I beg to move, That the Bill be now read the Third time.

I am pleased to open this Third Reading debate on the Income Tax Bill, which rewrites the core provisions of our current income tax legislation. The Bill has been produced by Her Majesty’s Revenue and Customs tax law rewrite project, which is working to rewrite our direct tax legislation so that it is clearer and easier to use. It is the third rewrite Bill to venture into the complex and extensive territory of income tax. Once enacted—[Interruption.]

Order. I am sorry to interrupt the hon. Gentleman, but may I ask Members who are not staying for the debate please to leave the Chamber?

I was encouraged a moment ago, Mr. Deputy Speaker, by the attendance in the Chamber for this important debate.

Once enacted, the Bill will complete the project’s work on income tax. In particular, it deals with the basic provisions covering the charge to income tax, including income tax rates, various reliefs and the calculation of income tax liability.

I am grateful to Opposition Members for the constructive way in which they have approached the proper scrutiny of the Bill, as they have with all previous tax law rewrite Bills. The cross-party support for the project and the distinguished and expert input that we get from within and outside Parliament are important features of the tax law rewrite project.

The project was set up in 1996 by the right hon. and learned Member for Rushcliffe (Mr. Clarke), and I am pleased to say that it has continued to have not only the support of his party in opposition but his personal commitment. I wish to place on record my appreciation of the way in which he chaired the proceedings of the Joint Committee on Tax Law Rewrite Bills last month. I also record my appreciation for the work of Lord Newton of Braintree in chairing the project’s steering committee.

The aim of the project is to rewrite the UK’s direct tax code, the provisions of which have been enacted over more than two centuries. The principal aim of the rewritten legislation is that it should be accepted by all the main users as clearer, as easier to use, and as preserving the effect of the present law, apart from minor agreed changes. To that end, the project proceeds through careful consultation and consensus, overseen by its two external committees: the steering committee and the consultative committee.

In between the three income tax Bills that have been enacted, the project has also rewritten pay-as-you-earn regulations in direct response to requests from users and representative bodies. Those Acts and regulations have been warmly welcomed by tax professionals and by other users.

The Bill follows the same tradition. The Institute of Chartered Accountants in England and Wales commented on it in a way that can be taken as representative of wider views of users of the measure. It stated:

“We commend the Tax Law Rewrite team on having produced another excellent rewrite Bill.”

While the Financial Secretary is speaking generally, I want to highlight the fact that, although the changes might be welcome, one of the problems in implementing them is the possible closure of regional tax offices such as those in Welshpool, Ceredigion and other outlying areas. Does he accept that there is a contradiction between passing potentially beneficial changes to the tax regulations and removing the direct contact through local tax offices that would ensure their smooth application?

I am sorry to say that rewriting tax legislation has nothing to do with the hon. Gentleman’s point.

Making any change to the main tax policies is clearly beyond the remit of the rewrite project, but it can encompass minor changes when they improve legislation. Examples include new provisions to: clarify points in existing legislation, repeal obsolete material, and correct minor, unintended anomalies. The explanatory notes on the Bill and the notes on the new clauses, which were added at the Joint Committee stage, list 162 such minor changes. However, major changes will always be matters for a Finance Bill.

The Joint Committee noted the widespread public scrutiny of the Bill as a whole, especially of the minor changes, which were clearly flagged up at each stage of the consultation process. The Committee satisfied itself, and reported to the House, that all the proposed changes were within the project’s remit. The House also heard that they all had the support of the project’s external steering committee.

The Joint Committee carefully considered the amendments to incorporate a new part into the Bill to rewrite the legislation about the accrued income scheme. The amendments were agreed. In reaching that view, the Committee heard that consultation had taken place on the rewritten provisions as part of the previous rewrite Bill and that the external steering committee supported the inclusion of the new material.

The Joint Committee paid particular attention to clause 1029—clause 962 in the original Bill—which confers a new power on the Treasury to undo changes in the law made by the Bill and restore the law to what it was previously. That is similar to the power to make consequential amendments, which is included in the measure and previous tax law rewrite Bills, and allows amendments to be made to correct the Bill without having to use primary legislation. The new provision will enable inadvertent changes that the Bill makes to the law to be corrected without the need for recourse to a Finance Bill.

