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Dawn Primarolo: I apologise for laughing. The right hon. Gentleman's remarks reminded me of the large number of Finance Bill Standing Committees on which we have served together. In those Committees, he usually began his sentences with the words "compare and contrast".

Mr. Jack: I am delighted that my words have seared their way into the Paymaster General's mind. I hope that my proposals about lessons arising from the exercise will have a similar effect.

Interestingly, section 23 of the Capital Allowances Act 1990 bears the title "Information relating to first-year allowances". The first thing that one reads about first-year allowances is the following statement:

A claim . . . for a first-year allowance in respect of expenditure to which 22(4)(c) applies . . . shall be accompanied by a certificate . . .

I shall not bore the House by reading out the rest of that opaque legislation paragraph by paragraph, but I cite it to contrast it with the start of first-year allowances in the Bill, in which clause 52 states, straightforwardly:

A person is entitled to a first-year allowance in respect of first-year qualifying expenditure . . .

and goes on to give details of the circumstances in which the allowances are applicable. Then, for the first time that I can remember, there follows a clear table laying out the types of expenditure and the allowances for which they qualify. The introductory section then provides an example of the signpost that the hon. Lady mentioned that points people to other parts of the Bill in which further information can be found. This is a remarkable change.

This is the only part of the Bill that I could find in which one could try to contrast the new with the old, but I would commend that exercise as a way of reassuring my right hon. and hon. Friends who have expressed concern about, for example, the nature of what constitutes a minor change, and about what the Bill seeks to do. Once one has looked at the before-and-after effect, one understands that minor changes have had to be made to enable this clearer exposition of the existing fundamental tax code to take place. If one overlays that with the appropriate incorporation of the extra statutory concessions, one begins to understand what the exercise is about.

It is also worth looking at the second document that the Paymaster General mentioned: the explanatory note annexes. She prayed in aid the document to illustrate where definitional changes had been made. I would like to look at one or two of those definitional changes, as they illustrate some of the problems with which the Bill has had to grapple.

15 Jan 2001 : Column 121

When I was in the Treasury, I had a big argument with the Inland Revenue over a provision about capital allowances on caravans. One would not have believed the number of definitions in law of a caravan. You and I, Mr. Speaker, would know what a caravan was if we were sitting behind one in a traffic queue. However, a separate piece of law that exists for council tax purposes defines a caravan, and there are two definitions of them in the tax code: caravans on touring caravan sites, and caravans of a more fixed nature. In terms of capital allowance legislation, those definitions had different effects until I managed to persuade officials that they described one and the same thing.

The new definition on page 3 of the explanatory notes annexes states:

The main significance of the extended definition in the present context is that it includes structures that can be moved only by being put on trailers.

That is a great breakthrough in the definition of a caravan, but it also illustrates the problem of tax law having to cater for special circumstances, which someone, at some time, thought was a good idea in terms of protecting tax expenditure or revenue in the context of capital allowances. This exercise, as illustrated by the Bill, will highlight the anomalies, and the need to do something about them will present considerable challenges to the Government.

Annexe 2 on page 73 of the same document highlights one of the challenges that has had to be met in terms of the language of the Bill. As the Paymaster General mentioned, clause 3(1) provides that

No allowance is to be made under this Act unless a claim for it is made.

It is intriguing to think about the legal cases that lie behind the decisions about the terms on which capital allowances can be claimed. The explanatory notes say:

It was argued by the Inland Revenue that, because trading expenses are automatically deductible in computing trading profits, the effect of making a capital allowance a trading expense was to obviate the need for the allowance to be claimed and to make it automatically deductible.

Somebody, in the case of Elliss v. BP Oil Northern Ireland Refinery Ltd., had wanted to determine in law when a claim could be made. That is one of the real difficulties of our tax code, and although the Bill writes the tax law in clearer language, it will not stop people questioning exactly what the words mean.

