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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

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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 I 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.

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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."

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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.

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