I am happy to confirm to the House, as I did to the Joint Committee, that it is our intention and undertaking to introduce orders under the new power only with the agreement of the tax law rewrite project’s steering committee. The benefit of including the power in the Bill may soon become evident—perhaps sooner than we had anticipated given that two minor errors of the sort that I described have already been identified. Both affect paragraph 38 of schedule 2. Subject to the views of the tax law rewrite committees, it is the Government’s intention to correct them with effect from the date on which the Bill is enacted.

I have explained that the Bill tackles the core provisions of income tax and the rewritten legislation for the basic provisions for the charge to income tax, income tax rates, the calculation of income tax liability and personal reliefs. It also includes rewritten legislation for specific reliefs, including loss relief, the enterprise investment scheme, venture capital trusts, community investment tax relief, relief for interest paid, gift aid and gifts of assets to charities.

The measure additionally contains specific rules about settlements and trustees, the deduction of tax at source, manufactured payments and repos, the accrued income scheme, tax avoidance and general income tax definitions.

I stress the management of the project and the consultation to underline the amount of expertise, scrutiny and, indeed, the extent of consensus about the Bill on Third Reading. It is right to pay tribute not only to those directly involved but to the users who play such an important part in ensuring that the tax law rewrite project lives up to its original aims. All those involved in the consultation process have made and will, I hope, continue to make an invaluable contribution to its success. The Paymaster General and I greatly value their commitment and contribution to the work.

To sum up, the project is worth while, modernises our direct tax legislation and makes it clearer and easier to use. The third Income Tax Bill completes the rewrite project’s work on income tax. It is a major milestone and I commend it to the House.

Having dealt earlier today with the arguments surrounding the Planning-gain Supplement (Preparations) Bill on behalf of Her Majesty’s Opposition, I am pleased—as, I suspect, is the Financial Secretary—to move on to the less controversial topic of the Income Tax Bill, which is the latest in the series of rewrite Bills undertaken under the auspices of the tax law rewrite project.

As hon. Members know, the House deals with such legislation through a special procedure under Standing Order No. 60. It means that, once the Bill is drafted and introduced, it is referred to a Second Reading Committee, which met on 17 January to take an initial look at the measure and referred it for more detailed consideration to a specially convened Joint Committee of both Houses.

The Joint Committee met on 24 January under the experienced chairmanship of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), a distinguished former Chancellor of the Exchequer. I am pleased to see him in his place. The Committee took evidence from experts, including the Financial Secretary, and key officials from the tax law rewrite team, led by its director, Mr. Mark Nellthorp.

The Joint Committee subsequently produced a report, HC 268, which I have here, and was published just before the half-term recess. Hon. Members have had an opportunity to examine it during the break.

Before we complete our consideration of the substantial measure, I have several comments to make about the Bill, the Joint Committee’s examination of it and its subsequent report.

The Bill centres on rewriting the tax code for income tax. Its main purpose, as set out in the explanatory notes, is

“to rewrite the income tax legislation that has not so far been rewritten to make it clearer and easier to use.”

The Bill is massive in size. It comprises three volumes, with a total of 1,035 clauses and four large and detailed schedules. Given the mass of detail in the measure, it is important to stress that it has been through a considerable gestation period, including detailed consultation with interested parties, before appearing before the House this evening.

During the proceedings of the Second Reading Committee, which were held Upstairs on 17 January, I went into some detail about the consultation process that took place before the Bill was published. I do not, therefore, intend to reprise that now. Suffice it to say that the measure is the product of extensive consultation with tax professionals for two years or more. It was drafted by a specially configured project team comprising officials from Her Majesty’s Revenue and Customs, parliamentary counsel and public and private sector tax professionals, whose work was overseen by the steering committee, which was originally chaired by Lord Howe of Aberavon and more recently by Lord Newton of Braintree. Considerable effort goes into rewrite Bills before they are even published, and that was certainly the case in this instance.