In tax law we are dealing not with precise scientific formulae but with words capable of interpretation. Page 75 of the explanatory notes, which is about clause 5, gives us another example on the same theme of the ownership of an asset. Obviously, the determination of when a capital allowance can be claimed is related to when someone acquired the asset--and again, there is some interesting case law that determines when ownership occurs. Ownership could begin on the day when someone bought an asset at auction, or it could begin when it was delivered to his premises. I shall not detain the House with a detailed exposition--

Mr. Ruffley: Go on.

Mr. Jack: No, I shall resist my hon. Friend's encouragement.

15 Jan 2001 : Column 122

I put those two examples on the record because they illustrate some of the real problems that arise when people say that we should have less complex tax law. Such people will criticise the Bill and say, "It doesn't look any less complex to me; it's simply that now I can understand the complexity better." However, when we realise that people go to law over questions of precise timing, and exactly when an asset becomes owned, we understand why our tax law is complex. As the Paymaster General said, £18.8 billion in tax is forgone as a result of the allowances that are at stake, so it is not surprising that it is necessary to ensure that the law is tightly drafted.

I have one or two criticisms of the layout of the Bill. I have talked to tax practitioners, and I know that there was real disappointment that three-part numbering could not have been incorporated. When the legislation was launched, especially in its exposure draft stage, all the practitioners commented on how much clearer things were with three-part numbering. In fairness to the Paymaster General, she supported that proposal--I hope that I have not embarrassed her by revealing that in public.

Sadly, upon immediate inspection, the present version of the Bill looks exactly like any other piece of legislation. Three-part numbering, which would have enabled practitioners more readily to identify its component parts, was denied the light of day because, we were told, the law had to be written so as to be compliant with everything else, not with the new form of numbering. A real opportunity has been missed to add to the clarity of the exercise.

I have already mentioned the idea of incorporating a table, and that leads me to make the point that, in commenting on its overall layout, some practitioners have said that the Bill should have had better spacing and a more modern look. That would have been an advantage, especially bearing in mind the unique nature of what we are doing here. Perhaps, in time, it will be possible for us to consider that proposal. I hope that the layout will be reconsidered, which would not detract from the content of the Bill.

Your predecessor in the Chair, Mr. Speaker, gave us proper counsel about not straying too far into policy issues. I shall respect his ruling entirely--save to say that I have been thinking about some of the individual capital allowances mentioned in the Bill, and the Institute for Fiscal Studies has produced some interesting analysis that makes us question the real-world effectiveness of some of the measures, however transparently they are drafted. Therefore, I--

Mr. Speaker: Order.

BUSINESS OF THE HOUSE

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),

That, at this day's sitting, the Motions in the name of Margaret Beckett relating to Tax Simplification (Joint Committee), Tax Simplification, Human Rights (Joint Committee) and Human Rights and proceedings on the Capital Allowances Bill may be proceeded with, though opposed, until any hour.--[Mr. Robert Ainsworth.]

15 Jan 2001 : Column 123

The House divided: Ayes 291, Noes 8.

