HC Deb 30 September 1909 vol 11 cc1428-35

Increment Value Duty shall not be collected on any periodical occasion in respect of the fee simple of or any interest in any land which is held by any body corporate or unincorporate, without any view to the payment of any dividend or profit out of the revenue thereof, bonâ fide for the purpose of games or other recreation, if the Commissioners are satisfied that the land is so used under some agreement with the owner which as originally made could not be determined for a period of at least five years or under other circumstances which render it probable that the land will continue to be so used, without prejudice, however, to the collection of the duty on any other occasion.

Question proposed, "That the Clause be now read a second time."

Mr. E. G. PRETYMAN

After the most careful reading and examination of this Clause, I am quite unable to see any meaning in it. It may be that I have been so long engaged in these Debates that I have lost the power of understanding; but the latter half of the Clause appears to me absolutely meaningless. The first part might exempt a corporate body, such as a club, which actually holds land on a long lease and uses it for the purposes of games and recreation; but as to what the latter half means, or to what it might apply, or with what object the words are added, is to me an absolute blank. I cannot understand it; and I should be very glad if the Chancellor of the Exchequer would be kind enough to explain what it means.

The UNDER-SECRETARY for the HOME DEPARTMENT (Mr. C. F. G. Masterman)

I am in a difficulty in answering, because I cannot quite understand where the difficulty arises. The Clause is the result of considerable discussion, in which I was fortunate to take part, between the representatives of the Treasury, those who were engaged in the Finance Bill, and very important representatives of practically all games and sports in England and Scotland. The point, of course, especially put forward, and which this Clause was designed to meet, and which, I think, the representatives of games and recreations in this country have already agreed it has met, is the contention that it is undesirable that land in the neighbourhood of great towns where games and recreations are provided for the poorer districts—such as that of the London Playing Fields Society—should be built upon. It is the only place where physical exercise is possible for the poorer boys and men who come out from London; and, if the Corporation Tax was levied upon them every 15 years, they would have no funds available with which to pay unless they sold a piece of land, which is exactly what is not wanted in the interests of the community as a whole. The Clause wholly exempts them from the Corporation Tax. Let me take a case which will appeal to the hon. and gallant Gentleman—the centre of English cricket—the ground at Lord's. The case of the Marylebone Cricket Club seems to be unanswerable. They say: "We get no dividend, and, if there is any surplus money, we give it to help cricket in poorer districts. The ground will probably increase in value, and you will take from us at the end of 15 years a considerable sum which we cannot pay unless we sell, which you do not want us to do." Under those circumstances, the Chancellor of the Exchequer agrees that, until that land is sold, they might be excused the Corporation Tax. They are put in the same position as the charitable and friendly societies we have excluded before.

Mr. ALFRED LYTTELTON

Why only bodies corporate?

Mr. MASTERMAN

It does not seem to us that an individual who has a private golf course of his own should come under the exemption. I think the hon. and learned Gentleman recognises that there is a real distinction which should be made. The last words of the Clause are similar to the Amendment which the Chancellor of the Exchequer has promised to move on the Report stage in connection with the Undeveloped Land Tax. On Clause 11 it was arranged that, if the land was so used under some agreement with the owner which could not be determined for a period of at least five years, or under circumstances which rendered it probable that the land would continue to be so used, then the Undeveloped Land Duty should be excused. We propose to extend that to the Corporation Tax without prejudice to the occasion when the land may be sold. The Undeveloped Land Tax would be such institutions as the London Playing Fields Society, say, be a very considerable tax, because it is good building land they buy. It is, however, necessary that they should remain in that position to provide for clubs. It is quite impossible for London clubs to carry on such games as football in winter further out. The fixing of the term of the lease at five years is in order to ensure that it shall be a bonâ fide transaction, otherwise, as the hon. and gallant Gentleman will recognise, it might be possible for any one to declare that his ground was used for the purposes of sport, and thus escape the Undeveloped Land Duty. It was submitted to us, however, that in the case of the poorer clubs they might be unable to take a lease for five years, as they might not be able to guarantee the rent. Under such circumstances, we give the Commissioners power, where it is reasonably pobable that the land will continue to be used for these purposes, to grant exemption. This, I think, is the only method we could adopt in order to preserve these sporting rights for the poorer members of the community.

