those arguments had never been raised, and were unlikely to be raised unless the Inland Revenue staff in question were to move to a consultancy later in their career. Wherever possible, the team resolved questions in favour of the taxpayer.

The Committee went through the changes, using them as our agenda, and at the end, as my hon. Friend will agree, we unanimously agreed that we could find no basis on which we could tell the House that any change had been made which went against the spirit of the process. There was nothing that we felt we should draw to the attention of the House as requiring further study. We should certainly have drawn to its attention any example where we thought the burden of taxation was being shifted to the taxpayer without due parliamentary process.

Our scrutiny was careful and proper, and it took only three detailed sittings because it is extremely difficult to find anybody outside the House who is challenging the process. I am not aware that any member of the Committee was lobbied by anybody trying to argue against the process or to get a member of the Committee to raise an objection. The process has been gone through in such detail that we have now reached a stage where the users of the legislation are waiting for it to be enacted.

Mr. Bercow


Mr. Forth


Mr. Clarke

I shall give way to my hon. Friend the Member for Buckingham first.

Mr. Bercow

My right hon. and learned Friend is making a racy and intoxicating speech, but I am still trying to get a flavour of the Joint Committee. In the light of what he has just said about comprehensive consideration, will he tell the House how long the Committee sat on each of the three occasions on which it gathered under his chairmanship; and whether any of the sittings was attended and observed by any right hon. or hon. Member of this House who was not a member of the Committee?

Mr. Clarke

To the best of my recollection—I hope that I shall not be held to this without having had an opportunity to look it up—the first sitting took about half a morning, during which time we discussed the purpose of the Bill, our procedure and holt, we intended to tackle it. Then, we held two sittings with witnesses, which took two full mornings. When witnesses were present, the sitting was open to the public and we were all hoping that the public would pour through the doors and be queueing down to Central Lobby, but the level of interest appeared to be low; none the less, a small body of interested observers attended. I regret to say that, because of the pressure of business elsewhere in the House, I saw no Member of this House present at the back listening to our proceedings.

I am as suspicious as my hon. Friend. I do not take an apparent lack of opposition at face value. This evening, I have taken part in two Divisions in which I think the score in my Lobby only just reached—or did not reach—double figures, which shows that I am perfectly prepared to walk alone when the occasion requires it. However, the Committee was quite unable to find a hint of controversy in the process; all we found were people urging us to get on with the job.

Mr. Forth

My right hon. and learned Friend has made some play of the fact that there was no hint of controversy and no member of the Committee was able to find anything wrong with the measure it was considering. Does he not concede that that is no great surprise, given that Lord Brightman is a former member of the tax law rewrite committee, Lord Goodhart is a member of the Institute for Fiscal Studies tax law review committee, and Lord Howe of Aberavon is a chairman of the tax law rewrite committee? The Committee consisted of the same old gang getting together to congratulate each other—no wonder there was no dissent.

Mr. Clarke

The Committee was a collection of people who have a great deal of expertise in tax law and have given up hours of their time to take the process forward.

Mr. Forth

The usual suspects.

Mr. Clarke

Had I wanted to find someone to come along to oppose the measure just for the sake of it, rather than wander around seeking the cussed Joe Citizen who would oppose it come what may, I would have consulted my right hon. Friend, who would surely have been able to find someone. In defence of the noble and learned Lords whom he has named, let me say that they are men of independent judgment who devoted a great deal of time to the task. The amendment we discussed was tabled by Lord Brightman—and the quotation my right hon. Friend read out earlier was my summation of a discussion of that specific amendment—although a variety of amendments were submitted from different quarters. In the end, the mood of the Committee was expressed by an overwhelming majority of its members: plainly, they did not want to make any amendment on the particular subject raised by Lord Brightman.

Lord Brightman, Lord Howe and the other noble Lord my right hon. Friend named are among the small minority of people who either understand the subject or are prepared to give up three mornings to the task of taking the project forward after already giving up hours and hours of their time serving on other committees that scrutinised the subject. I do not believe that any of the three would approve a process that did not simplify the law or, more importantly, one that represented any attempt to evade the privileges of the House in respect of tax legislation. I am sure that my right hon. Friend did not wish to traduce them in any way.

Finally, let me tell the House at whom I think this process is aimed. I have already said that the public did not flock to our proceedings, and I doubt whether many members of the public will pull the Capital Allowances Act 2001 from the shelf for a bedtime read—it will not be a best seller in that quarter. The users of such legislation will almost certainly be specialists. I hope that the intelligent layman who wants to understand the reasons why his advisers have given him certain advice will do so by reading the plain English of the legislation, but the main users of the measure will be tax professionals. They will be accountants, tax lawyers and some business men, especially the finance directors of companies, or self-employed business men who are trying to understand the tax liabilities that they might incur and the allowances for their capital against the tax liability of their businesses.

The other main users of the proposed legislation should be parliamentarians. It damages our debates on Finance Bills when most Members, with the greatest respect to them, do not understand the provisions before them because of the way they are drafted. [Interruption.] I do not want to hear shouts of horror. I listened to Budget speeches for many years, and I looked round the Chamber on those occasions. In the old days, we used to deal with intractable and unintelligible minor amendments that Customs and Excise used to insist on putting into Budget speeches. I looked to see which Members were nodding sagely to enhance their reputations as tax experts. Most of them were nodding sagely to words that they did not understand—any more than the Chancellor of the Exchequer or the draftsman did.

We need to move away from all that. There are definite benefits to be had in simplifying the expression of the law. Not only a closed group of Members but everybody will be able to understand the policy that lies behind tax changes. The process of simplifying the language of legislation clarifies many tax issues. It will throw out the areas that will be beyond the scope of the Joint Committee, where policy and the law itself need simplifying. That is a matter for the House and for Budgets. The process will show in much sharper clarity where the law is too complicated. We shall be able to understand the issues, and in future the House will be able to address itself to rewriting policy to make matters less anomalous, more clear and more rational. Sometimes the language that we have used in the past has hidden that objective from the House.

Sir Robert Smith (West Aberdeenshire and Kincardine)

Is the right hon. and learned Gentleman offering some hope to the pensioner who was in my constituency office recently, pleading that the self-assessment form should be made intelligible so that he could complete it without the use of professional advice?

Mr. Clarke

This is not yet enough, because it is only the first part of the process. The intention is that the tax law rewrite project should include the entirety of the Inland Revenue's responsibilities. Capital allowances were chosen first because they constitute one of the most closed and self-defined chunks of the law. I believe that the project team is now working on income tax, and the next Bill of this sort to come before the House will attempt to cover the clarification and rewriting of the law on income tax.

The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) is right. Now that we have introduced self-assessment, it is essential that we endeavour to rewrite income tax law so that someone who has a decent degree in mathematics, and perhaps some background in accountancy, will at least be able to understand the process. I would like to set our sights higher, and I hope that the ordinary, intelligent and reasonably educated taxpayer might be able to embark on a process of understanding.

We shall never reach that position if the present Chancellor of the Exchequer keeps complicating income tax legislation at the present pace, Budget after Budget. Self-assessment would have been difficult enough when it was introduced. It has been made almost incomprehensible by the subsequent changes that the Chancellor has made, with so many different rates of taxation.

Income tax comes next. We must aim ourselves at the intelligent taxpayer who is being asked to assess himself for his income tax liability and does not feel that he should be obliged to pay professional fees to do so when he is doing so much work for the Inland Revenue.

The new procedure that we have set up works, but it needs some refining. By and large, it is a proper process. We do not want the full procedures of the House to hold things up for months. Everyone who has worked on the project over the years has fulfilled a valuable public service, and I hope that the Bill passes through the House without dissent.

