New Clause.—(AMENDMENT OF S. 40 (3) OF FINANCE ACT, 1930). (Hansard, 20 June 1950)

§ Mr. Arthur Colegate (Burton)
I beg to move, "That the Clause be read a Second time."

§ The Deputy-Chairman (Colonel Sir Charles MacAndrew)
Perhaps in moving the Second Reading of the Clause the hon. Gentleman would combine with it the proposed new Clause standing next on the Paper in his name—[Exemption from Estate Duty of Buildings of Historic or Artistic Interest]—and the new Clause also in the hon. Gentleman's name—[Family Houses].

§ Mr. Colegate
I should like to do it, Sir Charles, if it would be for the convenience of the Committee, because it would enable me to put the object which I had in moving these proposed new Clauses in a very much simpler way.
1131 The Chancellor of the Exchequer and his colleagues are in such a gracious mood today that I hope they will look upon my equally non-party suggestions as favourably as they have looked at that of my hon. and gallant Friend who has just gained his point. My object is to complete the code which deals with the exemption of artistic and historical property from Death Duties, under certain conditions. I would remind the Committee that this exemption began at the very start of Death Duties, in the Act of 1894, in which Section 15 (2) made it lawful for the Treasury to remit Estate Duty on works of art, etc. which were given or bequeathed for national purposes, to universities, and so forth.
It is clear that those who originated Death Duties had a twinge of conscience about what might happen when Death Duties were enlarged, on account of the dispersion of the great heritage of collections of works of art, which, in 1894, were unparalleled in any country in the world. These fears were only too well founded. As the years went by, the enormous heritage of magnificent works of art were dispersed, not merely to America but to Germany and France. The great collectors of France still seem even now to be able to buy objects of interest from this country.
The 1930 Act, in Section 40, went very much further and made a real contribution in this matter. It remitted Death Duties on these works or art whether they were bequeathed or given or not. The works of art could remain, and many of them have remained, in the hands of their owners, subject to certain conditions. The Chancellor of the Exchequer has gone still further in Clause 38 of the present Bill, where a provision is laid down which tightens up the conditions. It is obvious that if exemption from death duties is given to the owners of such property, it is only right that those owners should take the necessary steps to preserve the objects, and to give certain facilities for research and inspection.
6.15 p.m.
The 1930 Act, in Section 40 (3), however has words which cut off a whole section of the sort of things that we are considering this afternoon. Those words are: not yielding income. 1132 At first sight they appear to give protection to the Treasury and to the public against any attempt by a tax evader to take improper advantage of the Section, but when I analysed the situation I found that abuse would be practically impossible. I would remind the Committee that these historical and beautiful objects must, first of all, be inherited. We cannot buy them and make some profit on them. We must make a claim on the Treasury that they should regard them as exempt from Death Duties, and the Treasury have to accept that claim. The last word is therefore entirely with the Treasury. There can be no abuse of that Section, nor of the new Clauses which I am attempting to move, because the Treasury has complete control.

§ Mr. Astor
Am I right in thinking that among the objects referred to, upon which tax exemption is given, are those which have to come into the category of heirlooms?

§ Mr. Colegate
No, there is no question necessarily of their being heirlooms. They simply must be objects of historical, scientific or other interest which the officer or department at the Treasury appointed for the purpose decides come within the categories. Therefore, so far from protecting the public and the Treasury, the words "not yielding income" cut off quite definitely a certain class of property which is just as worthy as any other class of objects covered.

§ Sir S. Cripps
Would the hon. Gentleman tell us what class is cut off? I am really anxious to know.

§ Mr. Colegate
Yes, I am coming to that point. What is cut off is any kind of artistic or house property or building of architectural merit.

§ Sir S. Cripps
I do not think the Clause would apply to buildings, anyway.

