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12 Feb 2003 : Column 942—continued
Mr. John Bercow (Buckingham): I well recall the racy and intoxicating speech made by my right hon. and learned Friend the Member for Rushcliffe on a previous occasion in a debate not dissimilar to this one. I am grateful to the right hon. Lady for confirming that the Government's 53 new taxes are included in the rewrite project, but will she tell the House—in the light of the 2,000 new clauses and schedules proposed by the Government over the last five years—whether a distillation and synthesis of the material is intended, such that there will be a reduction from the current 7,000 pages to something altogether more manageable?
Dawn Primarolo: It is part of the project to ensure that the legislation is easier to read, has shorter sentences, is easier to use, and has comprehensive signposts—[Interruption.] The hon. Member for Hertford and Stortford (Mr. Prisk) is pleading for larger print. It is true, however, that a simpler explanation that is easier to use can sometimes be of greater length than the original. Above all, however, the tax law rewrite project enables us to remove legislation that is no longer needed but happens still to be on the statute book, so this is a win-win situation. The legislation is usable and, where possible, shorter, and redundant legislation is removed so as not to confuse the taxpayer.
Tim Loughton (East Worthing and Shoreham): I have been listening intently to the Paymaster General's intentions regarding the simplification of the tax position that underlies the Bill. Surely the best way to simplify the tax situation is to abolish some of the taxes. The former Chancellor, Lord Lawson, made it a hallmark of his tenure of the chancellorship that he abolished a tax in each of his Budgets. Can the Paymaster General tell us how many taxes she or the Chancellor of the Exchequer have abolished over the past six years, in addition to the 53 extra taxes that her Government have created?
Dawn Primarolo: I stress to the hon. Gentleman that the tax law rewrite project is not about simplification as
it is understood within the tax debate, but about ensuring that the existing legislation is easy to understand. I can give him one clear example; there are many. The Government removed the tax relief for private medical insurance, which a Government of his party would apparently want to add to the system. That relief was complex, expensive and made no progress at all in terms of its use. I venture to say to the hon. Gentleman that if he suggested to business that the Government should remove capital allowances from the statute book—
Dawn Primarolo: Well, he needs to be clear. The tax system and its complexity is made up of many areas. People want relief when it will help them, despite the fact that it brings complexity, but do not want complexity if the relief goes to someone else.
Mr. David Cameron (Witney) rose—
Dawn Primarolo: I have already given way to the hon. Member for Buckingham, so I shall be fair to the hon. Member for Witney (Mr. Cameron), who is rising for the first time.
Mr. Cameron: I am grateful to the Paymaster General for giving way. I am enjoying this debate more than some of us may have expected. Given that the rewrite has been delayed, can the right hon. Lady explain how much of that delay is due to the length of the Budgets of this Chancellor who, I believe, holds the record for the three longest Budgets in our history?
Dawn Primarolo: The tax law rewrite project has not been delayed. I was being generous to the previous Administration, but that was clearly a mistake on my part. When the previous Administration made their original assessment that the entire tax code could be rewritten in five years, they were a tad optimistic, and that would be an understatement.
Mr. Cameron: Will the Paymaster General give way?
Dawn Primarolo: I know that hon. Members are enjoying the debate enormously, although it has taken a slightly different turn than I anticipated. I assure them that the rewrite is necessary because the central objectives and the central pieces of legislation involved in the tax law rewrite have been in place for some considerable time.
Dawn Primarolo: Before I give way to the hon. Gentleman again, I should check that no other hon. Member is waiting in the queue. If not, I shall gladly give way to him before I make progress on my speech, for which I am sure he is waiting with bated breath.
Mr. Bercow: I look forward to it with bated breath, eager anticipation and beads of sweat upon my brow.
However, I must implore the Paymaster General to widen her intellectual horizons. Tax law rewrite and tax simplification need not be mutually exclusive. In the interests of good governance, she would be well advised to take note of the seminal ten-minute Bill on tax simplification that my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) introduced in the last Parliament, as well as a similar Bill that I introduced for the edification of the House on 6 June 2000.
Dawn Primarolo: I always follow closely everything that the hon. Member for Buckingham says on the Floor of the House, irrespective of whether I agree with his allegations.