The spirit of the process is intended to be bipartisan, and to clarify the law rather than introducing measures that are potentially controversial and might more properly be reserved for a Finance Bill. The Financial Secretary was keen to reiterate that this evening. However, I want to return to two issues that I raised in the Second Reading Committee, which were pursued by the Joint Committee when it met the following week, as well as commenting on the special powers in what is now clause 1029.

The first of those issues concerns the draft clauses relating to the accrued income scheme, which clarify the details relating to the taxation of interest on the sale of interest-bearing shares. The clauses were presented to the Second Reading Committee as a set of 66 separate additional draft clauses, which the Government sought permission to add comparatively late in the day. As I observed at the time, the Chartered Institute of Taxation said of the late change:

“We note that to make extensive amendments to a rewrite Bill at such a late stage is unprecedented, and the reduced consultation period (over the Christmas break) has meant that line-by-line analysis of the clauses has not been possible on this occasion”.

However, as the Financial Secretary explained to the Second Reading Committee, the clauses had originally been intended for an earlier rewrite Bill, but had been removed at that stage. It was decided to insert them in this Bill, as it would be the last scheduled to deal specifically with income tax. The Financial Secretary told the Committee:

“The provisions did not come completely out of the blue from the tax law rewrite project; they had previously been proposed but were dropped during the later stages of the last rewrite Bill… Given that this is the last income tax Bill being handled by the tax law rewrite project, it seemed appropriate, given that the provisions are totally within the terms of the project, to include them in this rewrite Bill rather than deal with the matter in the Finance Bill.” ––[Official Report, Income Tax Second Reading Committee, 17 January 2007; c. 14.]

Owing to the slightly unusual nature of what happened, the Joint Committee nevertheless examined the issue of the late changes to the Bill and reached the following conclusion, which should give the House some comfort:

“The Committee accepts the Government’s proposed new part: Accrued income profits. While substantive new clauses such as those forming the new part would normally be included in the Bill prior to its introduction, we recognise that there were exceptional circumstances in this case. We consider that these clauses have been subject to extensive consultation and should be included as part of the Bill.”

We are grateful for that reassurance, and given that the Joint Committee has scrutinised the matter, we are content to allow the changes to be made.

The second issue that I want to raise relates to the definition of “associated operation” for the purpose of the transfer of assets in certain circumstances, which is contained in what is now clause 719. The proposed clause replaces the definition in section 742(1) of the Income and Corporation Taxes Act 1988, which the tax law rewrite project had already described as “ambiguous”.

I raised the issue in the Second Reading Committee following representations from the president and other members of the City of Westminster and Holborn Law Society. What concerned them was that the new definition, although undoubtedly clearer than the original, had changed the law by making the definition of “associated operation” far wider, rendering it beyond the scope of what would normally be expected in a tax law rewrite Bill and to the advantage of Her Majesty’s Revenue and Customs rather than the ordinary taxpayer. I was pleased to note that the Joint Committee paid some attention to that point.

The exchanges on the issue are on pages Ev 4 and 5 of the minutes of evidence that accompany the Joint Committee report. Some reassurance was given by Lord Newton of Braintree and Lady Cohen, and subsequently by the assistant director of the rewrite project, Mr. Brian Jones. Mr. Jones explained that the representations from the City of Westminster and Holborn Law Society had been re-examined by the consultative and the steering committees before the change was endorsed. In his testimony to the Joint Committee, he said:

“When the letter from the City of Westminster and Holborn Law Society arrived, we decided to put that again to the committees and there was a full discussion at the committees when the background was examined and both committees agreed that this was, first, within the remit of the project and, in addition to that, it was a change which should be made because it makes the law clearer.”

As a result, the Joint Committee was happy to let the change proceed. We are grateful for that additional reassurance, as no doubt will be the president and members of the City of Westminster and Holborn Law Society.

I want to say something about the proposed operation of what is now clause 1029, which for much of the process was clause 962. It is unusual, in that it grants Ministers power, by order, to amend the Bill up to 5 April 2010 to restore the law to its previous position following the discovery of any inadvertent change in the law that it might make. In his evidence to the Joint Committee, the Financial Secretary described the power as “novel”. I congratulate him on his perspicacity in ensuring that it can be used to deal with two small lacunae in the Bill. We cannot accuse him of being slow off the mark in implementing the new power with which the House seems ready to provide him.