The principles of the tax rewrite project and the object of simplification of legislation could be applied far more widely. Ever since I entered the House, when I was a practising member of the Bar—I practised for a time when I was last in opposition—I have felt that the language of legislation produced by the House is ridiculous. It is arcane and incomprehensible, it adds to the complications of parliamentary procedures, and it creates great difficulties for those outside Parliament. When Ministers and Back Benchers make those points, insiders always give the advice that such people do not understand, and that the law requires precision. They say that practitioners in the courts prefer language set out in that way, so that they can conduct their affairs properly.

I have been a practitioner in the courts and practised on and off for the best part of 16 years. I know many practitioners in the courts; I am now so old that most of my friends are on the Bench. I know scarcely any practitioners who have a good word for the wording of legislation that emerges from the House. I hear frequent complaints about the incomprehensibility of the law as produced by the parliamentary process. At the moment, a huge undertaking is in hand: rewriting tax law and producing simplification. I hope that, one day, the use of plain English, the search for clarity and the ambition of making laws passed by the House intelligible to the ordinary, intelligent citizen who applies himself or herself to trying to read and understand them, will be achieved.

Meanwhile, as we go back tomorrow, no doubt, to yet another Bill to which the Government have drafted hundreds of amendments at the last moment, we shall continue to produce what is sometimes gobbledegook, but which passes for legislation and passes through both Houses. We have passed a lot of gobbledegook on tax law in the past 10 years; the Bill before us this evening clarifies some of it, and I commend it to the House.

10.46 pm
Mr. Burnett

I am sorry that you seem to be out of sorts, Mr. Deputy Speaker, and I hope that you recover shortly.

I declare an interest as a lawyer. I used to practise in taxation, but I do not practise any more. I should also declare the fact that I was not a member of the Joint Committee. Nevertheless, on Second Reading, there were tributes from both sides of the House to Lord Howe of Aberavon, the tax rewrite steering committee, the consultative committee and all of the individuals who contributed, either in the past or currently, to the introduction of the Bill. I was, and am, happy to join in the tributes and congratulations to Lord Howe and his committee.

I should like to tackle a few points that arose in the Joint Committee, which have been alluded to this evening. I was surprised that, in that Committee, no evidence was taken in person from a practising tax lawyer or a non-Committee tax expert. I am not sure what steps were taken to encourage outside experts to give evidence, but it is a shame that no one did so. I refer the House to the comments of the eminent accountant, Mr. Adam Broke, who was referred to by the Paymaster General and the hon. Member for Croydon, South (Mr. Ottaway). Mr. Broke said: I would say that we have, as a consequence, a much better product than we did have. I say that as an accountant, not a lawyer, and I will be very interested to hear the views of lawyers on the Committee on that. I looked long and hard in the report of Committee proceedings for the views of an independent, practising lawyer, but I could not find any.

Mr. Broke went on to make one or two particularly interesting points in his evidence. He was complimentary about the Bill and I believe that, across the House, we share his views. Nevertheless, he made the point that the serious work of tax simplification was yet to come. He said: I do not think we have got into the real serious areas of complexity. We have not really got into anti-avoidance yet, where, in some senses, vagueness is the order 0f the day anyway. I hope that the Paymaster General will provide a response about the future of the tax rewrite project and what the Government have in mind to introduce in due course. Nevertheless, the Bill fulfils the tests that were set out by the tax law rewrite committee and successive Governments. Tax law is incomprehensible to most people, and overcomplicated. The tax law rewrite committee set itself the task of gradually rewriting the law on various taxes, and the Bill is the first in the rewrite project.

Mr. Redwood

I am surprised by the hon. Gentleman's fulsome praise. Has he, for example, read the hypothetical company test on pages 25 and 26? Is he suggesting that that is expressed with lucidity, so that a reasonable and well educated person can understand it? It looks like the old gobbledegook in a new bottle.

Mr. Burnett

I have not read every word in the Bill—I apologise to the House for that—but I have read significant parts of it. I have read sufficient to satisfy myself that it is a considerable improvement on the law that hitherto prevailed.

Mr. Ruffley

I am grateful to the hon. Gentleman. Would he like to hazard a guess as to the average amount of time spent by the Committee deliberating on each of the 66 minor changes?

Mr. Burnett

As I said, I was, not a member of the Committee, but I have read the three Hansard reports and I suspect that the Committee spent a total of less than 10 hours deliberating on the Bill. I am happy to give way to the right hon. and learned Member for Rushcliffe (Mr. Clarke) if he wants to correct me.

To return to what I was saying, the tax law rewrite committee's ambitions have largely been achieved, and the new Bill is considerably mote understandable. The use of plain English, with shone' sentences and clearer structure, is welcome. The explanatory notes are helpful and act, as I said on Second Reading, almost as an index.

The real problem that I experienced as a lawyer dealing with taxation matters was hunting around the various sections and statutes to find out exactly what the law was. The dovetailing and consolidation in the Bill are particularly welcome.

On Second Reading, we discussed the drawing into the Bill of various Inland Revenue concessions. That is important. When the Paymaster General intervened in my speech on Second Reading, she mentioned that a number of concessions remain unincorporated in primary legislation. I hope that that will be remedied soon, because although Inland Revenue concessions and, for that matter, statements of practice do not have legislative force, they must be relied on by taxpayers and their advisers.

Mr. Hogg

There is, of course, a problem, which I think the hon. Gentleman would admit: if, in the process of rewriting, extra-statutory concessions are incorporated into statutory language, a substantive change to the law takes place without the authority of Parliament. That has, in fact, happened in this case.

Mr. Burnett

The right hon. and learned Gentleman makes a good point. He anticipates what I am about to say. Taxpayers deserve certainty and should not have to put up with rules that are not laws passed by the House. That is extremely important. With regard to the effect of concessions on the law, concessions were largely an explanation of existing law and do not make a substantial or even a small change in the underlying law.

Mr. Redwood

I am sorry to return to the matter, but the hon. Gentleman said that he admired the shorter sentences in the Bill. I wonder whether he has read it. The hypothetical company test to which I referred has 84 words in its first sentence, and that is by no means the longest one. I recommend to him the definition of the limit on amount deferred—clause 138—which is probably twice the length. He ought to read the Bill.

Mr. Burnett

As I explained to the right hon. Gentleman, who is welcome to look at my copy of the will—[Laughter.] I almost had to redraft my will. If he looks at my copy of the Bill, he will see that it is fairly well thumbed. If he has scrutinised at length the Capital Allowances Act 1990 and the numerous Finance Acts that impact on capital allowances, and if he has even a scintilla or a basic modicum of knowledge, he will know that the Bill is infinitely better than the law that now prevails.

After the tax law rewrite committee's report was published, the Select Committee on Procedure conducted an inquiry into the appropriate parliamentary procedures for tax simplification legislation. The tax law rewrite committee stated that the purpose of debating such legislation was to discuss the clarity of the law, and whether further improvements could be made to that end; and whether or not the Bill accurately reproduces the effect of the existing law, other than where (with a view to simplification) departures are intentional, as disclosed by the explanatory memorandum. There was consensus that it was appropriate that policy in general should not be debated.

The Procedure Committee's report stated, however, that such a debate would be likely to be largely"— I emphasise the word "largely"— technical and 'Policy free'. The debate would not, therefore, be entirely technical and policy free, but would be largely so.

