§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Mr. Crosland
We certainly should not allow this Clause to go past without some explanation. I want to ask one or two questions. On Second Reading the Chancellor of the Exchequer simply said that this concession was one which had been strongly urged on him and which would be welcomed. By whom will it be welcomed? The Press comments on the Clause certainly did not 1300 suggest a welcome. For example, on 9th April, the Economist called this clausea most surprising feature of the technical side of the Budget which will delight owners of private companies.Why has this surprising feature been put into the Bill? On 10th May, in discussing the Clause, the Financial Times said,In certain cases this could mean a very big difference in the valuation.… Toughness on the taxpayer is thus combined with alleviation for the estates of deceased persons. There must be a political moral there somewhere, if one could only find it.1301 It would be interesting if the Financial Secretary told us precisely what is the political moral. In view of our debates on the Question that Clause 59 stand part of the Bill, there seems to be a general willingness on the Chancellor's part to make substantial concessions on the one lax—Estate Duty—which, unlike other taxes, does not fall on effort, on ability or on anybody's contribution to the common good. It is simply a matter of class according to the kind of parents to whom children are born. We need an explanation of the Clause which, judged by comments on it, may represent substantial concessions in terms of Estate Duty.
§ Sir E. Boyle
This Clause proposes quite a small change to the advantage of the taxpayer in what is known as the assets basis, that is to say, the method of valuation of controlling interests in one-man companies for Estate Duty purposes under Section 55 of the Finance Act, 1940. Briefly, the Clause abolishes "break-up" valuations for ordinary trading companies and provides that they shall always be valued on a going-concern basis.
The hon. Member for Grimsby (Mr. Crosland) asked who would be pleased by the Clause. I think certainly the directors and in some cases, perhaps, shareholders in private companies will be pleased. He asked why we should make concessions here for people who have done nothing to better themselves and their own position through hard effort in life. It is worth remembering that investment and property dealing companies are explicitly excluded from the new provisions of the Clause.
I think, also, that one must not in any way exaggerate the effect that this Clause will have. In the vast majority of trading company cases valuations are on a going-concern basis now and there will not be any great difference felt under the new legislation. This effect will be mainly felt in the comparatively rare cases in trading companies where a break-up valuation has been appropriate in the past. It will give some benefit to unprofitable businesses struggling to keep going, or profitable business with an asset which may usefully be used in some other direction. This is a pioneer Clause with a fairly limited scope, but within that scope I think it will prove valuable, and I can- 1302 not feel that it has the rather sinister aspect suggested by the hon. Member for Grimsby.
Mr. H. Wilson
We do not wish to delay the acceptance of this Clause, but perhaps the Financial Secretary would indicate what loss there will be to the Revenue as a result. So far as we can see, it seems an unexceptionable proposal, but particularly to allay the suspicions of my hon. Friend, perhaps the hon. Gentleman would say what in a normal year would be the loss.
§ Sir E. Boyle
This is the sort of Clause where it is difficult to make a firm estimate, but it is unlikely that the average would be as much as £250,000 in a full year.
§ Question put and agreed to
§ Clause ordered to stand part of the Bill