§ Motion made, and Question proposed. "That the Clause stand part of the Bill."
§ Mr. E. Fletcher
Like all the others in this group, Clause 21 is designed to give effect to some of the recommendations of the Millard Tucker Committee. While I do not quarrel in principle with the object of the Clause, which is to deal with the special case of cemeteries and to make provision for capital allowances in respect of the land which they acquire, it seemed that the language in which it was drawn was not particularly happily chosen. For that reason I put down an Amendment on the Order Paper. It has not been selected, but I think that the Economic Secretary may wish to elucidate subsection (2, a).
As I read that subsection it is designed to deal with the capital expenditure which a cemetery company has incurred in erecting buildings, "other than a dwelling-house" in a cemetery. Such buildings, presumably, are churches and chapels and other consecrated buildings. It seemed to me a little unfortunate to say the least, to suggest that those buildings were…likely to be of little or no value when the cemetery is full;I do not think that that can be the real intention of the Government. Although a cemetery may be full one knows perfectly well that the consecrated buildings there still have a very real value. They certainly have a spiritual value, and, I should have thought, a material value as well. If my surmise as to the intention of the Government is correct I would ask the Economic Secretary to look again at the Clause to see whether he cannot improve the language both to clarify the Clause and to 636 remove some of the objections which, for the reasons which I have given, might apply.
§ 5.45 p.m.
§ Mr. Mitchison
What is the position of local authorities with regard to cemeteries? I suppose that a local authority carrying on either a cemetery or a crematorium for profit may be taxed, although to some extent it is its duty to do something of the sort. I do not want to go into details, but I should like to know whether I am correct in my assumption. There are cases in which a local authothority may be taxed for either or both of those activities. If I am wrong in that assumption the other questions which I wish to ask will possibly be much more limited, but I am assuming for the moment that, as I think must be the case, they will be taxable activities, at any rate, in some cases.
That being so, the real difficulty which has caused the Millard Tucker Committee to call attention to this particular point and has, therefore, led to the introduction of this Clause, is that land in cemeteries becomes incapable of any other use for a very long period. We are only discussing taxation questions at the moment and I do not wish to develop that too far, but I should like to call the attention of the Economic Secretary to the following point.
A very great deal of financial trouble has arisen from an unnecessary delay in allowing the utilisation of disused cemeteries. It is a complicated matter and I obviously could not go into it all now. Nevertheless, it is a very well-known fact. It has been recognised I think, that the law and procedure relating to the matter are out of date, much too complicated and much too difficult in practice. I believe that the question is to be dealt with from another point of view by the ecclesiastical authorities, some of whom are themselves anxious that it should be simplified.
Reverting to the case of the local authorities, does this Clause provide that if a local authority carries on a crematorium at a profit, and a cemetery or a number of cemeteries at a loss it can set off one against the other, and what effect will that have on the capital provisions in the Clause? If it does not so provide and if, as appears to be the case, there is still some distinction in the Clause between the trade of carrying on 637 a crematorium and the trade of carrying on a cemetery, steps should soon be taken to enable something to be done.
A very large number of crematoria are carried on by local authorities. We have a particularly fine one in Kettering. I once heard one of our elderly and distinguished aldermen exhorting the inhabitants of a neighbouring local authority area to come to Kettering to be cremated. We are very proud of our crematorium. It is up there at the top of the hill. It is a magnificient building and I would ask the Economic Secretary to bear in mind—as I shall bear in mind myself—the very great advantages of the Kettering crematorium.
But, as with other local authorities, there is not the same attraction in Kettering as regards keeping cemeteries. They become a very great burden because of the difficulty of converting them to any other use. If this is not dealt with in this Clause—and I do not think it is—it could perhaps be considered as a matter for fresh legislation. The Government would then have the great and very unusual distinction of going one step further than the Millard Tucker Committee, a thing which they have not yet had the courage to do in matters of this sort.
§ Mr. Maudling
I was most interested in the remarks of the hon. and learned Member for Kettering (Mr. Mitchison) about the facilities available in his own constituency, and I would most certainly have accepted his suggestion had it not been for the fact that I have already given an option to my right hon. and learned Friend the Solicitor-General, who tells me that in his constituency there is an even better establishment.