With that in mind, I should like to raise one or two issues that relate to simplification and that should therefore be considered and debated now. First, I hope that all hon. Members agree that deeming provisions should be avoided in legislation. Unfortunately, although the Bill is by and large successful, deeming provisions continue to be used. On Second Reading, I referred to clause 297(2), which states: This Part has effect in relation to the person to whom the relevant interest is sold as if—". The provision goes on to define the relevant expenditure, writing-down allowances and appropriate balancing adjustment. However, it is important for clauses in tax law simplification Bills to say what happens in exact circumstances. They must deal with the tax effect in given circumstances, not pretend that something has happened and then provide for the tax consequences.

Mr. Hogg

Will the hon. Gentleman give way?

Mr. Burnett

No, not at the moment.

Such an approach over-complicates and obscures tax law. I hope that future Bills will avoid the use of deeming provisions.

Mr. Hogg

Will the hon. Gentleman give way now?

Mr. Burnett

No, I shall not do so for the moment.

Secondly, it is important to simplify the law. The last three Finance Bills—I had the mixed fortune of serving on the Standing Committees that considered the last two—have introduced countless extra complications and numerous tax rates. It is asking enough of the rewrite committee to give it the task of rewriting the plethora of existing legislation and dovetailing it into a specific Act. The Government must now resist the temptation to tinker gratuitously with the tax system and make it more and more complicated.

The Government could help the rewrite committee and taxpayers by altering the impact of balancing charges, especially for the small business sector. The balancing charge impacts on the taxpayer in one hit, whereas the allowance is made on a reducing-balance basis and, at best, takes seven or eight years to write out the cost of the asset. Surely the Revenue should not be treated considerably more favourably than the taxpayer and there should be some equity in the law between the two.

I hope that the Paymaster General will make it clear that, once a rewrite Bill has been enacted, future legislation—in this case, capital allowances legislation—will be drafted in the same helpful and comprehensive manner, on the basis of fitting into the existing rewritten form. It would be a complete waste of time and effort if future legislation reverted to type. There would be a mismatch: some legislation would be rewritten, but the remainder would be in the almost incomprehensible language that currently prevails.

As I have said several times, the Bill and the explanatory notes are welcome. I hope that, in due course, tax law will be capable of being understood by a reasonably intelligent person who is prepared to devote a reasonable amount of time to the task. The Bill's chief merits include dovetailing legislation into one measure and reordering legislation. The latter is especially helpful.

In a House of Lords debate on the taxation of chargeable gains, no less a legal authority than Lord Wilberforce said: This legislation is of unimaginable complexity. It is absolutely impossible for the ordinary citizen to understand. It is impossible for many accountants to understand. Indeed, as I know from personal experience, it is also impossible for the officials of the Inland Revenue to understand."—[Official Report, House of Lords, 14 January 1992; Vol. 534, c. 119.] I look forward to learning from the Paymaster General the next Act that is to be rewritten and when it will be considered in the House.

11.1 pm

Mr. John Redwood (Wokingham)

I have declared my interests in the register. The Bill demonstrates that if we begin with muddled, complicated, difficult and detailed legislation, no amount of rewriting can make it simple, straightforward and easy to comprehend. I have every sympathy with my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), who chaired the Joint Committee and tried to respond to well intentioned proposals.

However, the Government have missed a great opportunity. If they were serious about simplifying the capital allowance rules, they should have been bolder, changed the rules more dramatically, introduced new policy and attendant legislation and encouraged proper debate on methods of genuinely simplifying legislation that had grown like Topsy over many years under successive Governments and is now out of control.

The Paymaster General invites us to believe that a Bill with 581 clauses and four schedules is an easy read. It may not be Enid Blyton—to echo the vivid speech of my right hon. and learned Friend the Member for Rushcliffe—but the Paymaster General tries to persuade us that the measure is sufficiently lucid for ordinary people to read, digest and understand, and remain undeterred by its enormous bulk. It contributes to understanding only part of the way in which corporate tax works in this country It does not relate to the biggest part of our tax system in terms of the revenue raised or the impact on the daily life of British people. It takes 333 pages to establish the sort of allowances companies can try to offset against corporation tax liability. Yet the Paymaster General tells us without a hint of irony, humour or malice that she is proud of an effort that she perceives as an enormous simplification, which should make us leap for joy.

Before I became a Member of Parliament, I was executive director of a couple of companies. What would I think if I was now in that position and had to respond to the Bill, if it receives Royal Assent? Would I be grateful? Would I sit in my office and exclaim, "This is wonderful—the House of Commons has at last done something to make my life easier. I now have only 333 new pages to read and all will be clear about gaining capital allowances for my company's investment"? I fear that that would not be my reaction. I would perceive the Bill as a confounded nuisance. I would already have approached tax lawyers and accountants to take advice on the impact of existing tax law on those businesses. I would have paid the fees, made the calculations, and 1 would know where I stood. I would then have to repeat the process because the Bill makes 66 detailed changes.

My generous right hon. and learned Friend the Member for Rushcliffe assures us that the changes try to ease the burden on taxpayers and give the benefit of the doubt where doubt previously existed. That is a very worthy idea. However, the companies that 1 am describing would still—in their own interest—have to go back to their tax lawyers and accountants to find out whether they were beneficiaries of any of those 66 changes. Were they not to benefit from them, they would have succeeded only in spending a lot more money on legal advice, tax advice and accountancy advice for no benefit, because they would not have scraped through into any of the new improved arrangements.

When we consider the Bill in more detail, I fear that we may also find examples in which lawyers and accountants will be able to cavil that the changes have not always gone in the direction of the taxpayer. The House must scrutinise that matter carefully.

Mr. Stephen O'Brien (Eddisbury)

I have been following my right hon. Friend's argument with interest. I have, perhaps more recently, been involved in such a position in corporate life. When the crystal mark was introduced to simplify the language of many corporate documents, I found it notable that although the mark was intended to simplify, the company also had to pay further fees to have the documents properly interpreted because they used different words that could have been taken to have different meanings. Is not the best way of simplifying any law to have less law?

Mr. Redwood

My hon. Friend is absolutely right. As the former company secretary of an important British multinational group, he speaks from considerable experience. Voluminous legislation such as this, however well intentioned, will always impose new costs and duties on well run businesses. They must keep up with the change of words, determine whether the change of meaning will have any impact, arid ensure that there is nothing untoward in the way in which they are handling their affairs once the law has, effectively, changed.

Mr. Hogg

I often agree with my right hon. Friend. However, he seems to be advancing an argument against any attempt to rewrite or simplify statutory language. I find that a difficult conclusion to accept.

Mr. Redwood

My right hon. and learned Friend makes an extremely powerful point. Perish the thought that I should advance such an argument. However, as I said earlier, I would like the Government to achieve their aim by simplifying the thinking behind the legislation that they have introduced or inherited. I would then like them to introduce more radical proposals—which would cut down the number of pages dramatically—and deliberately change the law to make it easier and cheaper in its incidence by being more in favour of the taxpayer than the minor, but sometimes important, changes that we are considering tonight.

We have also heard from some hon. Members, particularly from the Liberal Bench that they are full of admiration for the much simpler, clearer language, and the shorter sentences. I referred to the hypothetical company test on pages 25 to 26 of the Bill. That is by no means the most confused or difficult part of the Bill; I have not selected the worst example, by any means. I would like the House to get the feel of this proposal, because I am not sure that all hon. Members are as fully acquainted with it as might be useful for the purposes of these debates. Clause 48(5) states: To apply the hypothetical company test, assume that—

  1. (a) the qualifying activity is carried oil by a company ("the hypothetical company"),
  2. (b) every trade, business, profession or vocation carried on by the business is carried on by the business as part of that activity,
  3. (c) the financial years of the hypothetical company would coincide with the chargeable periods of the business, and
  4. (d) accounts of the hypothetical company for any relevant chargeable period have been duly drawn up as if that period were a financial year of the company."
That is the end of the first sentence. To make matters crystal clear, clause 48(6) states: The business passes the hypothetical company test as a small or medium-sized company in relation to the expenditure in question if, on the assumptions in subsection (5), the company would qualify (or be treated as qualifying) as small or medium-sized under the relevant companies legislation in relation to the financial year in which the expenditure is assumed to be incurred. The clause then goes on at considerable length.