Division No. 52 [10 pm

AYES

Abbott, Ms Diane
Adams, Mrs Irene (Paisley N)
Ainger, Nick
Allan, Richard
Allen, Graham
Anderson, Janet (Rossendale)
Ashdown, Rt Hon Paddy
Ashton, Joe
Atherton, Ms Candy
Atkins, Charlotte
Bailey, Adrian
Ballard, Jackie
Banks, Tony
Barnes, Harry
Barron, Kevin
Battle, John
Bayley, Hugh
Beard, Nigel
Beckett, Rt Hon Mrs Margaret
Begg, Miss Anne
Bell, Martin (Tatton)
Benn, Hilary (Leeds C)
Bennett, Andrew F
Benton, Joe
Berry, Roger
Best, Harold
Betts, Clive
Blackman, Liz
Blears, Ms Hazel
Blizzard, Bob
Borrow, David
Bradley, Keith (Withington)
Bradshaw, Ben
Brinton, Mrs Helen
Brown, Russell (Dumfries)
Browne, Desmond
Bruce, Malcolm (Gordon)
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnett, John
Butler, Mrs Christine
Caborn, Rt Hon Richard
Campbell, Alan (Tynemouth)
Campbell, Rt Hon Menzies
(NE Fife)
Campbell-Savours, Dale
Cann, Jamie
Casale, Roger
Cawsey, Ian
Chapman, Ben (Wirral S)
Chaytor, David
Clapham, Michael
Clark, Rt Hon Dr David (S Shields)
Clark, Dr Lynda
(Edinburgh Pentlands)
Clark, Paul (Gillingham)
Clarke, Charles (Norwich S)
Clarke, Tony (Northampton S)
Clelland, David
Clwyd, Ann
Coaker, Vernon
Coffey, Ms Ann
Cohen, Harry
Coleman, Iain
Colman, Tony
Connarty, Michael
Cooper, Yvette
Corbett, Robin
Corbyn, Jeremy
Corston, Jean
Cotter, Brian
Cousins, Jim
Crausby, David
Cryer, Mrs Ann (Keighley)
Cryer, John (Hornchurch)
Cummings, John
Cunningham, Jim (Cov'try S)
Dalyell, Tam
Darvill, Keith
Davey, Valerie (Bristol W)
Davies, Rt Hon Denzil (Llanelli)
Dawson, Hilton
Dean, Mrs Janet
Denham, John
Dismore, Andrew
Dobbin, Jim
Donohoe, Brian H
Doran, Frank
Dowd, Jim
Drew, David
Dunwoody, Mrs Gwyneth
Eagle, Angela (Wallasey)
Eagle, Maria (L'pool Garston)
Efford, Clive
Ellman, Mrs Louise
Etherington, Bill
Fearn, Ronnie
Field, Rt Hon Frank
Fisher, Mark
Flynn, Paul
Foster, Rt Hon Derek
Foster, Don (Bath)
Foulkes, George
Gapes, Mike
Gardiner, Barry
Gerrard, Neil
Gibson, Dr Ian
Gidley, Sandra
Gilroy, Mrs Linda
Godsiff, Roger
Goggins, Paul
Golding, Mrs Llin
Griffiths, Jane (Reading E)
Griffiths, Win (Bridgend)
Hain, Peter
Hall, Mike (Weaver Vale)
Hanson, David
Harvey, Nick
Healey, John
Hendrick, Mark
Hepburn, Stephen
Hill, Keith
Hinchliffe, David
Hodge, Ms Margaret
Hoey, Kate
Home Robertson, John
Hoon, Rt Hon Geoffrey
Hope, Phil
Hopkins, Kelvin
Howells, Dr Kim
Hoyle, Lindsay
Hughes, Ms Beverley (Stretford)
Hughes, Kevin (Doncaster N)
Humble, Mrs Joan
Hurst, Alan
Iddon, Dr Brian
Jackson, Helen (Hillsborough)
Jamieson, David
Jenkins, Brian
Jones, Rt Hon Barry (Alyn)
Jones, Helen (Warrington N)
Jones, Ms Jenny
(Wolverh'ton SW)
Joyce, Eric
Keeble, Ms Sally
Keen, Alan (Feltham & Heston)
Keen, Ann (Brentford & Isleworth)
Kemp, Fraser
Khabra, Piara S
Kilfoyle, Peter
King, Andy (Rugby & Kenilworth)
Kumar, Dr Ashok
Ladyman, Dr Stephen
Lawrence, Mrs Jackie
Laxton, Bob
Lepper, David
Leslie, Christopher
Levitt, Tom
Lewis, Terry (Worsley)
Liddell, Rt Hon Mrs Helen
Linton, Martin
Lloyd, Tony (Manchester C)
Lock, David