§ Mr. Colegate
That is my object. That is why I have put down the new Clauses, and I hope that the right hon. and learned Gentleman will be good enough to look at them. I have used the word "buildings." One of the great heritages of this country is the great mass of architecture, not merely big houses but manor houses, tithe barns, etc. Any such building as attracted tax under Schedule A is excluded by those words from the 1133 operation of this excellent method of protecting objects of interest which hon. Members on all sides of the Committee would wish to protect and which most of us have enjoyed when visiting such houses.
At the present time there is a tremendous movement of public opinion that beautiful houses, apart from the collections and works of art they contain, should be open to the inspection of the public. It is becoming a matter of almost universal desire on the part of owners of property that there should be adequate opportunity of seeing these buildings. In that case, surely the words "not yielding income" are a mistake, and I venture to think that they should be removed from the Clause. I do not profess to be a Parliamentary draftsman, and I realise that the new Clauses in my name might not achieve my object. The Chancellor must know that I should be only too willing to accept a form of words on the Report stage which he thought would accomplish my object.
I hope that the Chancellor will consider this because in the past he has shown very considerable sympathy in the matter. I think that he appointed the Gowers Committee. It may be asked why we should not wait for the Report of the Committee and it may be said that the Gowers Committee will go very much further than anything that I may do, but it could not go further on the question of exemption from death duties. Whether anything like this is recommended by the Committee or not, I still think we should take this action now because the rate of destruction which is going on is very rapid. In my own constituency in the last three years more than eight houses, three at least of which had great architectural merit, have been completely destroyed and demolished. There is no time to be lost.
I see no objection to going a little in advance of any recommendations which the Gowers Committee may make. I hope that the Committee will make other recommendations on the lines which I must not develop here, of the French law which preserves great chateaux in the valley of the Loire and elsewhere and which even provides funds for the maintenance of the structure by the owners. We could not go that far. Anyway, it would be out of order for me to develop it at this stage, but I hope very much that 1134 the Chancellor will consider my Clauses and say whether he will introduce a form of words on the Report stage to achieve the objects which I have set out.
This is not a party matter. It is a matter in which, I am glad to say—my hon. Friend the Member for Twickenham (Mr. Keeling) will confirm this—there is a growing interest among all sections of the population, and owing to the development of the charabanc people in the lower income grounds are seeing more of the countryside and of the houses which adorn it. The consequence is this very great interest in the matter. When a place is demolished one can hear very great resentment expressed that there is no method of protecting it. I hope the Chancellor will consider the matter very carefully and say whether he can make a slight extension of the protection from Death Duties which has been afforded to objects of artistic, historic and scientific interest to the architectural beauties of the country in which most of us take so much delight.

§ Mr. Astor
I should like to make a short intervention to ask my hon. Friend another question. When I first read the Clause, I wished to support him because I believed it to be time that the position of the collector in the community—nobody stands up for him—should be safe-guarded, because the collector is the best patron of the arts, being infinitely better than any public body will ever be. However, my hon. Friend made a reference to the words "not yielding income" and said that when he first scrutinised the thing he thought it was a matter of tax evasion, implying that tax evasion was possible; but it seems to me, in all good faith, that anybody inheriting what they could turn into a private museum of this kind, which would be something which had immediately lost its personal sense in the terms of the private collector, could run a perfectly good tax racket if it were not for these words. That is the point which worries me. I do not see how it is possible to avoid tax evasion if we do not have these words. I am merely asking for guidance.

§ Mr. Colegate
I have looked into that matter and it is very difficult to conceive how one could make any money by such a method. First of all, one has to inherit the collection. Then one has to persuade 1135 the Treasury to put it on their list, and they really have absolute control. I am not quite certain what the position would be, but I imagine that the Treasury might have powers to strike off the list any property which seemed not to be complying with the scheme. If the cost of maintenance was set off in the case of even the most delightful collection, I cannot conceive how one could make it a money-making racket.

§ Mr. Follick (Loughborough)
What about stamp collecting?

§ Mr. Mott-Radclyffe (Windsor)
I hope the Chancellor will view the Clause with sympathy. My hon. Friend the Member for Burton (Mr. Colegate) made the point that by reason of the phrase "not yielding income" any house would be excluded from Section 40 of the Finance Act, 1930, because a house automatically attracts Schedule A, and that, presumably, in the minds of the Treasury would be technically deemed to be yielding income.
All in the Committee are aware of the value of the National Trust scheme in preserving houses and other buildings of historic importance, but, unless we are to be accused of being entirely materialistic and of failing to appreciate the architectural and art treasures which we possess, the time has come for concessions to be made outside the comparatively narrow scope of the National Trust scheme. I have no idea of what the Gowers Committee will report. I hope very much that it will recommend concessions to the owners of such houses and buildings.
However, all of us in the Committee agree that it is right and proper that the famous historic houses, together with their contents, should be preserved and kept intact, but I am not certain whether size or fame is necessarily the best or indeed the only yardstick by which to judge the artistic or architectural value of any building. I do not think it is. There are a great many smaller manor houses, farm houses, tithe barns and so on of immense architectural and historic value but which for various reasons are not acceptable to the National Trust, more often than not because any property made over to the National Trust must be endowed by the donor with sufficient capital to maintain it.

