§ (1)When on the formation of a joint board for the supply of water comprising representatives of local authorities property of any of those authorities is transferred to or vested in the joint board no stamp duty shall be chargeable in respect thereof.
§ (2) In this section the expression "local authority" has the meaning assigned to it by the Local Government Act, 1933.—[Mr. Black.]
§ Brought up, and read the First time.
§ Mr. Cyril W. Black (Wimbledon)I beg to move, "That the Clause be read a Second time."
This is a very small and modest Clause as far as its cost to the Treasury is concerned, but it is nevertheless a matter of very considerable interest and financial importance to many local authorities. I believe also that it is almost entirely a non-party matter, and I hope there may be support for the principle on both sides of the Committee.
For some reason, which it is very difficult to understand, the practice is to charge Stamp Duty on orders setting up joint water boards under the Water Act. I understand that the setting up of joint water boards is an operation which is looked upon with general approval by Her Majesty's Government, and in fact it is the declared policy of the Minister to put water supplies on to a more efficient basis. One of the generally accepted 1531 methods of accomplishing that purpose is to set up joint water boards. For some reason, which I have been entirely unable to understand, Stamp Duty is payable in such cases. I say it is inexplicable because it seems entirely contrary to the general rule operating in similar cases.
I can give one or two instances in which exemption from Stamp Duty is accorded. There is the exemption in the case of the London Passenger Transport Board in 1933, the British Electricity Authority in 1947, the Gas Council in 1948. There is, of course, the general exemption given by Section 52 of the Finance Act, 1946, in the case of nationalised bodies generally. The Stamp Duty on the order setting up joint water boards appears to have been one solitary exception to the general exemption which is granted in other similar cases. This is a very small point as far as the Treasury is concerned. It must, I imagine, be a matter of tens of thousands of pounds a year rather than hundreds of thousands of pounds a year.
12 midnight.
No doubt whoever replies for the Government will be able to give some estimate of the amount of money involved. But while it is true that it is a very small matter from the standpoint of the Treasury, it is also true that there are appreciable sums involved as far as the local authorities are concerned. I quote one case only. In the case of the setting up of the Guildford, Godalming and District Water Board, the Stamp Duty on the order amounted to no less than £4,100, being based upon the outstanding loans of the various amalgamated undertakings which at the date of the amalgamation amount to some £207,000.
I am sure that it is hardly necessary for me to point out that water boards are in a rather special category. They come obviously within the description of public utilities. They are non-profit making and they exist, generally speaking, for the purpose of providing a public service at the lowest possible cost consistent with balancing their accounts and making neither a profit nor a loss.
I contend that the present practice of charging Stamp Duty in such cases has results which are the exact opposite of what the Government desire. First, the 1532 charge of Stamp Duty frustrates the purpose of the Government who are believed to be favourable to the setting up of joint water boards. Secondly, it is wrong in principle, because it is different from the general practice in the case of other public utilities.
Thirdly, it is unfair as between one joint water board and another, the amount of the Stamp Duty being dependent simply upon the amount of loan that happens to be outstanding at the date at which the order is stamped. Fourthly, it is a defect in the existing tax law which it would be inexpensive for the Government to rectify. On these grounds, I hope that the Government may make some concession on this matter.
§ The Solicitor-GeneralI must congratulate my hon. Friend the Member for Wimbledon (Mr. Black) on moving this new Clause at rather short notice in a compelling speech which also had the merit of comparative brevity. He has drawn attention to a point which it should not be difficult to remedy. The Stamp Duty on the setting up of a water board is levied under Section 12 of the Finance Act, 1895. There is no doubt that it is legally levied.
At the same time, there are several precedents to which my hon. Friend referred for exempting from liability to Stamp Duty bodies created in the manner in which joint water boards are created. My hon. Friend was right when he said that the financial consequences of an exemption would be almost negligible.
We have given consideration to this point, and the reason why a provision of this sort was not included in the Bill was that in a Bill of this magnitude it was not possible to include all that we wished to do. But now that the matter has been raised, I am able to say to my hon. Friend that we are prepared to accept his proposal in principle and will table a new Clause to give effect to it on the Report stage.
We cannot accept the new Clause as it is drafted, because the definition of "local authority," for instance, applies only to England and Wales, and it would be very wrong to leave Scotland outside the definition of the Clause. There are other minor objections to the drafting of the Clause, but my reference merely to 1533 that one should satisfy my hon. Friend that its precise terms cannot be accepted, although we accept the principle behind it.
§ Mr. BlackI should like to express my gratification at the reply we have just received. My hon. Friends and I are concerned only with the principle involved, and not with the particular phraseology embodied in the Clause. In view of the assurances which have been given, I beg to ask leave to withdraw the Motion.
§ Motion and Clause, by leave, withdrawn.