Mr. PRETYMAN

I quite understood all that. What I do not understand is how the second part of the Clause and the first part hang together. The first part clearly exempts from the periodic tax land held by a corporate body, but it does not apply to the private individual. The second part applies to the owner who holds the land bonâ fide for the purpose of games and recreation. But then no one except the corporate body pays periodic duty. What we understood the intention of the Clause to be was this: that where any body, whether a private individual or a corporation, has made any agreement to allow land to be used for the purpose of games or recreation, they should not, while the land is so used, be charged the Increment Value Duty until and unless they sell it. No doubt this does cover the case of a corporation, such as that referred to by the hon. Member, which holds lands specially for the purpose of games and recreation. But those cases are comparatively scarce. As regards the case of the private owner who allows his land to be used under an agreement, I think the words in the latter part of the Clause are perfectly satisfactory. In such case the land is to be exempt from this duty until it is sold. But we also understood it was not to be charged—in the event of the death of the owner—the Death Duties. This Clause certainly does not enact that.

Mr. LLOYD-GEORGE

I take it what the hon. and gallant Gentleman wants to do is to safeguard football and cricket clubs or other clubs connected with games and recreation from having to pay this Undeveloped Land Duty or the Corporation Duty in respect of lands which they hold. Our intention is that such clubs shall be exempted, but I do not see why all private owners should be exempted, as it might make it worth an owner's while to enter into some agreement with a club until the time came round when his estate can be developed. The intention undoubtedly was to exempt those who were actually engaged in furnishing fields for sports and recreation during such time as the land is occupied and used for such purposes, but it was never intended to exempt these lands from the Death Duties.

Mr. PRETYMAN

A man can only allow the land to be held for these purposes until his death. He cannot control the use after his death. If he has allowed the land to be so used free of charge during his lifetime, surely in such cases the exemption should apply. We certainly understood that that concession would be granted. There are innumerable cases where an owner has not only allowed use of the land free of charge but has incurred considerable expense in preparing the ground for the use of the people. He, at any rate, makes no profit out of it. But the land does and must increase in value. I quite agree he should pay the duty in full if he sells it. The periodic duty paid by corporations corresponds in his case to the Death Duty, and I ask why should a corporate body be treated more liberally in a case like this than the private individual who allows his land thus to be used? I can see no possible distinction between the two cases. The result of this proposal of the Government will be that either the clubs will be deprived of the ground or they will have to pay the Increment Value Duty.

Mr. LLOYD-GEORGE

This is the first time that argument has been put forward. My hon. Friend was good enough to receive a deputation on this matter, and no speaker put forward such a claim. The hon. and gallant Member is the first to put forward this claim on behalf of the landowner. No one else ever thought of it. We are quite prepared to exempt the private owner from the Increment Value Duty so long as he allows his land to be used for games and recreation. Surely the hon. and gallant Gentleman does not mean to suggest he should be altogether exempt from the Death Duties?

Mr. PRETYMAN

I never suggested that.

Mr. LLOYD-GEORGE

If you exempt him from one part of the Death Duties why not from the rest? This is the first time such a suggestion has been put forward. We have gone as far as we were asked.

Mr. HART-DAVIES

What would be done if the land were left in trust for a club; if it were left to somebody subject to the provision that the club should have the use of it?

Mr. LLOYD-GEORGE

In a trust of that kind the club would have to pay.

Mr. J. D. REES

What would be the position of the governors of Harrow School, or any other similar unincorporate body, in regard to their land? They might be forced in consequence of the Undeveloped Land Duty to sell it. I know that this case does not stand on all-fours with that put forward by the hon. and gallant Member (Mr. Pretyman), but I should like to know how it will fare with bodies unincorporate which have bought land solely for the purposes of games and recreation?

Mr. LLOYD-GEORGE

If the hon. Member will look at Clause 25 he will find that Harrow School will not pay any duty at all as long as the land is actually in use for the purposes of games and recreation.

Mr. REES

I am much obliged to the right hon. Gentleman. I am very grateful to him, and I am quite sure that he is anxious to dissipate my doubts, but they still exist. I referred to land outside the fields actually used for the purpose of cricket or football.

The CHAIRMAN

I do not see how that arises now. This land must be used bonâ fide for the purpose of games.

Mr. WATSON RUTHERFORD

Do we understand that the Government have made up their mind that, assuming there were two pieces of land, one belonging to a limited company, and the other to a private individual, each allowed to be used by boys for the purpose of playing games, and the private individual died, and his successor went on in the same way, there would be this Increment Value Duty to pay, whereas the land which happened to be in the same category belonging to the limited company, which never dies, would entirely escape so long as the company continued to own and use it in that way? If we are right in understanding that that is the intention of the Government as expressed by this Clause, I suppose we can only comment upon it, we are bound to submit.

Mr. REES

With great respect, Sir, I venture to ask whether or not the words used here are not "games and recreation," and whether those words are necessarily confined to such violent and concentrated efforts as are represented by cricket or football, and may not extend to country walks for which the lands I was referring to are purchased and maintained by the school?

