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Chris Bryant (Rhondda) (Lab): Guffaws of laughter.
Mr. Osborne: No doubt the hon. Gentleman is looking forward to his own lengthy contribution to the debate. I am sorry that he has moved back to his usual place in the Chamber, because I thought for a second that he had been promoted to the post of the Minister's Parliamentary Private Secretary—that he had finally reached the first rung of the ladder—but, sadly, he seems to have fallen to the ground. I think that I have advised him before to make more helpful interventions on Ministers' speeches if he wants to get on in life.
I also thank the consultative committee: representatives of lawyers, accountants and other tax practitioners and, indeed, representatives of taxpayers such as the Confederation of British Industry, the Institute of Directors, the Federation of Small Businesses and the London chamber of commerce. Theirs is detailed work. Those representatives are in the front line in dealing with the complexity and obscurity of tax laws that we pass here and I thank them for their help in trying to make legislation clearer and simpler.
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Let me now deal with the substance of the Bill and specific issues. If the Minister does not wish to intervene, perhaps he will write to me if he thinks he could respond to any points that I raise.
The Minister mentioned the integration of foreign with United Kingdom income tax rules. That is, I think, one of the most welcome features of the Bill. Perhaps the Minister will now consider introducing a single tax form for foreign and UK income. A question was asked about that in the Joint Committee. I know that it is beyond the remit of the rewriting team, but it is very much within the Minister's remit. It might be of practical benefit to the whole rewriting process if people could fill in just one form.
Clause 882, which was also discussed in the Joint Committee, gives the Treasury power to alter the legislation by an order that is subject only to a negative resolution, rather than the affirmative procedure that we would expect. The issue was also considered by the Delegated Powers and Regulatory Reform Committee in the House of Lords. I understand why the power is necessary—technical changes may be needed to correct any mistakes or omissions in this complex legislation—but will the Minister now repeat his assurance to the Joint Committee that he, or other Treasury Ministers, would make such orders only after securing the agreement of the consultative and steering committees? That is, I feel, an important check.
Appendix 4 of the memorandum submitted by the Inland Revenue to the Joint Committee indicated that there were some extra-statutory concessions that had not been written, or rewritten, into the legislation. The reason given by the Revenue was that they were too complex. They include fairly important matters such as directors' fees, the profits and losses of theatre backers, compensation for the compulsory slaughter of farm animals, and wear and tear on furniture and the like in furnished lettings.
I know that the tax law rewrite team gave detailed consideration to what might be done in those areas, but decided that it could not make any great improvement—or that it was not worth trying to do so. Is the Minister satisfied with that conclusion? It seems a shame to leave some particularly complex parts of the law unrewritten just because they are particularly complex. Perhaps once the whole body of direct taxation has been rewritten, the rewrite team will look again at the bits that they have had to leave out. I know that there will only be a few, but it would be a shame just to leave them standing there, unrewritten.
Other clauses affect the tax paid by individuals, both in theory and in practice. The Joint Committee looked in depth at the 43 changes that may lead to the payment of less or, indeed, more tax by an individual. Examples include clause 412, on stock dividends, clause 150, on securities held as circulating capital, and clause 666—a rather inauspiciously numbered clause—on beneficiaries' income from estates in administration. The Joint Committee satisfied itself that the changes are sufficiently obscure as to be very unlikely to have a significant impact and I am sure that it is right. However, as tax law develops and as the courts and the Revenue interpret it, one would not want individuals to end up paying more tax as a result of a rewrite. I hope that the Minister will assure me that, despite the Joint Committee's having satisfied itself on this matter, the
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Treasury will continue to keep an eye on it as the various rewrite laws bed in and new tax practice develops around them. We do not want taxpayers to pay an unfortunate price for what should be a very welcome process.