A good, trained accountant who was well versed in company law would probably be able to work that proposal out, but I do not think that one immediately gets the gist of the test from reading the Bill. Clause 48(5) is certainly not a short sentence, and it is a very complicated one. The underlying thought is even more complicated because it deals with hypothetical companies in the test, not with actual companies.

Mr. Bercow

Why is it necessary and desirable—I do not say that it is not; I merely ask the question—to distinguish between qualifying and being treated as qualifying?

Mr. Redwood

That is an extremely good question. I am sure that the Minister will be desperate to respond to that and many other vital points, but I do not think that it is for me to reply to my hon. Friend. I am attacking the formula: I would not have phrased it in the same way, and I do not regard myself as being responsible for it in any sense.

There are many other examples, although I shall not bore the House by citing others or, indeed, by identifying the worst.

Mr. Keith Darvill (Upminster)


Mr. Redwood

I detect some interest in what I am saying. I give way.

Mr. Darvill

Indeed, I have listened closely to what the right hon. Gentleman has been saying. Did he choose to make the same observations here when his right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) proposed the project in 1996?

Mr. Redwood

I did not catch the Speaker's eye at the time, but under my right hon. and learned Friend I had greater hopes of the project than would be justified under the present Government. I am sure that, were he still Chancellor, my right hon. and learned Friend would be going in for rather more of the kind of tax simplification in which I believe, and in which I think my hon. Friends believe. It involves simplifying the underlying thoughts and, above all, reducing the incidence of taxation. The simplification that people want involves a cut in their tax bills, and fewer difficult taxes to compute in the first place.

If we examine the Bill's structure, we see why it has ended up so confusing and long-winded. Over the years, our capital allowances system has grown like Topsy, having been changed year after year. No doubt that was done for good reasons, but as a result it is now very confusing and complicated. As the rather good explanatory notes make clear, there is no simple investment allowance: we have to distinguish between different types of allowance.

Part II deals with plant and machinery allowances. Part III deals with industrial buildings allowances. Part IV deals with agricultural buildings allowances, which are treated differently from industrial buildings allowances and involve different language. In many cases, it is becoming difficult to distinguish an industrial building from an agricultural building. More and more farmers who are being bankrupted by the common agricultural policy, and by the Government's policies generally, are having to turn to quasi-industrial processes to try to add value to the commodities that they are producing.

There is a mineral extraction allowance, which is different again. It relates to industries such as mining and oil. Careful distinctions must be made between that allowance and the general plant and machinery allowance—which is not always easy, as anyone with any acquaintance with the oil industry will understand.

There are research and development allowances. They are different from know-how allowances, which have yet another definition. There are patent allowances, which are different from know-how allowances and, indeed, from the research and development allowances that may have helped to generate the patent in the first place. There are dredging allowances, which my right hon. and learned Friend the Member for Rushcliffe was keen should be debated properly this evening. I live in hope, and I note that other Conservative Members feel the same about these important matters. There are assured tenancy allowances, and there is the question of contributions—another aspect of tackling the difficult problem of capital allowances.

Given provision for nine types of allowance, and consequential provision for contributions and other matters, it is no wonder that the Bill has ended up with 333 pages. When the Minister and her boss the Chancellor were considering the project, why did they not ask themselves whether they should be a little bolder? I wonder why it did not occur to them—rather than asking people to devote a large part of their lives to turning extremely lugubrious prose into prose that some consider a little less lugubrious and others deem just as lugubrious in a different way—to ask, "Do we really need these nine different types of allowance? Could there not be just one or two types treated in a similar way, to avoid all the definitional difficulties and niceties involved in trying to split hairs over whether an allowance is a know-how or an R and D allowance—or, if the oil industry is involved, whether an investment is a mineral extraction or a plant and machinery investment, dealt with by a different part of the legislation?"

I should like to know why the Minister and her colleagues did not consider trying to be bolder and perhaps change the structure on which we base capital allowances. If they had done so, we could have cut through an awful lot of the complexity in the legislation.

It is important also, in what time is allowed us in these important debates, to make a stab at considering the issues on which the Committee had to deliberate by sampling and taking evidence—namely, on whether the 66 changes made in the Bill are within the spirit of the outlined process and procedure. We know that the idea behind the process was that the changes should be only minor. We have also heard the very interesting elucidation that the Committee decided—therefore, the Government must have decided before the Committee—that when changes were being made, they should move in the direction of the taxpayer.

Of course I welcome that. As I said, I would far rather that the Government introduced bold legislation that moved much further, and in all types of ways and in all types of cases, in the direction of the taxpayer. However, one or more of the 66 changes could also disadvantage particular taxpayers. It could be that a company has just spent a lot of money on organising its affairs in a certain manner on the basis of the law before it was changed, only to discover that it had got it wrong and that it would have been better off organising its affairs in a different manner to take advantage of one of the 66 changes. One would therefore not want the process to be used for making changes, as it is not being publicly announced and advertised as Budget changes are advertised.

Our Budget process has a lot of showmanship and many critics, but its one good advantage is that it receives enormous publicity when the tax changes are being made, so that everyone, in business and elsewhere, is alerted to them. People's attention is drawn to the Budget, and they know that there is a Finance Bill and that they have to make proper inquiries and ensure that they have kept up with the changes.

Dawn Primarolo

he right hon. Gentleman has been informed on Second Reading, in my speech today and in the very full comments made by the right hon. and learned Member for Rushcliffe (Mr. Clarke), that the changes are extra-statutory concessions. They are published and taxpayers are already aware of them. One point that the Committee had to deal with was that, for the reasons that the right hon. Gentleman has just given, the tax law rewrite process will result in no changes in the law. The process is not a Budget. Changes to basic, underlying policy can be made only in Finance Bills, with the appropriate announcements and information that they entail, and not in a tax law rewrite process. Moreover, the process was established before the previous general election by the previous Conservative Government, of whom he was a member. We have merely implemented that process.

Mr. Redwood

Although I am very grateful to the Minister, I am not entirely reassured. My point is not that she has failed to inform the House. She has been very courteous, devoted time and provided much documentation to accompany her remarks to ensuring that the House is aware of the changes. My right hon. and learned Friend the Member for Rushcliffe has been his usual courteous and fulsome self in explaining them as well. However, I doubt whether our proceedings today or on Second Reading will be widely reported. My point is that a Budget by its very nature attracts enormous press and publicity which are followed up when the Finance Bill detail is seen.

Dawn Primarolo

Will the right hon. Gentleman give way?

Mr. Redwood

I should like first to finish my point.

The right hon. Lady is quite right that well informed people—tax lawyers and advisers—will be aware of the non-statutory concessions that have been made. However, they have a stronger status now that they are being confirmed. There are 66 changes, so why are not the Government being bolder about telling the business community about them? The changes could have an impact on people's businesses.

Dawn Primarolo

When each exposure draft was released, it was accompanied by a press release. The explanatory notes accompanying the Bill show that the information was published and that all the relevant organisations were notified. They were given every opportunity to comment on the draft, and changes in the draft were pointed out to them. They were asked if they saw any problems at all with the Bill—that is, whether it changed the law or clouded the interpretation of the law in a way that would put the taxpayer at a disadvantage.