The CHAIRMAN

This land about which the hon. Member is inquiring, is kept for the purpose of the Harrow boys walking round it?

Mr. REES

With respect, Sir, I submit it is to a great extent. If I may go on for a moment in regard to motives I would say there are always mixed motives, and the motives of the governors of Harrow School, may, like those of other individuals, be of that character. Of course there may be the wish to keep off the builder, which I submit to the Committee is a perfectly legitimate and laudable object. I cannot see why the builder who erects red brick houses for the few is a greater benefactor than the farmer who raises food for the many.

The CHAIRMAN

Now the hon. Member is showing what he really means, and he is not in order.

Mr. JAMES HOPE

This is not a common case, but I know one in the north-west of London where the land has been let, but at a very low rent, because the club could not afford more for the purposes of sport. Suppose the owner dies and the property passes to trustees, if Increment Value Duty is to be paid I suppose the trustees would be in honour bound, as trustees, to get some return. Undoubtedly the land would fetch a higher rent, and they may have to exact it, or they may probably sacrifice a part of it, and the consequence will be that the land will pass away from the club and would be lost for the purposes of sport. I can imagine a case in which the point would be met if the right hon. Gentleman confined the Increment Value Duty to sales, but if there is that duty at death the result will not be so much to relieve the landlord as it will be to drive these clubs out of possession of ground very much against the interests of sport. Just one other question arises under this Clause. Under Clause 11, which deals with Undeveloped Land Duty, the Commissioners were not, I understood, to have anything like the same powers as they, are given under this Clause, but that there was to be an appeal to some form of referee; and I would ask whether it is right to give the Commissioners these powers without the same appeal that you have agreed to give in the case of parks and access to parks under Clause 11? If an appeal is good in one case it certainly should be good in the other.

Mr. LLOYD-GEORGE

We cannot let the individual off Death Duties in a case of this kind. After all, the case of the corporation and of the private individual is not on all fours. In the first place, a corporation does not pay Death Duty in the ordinary sense of the term, whereas the individual does. There is a nominal Death Duty against corporations, but it is only nominal. Moreover, the private individual might make arrangements of this kind to escape the duty altogether until he dies, but I cannot conceive that any corporation working for a profit would do so. Therefore in regard to corporations there is not the same danger of evasion which it is necessary to safeguard in cases of this kind with regard to individuals. All that is wanted is, as far as we possibly can, to encourage the owners giving the land for the purpose of games without charge, but, at the same time, not to open the door which might result in the loss of a considerable amount of revenue from which the taxpayer will escape. I must guard the safety of the revenue in that direction, and I am sure if the Clause were extended as proposed by the hon. Member we should be endangering a considerable portion of the revenue.

Mr. JAMES HOPE

May I ask about the appeal and that under Clause 11?

Mr. LLOYD-GEORGE

I cannot remember the arrangement referred to. I do not think it is a case for judges to decide. If the hon. Member will look at the Clause he will see that it is a case which the Commissioners could be much better left to decide.

Mr. JAMES HOPE

Clause 11 deals with access to parks, and I understood there was a distinct promise that there was to be an appeal, though the exact appeal was not determined; some suggested the Local Government Board and others special referees.

Mr. LLOYD-GEORGE

I was not present when that particular matter was discussed. I believe there was considerable debate.

Mr. REES

Am I right in supposing, Sir, that upon this Clause, which we are discussing before any Amendment is moved, it is competent to ask the Chancellor of the Exchequer or to appeal to him to alter it in form so as to cover any particular case which would not now come within its purview?

The CHAIRMAN

It depends upon whether I consider the point which is raised comes within the four corners of the Clause or not.

4.0 P.M.

Mr. REES

Am I in order in asking the Chancellor of the Exchequer if, in regard to this Clause, he will consider whether the words cannot be so amended that they may expressly cover not only ground which is actually used for games, but whether they could be made to cover the larger and more extensive case of land used actually for recreation, though not in the actual sense of games? The reason I put this to you is that I gather I was ruled out because the lands to which I referred were used for recreation and not for games.

The CHAIRMAN

That was not the point I ruled the hon. Member out for.

Question, "That the Clause be now read a second time," put, and agreed to.

Mr. REES

May I ask the Chancellor of the Exchequer whether he would consider the short case I put to him?

Mr. LLOYD-GEORGE

The hon. Member wants to exempt land which is not used for football or cricket, but on which boys may have a sort of paper-chase. That would cover the whole of the land in the neighbourhood of London.

Clause added to the Bill.