The tax system—in terms not only of the language of the legislation and its accessibility to those who wish to use it, but also of balancing fairness, certainty and continuity for business with ensuring that all taxpayers get a fair response from the tax system—does not always lend itself easily to simplification. Simplification can be unfair, short and discriminatory, like the poll tax. I am sure that hon. Members will therefore agree that I should move on to consider the Bill.
It is beyond the project's remit to make any change in the main tax policies. However, as the long title suggests, the rewrite can encompass minor changes in detail that further improve the Bill. Examples include: new provisions to fill gaps in existing legislation; incorporating extra statutory concessions; abolishing obsolete material, and correcting minor anomalies. Major changes to tax legislation are matters for the Finance Bill alone. Hon. Members who want to discuss the complexity of the tax system should make their points during consideration of that measure, as they do every year.
Mr. Eric Forth: (Bromley and Chislehurst): Will the Paymaster General give way?
Dawn Primarolo: I have been very generous. I appreciate that the right hon. Gentleman is the only Conservative Member to whom I have not given way and I shall therefore allow him to intervene later so that he does not believe that I am persecuting him. First, I should like to make a little progress.
The Joint Committee focused on the minor changes and satisfied itself that their significance was small and thus within the Bill's remit. The Joint Committee also noted the wide public scrutiny of the Bill, especially the minor changes, which the consultation process clearly flagged up. The project drops any proposed changes that do not fulfil the public scrutiny test.
There is a rigorous system of public consultation for the rewrite Bills. For example, three exposure drafts and a draft Bill were published for formal consultation before the current measure was issued. Meetings have taken place with representative public bodies and informal contact has been made by electronic means with various interested parties.
The Bill is the second measure to emerge from the project. The first dealt with capital allowances two years ago. Tax professionals and other users warmly
welcomed the Capital Allowances Act 2001. On Second Reading, I said that I was gratified to read the comments of a leading tax author, who wrote:
- "For those learning about capital allowances for the first time, the Capital Allowances Act 2001 is an unqualified blessing. Besides consolidating the old law into one Act, the new legislation is much more clearly laid out than the patchwork of legislation which it replaced."
I want to consider the second rewrite Bill. It makes a start on the rewrite of income tax by rewriting schedule E. Approximately 25 million people are taxed under it, giving rise to more than 90 per cent. of total income tax. The charge to income tax is currently broken down into several schedules. They have come and gone, but we currently have schedules A, D, E and F.
Schedule E deals mainly with income from employment but also includes some charges on pension income and social security benefits, when they are taxable. The Bill covers the current schedule E provision. It brings together all provision for pension income in part 9 and therefore includes even pensions that are currently taxable under schedule D. It also includes the primary legislation for pay-as-you-earn. In the spring, in response to users' representations, the project will publish for consultation a complete draft of the rewritten pay-as-you-earn regulations.
The Joint Committee concluded that the Bill was a welcome clarification of existing law and would be easier to use and more accessible to Parliament, the judiciary, informed professionals, business people and other users. Various techniques have been used in the Bill to effect that.
The first and most important element is the imposition of a coherent structure. Instead of the ramshackle order of provision in existing legislation, the Bill presents all the material logically and groups linked topics. For example, all provisions dealing with taxation of benefits in kind are drawn together to form a benefits code. And, for the first time, all legislation for share-related remuneration is brought together, including, for instance, the various types of share scheme and share option plan.
Another feature that makes the Bill easier to use is the inclusion of plenty of navigational aids for the reader, such as introductory scene-setting chapters and signposts to other relevant provisions. All those are designed to help readers find their way through this large body of legislation. Other features of the rewrite include shorter sentences, modern language, more consistent definitions and, where it is helpful, more use of reader aids such as formulae, tables and method statements.
All that combines to make a new style of tax law that is more accessible, easier on the eye and altogether more user-friendly. That is evidenced by public reaction. For example, the Confederation of British Industry described the Bill, as published in draft last summer, as
- "a very great improvement on the existing legislation",
- "another major step forward in improving the intelligibility of UK tax legislation in areas of the law that affect the majority of taxpayers".
- "Restate, with minor changes, certain enactments relating to income tax on employment income, pension income and social security income; and for connected purposes".
Before I finish my speech I will give way to the right hon. Member for Bromley and Chislehurst (Mr. Forth), if he still wishes to intervene.
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