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House of Lords

Wednesday, 7th October 1998.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Ely.

Lord Millett

The Right Honourable Sir Peter Julian Millett, Knight, a Lord Justice of Appeal, having been appointed a Lord of Appeal in Ordinary and created Baron Millett, of St Marylebone in the City of Westminster, for life--Was, in his robes, introduced between the Lord Browne-Wilkinson and the Lord Woolf.

Lord Hobhouse of Woodborough

The Right Honourable Sir John Stewart Hobhouse, Knight, a Lord Justice of Appeal, having been appointed a Lord of Appeal in Ordinary and created Baron Hobhouse of Woodborough, of Woodborough in the County of Wiltshire, for life--Was, in his robes, introduced between the Lord Goff of Chieveley and the Lord Lloyd of Berwick.

Tax Law Rewrite Project: Progress

2.47 p.m.

Lord Ezra asked Her Majesty's Government:

    What progress has been made with the Tax Law Rewrite project.

Lord McIntosh of Haringey: My Lords, the Tax Law Rewrite project aims to rewrite the United Kingdom's existing direct primary tax legislation to make it clearer and easier to use without changing the effect of the existing law. It requires the in-depth analysis of our current tax legislation so that it can then be restructured and rewritten in clearer language.

The project is making good progress. It has already published two exposure drafts containing draft rewritten legislation for public comment, with four more planned by next March. The project commands cross-party support and has been widely welcomed by all parts of the tax community. It is committed to a continuing process of consultation. This is a highly innovative project and a massive task, but we are committed to doing it well.

Lord Ezra: My Lords, I thank the noble Lord for that very positive report and commend the work so far done. I pay tribute to the noble and learned Lord, Lord Howe of Aberavon, who is chairman of the steering committee and who was largely responsible for the initiation of the project. However, I should like to ask the Minister two questions. First, is it not a fact that the project as at present defined is likely to take longer than was

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originally anticipated, and does that not argue for more skilled personnel to be devoted to the task? Secondly, is it the Government's intention that major new tax legislation should initially be drafted in user-friendly language? If that is not the case, it is difficult to conceive how the task could ever be completed as previous chunks of legislation would be rewritten, to be succeeded by new chunks which would still require to be rewritten.

Lord McIntosh of Haringey: My Lords, I am glad to echo the noble Lord's tribute to the noble and learned Lord, Lord Howe of Aberavon, for his work both in initiating the project and as chairman of the steering committee. I believe that the noble Lord was, as I was, a recipient of a letter in August from the noble and learned Lord asking for our views about progress on the project. One of the questions he asked was whether it was acceptable for the project to last more than five years from its starting date of March 1997. The Government's response is that if that is what is necessary to get it right, then it is acceptable. I believe that that answers the noble Lord's first question.

As far as new tax legislation is concerned, yes, we are keen that future finance Bills should, as far as possible, be written in the form devised by the rewrite project. However, that is not always possible bearing in mind the timetable for finance Bills and the fact that they grow and change as they go through Committee in another place.

Lord Mackay of Ardbrecknish: My Lords, is the Minister aware that I welcome the Government's commitment to the tax law rewrite group? It follows on the commitment of the previous government which I gave from the Dispatch Box. Like the noble Lord, I received a similar letter. Is he aware that I replied in much the same terms, namely, that if it takes a little longer to get it right, so be it? However, may I ask the noble Lord if it would not be possible to suggest to the draftsmen of Part IV of the Scotland Bill that they might profit from a visit to the tax law rewrite group before the Report stage of the Bill? After all, the slogan of the tax law rewrite group is "Making tax law clearer". If any noble Lords wish proof of the necessity of that, I commend to them Part IV of the Scotland Bill.

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Lord for his first comment. A project which will inevitably last more than five years clearly needs cross-party support and I am glad to hear him confirm that it has that, as I have done previously. My noble friend Lord Sewel has heard the noble Lord's second question.