Mr. Redwood

Again, it comes as no surprise that the Minister has behaved properly—unlike many other Ministers in the Government—and that she has gone through due process. I only wish that her colleagues in other Departments would do as much. I am delighted to hear what she has to say, but my point is that the publicity, hubbub and interest generated by a Budget will not be aroused by the changes contained in the Bill. If the Bill is enacted, the Minister may have to take further action to ensure that people are aware of the changes—people who are not consultees and do not belong to the professional bodies, but who run businesses and will be affected by them.

Mr. Kenneth Clarke

My right hon. Friend seems to have got the impression—probably from what I said—that the Committee was not averse to accepting changes that would effect a substantial benefit for taxpayers rather than the Treasury. That was not the test that we applied. The test that we were enjoined to apply under the procedures laid down by the Select Committee on Procedure was whether the changes were minor arid necessary. Had we found that any of the changes wet e of substantial benefit to a group of taxpayers, we would almost certainly have decided that the matter was one for the whole House and that it should be referred back to Parliament as a whole.

The 66 changes are minor. Questions were asked about whether the shift in the burden could be quantified. In almost all cases, it was impossible to quantify the shift in the burden as the practical effect was so insignificant. For example, we referred details of the relevant changes to the oil industry. The industry went over them, and its response was totally relaxed, as the changes were considered to be insignificant.

Mr. Redwood

I am grateful to my right hon. and learned Friend for that clarification. I think that I had understood that the Committee, quite properly, tried to avoid any material change in tax legislation. I had thought that he said that, where a change of a minor nature was being made, the Committee had tried to ensure that it was in favour of the taxpayer. That was the case with the extra-statutory concessions on which the Minister implied that all the changes are based.

I offer no criticism of my right hon. and learned Friend or his Committee. I merely want to make the point to the Minister that a difficult dividing line is being drawn?between a change that is made with all the publicity and hubbub attendant on a Budget, and one that is made as a result of what has happened in case law. I think that the Minister would be well advised to ensure that not only are the special advisers and consultees involved, but the wider business community is alerted to what is going on.

For example, the explanatory notes state in connection with the demolition costs covered in clause 26(1)(b), that section 61 of the Capital Allowances Act 1990 applies where any plant or machinery 'which is in use for the purposes of the trade' is demolished. On its literal reading, this would appear to exclude the beneficial treatment of demolition costs where the person has ceased to use the plant or machinery before the demolition occurs. In contrast, clause 26 applies where 'the last use of the plant or machinery was for the purposes of trade'. So there is no risk of taxpayers being excluded from the beneficial treatment of demolition under this clause, because the plant or machinery has ceased to be in use at the time when the demolition occurs.

That is an extremely helpful change. It will clearly benefit some taxpayers who previously were not benefiting or who had to benefit under an extra-statutory concession and might not have been aware of it or claimed it in the right way.

I would like to feel that as there are people outside who will benefit from this change, the Minister will take action to tell them. The Government are always keen to explain new schemes and new sums of money that they are spending. Should they not also be keen to say that, in this minor but important way, the legislation provides a beneficial change for a few businesses?

Mr. Bercow


Mr. Redwood

I will give way to my hon. Friend, who is getting worried.

Mr. Bercow

I am indeed getting worried, and would be grateful if my right hon. Friend could reassure me. Does he agree that whereas one could probably safely take it for granted that most large businesses affected one way or another by the change would be aware of it because of their extensive in-house resources and access to professional advice, small businesses might not be? As they constitute 99.6 per cent. of British businesses, employ 57 per cent. of the private sector work force and produce two fifths of the national output, should they not be told?

Mr. Redwood

I thought that my hon. Friend was getting worried because I was highlighting a small benefit from the Government. It is most unusual to find the Government providing a benefit, and perhaps I was too generous. However, I am delighted with my hon. Friend's intervention. He identifies the bulk of the business community that could not be expected to retain tax lawyers, read the latest exposure drafts or be in contact with the grand consultees to whom the Government go on these matters. Yet those are exactly the types of businesses that might be affected by the legislation.

Such businesses have to be even more careful because the legislation has an impact on whether a business is deemed to be small or medium-sized for the purpose of entitlement to a first year allowance. That is an important question because there is a different regime, depending on the size of the company. The argument is set out—with great clarity and in exemplary prose, according to Liberal Democrat Members, I am sure—on pages 5 and 6 of the explanatory memorandum. It says: Subsections (8) and (9) of clause 48 correct small anomalies in the way that legislation relating to companies is referred to in connection with first-year allowances for small or medium-sized enterprises. It goes on to say that the sections of the Capital Allowances Act 1990 on which the clause is based deal both with small or medium-sized companies and with small or medium-sized 'businesses'. In this context, 'business' means individuals, partnerships consisting of individuals and so on—people or entities which are not companies. The explanatory memorandum goes on to try and cut through this complicated Gordian knot. There is an added complication in the case of Northern Ireland, where companies registered and formed were treated differently under the 1990 Act.

I do not want to bore the House, but I hope that I have shown that there are a number of changes—66 in all—that will definitely impact on the tax liability of a number of businesses and people. That is, after all, why they are flagged up as changes. The Government assure us that these are sufficiently minor not to warrant finance legislation. I do not quibble with that, but I think that the Minister owes us an explanation. Given that there will be changes that will have an impact on business, how will she make up for the publicity deficit which, as my right hon. and learned Friend the Member for Rushcliffe says, seems to have dogged this important legislation throughout its passage so far?

I think that we deserve an answer explaining why Ministers are so reluctant to be rather more radical and enterprising and understand that the reason that so much gobbledegook is left in the Bill, even after these fine, learned accounting brains have been applied to it, is because the underlying complexity of the law is inherent in it. We have to sort it out not by rewriting it, but by substantial amendment or, even better, substantial repeal.

We cannot have a simple capital allowance regime with nine types of capital allowance. We cannot have a simple regime if we have different definitions of small, medium and large enterprises and they are treated differently. We cannot have a simple regime if businesses are different from enterprises and companies. We cannot have a simple capital allowance regime if we have calculations and computations on complicated formulae. I have not troubled the House with those, but there are many in the Bill, and some of my right hon. and hon. Friends may wish to mention them if time permits and they catch your eye, Mr. Deputy Speaker.

A great deal of time, money and energy has been spent on the measure, but I should be surprised if it was welcomed by the business community. Many business people will be worried that they have to wade through a further 333 pages of tax legislation that might then all be changed in a few weeks by the Budget. The measure will result in more cost, more regulation and more difficulty rather than the simplification that my right hon. and learned Friend the Member for Rushcliffe so wisely wanted. That is not being delivered by the Government and the Bill.

11.30 pm
Mr. Eric Forth (Bromley and Chislehurst)

Before I get into the meat of the Bill, I want to take an approach slightly different from that of my right hon. Friend the Member for Wokingham (Mr. Redwood), by looking at the first report of the Joint Committee. That report is quite revealing—perhaps more so than the participants might have wished. It began, helpfully, by stating the declaration of interest of those involved. We were led to believe that the Joint Committee of both Houses would be a useful exercise, and that it would carry out substantial work on our behalf expertly and eruditely. My heart rose somewhat when I read not only that, mercifully, several of its members had considerable involvement in the real world, but that a number of them had already been involved up to their armpits in the whole tax law rewrite venture.