The Financial Secretary explained the proposed operation of the clause to the Joint Committee. Given that the position is unusual, I think it worth putting what he said on the record:

“Technically… it would be possible to lay the Treasury order without consulting and without clearing it with the Consultative Committee or the Steering Committee of the Tax Law Rewrite Project. In the explanatory memorandum, we have given an indication and a commitment that we would do so, discuss and agree with both committees before laying such an order, if we deemed it appropriate. I, as Minister responsible, would like to underline that commitment on the record for the Committee today.”

The Minister reiterated the commitment this evening, and we are grateful for that.

The Joint Committee obviously appreciated the Minister’s reassurance on what is now clause 1029. In its subsequent report, it commented:

“We accept that the power given in Clause 962”

—as it was then—

“will not be used to substantively change the law outside of the Tax Law Rewrite Project. We note with approval the Minister’s assurance that the power could not be exercised without both reference to the Consultative Committee and the agreement of the Steering Committee.”

rose—

I should be delighted to give way to my right hon. and learned Friend.

Our Committee paid particular attention to the question of whether tucked away in this huge Bill was a power enabling the Treasury to make substantial changes to tax law without reference to the House. I am sure that the Minister did not intend that, but it is best not to tuck such powers away in lengthy legislation. In fact the power is extremely limited, and the Minister has given us very adequate assurances by which I am sure any subsequent Minister in any Administration will abide. Moreover, it exists only for the purpose of returning the law to its original state; it is not some tremendous blanket power to sweep the House aside. I think the Committee was generally assured that there was no danger lurking in the provision, and I am glad that my hon. Friend seems to have reached the same conclusion.

My understanding of the Joint Committee’s role was that it should examine any particularly interesting aspects of the Bill in detail, and that is exactly what it has done. It has provided, in a sense, a constitutional safeguard. As the Committee seems to have been satisfied and the Minister has given a firm commitment, we are satisfied as well. The matter has been scrutinised, and I think that we can leave it there. I note, however, that there is already an intention to use the power.

I want to say a little about the tax law rewrite project and its interaction with the rest of the United Kingdom tax code. This is the fourth in a series of tax law rewrite Bills, and in the Second Reading Committee the Financial Secretary confirmed that it would shortly be followed by a further rewrite Bill dealing with corporation tax. The consultation exercise on this new Bill has only just been initiated. We have speeded up the process of rewrite Bills to a pace of about one a year from about one every two years. Unfortunately, it seems as though some rewriting and clarification of our tax code may be necessary—largely thanks, it has to be said, to the Chancellor of the Exchequer rather than to the tax law rewrite project.

Tolley’s tax guide, which I have here with me and which is usually referred to as the accountant’s bible, has almost doubled in length since Gordon Brown, a man who loves complexity, became the Chancellor of the Exchequer back in 1997—

Order. The hon. Gentleman needs to recognise that he should not refer to hon. Members by name, but by their position or constituency.

You are entirely right, Mr. Deputy Speaker.

The current Chancellor of the Exchequer, who took up his post in 1997, has had some responsibility for expanding the length of the UK’s tax code. In 1997, Tolley’s was 4,555 pages long, whereas today it now stretches to 9,841 pages. That was picked up by the Financial Times in September 2006, when it specifically pointed out that the tax code had doubled in length under the Chancellor’s stewardship. In an article entitled, “Guide to tax code doubles in length under Brown”, Vanessa Houlder commented—

Does not the hon. Gentleman accept that quality and clarity are more important in tax legislation than brevity? That underlies the purpose of the tax law rewrite project, and its production has been welcomed by professionals in the field.

I would accept that in principle and I have already complimented the work of the tax law rewrite project. I am simply commenting on the fact that our tax code appears to be getting longer and longer. As I shall briefly explain, that is not down primarily to the rewrite project, but to the Chancellor of the Exchequer.