This Clause is inevitably somewhat incongruous in its wording because we are treating as an economic activity the business of cemeteries and crematoria. Therefore, inevitably the language gives rise to rather unusual phrasing. For example, I have been advised that the purpose of the Clause is to write off the cost over the life of a cemetery, which seems to me a rather strange phrase.
As for the point made by the hon. Member for Islington, East (Mr. E. Fletcher), when I saw his un-called Amendment on the Paper I was not quite certain what he had in mind. I thought 638 the intention was what he says it is. It is true that by little or no value we mean precisely that—little or no monetary value. Obviously, these buildings have great spiritual value and non-material value. I will consider what the hon. Gentleman has said, although my own impression is that it would be wrong to write into this Clause the words "material value," because it would always be a presupposition that any Act of Parliament of this kind dealing with Income Tax is concerned solely with values assessed for Income Tax.
I think that the hon. and learned Member for Kettering is right in saying that so far as local authorities make profits out of the operation either of cemeteries or crematoria, they will be liable to tax on those profits, although, on the face of it, I should think it would be unlikely that this is the sort of activity which local authorities would seek to carry on at a profit. I should imagine that they would wish to carry on that sort of activity at neither a profit nor a loss.
As for offsetting one activity as against another, my impression is that the normal rules of offset apply to the offset of profit on one activity against the loss on another activity. If I am wrong, I will let the hon. and learned Member know afterwards. The reason why cemeteries and crematoria are treated differently is because we are trying to apply to cemeteries and crematoria the normal Income Tax rule that capital that is used up in the course of earning a profit is written off. In the case of a cemetery, obviously the whole of the land involved will be used up in course of time, and when the land has been used up the buildings cease to become usable for making a profit, which is the purpose for which they were originally intended.
In the case of crematoria, the explanation which was given to me is a little unusual—namely, that there is no such limit to the useful life of a crematorium. In other words, crematoria buildings continue to be used over an almost indefinite period, and their life is not terminated by the exhaustion of land which is attached to a cemetery. Therefore, they are treated on a different basis. As for the activities of local 639 authorities, I can assure the hon. and learned Member that the normal rules of Income Tax with respect to the computation of profits continue to apply and will not be affected.
§ Mr. Jay
I do not wish to enter into the constituency competition over crematoria, still less to add to the incongruity of the Economic Secretary's language. I should like to ask him about what I might perhaps not incongruously call the philosophy of this Clause. I think he said that it was a principle of Income Tax which we ought to apply, that where a capital asset was destroyed over its life, if one may use that word in this connection, it should be written off during a period.
The Millard Tucker Report lays down the principle that, in general, land is not a wasting asset the value may fluctuate, but it cannot depreciate from use. There is, therefore, no case for giving an allowance. The Report then says that there are exceptions, and that the Committee have already dealt with one or two special exceptions to this general rule in the case of mines abroad, and another exception is land used for cemeteries.
I should like to be told why this particular exception to the rule has been selected for legislation in this Clause. Presumably it is not the only case where, in the course of some economic activity, the value of land is destroyed or, at any rate, heavily diminished. Indeed, the wording of the Millard Tucker Report implies that there are further exceptions over and above that. I wonder if the Economic Secretary can tell us what is the position in the case of a sand and gravel business, or indeed, an iron ore quarry, or other cases where it would appear to the plain man that a similar problem arises of the land losing its value over a period.
I am not suggesting that the hon. Gentleman should go into a special disquisition about those types of business, but I would like him to explain whether a cemetery is really unique in this matter. If it is not, what is the position of other businesses where land diminishes in this way, and why has this particular example been picked out?
§ Mr. Maudling
This example has been picked out because it was a recommenda- 640 tion of the Millard Tucker Committee. In a sense, land used by cemetery companies is different because what they do with the land is to dispose of it. As for other examples, there was mentioned in the Committee land used for dry docks and things of that sort. The Royal Commission is, I understand, considering other examples of this principle, and no doubt in due course we shall hear from them on the subject.
§ Question put, and agreed to.
§ Clause ordered to stand part of the Bill.