In considering the value of the work that has been done, our first judgment must be whether we believe that the fact that the Committee was substantially populated by people who had already been involved in the exercise was a plus, in the sense that their expertise or experience were being brought to bear on the matter, or a minus, because they were already so committed to the project that they would be unable or unlikely to bring an impartial and fresh eye to their work on the Committee. We should at least pause to consider that question. The report notes that three of the Committee members, Lords Brightman, Goodhart and Howe, had previously been involved in the tax law rewrite exercise, so presumably they could not reasonably be expected to bring a fresh mind to bear on the matter.

Whether Members of this House were able to do that is another matter. The Paymaster General has an honourable and proper position—albeit hardly impartial—on the subject. It would appear that my hon. Friend the Member for Croydon, South (Mr. Ottaway) was rather isolated in his desire to bring a fresh mind to the matter—or, indeed, to introduce anyone else with a fresh mind. He seems largely to have been denied in that endeavour, which must heighten our suspicions.

All that is bad enough. However, we might have thought that if the Committee was to do any substantial work, it might have made some alteration to the documentation that it was offered. I read the proceedings of the Committee to try get into the minds of its members—to understand their approach to the matter. During its proceedings on 31 January 2000, the Chairman said: I think we ought to be clear on the procedure. Without taking advice, I am not sure. He was commendably honest, as ever—as we expect our Chairmen to be. He continued: I would be very surprised if we could amend the Bill. Straight away, a glimmer of suspicion enters my mind: what on earth is the point of the Joint Committee sitting if, right at the beginning of its meeting, the Chairman says that he would be very surprised if they could amend the Bill? If the Committee is taking that position, under the guidance of its Chairman, at the outset, why have we asked it to undertake that work on our behalf?

The Chairman then went on to talk about how difficult it would be to make amendments, saying: If they are taken after 10 o'clock they would be subject to the new-style votes, no doubt. He was probably referring to our ghastly deferred Division procedure, which has made such a farce of our proceedings. He then said: We are making up procedure as we go along, but I cannot believe that we shall be allowed to set a precedent where we can amend a Bill without it going back to the Floor of the House. I begin to wonder whether there was a suggestion that if the Committee decided that it needed to amend the Bill, it might have had to return to the Floor of the House, where we might have had an opportunity to consider it further in a substantial way. I therefore wonder whether the Committee had a wholehearted commitment to give the Bill proper scrutiny, and whether it had the freedom to amend it if it felt constrained in that way from the start.

Mr. Kenneth Clarke

It is most untypical of my right hon. Friend to be deficient in his reading or to misquote in quite that way. The point of the words that he quotes was that I would have been surprised if the Committee could amend the Bill without the amendment going back to the Floor of the House. I was expressing the opinion that nothing could be done to change the Bill in Committee that would avoid debate on the Floor of the House. He suggests that I was arguing that we could not amend the Bill at all, which, as I am sure he will agree, must be an entirely accidental misreading of the purport of my remarks.

Mr. Forth

I am grateful to my right hon. and learned Friend for helping me, but the thrust of what is said later in that paragraph at the very least gives the impression that the Committee would want to avoid doing anything that would cause the Bill to return to the Floor of the House.

Mr. Clarke

I strongly dispute that interpretation; the opposite point was plainly being made.

Mr. Forth

I am delighted to hear that confirmation, because it shows that the Committee felt entirely free to make any amendment that it thought necessary, but that it did not think it necessary to make any. So we obviously need to probe much further to find out why that was the case.

Mr. Clarke

At last we reach agreement, but for the avoidance of doubt, I should say that the Committee felt perfectly free to make any amendment that it wished; we insisted that we were entitled to do so. We were clear that any amendment that we made would have to be debated on the Floor of the House, which could revise it. After considered discussion, we concluded that we wished to make no amendment.

Mr. Forth

That is extremely reassuring. We have been told over and over again that 66 allegedly minor changes—I shall return to the word "minor" later—had been identified, so we might have expected the Committee to have spent some time considering them.

Mr. Hogg

Does my right hon. Friend accept, moreover, that the consequence of the decision not to amend the Bill in Committee is that only four Members of this House had the opportunity to consider it in detail? The absence of amendments means that the House did not debate the Bill on Report.

Mr. Forth

That is the case.

Perhaps my right hon. and learned Friend the Member for Rushcliffe can help me on another matter. On page 47, he is reported as having said: As we are a Select Committee I do not want to take a vote unless we have to, but can Members of the Committee indicate if they agree that we should make no amendment whatever?". On a simple reading, without understanding the subtleties of thought involved in the Committee's deliberations, that again suggests that the Committee set out with the determination not make any amendments.

Mr. Clarke

With respect, my right hon. Friend would agree that a simple and careful reading would reveal that the remark he quotes relates to amendments on the particular topic then being raised by Lord Brightman. There was no inhibition about proposing other amendments. The fact is that no member of the Committee was in favour of any amendment, and no outside body suggested any amendment to us; nor, so far as I am aware, has any hon. Member done so during the years of consultation that took place to produce the Bill.

Mr. Forth

My right hon. and learned Friend is fond of saying that, but surely this is the point at which the House would have had an opportunity to consider the matter properly, but for the fact that the Joint Committee chose not to make any amendment so that, procedurally, the Bill could zip through without touching the sides, to confront us now, when the House has no chance to make any amendment.

Mr. Clarke

My right hon. Friend and I are great reactionaries concerning the procedures of the House, which shows that we are jealous of its privileges. Surely he will concede that we never debate any Bill on Report if the Standing Committee that considered it made no amendment.

Mr. Forth

Exactly, and we find ourselves in an invidious position. My right hon. and learned Friend may be aware that I argued against the Joint Committee, and my suspicions are being fully confirmed. It has seen fit to make no amendment to such a large Bill, and that has denied Members who were not on it the opportunity to have an input.

Mr. Hogg

Does my right hon. Friend remember that the House approved a Government motion to discharge the Committee of the whole House from considering the Bill? If that had not been approved, presumably the Bill would still be in the charge of a Committee of the whole House and, in theory, amendments could be made.

Madam Deputy Speaker (Mrs. Sylvia Heal)

Order. The right hon. and learned Gentleman should not be discussing procedure.

Mr. Forth

I am delighted by your nudge, Madam Deputy Speaker. Having got rid of the little preliminaries, I can get on to the meat of the Bill.

The problem with the project is that it is all smoke and mirrors. My right hon. Friend the Member for Wokingham hinted at that. My brief perusal of the Bill has confirmed my suspicion that we have not got very far.

Mr. Bercow

We are being invited to pronounce our verdict and to decide whether to give the Bill a Third Reading. How can we be confident that the decision not to table amendments was reached by members of the Joint Committee after a thorough consideration of the Bill's contents when, sadly, three of its members who hail from this House have been unable to be present for our deliberations?

Mr. Forth

I greatly regret the fact that key Committee members have not felt it necessary to guide us tonight. We have received guidance from the Chairman, which was most welcome, and the Minister will no doubt guide us further. In the meantime, we are having to engage in much unguided speculation, which simply lengthens our proceedings.

Mr. Hogg

Does my right hon. Friend recall that when we appointed the Committee members a few weeks ago, only one prospective candidate was in the Chamber when the nominations were made?

Mr. Forth

There seems to have been a rather casual attitude throughout our proceedings. I was going to analyse the attendance of Committee members, but I decided not to embarrass them.

I shall now deal with the Bill itself; you can see, Madam Deputy Speaker, that it is in my hands. I have annotated it so that I can guide myself and the House through it.

Mr. Clarke

Is my right hon. Friend proposing a new rule of procedure to ensure that anyone who is nominated to a Standing Committee is in the Chamber when nominated? If so, would it ever be possible to man a Standing Committee on a major Bill?