Mr. Leslie Hale
Some of us on this side of the Committee have not referred to the Section which the Clause seeks to amend. If I follow the argument, is the suggestion behind this Clause that, for example, Chatsworth Park, fully occupied, and the whole hall, should be exempt from Estate Duty while every other house in the area should remain liable?

§ Mr. Mott-Radclyffe
No, if the hon. Gentleman will read the Section and the Clause he will see there should not be any misunderstanding about that. Chatsworth would come into a separate category altogether. It is a famous house and has a special value of its own. I am not arguing exclusively for the stately homes of England, as they are known in the popular Press, but for the smaller manor houses, farm houses, and other less well known buildings which together with their contents have great historic and architectural value.
There is often a tendency to underestimate how important it is to keep intact some of the priceless contents of these smaller manor houses. It is true that any of us can do and look at a picture in a picture gallery or at a piece of furniture in a museum, but I am certain that if one takes the picture or the piece of furniture out of its original setting, that furniture or that picture loses half its value, not in the financial sense but in the artistic sense. But we must bear in mind that the contents of a house, where both the exterior and the interior are good, reflects the history of taste throughout many centuries, from perhaps the Tudor period to Queen Anne, through the Georgian period to the Victorian period. We may prefer some periods to others, but so long as the contents of that house remain intact there we have the history of taste through a given period for everybody to see.
I should have thought that the safeguards against any abuse are perfectly adequate. No hon. Member on any side of the Committee would wish the objects which my hon. Friend seeks to achieve by this new Clause to be abused in any way but, as he said, there are perfectly adequate safeguards. In the first case the property has to be inherited and not purchased. Secondly, it has to be kept in a reasonable state of preservation. 1137 Thirdly, it has to be open to examination by a person authorised by the Treasury. For those reasons I suggest that the right hon. and learned Gentleman should give sympathetic consideration to this Clause in order to avoid the houses and buildings of great merit being demolished, or falling into disrepair, their contents dispersed, and articles of great value being lost, both to their owners and to the public who may wish to see them.

§ Air-Commodore Harvey (Macclesfield)
I rise to support my hon. Friend. I can see the difficulties that the Chancellor would have in meeting us over such a wide problem, nevertheless I feel something ought to be done because, unless steps are taken to preserve these old homes, I believe this generation will be condemned in years to come. The incomes of most families are reduced today to such an extent that it is impossible even to attempt to maintain the large homes which are of priceless value to every person in the country, as has been proved in recent years by the thousands of people who take enjoyment and pleasure at weekends in visiting these homes. Efforts are being made by their owners to sustain them by charging 2s. or 2s. 6d. a visit.
While I do not wish to be out of order on this point, I would ask the Chancellor to consider this matter sympathetically by giving tax relief. Perhaps during part of the recent visit of the Prime Minister to France he was inquiring into the French method of maintaining the homes of France. I hope the Chancellor will give an assurance that he will look into this matter and, on the Report stage, give the House some idea of what can be done to preserve the homes of Britain.

§ The Solicitor-General
It was just because my right hon. and learned Friend recognised that this was an important question, with wide implications, that last year he set up the Gowers Committee within whose terms of reference it was not only to examine the position with regard to houses and buildings of historic and artistic interest, but also to examine the position with regard to the contents of those houses—objects, pictures, and so on, of artistic and historic interest. That Committee has just presented its report. It is intended to publish that report in due course, and no doubt there will have to 1138 be full discussion upon its various proposals. As hon. Members opposite have said, this matter is by no means a simple one.
If I may begin with Section 40 of the 1930 Act, it would not improve the matter very much simply to take out the words "not yielding income" in subsection (3) of that Section. Those words, which have been in the legislation on this kind of topic for 153 years, are designed to prevent a person using his artistic treasures for the purpose of earning income while he is alive and, having earned income by the use or exhibition of them during his life, for his heirs to enjoy the advantage of exemption from Death Duties.
That Section is not, on its true construction, designed to refer to or to include houses. As my hon. and learned Friend said when the hon. Member for Burton (Mr. Colegate) was moving the Motion, what we refer to as the ejusdem generis rule would have to apply, and that Section takes in the pictures, prints' books, manuscripts, works of art, scientific collections and things of that sort. It is designed simply to deal with the contents of houses.
As the hon. Member has said, the Treasury has to say what objects of that character can be said to have artistic or historic interest, and it has been possible to operate that provision because there have been available the services of experts from the National Gallery and the Victoria and Albert Museum upon whose advice those responsible for the decision have been able to act. Supposing the scope of this type of legislation is extended to include historic buildings, there would have to be some body to which those who have to determine whether a building can be designated as having historic or artistic interest can refer. At the moment there is no obvious body, and no doubt some body for that purpose would have to be set up.