The Financial Times said:

“The burgeoning of Tolley’s commentary on the code reflects the growth of tax legislation and the increasing complexity of the system according to LexisNexis, the publisher. It said this year’s budget alone was responsible for adding more than 600 pages of the guide, which is now almost 10,000 pages long.”

Moreover, The Economist pointed out prior to Christmas that the problem of the length of our tax code, of which today’s Bill will eventually become a part, is becoming worse. Citing recent research by PricewaterhouseCoopers and the World Bank into the comparative length of tax codes around the globe, The Economist highlighted the fact that Britain now has virtually the longest tax code in the developed world, coming second only to India.

The hon. Gentleman may go on to make this point, but if he does not, does he recognise that the PricewaterhouseCoopers report referred only to primary legislation? It does not refer at all to state or local taxes, which are a significant feature of the tax code in many other countries, but not, of course, in the United Kingdom.

The Minister pre-empts me, as I was just about to provide the definition that was used in the PWC-World Bank study. I thank the Minister for his alacrity, but if he will bear with me for just a moment, I will define exactly what it refers to.

Of the major countries examined in the PWC-World Bank study, the comparative length of their respective tax codes, defined as the number of pages of primary tax legislation, was as follows: India, 9,000 pages; the United Kingdom, 8,300; Japan, 7,200; Germany, only 1,700; France, 1,300; and Switzerland only 300 pages of primary tax legislation. That shows a major disparity in the length and complexity of tax legislation across a number of major economies, with the UK now coming almost top of the league.

The study was based on the compliance burden of a company actually manufacturing flower pots in the different countries in question. That led The Economist to publish an article on the complexity of UK tax legislation in its 11 November 2006 edition entitled, “Bill and Ben and Gordon, Business Taxation”, which argued:

“Of the world’s 20 biggest economies, Britain is second only to India in the number of pages taken up by its primary legislation. Each episode of the flowerpot men, a children's television show, used to end with the question: ‘Was it Bill or was it Ben?’ Where Britain’s rising tax burden is concerned many businessmen know the answer: it was Gordon.”

At that point, I gladly give way.

I do not know about the hon. Gentleman’s attempted joke, and I am not sure what point he is making. He listed France and Germany, but does he accept that their tax burden is higher overall than the tax burden in the UK, so the example bears no relation to the point that he is making—if, indeed, there is any practical point to what he is saying?

As I understand it, when it comes to the tax burden we are actually in the process of overtaking Germany, so I am not quite sure that the hon. Gentleman’s point is entirely correct—[Interruption.] Well, he asked me about both countries, so he should have been more careful in the question that he asked.

Our tax code is being added to all the time. The PWC study was completed prior to the Finance Act 2006, which itself comprised 181 clauses and 25 schedules of additional tax legislation. On top of that will now be added the 1,035 clauses of the Income Tax Bill that the House is considering tonight—and on top of that will shortly come the Finance Bill 2007, to turn the Chancellor's next and probably final Budget into law. Even if that Bill is only the same size as the Finance Bill 2006, the combined effect of all of this legislation will almost certainly be to present the UK with the longest tax code of primary tax legislation in the entire world.

While the rewrite Bills help to clarify tax law, which itself is a welcome thing, when combined with the Chancellor’s innate love of complexity and long Finance Bills—something for which he has become renowned—it means the production of an ever-expanding tax code. It is the Chancellor of the Exchequer who is the main culprit here and we have to be careful that we do not discourage enterprise further by his love of devising ever-greater complexity and anti-avoidance legislation.

rose—

The Financial Secretary is always courteous in giving way to me, so I shall be courteous in giving way again to him.

I am grateful to the hon. Gentleman, whose research team has obviously done its work. Does he accept that it is less the length and more the way in which a tax code operates that is important? Is he aware of the World Bank report last autumn, which identified the UK as first rank in Europe and sixth worldwide in terms of ease of doing business? When it came to ease of paying taxes, the UK was second in Europe only to Ireland and 12th worldwide.

