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Finance Bill

I am not sure that the hon. Gentleman is following the debate as well as he has followed the written advice that the professional bodies supplied for it. I am responding to the points that were raised during a fairly wide-ranging debate. The hon. Member for Cities of London and Westminster asserted that tax matters should be determined only by Members of this House, but that directly contradicts the new clause and the sentiments that underpin it. The hon. Member for Chipping Barnet (Mrs. Villiers) made an interesting contribution to the debate and spoke very fluently for a new Member. She expressed concern about the competitiveness of the British economy and tried to harness that to an argument in support of the new clause. She may not be aware that independent surveys consistently show that the UK has among the lowest administrative burdens for business in the world. This year, the World Bank published a survey that showed the UK to be top of the league of major countries in terms of regulatory quality. I turn specifically to the simplification of the tax system, which is a regular subject of debate in this House and elsewhere and has been recurrent theme in our proceedings on the Bill in Standing Committee and at other stages. Most people want a tax system that is simple but also certain, efficient, competitive and fair. Certainty is particularly vital when it comes to matters of, and decisions about, tax. The Government want a tax system that contributes towards a stable economy, helps to raise productivity, increases employment opportunities for everyone, and helps us to build a fairer society. We need to strike a balance between all those things while ensuring that the system remains manageable. That said, we are always keen to simplify where we can, where that can be done consistently with our other policy—not technical—objectives for the tax system. That can be particularly difficult when maintaining tax yield is of central importance—as it is for any Government—because anti-avoidance measures may always also be needed. Many of the complexities in the Bill, which other Finance Bills have had to include, are a direct result of the complexity of the schemes that the tax planning industry suggests to its clients as ways of avoiding the tax that their clients should be paying. The hon. Member for Cities of London and Westminster dwelled on the work of the tax law rewrite project, which, despite his somewhat lukewarm description, is a very substantial piece of work: it has rewritten income tax Acts. It has drawn high praise from the professional bodies that brief the hon. Gentleman and his colleagues on the Bill, and from employers’ organisations such as the CBI. Its benefits are clear: less time needed to get to grips with legislation and fewer errors caused by misunderstandings of legislation; fewer issues on which time needs to be spent obtaining specialist advice; fewer queries about interpretation; and fewer disputes with Her Majesty’s Revenue and Customs about the meaning of legislation. In due course, better legislation can lead to better taxpayer guidance. The project has produced three Acts and rewritten the pay-as-you-earn regulations. Its work continues and further legislation is in prospect. The next Bill will comprise the third and final Bill on income tax, and the following Bill will cover a large part of the corporation tax system. As the hon. Member for Cities of London and Westminster recognised, it is a project that has consistently had all-party support. It was set up under the right hon. and learned Member for Rushcliffe (Mr. Clarke) when he served as Chancellor, and has been ably chaired by Lord Howe of Aberavon. The project makes the law clearer and easier to use. That may not be regarded as simplification in its fullest sense by all parties, but the law should be simple to understand and practical to comply with, and that is precisely the impact of the project’s work. In addition, we have made many substantive improvements and simplifications to the tax system. I will not prolong the debate significantly by listing them. Let me be clear that the Government recognise that complexity can bring additional costs and burdens on taxpayers. We are committed to a tax system that keeps the burden of regulatory requirements to a minimum, and we take every possible opportunity to reduce that burden, particularly on small businesses. That is why the new HMRC has a specific remit from the Chancellor to reduce the tax system’s administrative burden on small firms. The hon. Member for Cities of London and Westminster said that regulatory impact assessments were never followed up and that the Government never reverted to them to check their accuracy or the cost that a specific measure had imposed in practice. My right hon. Friend the Paymaster General and I gave evidence to the Treasury Committee when it examined those issues last year. When it considered tax compliance cost, we set out the RIAs’ post-implementation reviews, which it was keen to study. They have been conducted in consultation with outside interests and subjected to external scrutiny. I hope that the hon. Gentleman will reflect on his earlier comments when he reads those reports.The merger of the Inland Revenue and Customs and Excise gives us the opportunity and scope to build further on the work that we have already completed. The hon. Gentleman knows that any Government maintain a constant and continuous review of the tax system. For us, that includes the objectives of modernisation, improvement and simplification of tax, as well as the reduction of administrative burdens. The process benefits from regular and effective consultation with all the interested parties. There is therefore no gap, as the hon. Member for Chipping Barnet argued, in the system. New clause 4 would trigger a further review process, conducted by a new commission. That would add little, and would duplicate something that is probably the task of Government. It is unnecessary and inappropriate to franchise out that task to a separate body. The Government are already simplifying the tax system and we have set out our objectives for the tax system. We report regularly on progress against those objectives and consult widely across the spectrum on a range of issues. It is the fundamental job of Government to do that, and we are held to account for it. I hope that the hon. Gentleman will not press the new clause to a vote. If he does, I shall have to ask my hon. Friends to reject it.