§ Mr. Colegate
I think the right hon. and learned Gentleman must have overlooked the fact that the Victoria and Albert Museum has an important architectural section. I have no doubt they would be delighted to advise the Treasury.

§ The Solicitor-General
I am told that particular section could not see its way to undertaking this additional function of 1139 giving advice in the case of all these buildings, and, therefore, it would be necessary to set up some kind of body from whom that kind of advice could be obtained.
There is another point that would arise for consideration on this matter. Supposing one excluded from the scope of Death Duties large properties of great value, the question would have to be considered whether the State should not have some measure of control or supervision over those buildings to see that they were properly maintained and made available, in the sense in which it would be natural to expect that they should be made available, if tax exemption attached to them in that way. I am not simply stating these problems to give a mere stonewall refusal to what is being proposed by the hon. Member in the new Clause which he is putting forward. I am simply saying that I think it is premature now to accept what he suggests.
As I have said, this Committee, which has produced a very voluminous report and which has very fully and exhaustively examined all these problems and has made suggestions with regard to it, has just presented its report. The implications of that report, which will be published, will require study, and the kind of problems which I have been indicating will have to be resolved in the light of the suggestions of those who form the Gowers Committee. I hope, therefore, that this Committee will agree that it would be premature to accept any of the three new Clauses now. It would be premature to do so when we have this report to hand and when it can shortly be considered.
If we simply accepted the first of the three new Clauses, that really would not make very much difference. It would simply take out the words "not yielding income" and it would take out what the Committee may well think is not an unreasonable safeguard, namely, that if any particular owner of a picture, collection, or something of that sort, is to have tax exemption, he should not, at the same time, be able to use the collection, the pictures or whatever it might be, as a money-earning asset during his lifetime. That is what those words are designed to do, and it would not really carry the 1140 matter very much further merely to take those words out.
The second and third of the three Clauses introduces the larger question of buildings. That is an important and difficult question. Often when these proposals are made, the argument is quite rightly adduced, and it always has been, that one of the major objectives to be attained is to prevent pictures and objects of artistic value being sent abroad and bought overseas. Of course, that consideration is peculiarly applicable in the case of things which can be sold overseas. It does not really apply in the case of buildings. [Hon. Members: "Oh!"] Well, I believe that attempts have been made to transport buildings brick by brick, but, broadly speaking, that kind of argument applies to pictures, and so on, but not to solid, fixed things like buildings.
One hon. Member raised the question whether, for example, a house like Chatsworth would be included within the scope of the Clause. It undoubtedly would. If the second new Clause were accepted it would refer to all those very large—

Mr. Leslie Hale
And to every public house where Queen Elizabeth slept. Almost half the older buildings in the country could come within the scope of the Clause once it includes houses and buildings.

§ Mr. Colegate
To pass from that frivolous point to one which is more serious, surely the right hon. and learned Gentleman must recognise that this is not a question of what one can claim. The whole matter is within the complete discretion of the Treasury, and from what I know of them they are not likely to include public houses.

