ELECTRICITY (INCOME TAX AND PROFITS TAX) (Hansard, 20 February 1957)

§ The Financial Secretary to the Treasury (Mr. J. Enoch Powell)
I beg to move, That, for the purposes of any Act of the present Session to provide for the dissolution of the Central Electricity Authority and the esablishment of a Central Electricity Generating Board and an Electricity Council, it is expedient to provide, as from the date on which the said Authority is dissolved by that Act,—

(a) that, for the purposes of the enactments relating to income tax, and of the enactments relating to the profits tax, the said Council shall be treated as carrying on a trade or business;

(b) that those enactments shall have effect, and shall be deemed always to have had effect, as if the trade or business carried on by the said Authority at any time before the said date had been the trade or business of the said Council, and as if any reference in those enactments to the said Authority were a reference to the said Council;

(c) that those enactments shall have effect, in relation to any time on or after the said date, as if any reference to an Area Board established under the Electricity Act, 1947, included a reference to the said Central Electricity Generating Board;

(d) that, for the purposes of the enactments relating to income tax, the trade carried on by the said Authority shall not be treated as permanently discontinued on the said date, nor shall a new trade be treated as set up and commenced on that date by the said Central Electricity Generating Board or the said Council,

so however that for the purposes of the operation of the said enactments in accordance with the preceding paragraphs anything done by, to or in relation to the said Authority shall be treated as from the said date as if it had been done by, to or in relation to the said Council. Perhaps it would be of use if I said a few words in explanation of this Ways and Means Resolution, which in fact has a very simple purpose. It is to enable what is little more than a drafting defect in the Electricity Bill to be corrected.
It arose in the following way. As the law stands at present the Central Electricity Authority is responsible for paying Income Tax and Profits Tax for the whole undertaking and has powers under the Electricity Act, 1947, of recovering 522 accordingly from the area boards. The Electricity Bill as it stands places the Generating Board in this respect, as in many others, in the place of the Central Electricity Authority, but it also repeals—by the second part of the Fourth Schedule—the powers to recoup from the area boards. That clearly results in an impossible position. The sensible solution, obviously, is to enable the new Electricity Council to step into the shoes of the old Central Electricity Authority with similar obligations in respect of tax and with the same powers of recoupment. This Ways and Means Resolution, if the Committee passes it, will enable the Standing Committee which is considering the Bill, if it thinks fit, to make an Amendment accordingly.

§ Sir Frank Soskice (Newport)
We are grateful to the Minister for explaining the purpose of this Resolution. I hope that it achieves the purpose which the Government have in mind. I wish to call attention to the fact that paragraph (a) treats the Council as if it is carrying on a trade or business. Of course it does not treat it as if it has an income, because it has not. I should be grateful if the hon. Gentleman would point to that part of the Resolution which has the effect which he indicated as being the object he seeks to achieve, namely, the effect of vesting in the Council the same powers that the Central Electricity Authority had to recoup itself by a levy on the area boards.
Certainly paragraph (a) does not do that, (b) would seem not to do it, but conceivably it is (c) that does it.

§ Sir F. Soskice
The Minister shakes his head. I should be grateful if as a matter of exposition he would make clear to the Committee exactly what words in the Resolution have the somewhat drastic effect—in a somewhat concealed form having regard to the wording—of vesting in the new Council power to recoup itself which the old Electricity Authority possessed.

§ Mr. Powell
The explanation is that it is not necessary to have a Ways and Means Resolution to furnish the powers of recoupment, which are internal affairs of the undertaking and not matters of taxation as between the Inland Revenue 523 and the undertaking. It is not necessary, therefore, for that amendment to be paved by a Ways and Means Resolution.

§ Sir F. Soskice
I follow what the hon. Gentleman says, that it is not necessary for that to be done in the Ways and Means Resolution, but could he be so good as to indicate in what Clause and what subsection of a Clause in the Bill at present being considered in Committee power is vested in the Electricity Council to recoup itself from the area boards which previously was possessed by the Central Electricity Authority? The Minister must know.
We should like to be assured that this Council, which so far as we can see is wholly deprived of income and completely stripped of any possibility of earning income, is given the necessary power. We should like to be assured that if it is not to be found in the terms of this Resolution, the power to recoup itself is to be found in some—and if so what?—provision of the Bill being considered upstairs.

§ Mr. Powell
It is not to be found in the Bill as it stands at the moment; hinc illae lachrymae. It is because of that omission that a good deal of this operation is necessary. The existing power contained in Section 41, as amended, of the Electricity Act, 1947, is repealed by the Second Schedule of the Bill and nothing is put in its place. The Standing Committee will be able to put something in its place, if it thinks fit.