§ Motion made, and Question proposed, "That the Clause stand part of the Bill."
§ Mr. Crosland
I hope it will not be considered an impertinence for a layman to intervene briefly in the debate on the Millard Tucker Clauses. Clause 20 cannot be described as the most revolutionary Clause in the Bill, nor one raising very large issues of general principle, but it follows a recommendation made in the Report. I want to put three points to the Government.
Paragraph 278 of the Millard Tucker Reports states:It was represented to us that the present treatment of costs incurred in demolishing a 633 building or an item of plant is in certain respects inequitable. Under existing law such costs are not an admissible expense in computing profits.The Report goes on to explain that in certain circumstances certain allowances are granted for demolition costs, but, in that Committee's view, not adequate ones. I take it that the phrase "net cost" means demolition costs less any earnings from scrap. That is the first point which I wish to put to the Government.
My second question relates to a matter which, perhaps, ought to be clear to me on reading the Clause. How far does the Clause carry out the recommendations of paragraph 278 of the Report? There were two separate recommendations in that paragraph. The first was that depreciation allowances should be given on commercial buildings. The point of that was that demolition costs could be set off against them. Is that recommendation carried out? I imagine that it is not, because under Clause 15 commercial buildings still do not attract capital allowances. I may be confused about this and should be grateful if the Economic Secretary would make it clear.
The second recommendation in paragraph 278, and the main one, was:…if the demolition costs exceed the scrap proceeds the excess should be taken into account in computing a balancing allowance or charge on the old asset.I take it that, in broad terms, it is that recommendation which the Clause carries out. Again, it is an extremely complicated matter, and I shall be glad to have reassurance.
Having regard to the paragraphs in the Millard Tucker Report coming under the heading "G. Miscellaneous," why has this recommendation been picked out and why have others been omitted? Perhaps the others have been dealt with in previous years, but it would be interesting to know. However, the recommendation about dredging in paragraph 277 and the recommendation about tropical buildings in paragraph 273 have not been dealt with in earlier years.
§ The Chairman
The hon. Gentleman is referring to matters to which the Economic Secretary cannot reply on the Question, "That the Clause stand part of the Bill." We can only deal with things which are in Clause 20. We cannot regret things which are not there.
§ Mr. Crosland
I do not want to embarrass the Economic Secretary, but I was curious to know why the paragraph referring to demolition costs had been picked out. If the Economic Secretary cannot answer that and remain in order in this Chamber, perhaps he would be kind enough to have a word with me about it outside. It would be of assistance to us to have a few words in explanation of the Clause.
§ Mr. Maudling
The answer to the hon. Member's pertinent questions is that he has accurately interpreted the purpose of the Clause. "Net cost" is, as he supposed, the cost of demolition less the scrap proceeds.
With regard to commercial buildings, the recommendation of the Millard Tucker Committee was that if the recommendation that depreciation allowances should be given to commercial buildings was adopted, it would close the first gap referred to. The Government have not accepted the recommendation that commercial buildings should be given depreciation allowances.
The Clause carries out the recommendation at the end of paragraph 278, the purpose of the recommendation being that the excess of demolition costs over scrap proceeds should be allowed as a balancing allowance to the company in the year the demolition took place.
I cannot answer the fourth point put by the hon. Member while remaining within the rules of order. The reason for the decision to include the provision was that it would be useful and would not be expensive.
§ Mr. Maudling
It is true that subsection (5) is rather a difficult point. It provides that where any of the foregoing 635 subsections apply, the present practice by which the net demolition cost is treated for the purpose of capital allowances as part of the cost of an asset replacing the demolished asset, shall not apply. This Clause gives immediate relief in respect of demolition costs and it would be quite wrong also to give relief for the cost of the new asset, which is the present practice.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.