I shall pass the Minister’s compliments, which are gratefully received, to my researcher. As he asks me, I would say that it is a constant feature of Finance Bills that we are dealing with ever-greater complexity. One of the reasons for that is that the Chancellor is a great fan of anti-avoidance legislation. Because it attempts to provide for all sorts of different contingencies, it tends to be very detailed. The Government would argue that they are protecting the revenue, but the way in which they have proceeded in recent years has certainly made the tax code more complicated.

In summary, we welcome the Bill and its contribution to trying to clarify our complicated tax code. We accept that the measure has been the subject of extensive consultation with experts, both before it was drafted and since, and that it has subsequently been looked at afresh by both a Second Reading Committee of MPs and a Joint Committee of MPs and Peers with specialist knowledge in this area—and certainly with a very specialist Chairman. We therefore believe that, despite its massive size of more than 1,000 clauses, the Bill has still received detailed scrutiny in the course of that two-year process.

Specifically, we are pleased that the Joint Committee looked in more detail at issues such as the accrued income scheme, the new definition of “associated operation” and the practical operation of the novel powers now contained in clause 1,029 and are about to get a run-out. We note that the Joint Committee has subsequently provided some reassurance on each of those points in its report. Having looked into the Bill, the Joint Committee report concluded:

“The Committee is of the opinion that the Bill is a welcome clarification of the existing law and will be easier to use and more accessible to Parliament, the judiciary, informed professionals, business people and other users of the legislation."

Our only proviso, if it can be called that, is the length of the tax code in which the Bill will now be incorporated. Given the 1,035 additional clauses of this Bill and then the additional clauses of the Finance Bills of 2006 and 2007, it seems to us that the United Kingdom will almost certainly have the longest tax code in the entire developed world—if, indeed, we do not already have it. Britain under this Chancellor will finally be a world-beater, but perhaps not in the way that the Chancellor would have wished. When the Minister responds to the debate, will he answer the question that he so artfully ducked in the Second Reading Committee? I am sure that he will welcome the entire rewrite project as I do, but will he now confirm whether, in terms of primary legislation, we have the longest tax code in the world?

I was going to start by saying that we would not break the consensus on the Bill, but the hon. Member for Rayleigh (Mr. Francois) came dangerously close to doing so. We broadly welcome this rewrite, because it is important to present our legislation in language that is simpler and easier to understand. That is the aim of the Bill, rather than to simplify the existing legislation, although there is an argument to be had about whether that needs to be done too. The Bill is about producing tax legislation in a language that is easier to understand. Anything that makes a long complicated tax code easier to understand is most welcome. We also welcome the extensive consultation process that preceded the drafting of the Bill, as well as the consideration that it was given by the steering committee and the Joint Committee.

I do not want to detain the House for too long, but I want to raise one or two issues that were highlighted in the Joint Committee report. The first relates to the concerns expressed on Second Reading about the way in which additional clauses had been added to the Bill after its publication. This point has also been raised by other hon. Members. The Committee noted that in normal circumstances such substantive clauses should be introduced at the outset, but that in this case they could be added to the Bill because they had been the subject of extensive consultation, and had already been considered for a previous rewrite Bill. We stand by those recommendations. We shall also stand by the further amendments tabled by the Government, which were mainly technical and consequential to the proposed new clauses.

I also want to comment on clause 1029—formerly clause 962—which grants the Treasury the power by order to amend the Bill until 5 April 2010, in order to restore the law to its previous position in the case of any inadvertent change to the law having been made by the Bill. I welcome the Minister’s clarification, in giving evidence to the Committee and when speaking to the House today, that that power would be exercised only after reference to the consultative committee and with the agreement of the steering committee. I smile somewhat ironically as I note that there are already two instances in which that power might need to be exercised.

I have a couple of questions for the Minister on this point. What would happen if changes were put forward which the consultative committee or the steering committee did not agree were only minor changes? What would happen in the reverse of the example that the Minister gave earlier, when he said that if there was an unintended change in the sense of the legislation, the law could be changed back to what it was before? What would happen if there were an omission to which the provisions needed to be extended? I mention this because we recently debated a statutory instrument on civil partnerships that dealt with changes to income tax, in which definitions had not been applied in every case. How would the clause apply to such a situation? Would the problem have to be dealt with through a statutory instrument, or would clause 1029 be able to deal with it? I would appreciate the Minister’s clarification of those matters.