Lord Taverne: My Lords, do the Government agree that the first examples of the rewrite project are wholly encouraging in achieving a clarity of language which seems quite alien to traditional tax legislation? On the question of the timetable, it seems somewhat unrealistic

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to expect this tremendously ambitious project to be completed within five years. Have the Government a more realistic timetable now in view?

Lord McIntosh of Haringey: My Lords, I am grateful for the first comments of the noble Lord. This is becoming boring. I believed this to be the most boring subject that I had to deal with. But when I look at the examples in the exposure drafts the improvement in clarity of the original legislation in the rewrites is very striking. The noble Lord referred to progress. The letter we have received from the noble and learned Lord, Lord Howe, is part of the stocktake undertaken by the steering committee. Responses to that letter have been asked for by 30th September. The steering committee is considering them and will report to the Government accordingly. I believe that at that stage we shall have a clearer view of progress. But the commitment remains that the first new Act on capital allowances to emerge from this process will be available within two years of May 1998.

Lord Goodhart: My Lords, speaking as a member of the Tax Law Review Committee which initially proposed the rewrite, perhaps the noble Lord will allow me to join him and my noble friend Lord Ezra in thanking the noble and learned Lord, Lord Howe of Aberavon, for all of the work that he has done on this subject. Does the noble Lord agree--I am sure he does--that it is highly desirable that tax law should be rewritten in language that is not, as at present, comprehensible only to those of us who are tax lawyers, and very often not to us? May I encourage the noble Lord to proceed with all possible speed with this highly worthwhile project?

Lord McIntosh of Haringey: My Lords, question one, yes; question two, yes. As one of the effects, I understand, would be to provide less work for the tax Bar I am surprised to find it so supportive of the project.

Conditional Fees

2.55 p.m.

Lord Ackner asked Her Majesty's Government:

    When, and in what manner, they propose to monitor how the practice of charging conditional fees is working and, in particular, whether they way in which the risk is assessed and the success fee calculated is operating fairly.

The Lord Chancellor (Lord Irvine of Lairg): My Lords, lawyers have traditionally been paid whether they win or lose. Under conditional fee agreements they are paid only if they win. For sharing the risks of litigation with their clients under conditional fee agreements they are paid a percentage uplift on what their fees would otherwise be. Generally that uplift is less than 50 per cent. I am minded to make the amount of that uplift recoverable from unsuccessful defendants. They will then be able to challenge the reasonableness

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of uplifts by court taxation of fees. That will be a very effective form of monitoring in practice. I do not believe that there is any problem of excessive uplifts, but nonetheless my department is currently considering research projects, and I have decided to authorise one into the operation of conditional fees.

Lord Ackner: My Lords, I thank my noble and learned friend for his Answer. Does he recall taking part in the debate on his predecessor's Green Papers and saying:

    "I regard contingency fees in any shape or form, however diluted, as abhorrent",
to which Hansard records a series of "Hear, hears"? The noble and learned Lord concluded his short but by no means complimentary observations in this form:

    "Flirting with contingency fees is another gimmick to avoid state responsibility and to secure justice on the cheap. Like so many bargain basement practices, the lawyers would be no exception to the risk that shoddy standards would result".--[Official Report, 7/4/89, col. 1326.]

In the light of those sentiments, was my noble and learned friend well advised to extend the ambit of contingency fees to the whole area of civil claims without any form of research into how they worked?

The Lord Chancellor: My Lords, there is an important distinction between contingency fees and conditional fees. Contingency fees arise where the lawyer gains a slice of the outcome; that is to say, the damages are recovered. Conditional fees are an agreed uplift on the costs that he would otherwise receive. It is well known that the noble and learned Lord is opposed to conditional fees in principle. He has condemned them in this House as inherently immoral, and that colours everything that he says about monitoring. To harp continuously on the need for the them to be monitored is to raise a scare that they will be abused when there is not a shred of evidence that they are being abused.

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