Mr. Forth

I am not proposing that, but it might be beneficial to the House if only those people who showed a sufficient interest in Bills were appointed to Standing Committees, so that they were not composed of the usual zombies—

Madam Deputy Speaker

Order. I remind the right hon. Gentleman about parliamentary language.

Mr. Forth

Perhaps I should have said robots. I would not dream of calling any hon. Member, irrespective of his party, a zombie. However, I want to get on with debating the Bill and shall not be led astray any further by my right hon. and hon. Friends.

There have been several references to "minor changes". That concept has bedevilled our deliberations. "Minor" is a subjective word at best. As the Chairman explained, it was a prime consideration of the Committee to determine what was a minor change. The magic figure of 66 minor changes has been mentioned. We have not got to the bottom of the question of whether the Committee considered in detail each of the minor changes, satisfied itself that they were minor, and then decided to approve them without amendment. We can assume that it probably did. I remain worried, however, about whether that formed part of the Committee's deliberations.

That worry increased when I considered the wording used in the Bill, which was unamended by the Committee. We must therefore assume that the wording has the Committee's approval, and that it saw no need to amend it. My eye first lit on clause 33, headed "Personal security", which says: This section applies to expenditure if … it is incurred by an individual or partnership of individuals in connection with the provision for, or for use by, the individual, or any of the individuals, of a security asset". I wonder whether that form of words is remotely detailed or specific enough to help those who seek to interpret it. It involves the use of terms such as "in connection with", "any of the individuals" and "of a security asset" in one sentence, and I should have thought that any of those terms could reasonably give rise to doubt. Given that the whole point is supposed to be simplification, and that it was stressed earlier that all the experts have considered the Bill at great length and pronounced themselves satisfied, I wonder whether they have done the job properly.

My suspicion grew when I read clause 45, headed "ICT expenditure incurred by small enterprises". That starts rather encouragingly by saying: Expenditure is first-year qualifying expenditure if … it is incurred on or before 31st March 2003". I should have thought that one could be reasonably satisfied that that is specific and definite and could therefore be relied on by those who look to the Bill for guidance on capital allowances. The clause then plunges into uncertainty, however, because it says that expenditure is first-year qualifying expenditure if it is incurred by a small enterprise". Let us give the Bill the benefit of the doubt and say that small enterprises are adequately defined in prior statute.

The Bill goes on to say that expenditure qualifies if it is expenditure on information and communications technology, and … is not excluded by section 46 (general exclusions)". It continues: 'Expenditure on information and communications technology' means expenditure on items within any of the following classes. One assumes that the Bill will now give sufficient information to put the matter beyond doubt. It says that the first class covers computers.

At this point, doubts start to arise in my mind. I confess straight away that I am not a computer expert, nerd or anorak. I do not use a computer; indeed, I do not know how to use one. Even I should have thought, however, that simply to say that the first class covers computers can hardly, in this day and age, be sufficient. I imagine that the term now covers state-of-the-art, hand-held telephones with an internet capability, hand-held computers that are not telephones, and also any other device that is capable of computing. That encompasses a wide range of equipment.

Mr. Stephen O'Brien

I have been following my right hon. Friend's argument, and although of course it carries the force of logic and eloquence, as ever, I find it confusing that he seems to be arguing for greater detail. As we are dealing with a simplification Bill, surely he should be seeking a change in the other direction.

Mr. Forth

I am afraid that I have to disagree with my hon. Friend, because simplification, in tax matters above all things, does not mean reducing phrases to one word, which could have a variety of interpretations.

Mr. David Taylor (North-West Leicestershire)

Does the right hon. Gentleman accept that the Bill's objective is not simplification as he has described it, but clarification and codification, which makes legislation more acceptable to practitioners, businesses and other interested individuals, and that his remarks are misguided in that respect?

Mr. Forth

I do not believe so. The whole purpose of the exercise was alleged to be tax simplification; that is what the Joint Committee—indeed, the whole exercise—was supposed to be about. Therefore, that is what I am looking for in the Bill and why my search has been so frustrating.

Mr. Bercow

There is a real problem. The hon. Member for North-West Leicestershire (Mr. Taylor) has contributed to the debate, apparently without having had sight of the relevant material. My right hon. Friend was a bit soft on him, but does he not think it unfortunate that the hon. Gentleman is unaware that he has only to look at the cover of the first report to see that the name of the Committee is the Joint Committee on Tax Simplification Bills—not codification, but simplification?

Mr. Forth

Yes, the hon. Member for North-West Leicestershire appears to have wandered into the Chamber unarmed with any documentation, so he was presumably guessing when he intervened. I am grateful to my hon. Friend for providing that guidance to the hon. Gentleman, who might want to go to the Vote Office and arm himself before he intervenes again.

Moving on swiftly, as is my wont, I turn to clause 81, which is headed "Extended meaning of 'car'" and states: In this Part "car" means a mechanically propelled road vehicle other than one—

  1. (a) of a construction primarily suited for the conveyance of goods or burden of any description, or
  2. (b) of a type not commonly used as a private vehicle and unsuitable for such use.
I do not know much about computers, but I do know a little bit about cars. Contemplating categories that include sports utility vehicles, the vehicle known in the United States as a pick-up truck, and all the other varieties of vehicle in between, which might have an open rear part for carrying goods, but a cabin designed to carry a number of people, or be a four-wheel drive vehicle designed primarily for off-road purposes but also able to carry heavy burdens, causes me to wonder whether the description provides sufficiently flexible coverage of the range of vehicles known generally or generically as "car" to serve as any useful guide in the matter of capital allowances.

Confusingly, the clause then states: References to a car accordingly include a motor cycle. If that is the fruit of the work of the Joint Committee of both Houses of Parliament on tax simplification, I despair. I begin to have great sympathy with my hon. Friend the Member for Croydon, South (Mr. Ottaway), who uttered a cry of frustration when speaking about the Bill. I suspect that he had nightmares about clause 81 after reading it, and well might it cause him to wonder why he spent all that time—well, not much time at all, as it turns out—in the Committee during its deliberations.

Mr. Redwood

My right hon. Friend has passed over the preceding clause. Did he find clause 80 easy to understand? I found the calculation of the final chargeable period especially difficult under the formula therein. Would my right hon. Friend care to alert the House to the fact that

(AQE?TDR) x A/B is not a terribly lucid explanation of how one goes about calculating one's balancing allowance as an employee? I pity the poor employee who has to use that formula.

Mr. Forth

My right hon. Friend would be right, were it not for the fact that, helpfully, the clause goes on to define—

Mr. Thomas McAvoy (Comptroller of Her Majesty's Household)

rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House divided: Ayes 238, Noes 31.