I might be able to help the hon. Lady on both those counts. First, clause 1029 would be used only if we had consulted and received the agreement of the two external committees. If they did not agree, we would not use it. Secondly, it can be used only to revert to the original state of the law amendments made by a tax law rewrite Bill, as the right hon. and learned Member for Rushcliffe (Mr. Clarke) made clear. The circumstances to which the hon. Lady is referring would not therefore be covered by the provisions of the clause.

My concerns are allayed. I understand that such issues would be dealt with in a Finance Bill or by other instruments; I think that the Minister is nodding his head.

My hon. Friend the Member for Twickenham (Dr. Cable) spoke for many in the Second Reading Committee when he said that this tax law rewrite project continues to be a labour of love. We should not lose sight of the intended aim of that labour of love, which is to simplify and codify tax law, not to create more. We should therefore ask whether that has been achieved through this process. It was pointed out by my hon. Friend in that Committee, and by the Chartered Institute of Taxation, that rewriting the legislation is worth doing only if it enables the users of the law to understand the relevant points more quickly or more easily. The institute has said:

“It is doubtful whether this has been achieved. Not only does much of the old legislation still remain in force…but the quality of drafting is questionable, being long winded and often imprecise”.

That raises the issue of whether existing practitioners will have to consult not only the new but the old legislation in order to understand the position. I realise that for new practitioners the process will be much simpler.

I understand from the Second Reading Committee that although 49 obsolete provisions will be removed from tax legislation as a result of the Bill, a further 159 provisions will be added. There will be a real benefit in providing a clear and simple quantification of the impact that this tax rewrite Bill will have on Tolley’s tax guide. Such a quantification would give a tangible sense of what the rewrite had achieved, not only for the practitioners to whom the Joint Committee report referred, but for the wider public. There is a real issue about making the language easier to understand, but the separate issue of simplifying the taxation process also needs to be taken into consideration.

I welcome the Bill, and congratulate the Minister on the way in which he has handled the production of this enormous piece of legislation. He and my hon. Friend the Member for Rayleigh (Mr. Francois) have already described the process through which the Joint Committee went, and I can confirm that their description of the Committee’s deliberations entirely accords with my recollection. The Joint Committee paid attention to all the points that we should have considered, including whether the consultation had been adequate, and whether any substantive changes were being slipped through that might alter the incidence of taxation in any significant way. We paid particular attention to the points raised on Second Reading, and all those matters have been covered. The process was comprehensive.

This debate gives me the opportunity to thank the members of the rewrite committee. After a little over 10 years, we have reached a significant landmark. Rewriting in plain English the entire law on income tax in this country has been a labour of Hercules. The leaders of the team gave evidence to the Joint Committee and impressed us with their clarity and almost instant recall of the most minute details of parts of the provision. The whole thing has obviously been embarked upon extremely conscientiously and very professionally by those people from the Inland Revenue and the office of the parliamentary draftsman. I congratulate all involved.

The whole process started as a result of some of the debates about my 1996 Budget. I was sensitive to the criticisms that came from the Labour Benches about the growing length of my Finance Bills. My hon. Friend the Member for Rayleigh has already pointed out that my successor, the present Chancellor, produces Finance Bills that are about twice the length of mine, which are having a substantial impact on the tax code. I was also sensitive to the growing criticisms from practitioners that I was producing legislation that was getting longer. Indeed, the experts themselves—including members of the judiciary who found themselves hearing tax cases, and practitioners who were meant to be giving advice to their clients—were finding it increasingly difficult to understand the drafting of the legislation that was being applied. That led to a process of rewriting it in plain English. As my hon. Friend said, it is my successor and a succession of Labour Ministers—the Financial Secretary to the Treasury is following the Paymaster General, who implemented many of these provisions—who have carried the process through. I have merely chaired the Joint Committee for some years, and marvelled at the progress that we have made.