Love, Andrew
McAvoy, Thomas
McCafferty, Ms Chris
McCartney, Rt Hon Ian
(Makerfield)
McDonagh, Siobhain
Macdonald, Calum
McDonnell, John
McFall, John
McGuire, Mrs Anne
McKenna, Mrs Rosemary
Mackinlay, Andrew
McNamara, Kevin
McNulty, Tony
Mactaggart, Fiona
McWalter, Tony
McWilliam, John
Mallaber, Judy
Marsden, Gordon (Blackpool S)
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert
Meacher, Rt Hon Michael
Merron, Gillian
Michael, Rt Hon Alun
Michie, Bill (Shef'ld Heeley)
Miller, Andrew
Mitchell, Austin
Moffatt, Laura
Moonie, Dr Lewis
Moran, Ms Margaret
Morgan, Alasdair (Galloway)
Morris, Rt Hon Ms Estelle
(B'ham Yardley)
Mountford, Kali
Mudie, George
Mullin, Chris
Murphy, Jim (Eastwood)
Naysmith, Dr Doug
O'Brien, Bill (Normanton)
Öpik, Lembit
Organ, Mrs Diana
Osborne, Ms Sandra
Pearson, Ian
Pickthall, Colin
Pike, Peter L
Pollard, Kerry
Pond, Chris
Pope, Greg
Pound, Stephen
Powell, Sir Raymond
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)
Primarolo, Dawn
Purchase, Ken
Quinn, Lawrie
Rammell, Bill
Rapson, Syd
Raynsford, Nick
Reid, Rt Hon Dr John (Hamilton N)
Rendel, David
Robertson, John
(Glasgow Anniesland)
Roche, Mrs Barbara
Rooker, Rt Hon Jeff
Rooney, Terry
Ross, Ernie (Dundee W)
Roy, Frank
Ruddock, Joan
Russell, Bob (Colchester)
Ryan, Ms Joan
Salter, Martin
Sanders, Adrian
Sarwar, Mohammad
Savidge, Malcolm
Sedgemore, Brian
Shaw, Jonathan
Sheerman, Barry
Sheldon, Rt Hon Robert
Simpson, Alan (Nottingham S)
Singh, Marsha
Skinner, Dennis
Smith, Rt Hon Andrew (Oxford E)
Smith, Miss Geraldine
(Morecambe & Lunesdale)
Smith, John (Glamorgan)
Smith, Llew (Blaenau Gwent)
Smith, Sir Robert (W Ab'd'ns)
Snape, Peter
Soley, Clive
Southworth, Ms Helen
Spellar, John
Squire, Ms Rachel
Steinberg, Gerry
Stewart, David (Inverness E)
Stewart, Ian (Eccles)
Stoate, Dr Howard
Stringer, Graham
Stuart, Ms Gisela
Stunell, Andrew
Taylor, Rt Hon Mrs Ann
(Dewsbury)
Taylor, David (NW Leics)
Taylor, Matthew (Truro)
Temple-Morris, Peter
Thomas, Gareth R (Harrow W)
Thomas, Simon (Ceredigion)
Timms, Stephen
Tipping, Paddy
Todd, Mark
Tonge, Dr Jenny
Touhig, Don
Turner, Dennis (Wolverh'ton SE)
Turner, Dr Desmond (Kemptown)
Turner, Neil (Wigan)
Twigg, Derek (Halton)
Twigg, Stephen (Enfield)
Tyler, Paul
Tynan, Bill
Walley, Ms Joan
Ward, Ms Claire
Wareing, Robert N
Watts, David
Webb, Steve
White, Brian
Whitehead, Dr Alan
Wicks, Malcolm
Williams, Alan W (E Carmarthen)
Willis, Phil
Winnick, David
Woolas, Phil
Worthington, Tony
Wray, James
Wright, Anthony D (Gt Yarmouth)
Wyatt, Derek

Tellers for the Ayes:

Mr. Gerry Sutcliffe and
Mr. Robert Ainsworth.

NOES

Bottomley, Peter (Worthing W)
Brooke, Rt Hon Peter
Hogg, Rt Hon Douglas
Howarth, Gerald (Aldershot)
Lilley, Rt Hon Peter
McIntosh, Miss Anne
Redwood, Rt Hon John
Ruffley, David

Tellers for the Noes:

Mr. Eric Forth and
Mr. Christopher Chope.

Question accordingly agreed to.

15 Jan 2001 : Column 125

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

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