Division No. 122] [11.53 pm
Adams, Mrs Irene (Paisley N) Cunningham, Rt Hon Dr Jack (Copeland)
Ainger, Nick
Ainsworth, Robert (Cov'try NE) Cunningham, Jim (Cov'try S)
Allen, Graham Dalyell, Tam
Anderson, Rt Hon Donald (Swansea E) Darvill, Keith
Davey, Valerie (Bristol W)
Anderson, Janet (Rossendale) Davidson, Ian
Armstrong, Rt Hon Ms Hilary Davies, Rt Hon Denzil (Llanelli)
Ashton, Joe Davis, Rt Hon Terry (B'ham Hodge H)
Atkins, Charlotte
Austin, John Denham, Rt Hon John
Bailey, Adrian Dobbin, Jim
Barnes, Harry Donohoe, Brian H
Battle, John Doran, Frank
Bayley, Hugh Drew, David
Begg, Miss Anne Eagle, Angela (Wallasey)
Bennett, Andrew F Eagle, Maria (L'pool Garston)
Benton, Joe Efford, Clive
Bermingham, Gerald Ellman, Mrs Louise
Berry, Roger Ennis, Jeff
Betts, Clive Etherington, Bill
Blears, Ms Hazel Fitzpatrick, Jim
Blizzard, Bob Fitzsimons, Mrs Lorna
Boateng, Rt Hon Paul Flint, Caroline
Bradley, Peter (The Wrekin) Flynn, Paul
Bradshaw, Ben Follett, Barbara
Brinton, Mrs Helen Foster, Rt Hon Derek
Brown, Russell (Dumfries) Foster, Michael Jabez (Hastings)
Browne, Desmond Foulkes, George
Buck, Ms Karen Gapes, Mike
Burden, Richard George, Rt Hon Bruce (Walsall S)
Burgon, Colin Gerrard, Neil
Butler, Mrs Christine Gibson, Dr Ian
Campbell-Savours, Dale Gilroy, Mrs Linda
Caplin, Ivor Goggins, Paul
Chapman, Ben (Wirral S) Golding, Mrs Llin
Clapham, Michael Griffiths, Jane (Reading E)
Clark, Rt Hon Dr David (S Shields) Griffiths, Nigel (Edinburgh S)
Clark, Paul (Gillingham) Griffiths, Win (Bridgend)
Clarke, Rt Hon Tom (Coatbridge) Hain, Peter
Clelland, David Hall, Mike (Weaver Vale)
Coffey, Ms Ann Hamilton, Fabian (Leeds NE)
Cohen, Harry Hanson, David
Coleman, Iain Healey, John
Connarty, Michael Henderson, Doug (Newcastle N)
Cousins, Jim Henderson, Ivan (Harwich)
Cox, Tom Hendrick, Mark
Cranston, Ross Hepburn, Stephen
Crausby, David Heppell, John
Cryer, John (Hornchurch) Hesford, Stephen
Cummings, John Hill, Keith
Hodge, Ms Margaret Pearson, Ian
Hoey, Kate Pendry, Rt Hon Tom
Hood, Jimmy Pickthall, Colin
Hopkins, Kelvin Pike, Peter L
Howells, Dr Kim Pond, Chris
Hoyle, Lindsay Pope, Greg
Hughes, Kevin (Doncaster N) Pound, Stephen
Humble, Mrs Joan Prentice, Ms Bridget (Lewisham E)
Hurst, Alan Prentice, Gordon (Pendle)
Hutton, John Primarolo, Dawn
Iddon, Dr Brian Prosser, Gwyn
Illsley, Eric Purchase, Ken
Jamieson, David Quinn, Lawrie
Jenkins, Brian Raynsford, Nick
Johnson, Alan (Hull W & Hessle) Reed, Andrew (Loughborough)
Jones, Rt Hon Barry (Alyn) Robertson, John (Glasgow Anniesland)
Jones, Mrs Fiona (Newark)
Jones, Dr Lynne (Selly Oak) Roche, Mrs Barbara
Jones, Martyn (Clwyd S) Ross, Ernie (Dundee W)
Jowell, Rt Hon Ms Tessa Rowlands, Ted
Joyce, Eric Ruane, Chris
Kaufman, Rt Hon Gerald Russell, Ms Christine (Chester)
Keen, Alan (Feltham & Heston) Sarwar, Mohammad
Keen, Ann (Brentford & Isleworth) Savidge, Malcolm
Kemp, Fraser Skinner, Dennis
Kidney, David Smith, Rt Hon Andrew (Oxford E)
Kilfoyle, Peter Smith Angela (Basildon)
Kumar, Dr Ashok Smith, Miss Geraldine (Morecambe & Lunesdale)
Ladyman, Dr Stephen
Lammy, David Smith, Jacqui (Redditch)
Lawrence, Mrs Jackie Soley, Clive
Leslie, Christopher Southworth, Ms Helen
Levitt, Tom Squire, Ms Rachel
Lewis, Ivan (Bury S) Starkey, Dr Phyllis
Liddell, Rt Hon Mrs Helen Steinberg, Gerry
Linton, Martin
Lloyd, Tony (Manchester C) Stewart, David (Inverness E)
Lock, David Stewart, Ian (Eccles)
Love, Andrew Stoate, Dr Howard
McAvoy, Thomas Strang, Rt Hon Dr Gavin
McDonagh, Siobhain Stringer, Graham
Macdonald, Calum Stuart, Ms Gisela
McDonnell, John Sutcliffe, Gerry
McFall, John Taylor, Rt Hon Mrs Ann (Dewsbury)
McGuire, Mrs Anne
McIsaac, Shona Taylor, David (NW Leics)
McKenna, Mrs Rosemary Temple-Morris, Peter
Mackinlay, Andrew Thomas, Gareth R (Harrow W)
McNulty, Tony Tipping, Paddy
Mactaggart, Fiona Trickett, Jon
McWilliam, John Truswell, Paul
Mahon, Mrs Alice Turner, Dennis (Wolverh'ton SE)
Mallaber, Judy Turner, Dr Desmond (Kemptown)
Mandelson, Rt Hon Peter Turner, Neil (Wigan)
Marsden, Gordon (Blackpool S) Twigg, Derek (Halton)
Marshall, David (Shettleston) Twigg, Stephen (Enfield)
Martlew, Eric Tynan, Bill
Maxton, John Walley, Ms Joan
Merron, Gillian Ward, Ms Claire
Michael, Rt Hon Alun Wareing, Robert N
Michie, Bill (Shef'ld Heeley) Watts, David
Miller, Andrew White, Brian
Moffatt, Laura Williams, Alan W (E Carmarthen)
Moran, Ms Margaret Williams, Mrs Betty (Conwy)
Morgan, Ms Julie (Cardiff N) Winnick, David
Morris, Rt Hon Ms Estelle (B'ham Yardley) Winterton, Ms Rosie (Doncaster C)
Wood, Mike
Mullin, Chris Woodward, Shaun
Murphy, Denis (Wansbeck) Woolas, Phil
Murphy, Rt Hon Paul (Torfaen) Wray, James
Naysmith, Dr Doug
O'Hara, Eddie Tellers for the Ayes:
Olner, Bill Mr. Jim Dowd and
Osborne, Ms Sandra Mr. Don Touhig.
Beggs, Roy Ottaway, Richard
Beith, Rt Hon A J Paisley, Rev Ian
Bercow, John Redwood, Rt Hon John
Burnett, John Rendel, David
Clarke, Rt Hon Kenneth (Rushcliffe) Robinson, Peter (Belfast E)
Ross, William (E Lond'y)
Collins, Tim Ruffley, David
Day, Stephen Russell, Bob (Colchester)
Donaldson, Jeffrey Sanders, Adrian
Forth, Rt Hon Eric Smith, Sir Robert (W Ab'd'ns)
Hayes, John Stunell, Andrew
Heath, David (Somerton & Frome) Swayne, Desmond
Hogg, Rt Hon Douglas Thomas, Simon (Ceredigion)
Keetch, Paul Webb, Steve
Leigh, Edward
Maclean, Rt Hon David Tellers for the Noes:
O'Brien, Stephen (Eddisbury) Mr. Peter Atkinson and
Öpik, Lembit Mr. Geoffrey Clifton-Brown.

Question accordingly agreed to.

Question, That the Bill be now read the Third time, accordingly put and agreed to.

Bill read the Third time, and passed.

Madam Deputy Speaker

Order. Will hon. Members who are leaving the Chamber please do so quickly and quietly?