HC Deb 15 July 1958 vol 591 cc1113-9

(1) In the case of deaths occurring after the commencement of this Act, section thirty-three of the Finance Act, 1956 (which reduces the estate duty chargeable on land compulsorily purchased within five years after the date as at which it is valued for the purposes of duty), shall apply in relation to an interest in a house which is demolished in pursuance of a demolition order under Part II of the Housing Act, 1957, or a clearance order under Part III of that Act, as if—

  1. (a) the house had been purchased at site value in pursuance of a compulsory purchase order made by virtue of the said Part II or the said Part III, and compensation in respect of the interest had been payable accordingly; and
  2. (b) the purchase had been made in pursuance of a notice to treat served on the date on which the clearance order or demolition order was made.

(2) Subsection (1) of this section shall apply where a house which might have been the subject of a demolition order is, without the making of such an order, vacated and demolished in pursuance of an undertaking given to the local authority, as if there had been a demolition order made at the date when the undertaking is given.

(3) In this section— house" includes any building constructed or adapted wholly or partly as, or for the purposes of, a dwelling; site value" in relation to a house means the value, at the time the valuation is made, of the site as a cleared site available for development in accordance with the requirements of the building byelaws for the time being in force in the district.

(4) This section shall have effect in relation to a house in Scotland as if for the references to the Housing Act, 1957, there were substituted references to the Housing (Scotland) Act, 1950, and for the reference to the building byelaws there were substituted a reference to the building regulations.—[Mr. Pickthorn.]

Brought up, and read the First time.

Mr. Pickthorn

I beg to move, That the Clause be read a Second time.

This is not the sort of matter which I flatter myself I understand uniquely well, but I hope that I can explain my point sufficiently without using very many words. It came into my mind because of an experience I had in my constituency, from which I learnt that it is possible for a man who inherits a house to pay Estate Duty on a valuation, say, of £700, and to find that within a year the house is valued for other purposes as nil; that he is ordered to demolish it at his own expense, and that he then gets back only part of the Estate Duty, if he gets any back at all.

That seemed to me a plain injustice. I know that it is always dangerous to say that something is obviously unjust; it at once arouses in the breasts of those who are properly called reactionaries a determination to assert the opposite. But, on the face of it, this is and was unjust, and I thought that it therefore ought to be put right in cases where the property concerned has been in the same ownership throughout.

The method proposed to do this is by adapting Section 33 of the Finance Act, 1956, which covers the other cases under the Town and Country Planning Act, so that it will deal with the cases which I have endeavoured to indicate. The new Clause adapts Section 33, so as to treat a demolition notice as if it were a notice to treat for the purpose of compulsory acquisition. It treats the site value as if that amount were payable as compensation on a compulsory purchase.

This concession would cost very little So far as I can trace, there has been only one case of this kind since the war and I do not suppose there will be many more. That case related to a house valued at £700 for Estate Duty purposes. The plain justice of the matter seems reasonably simple. I hope that it is not necessary for me to champion the proposed new Clause at any greater fullness.

Mr. Mitchison

Would the hon. Gentleman enlighten my curiosity on one thing. He says that there has been only one case since the war; from where did he get that information? I do not doubt it.

Mr. Pickthorn

I was told that by the professional experts and I took their word for it. I do not endeavour to hide from the hon. and learned Gentleman that I could not have drafted the proposed new Clause, and I never attempted to do so.

Mr. Rupert Speir (Hexham)

I beg to second the Motion.

The purpose of the proposed new Clause is simple. It is to remove an injustice. It is unjust for the State to value a property for Estate Duty at one level and then, for the purpose of paying compensation, to value it at a lower level. My hon. Friend the Member for Carlton (Mr. Pickthorn) has said that the proposed new Clause will not apply to many cases. I hope, therefore, that the Government will be able to give the proposal sympathetic consideration.

Mr. Simon

In general, all property is valued for Estate Duty purposes according to its value in the market at the time of the death, and that goes for a dwelling-house like any other property. Where the house is compulsorily acquired from the beneficiary by a public authority within five years of the death, its value, as my hon. Friend the Member for Carlton (Mr. Pickthorn) pointed out, for the purpose of Estate Duty may be reduced to the amount of the compensation, by virtue of Section 33 of the Finance Act, 1956.

That provision does not apply up to now where a house is demolished under a demolition order or a clearance order. The proposed new Clause seeks to adapt or to apply the provisions of Section 33 to that set of circumstances. The way it does it is to say that where a house is demolished under a demolition or clearance order which is made within five years of the death in question, the value for Estate Duty may be reduced to the value of the site, which is normally the compensation payable in the case of a demolition or clearance order, plus the amount of the compensation payable.

The general conception behind the Clause, as I understand it, is that if the State deprives anyone of his property it ought not to value the property on one basis for the purpose of levying duty on it and on a different basis which produces a lower figure for the purpose of paying compensation. My hon. Friends stigmatised that as unjust, and I think that epithet will commend itself to the House.

It seems, therefore, that my hon. Friend has made out his case for the proposed new Clause. It is quite true, as he says, that the Inland Revenue knows of only one case, that which arose in my hon. Friend's constituency and which has led to his proposing the new Clause. It must in its nature be rare. It requires two things, first a liability to Estate Duty on the death of the owner, the estate being over £3,000, and, secondly, the house must have a market value although unfit for human habitation. That is not a frequent combination of circumstances, but it has arisen and it may arise again. Therefore, it should be put right by the House in the way suggested by my hon. Friend.

Mr. Mitchison

I am sorry to throw cold water on this atmosphere of agreement about what appears to be a singularly small matter. There are objections to the proposed new Clause.