§ The Solicitor-General
It would be within the discretion of the Treasury, and to enable the Treasury to act with any kind of sensible consistency it would be necessary for them to have some authority to which to refer to obtain advice on these matters.
My hon. Friend the Member for Oldham, West (Mr. Leslie Hale) asks about public houses which have historic associations. He was not saying that flippantly; I am quite sure that he meant 1141 it. The question would arise in connection with public houses which have historic associations. Many houses in London now have great artistic value and beauty and one must have some kind of organisation set up in order for some kind of consistency to be introduced into the matter. After all, to exempt them all from Death Duties would mean an enormous sum of money in due course. To accept this proposal—I do not say this at all offensively—in the very bare form in which it is put forward is, I would suggest, entirely premature.
Therefore, I hope the Committee will agree that the right attitude to adopt towards the proposals which are made in the new Clauses is to say that they should stand over and that we should first have an opportunity of considering the implications of the Gowers Report so that we can work out, if possible, in the light of what they say, some kind of coherent, sensible scheme if it appears desirable in the light of their report.
6.45 p.m.
I would only add this. It is not right to think that we have not already done a great deal in that respect. Obviously, it is desirable to prevent buildings of value being destroyed or dismantled in one way or another. Our existing legislation, besides the enactment to which attention has already been called, contains a considerable measure of protection. I would remind hon. Members of the provisions regarding houses which are given to the National Trust under the 1931 Act; and in the Finance Act of last year we went further and extended the exemption to maintenance funds which were made available for the preservation of houses of that kind.
Furthermore, there is the legislation which enables the Ministry of Works to concern itself with scheduled ancient monuments. That is contained in Section 40 of the 1931 Finance Act. From a rather different angle, in the Finance Act, 1946, we established the National Land Fund, which, also, will to some extent assist in the preservation as buildings of these historic houses, and so on. I hope the Committee will agree that it would be premature now, and indeed impossible, having regard to the problems I have indicated which would first have to be solved, to accept the proposals contained in the new Clauses.

§ Mr. Keeling (Twickenham)
I only rise to ask one question and to make one remark. I ask the question first in the hope that if the Solicitor-General has not the answer with him, perhaps he would be so kind as to obtain it while I am making the remark.
The question is, can the right hon. and learned Gentleman confirm that the report of the Gowers Committee will be published on Friday? The remark is this. Both my hon. Friend the Member for Windsor (Mr. Mott-Radclyffe) and the Solicitor-General referred to the National Trust. Although houses and other buildings which are left to the National Trust are exempt from Death Duties provided that they are forthwith declared inalienable by the National Trust that is not true of chattels. Furniture, pictures, tapestries and other chattels which are left to the National Trust are not as such exempt from Death Duties. Can the Solicitor-General answer my question?

§ The Solicitor-General
It is hoped to publish the report on the 23rd of this month, which is Friday. With regard to chattels, they are, of course, within the protection already given by Section 40 of the 1930 Act. The houses which are vested in the National Trust obtain the exemption which goes with them; and chattels, the other side of the question to which the hon. Member refers, are covered by Section 40 of the 1930 Act, to which we have just been referring.

§ Mr. Keeling
I might add that National Trust chattels do not yield any income.

§ Mr. Colegate
I had hoped for a rather more sympathetic reception towards the new Clauses, and I feel that a little more imagination might have been used by the right hon. and learned Gentleman. It is very difficult to resist the persuasiveness of the Solicitor-General, but it proved a little too much when, after telling the Committee that one of the greatest difficulties would be in trying to distinguish which buildings should be preserved and rejecting my suggestion of inviting the assistance of somebody from one of the museums, he went on to say that they were doing this kind of thing every day of the week and that use is made of the Ministry of 1143 Works, who select the ancient monuments to preserve and the National Trust. The Ministry, however, are constantly in the habit of discriminating between the ancient monuments which may be offered to them. One cannot simply go to the National Trust or to the Ministry of Works and plant upon them any ancient monument or artistic house one likes.
The Solicitor-General talked as though there were no discrimination. Of course, there is a great deal of discrimination, and I have no doubt, from the great deal which I had at one time to do with the Office of Works, that they would be delighted to be charged with the task in question.

§ Mr. Colegate
Perhaps not under the present Minister, but there have been Ministers who took a great interest in these matters. I was rather surprised that the right hon. and learned Gentleman rode rather loosely over one of the very things set out in Clause 38, that one of the conditions is that reasonable steps should be taken for preservation. There is no question that if the scope of the Clause is enlarged it would be possible to go beyond that. However, in the hope that when the report comes out it might touch the imagination of hon. Members and that we might have some protection really worthy of this nation and this magnificent collection of historic objects, I beg to ask leave to withdraw the Motion.

§ Lieut.-Commander Braithwaite
On a point of order. Do I understand that the new Clause [Exemption from Entertainments Duty of Amateur Entertainments], on which I understand a great many Members have had a great deal of correspondence and which is in the name of my hon. Friend the Member for Twickenham (Mr. Keeling), has not been selected?

§ The Deputy-Chairman
No, it has not been selected.