HC Deb 12 July 1965 vol 716 cc130-3
Sir Eric Fletcher

I beg to move Amendment No. 108, Clause 65, in page 137, line 2, at the end, to insert: (8A) Subsections (1) and (7) of this section shall have effect as if references to a registered industrial and provident society included any co-operative association established and resident in the United Kingdom, and having as its object or primary object to assist its members in the carrying on of agricultural or horticultural businesses on land occupied by them in the United Kingdom or in the carrying on of businesses consisting in the catching or taking of fish or shellfish. In this subsection "co-operative association" means a body of persons having a written constitution from which the Minister of Agriculture, Fisheries and Food (as regards England or Wales), the Secretary of State (as regards Scotland) or the Ministry of Agriculture for Northern Ireland (as regards Northern Ireland) is satisfied, having regard to the provision made as to the manner in which the income of the body is to be applied for the benefit of its members and all other relevant provisions, that the body is in substance a co-operative association. This Amendment implements an undertaking that was given in Committee in response to an Amendment put down by the hon. Member for the City of Chester (Mr. Temple). The hon. Member raised the point and we have had discussions with the interests affected. The practical purpose of the Amendment is to extend to certain co-operative companies operating in the agriculture and fishing industries the special treatment allowed by Clause 65 for Corporation Tax purposes to registered industrial and provident societies, generally known as co-operative societies. This extended treatment consists in allowing share interest payable to members to be deducted in computing profits for Corporation Tax purposes. The effect also is to facilitate the amalgamation of such companies with each other or with co-operative societies without any immediate charge to tax to capital gains.

In Committee, there was discussion between the hon. Member for the City of Chester and myself about whether it would be appropriate to make this Amendment in Clause 83 or in the present Clause. At that time, we thought that the Interpretation Clause would be more appropriate, but we have come to the conclusion that since the Amendment affects merely this Clause, this is the right place for it.

The hon. Member for the City of Chester will realise that whereas we accepted the principle of his Amendment, we have put it down in a slightly different form. The reason for that is that the form proposed by the hon. Member was unsuitable, as it would have tied the tax relief to compliance by companies with an Act which had a substantially different purpose. Our Amendment will work out much better. The hon. Member's Amendment would have covered co-operative companies connected with forestry, whereas the Amendment which I now move does not. The reason is that we have ascertained from the Forestry Commission that there are no such companies.

8.15 p.m.

Mr. Barber

We on these benches have almost given up thanking right hon. and hon. Members on the Government Front Bench or congratulating ourselves on our achievements. At the end of this mammoth series of Amendments which have been so courteously and succinctly moved from the Government Front Bench, I should, however, like to say that we are grateful for the Amendments to Clauses 63, 64 and 65, which have met so many of the points that were raised by us in Committee.

Mr. John M. Temple (City of Chester)

I thank the Government for bringing forward the Amendment in the form in which they have presented it. I should like particularly to thank them for the reference to fishery co-operatives. As a Governor of the Fisheries Organisation Society, I will convey this good news to the fishing industry. I regard the Government's Amendment as being entirely satisfactory.

Mr. James Scott-Hopkins (Cornwall, North)

I also join in the thanks to right hon. and hon. Members opposite. I was a little confused about why the Amendment was put down after the assurance which I was given by the Chief Secretary when we discussed the Clause in Committee. On that occasion, the right hon. Gentleman assured me that all co-operatives were included under these provisions which we are now discussing and that an Amendment of this kind was not needed. Nevertheless, I am glad that the Minister without Portfolio has brought forward the Amendment.

I agree with the hon. Gentleman that there are at present no forestry co-operatives, but this does not mean that there will not be any in future. I regret that, because there are none at the moment, the hon. Gentleman has decided to exclude them. This is a pity, because in a later Finance Bill it will be more than probable that we shall need a Clause reinstating them so that they can get exemption in the same way as agricultural and horticultural societies are able to do. I understand that an agricultural co-operative which carries on forestry as a subsidiary business is covered by the Government's Amendment.

My next point concerns the need to satisfy the Minister of Agriculture, Fisheries and Food under the second paragraph of the Amendment. There is no provision, I understand, regarding the size of capital of a co-operative and I understand from the wording of the Amendment that the size of the capital is of no relevance. I hope that the Minister without Portfolio will be able to confirm this.

What kind of certificate will be required by the Ministry of Agriculture? Will all the accounts have to be produced? What exactly is the meaning of the words in the latter part of the second paragraph of the Amendment concerning the Minister's responsibility? Must a co-operative get a certificate from the Minister before it can qualify? A word of clarification from the Minister without Portfolio would be helpful.

Sir Eric Fletcher

I think that I can satisfy the hon. Member on the two points which he has raised. To deal first with his second point about what has to be done to satisfy the Ministry of Agriculture so that a co-operative society can come within the benefit of the Clause, I give the assurance that the amount of capital involved is not a relevant consideration. Secondly, I think that the hon. Member will be satisfied with the assurance that the Ministry of Agriculture will apply precisely the same kind of tests as those which the Registrar of Friendly Societies applies in deciding whether to register an industrial and provident society. I think that that is the proper approach.

The hon. Member asked about forestry co-operatives and agreed that at the moment there is no co-operative company connected with forestry which could benefit from the provisions of the Bill. My information is that there is unlikely to be, because all co-operative marketing of forestry products, which obtains only to a very limited extent, is at present carried out by registered industrial and provident societies, and it is unlikely that there will be any change in that regard.

Amendment agreed to.