Let me first point out one small but not unimportant objection. If a house is incapable of habitation and unfit for habitation and is incapable of being made fit at a reasonable cost—which is the test for demolition of a single house or of a clearance area—a clearance order is not the only way of dealing with it. It can be dealt with by a closing order. That was enacted for a good but curious reason. A very bad house may be part of a row of very bad houses, some a bit better than others. If we pull down the worst one the two on each side may fall in. We would not wish to have them demolished, though they may be technically unfit houses. I had something to do with the private Members' Measure in which that provision was enacted.

The curious result follows that, if the proposed new Clause is now accepted, a house which is demolished will attract advantages which will not be given to those which are in exactly the same circumstances and not subject to closing orders. I am sure that the Treasury, which is always very particular about these niceties, would not wish that sort of thing to happen.

There seem to be other difficulties of a rather larger nature. I noticed that the Financial Secretary and the seconder of the Motion both said it seemed unjust that if the State pays one price for a house another price should be used for duty purposes. But it is not the State which pays the other price; it is the local authority. They are not the same thing. If we are to expect a complete identity for all monetary purposes between the local authority and the central Government, we shall get some remarkably odd results.

Mr. Speir

We get very odd remarks from constituents.

Mr. Mitchison

Whatever odd remarks anyone gets from constituents, I hope the hon. Member will agree that there is some difference in the minds of constituents and, I should have thought, in the minds of hon. Members opposite—between a local authority and central government. If he regards them as identical, I can only say that I do not agree with his point of view, and if he reflects on it a little he will not maintain it himself.

8.30 p.m.

I wonder whether this Clause is really worth it? That is why I asked the hon. and learned Gentleman if there had been any case of this sort. The Section in the Finance Act, 1956, deals with houses which may be, and no doubt usually are, perfectly good houses. Some may have considerable value. They are simply houses which are compulsorily acquired. Incidentally, they are not confined to houses compulsorily acquired under planning powers. Suppose the Treasury acquired compulsorily a very eligible private house adjacent to Whitehall and paid a large sum of money for it, the Finance Act would apply to that sort of case. It is intended to apply to every kind of house. In the vast majority of cases the circumstances are wholly different from the very peculiar case we are now considering. The case we are considering is one where the house is unfit to live in because it is very unlikely to become unfit to live in in the five years, which is the maximum—

Mr. Pickthorn

Less than one year.

Mr. Mitchison

I am sorry, I do not understand the purpose of the intervention.

Mr. Pickthorn

The hon. and learned Member says that it is unlikely to happen in less than five years—

Mr. John Rankin (Glasgow, Govan)

The hon. Member for Carlton (Mr. Pickthorn) need not be so angry about it.

Mr. Pickthorn

I am not angry about it, and the hon. Member for Govan (Mr. Rankin) need not be impertinent about it if we are to be disorderly. The hon. and learned Member for Kettering said it could hardly happen in five years, but it happened, I think I am right in saying, in one year, or very little more than a year.

Mr. Mitchison

I am sorry if I did not make myself clear to the hon. Member for Carlton. I was not in the least angry with him, and I doubt if he was angry with me. The five years to which I referred are the five years in Section 33 of the Finance Act, 1956. Once those five years have passed one cannot get the benefit of these provisions. Conceivably, there may be a house which is wrongly or differently valued for Estate Duty and, if it is compulsorily acquired six years later, one does not get the benefit.

Obviously, this occurs only very rarely, and in all probability the houses are going to be valued in the same condition, substantially, as when a demolition order is served. It seems very unlikely that the value for Estate Duty purposes will be substantially different from the site value. We were given an instance—the only one—and the difference, if I heard rightly, was £25 to £700, or did I get the figures wrong?

Mr. Pickthorn

That was not the difference; that was the Estate Duty. The difference was £700 or more.

Mr. Mitchison

I did not get the figures quite rightly, but this seems a very small business. I should have thought we might get difficulties the other way just as much as in the way we are considering now. We might get wholly unfit houses undervalued for Estate Duty purposes, and subsequently more being attracted under a demolition order. As the hon. Members concerned will remember, there is also a well-maintained house allowance, which may make a considerable difference to the amount allowed on demolition. Generally, my feeling about the Clause is that it is very small beer indeed on the figures, that it is wrongly worded, does not cover the particular case I have mentioned and is hardly worth having.

Mr. Pickthorn

I wonder whether I might say one word—

Sir Frederick Messer (Tottenham)

Not without permission.

Mr. Pickthorn

I said I wondered if I might say one word. If anyone wishes to stop me, let him try. It is the conventional way of saying it to say that I will say a word if the House will permit me.

I think the hon. and learned Member for Kettering (Mr. Mitchison) has misunderstood the thing. I think his main fallacy comes from saying if the house is uninhabitable and incurable. That is the hypothesis from the point of "them"—of the great man, the State, the municipality, whom he asks us not to confuse, and whom I do not think I did confuse. That is not the language of the very small man who, as he said, drinks very small beer, and very little of it, who inherited a very small house.

Mr. Mitchison

I wonder whether the hon. Member would allow me to remind him that this is any interest in the house. It may be the man living in it or somebody else.

Mr. Pickthorn

That man in this particular case did get a good maintenance allowance. The fact is that one valuer said the house was worth £700 and within a year a quite different valuer for a quite different purpose, but the emissary of the State, the irresistible emissary, I will not say of the State but of the central authority, valued it at naught. He and his friends and everybody in the village feel there has been a great injustice, and, upon my soul I think there has. As statute law stands—Naboth's vineyard was not too awfully big—as the statute law stands, no more can be done for that case. We think it worth asking the trouble of the House to see that that case does not happen again.

Question put and agreed to.

Clause read a Second time, and added to the Bill.