I want briefly to reinforce the comments made by my hon. Friend the Member for Rayleigh. We are rewriting into plain English tax law that is becoming ever more complex. Our tax law may still have some advantages compared with the law overseas, but we are eroding any competitive advantage that might have resulted from having simple tax law in the past. This stems from a policy difference, a difference of approach, and a difference of instinct and philosophy.

When I was Chancellor, I tried to follow a practice that I thought I had acquired from watching Lord Lawson of Blaby when he was Chancellor of the Exchequer. His principle was that taxation should be as simple as possible, with exemptions and exceptions as limited as possible, and that it should be imposed at the lowest level possible, while still raising the revenue that one needed. I fear that the present Chancellor does not have the same instincts. He is a micro-manager, and he keeps introducing more complexity into the policies of taxation, which the rewrite project must then turn into plainer English. The result is thousands of clauses of ever greater length. The whole House should continue to press the next Chancellor—who will have the unhappy task of being Chancellor for the next Prime Minister, and will probably have a limited scope in some policy areas—to be a tax reformer and to return to some simplicity of policy, which would be welcomed in all quarters.

My other point has already been raised by the hon. Member for Falmouth and Camborne (Julia Goldsworthy). When the project was set up, we talked about rewriting the entire tax code in five years. A little more than 10 years later, we have a long way to go; I think that the next item on the agenda is a rewrite of the entire law on corporation tax. There have been some criticisms as to whether that fantastic effort is justified; I was somewhat concerned that the Institute of Chartered Accountants queried whether we were getting the right return on all the effort being put in. I have reflected on that since the Joint Committee. I think that the answer is yes, but I suspect that, as has been mentioned, part of the problem—a familiar one to me, as someone who used to practise law—is that those who have practised for a long time and have wrestled to become familiar with the existing law find it slightly irksome that they must start all over again and remember where the law is now in the rewritten Bill, whereas new practitioners, who were recently at law school, find the straightforward language much simpler. That is inevitable when any law is simplified.

There was a problem with language and drafting, and many distinguished practitioners were beginning—unfairly, as it turned out—to curse the office of the parliamentary draftsman, which I also did, for producing such impenetrable language. Representatives of the office of parliamentary draftsman have played a leading role, however, in turning that into the nearest that one can get to plain English, given the legal language that a tax code must have to provide certainty and fairness. The whole thing will become impossible if we do not continue the process and continue to clarify what has been enacted.

At some stage—I do not think that it was today—the Economic Secretary to the Treasury said that the acid test was whether the professional bodies continue to be prepared to devote time and effort and to apply themselves to the consultation process, which is essential if we are to make sure that no serious mistakes are made. As far as I can tell, the members of the professional bodies do appreciate that: plenty of people in the professional world are prepared to give a great deal of what would otherwise be their expensive time to that. Therefore, the labours of Hercules should be continued.

The process will require the same levels of professionalism and application as we have had from the Ministers whom we have been lucky enough to have handling the matter over the past 10 years; for a long time it was one Minister, and I am sure that she is mightily glad to be rid of it and pass it on to her successor. The process is worthwhile, however, and today marks an extremely significant step. I just hope that we find that only two errors have been made in the hundreds of pages, and that the provision that has rightly been included to achieve minor corrections and return to the old law if anything is wrong does not have to be overused. I shall be very surprised if it does, because I was so impressed by the way in which the whole Bill had been put together.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

With permission, I shall put together motions 5 to 9.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

terms and conditions of employment

That the draft European Communities (Employment in the Civil Service) Order 2007, which was laid before this House on 25th January, be approved.

income tax

That the draft Tax and Civil Partnership Regulations 2006, which were laid before this House on 12th December, be approved.

northern ireland

That the draft Northern Ireland Arms Decommissioning Act 1997 (Amnesty Period) Order 2007, which was laid before this House on 11th December, be approved.

housing

That the draft Local Authorities (Contracting Out of Anti-Social Behaviour Order Functions) (England) Order 2007, which was laid before this House on 9th January, be approved.

mental capacity

That the draft Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007, which were laid before this House on 15th January, be approved.—[Tony Cunningham.]

Question agreed to.