I turn now to an issue that I raised on Second Reading, but which is worth airing again on Third Reading. The valuable work done through this process by the tax rewrite team will be completely pointless if it is to be undermined by subsequent legislation that is poorly drafted or inconsistent with the rewritten law's language, and which returns us to the very morass that the rewrite project is supposed to address. This is, as the Minister well knows, a real threat, because it has already happened. Large parts of the Income Tax (Earnings and Pensions) Act 2003 were superseded just a couple of months later by schedule 22 of that year's Finance Act, which was hideously complex, used language inconsistent with the rewritten tax law and, indeed, undermined the whole purpose of the rewrite project. That is not just my view but that of the Inland Revenue itself. Indeed, its "Tax Law Rewrite: Plans for 2004/05" address this very point, saying:
"One issue which gave rise to a considerable amount of comment and discussion during 2003–04 was raised by Schedule 22 to the Finance Act 2003 . . . Critics argued that the style and format of Schedule 22 compared unfavourably with the quality of legislation produced by the project; and that it was highly unfortunate that a substantial part of the second Tax Law Rewrite Act had to be replaced so quickly by new legislation that was perceived to be of lower quality . . . The topic received considerable public airing. It was also discussed on several occasions by the project's Committees . . . this is an issue that will no doubt stay with us—to some degree—and on which we must continue to work. It will be a priority in 2004–05 to keep this issue in front of us and to promote further discussion about how best to tackle it."
I have quoted that passage at length because it is very important and it gets to the heart of the issue, which is whether this process is simply temporary or will bring about a real change in the way in which we produce tax law.
When I raised this issue on Second Reading, the Minister conceded that I had made a fair point. He said that the Government were learning lessons from the debate and from the criticisms that were received of schedule 22. His excuse was that it is difficult to produce good-looking legislation when it needs to be produced to tackle such problems in a fairly short time and under pressure. Of course, he is right, in that parts of the Finance Bill are often produced in that way in order to deal with what the Government of the day would describe as "tax-avoidance schemes". But given that that is a normal process in Finance Bills, the Minister must surely look at a way of ingraining into the team currently writing tax law some of the principles and language used by the rewrite team. Otherwise, we will shortly find that—under perhaps Governments of either persuasion—much of the rewrite team's good work is undermined as bits of the tax law are superseded by hastily and poorly drafted new tax legislation. I ask the Minister to look again into that matter and see what can be done. The Inland Revenue said that it wanted to promote further discussion on how best to tackle the problem in 2004–05 and time is rapidly running out, so this is probably my last opportunity to make the point.
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Mr. Geoffrey Clifton-Brown (Cotswold) (Con): Does my hon. Friend accept that some of the most byzantine legislation emanates from Europe, and will he urge our European colleagues to reflect further on the lessons that we have learned from our tax rewrite system here to see if they can improve their legislation by writing it in that format? [Interruption.]
Mr. Osborne: My hon. Friend makes an excellent suggestion. The hon. Member for Rhondda (Chris Bryant) made the point that "Byzantine" does not relate to Europe, but one hopes that, with the Turkish accession, it soon will. The EU, which is now the source of an enormous amount of financial regulation, if not yet tax law, should certainly learn the lessons from our rewrite project, which has been a model of how to produce clear and consistent language. If those in Brussels pay any attention to what is going on in national Parliaments, I hope that they have heard my hon. Friend's point.
The Bill reinforces the determination of Conservative Members—I hope that it is reciprocated on the Government side—to ensure that the rewrite project continues—and continues to be properly funded. As I understand it, it has completed only about a third of its scheduled work and there is at least one more income tax Bill to come, before the team moves on to capital and corporation taxes. I can certainly give a commitment today that a future Conservative Government would ensure that it received all the support that it needed.
We would like the process to go even further and build on the work of the rewrite project by promoting tax simplification—[Interruption.] I see that that commands broad support on this side of the House. We believe that the UK tax system has become over-complicated and changes too frequently. It is riddled with inconsistencies, complexities and obsolete provisions and those inconsistencies impose a considerable burden on taxpayers and businesses, adding to the costs of complying with tax law. They also add to costs of the Inland Revenue and have led to a huge growth in demand for tax services in the past few years.
We have examined the proposals put forward by Lord Howe himself in his Hardman memorial lecture of 2000 and, indeed, the recommendations of the working party that Sir Alan Budd chaired for the Institute for Fiscal Studies. When we are elected to government, we would wish to proceed along the lines recommended and establish a simplification project to run in parallel with the rewrite project. We would also introduce a tax structure review programme to look into the existing primary direct and indirect tax legislation, which would identify measures to be modified, approved or abandoned. We would hope that, just as with the rewrite project embodied in the Bill today, the tax simplification project would command broad support throughout the House. It would follow in its structure many of the structures in the tax rewrite system and we shall shortly publish details of exactly how we wish to proceed.
Tax law has become more complex and I applaud the efforts to rewrite it in consistent and clear language, but we now need to take a further step to make the substance of our tax system altogether simpler and fairer for those who pay it. Having said that, I greatly welcome the Bill before the House today and wish it a speedy passage.
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