§ Mr. RossI beg to move Amendment No. 19, in page 4, line 21, after "acquire", to insert:
by agreement and carry on".
§ Mr. SpeakerI suggest that it would be convenient to discuss with this Amendment Amendment No. 20, in page 4, line 21, after "acquire", insert "by agreement".
§ Mr. RossThis Amendment implements an undertaking given in Committee to consider the insertion of words for clarification in relation to the acquisition by the Board. It puts beyond doubt that the Board is given power to acquire only 971 by agreement and not by compulsion. The Opposition appreciated that the original wording conveyed no power of compulsory acquisition, but hon. Members opposite rather feared that the absence of the words, "by agreement", might give the Board such compulsory power.
I hope that the Opposition will be satisfied that we have covered that point. We have also included the words, "and carry on", which is a point of drafting to enable the Board to do what the Committee desired that it should be able to do.
§ Mr. G. CampbellWe are grateful to the right hon. Gentleman for having accepted what we proposed in Committee and moving an Amendment similar to the one which we had on the Notice Paper. The Government explained in Committee that it was the intention that acquisition under Clause 6 should be by agreement. We thought that this should be written into the Bill to make it absolutely clear. Therefore, we accept this Amendment, but that does not mean that we like the Clause.
We also had an assurance in Committee that the Government regarded the power to acquire by agreement under this Clause as a reserve power to deal with a special case or two which might arise. The Minister of State cited the case of the Brora coalmine, where the Highland Fund was able to run the business for a short time to fill a gap. That was an exceptional kind of case mentioned by the Minister of State. That, again, we accepted as some assurance that the Clause was to be only in reserve to meet a special case, but the Clause and this acquisition by agreement provides very wide powers which we do not think are necessary.
I again take up a point that was made by my hon. Friend the Member for Cornwall, North (Mr. Scott-Hopkins) about the area to which the power extends. Our understanding from what was said in Committee was that the powers under Clause 6 would extend to the whole of the United Kingdom. I should be grateful if the Minister would confirm whether that is the case or not. I agree that this is not compulsory acquisition, but we must get the matter clear. Where these 972 powers are concerned it is our business in the House of Commons to know the extent of the powers which are being given to a Government.
§ Mr. SpeakerOrder. It may be our business, but I do not follow how the adoption or negativing of this Amendment would affect the matter in any way.
§ Mr. CampbellI am sorry, Mr. Speaker. I shall not stray further on that, I wish to make clear that in accepting this improvement of the Clause and the actual wording I wanted confirmation as to whether the power extended to the whole of the United Kingdom.
§ Mr. Russell JohnstonWe have been very interested in clarity and particularly in legal exactitude, yet this Amendment would insert after the word "acquired" the words "by agreement". As was correctly said by the hon. Member for Moray and Nairn (Mr. G. Campbell), a similar Amendment was moved in Committee. What did the hon. and learned Member for Edinburgh, Pentlands (Mr. Wylie) say about it when he moved it? He said:
I am not pressing the Amendment. As I said, I am satisfied with the wording of the Clause as it stands.What did the Minister say in reply? He said:I take the hon. and learned Gentleman's point, and I can give him a categorical assurance that the Amendment is unnecessary."—[OFFICIAL REPORT, Scottish Standing Committee, 4th May, 1965; c. 559.]Yet now the Government move this Amendment. This appears to be very much out of line with what was said by the Minister:I have always advocated in the past that we should never clutter up Bills with words which are unnecessary."—[OFFICIAL REPORT, Scottish Standing Committee, 1st April, 1965; c. 179.]
Mr. Edward M. TaylorThe Minister has said that this Amendment is to clarify Clause 6. I appreciate that we cannot discuss the principle of the Clause, and it is not my intention to do so, but this Amendment relates to one of the most important Clauses in the Bill. Although we discussed it for three-and-a-half hours it is surprising that this was the only discussion during which a Count was called and now there are only nine hon. Members on the Government side present.
973 I wish to refer to the effect of the Amendment on the actual position of undertakings under Clause 6 so far as tax concerns them. If the effect of the Amendment is to limit the ability of the Board to set up undertakings of this sort, it might in some way restrict the powers of the Board and the taxation of such undertakings is relevant because if there is a larger or smaller number the tax position is affected. I wish to ask what is the tax position of such an undertaking.
§ Mr. SpeakerOrder. Great admirer of the hon. Member's ingenuity as I am, this exceeds anything I can compass. His question does not arise on this Amendment.
Mr. TaylorIf the Amendment does anything at all—and I think that we are right in assuming that the Government would not have introduced it unless it did something—the effect would be to make it easier or more difficult for the Board to bring in things of this sort. Whether the number of undertakings is or is not reduced is a relevant consideration to the question of what the tax should be. The answer to that would have an effect in deciding whether these undertakings should pay Corporation Tax of not.
§ Mr. SpeakerWith respect, the hon. Member is going back to the same point. He must not, because it does not arise.
§ Mr. Scott-HopkinsUnder this Clause, I understand the Board can acquire by agreement land in the United Kingdom, which, of course, means in England and Wales as well as in Scotland. I should like to find whether this is so. Would the Minister indicate the type or kind of business or undertaking which will be restricted—[Interruption.] It is all very well for the Minister of State to make rather peculiar noises, but the Amendment says, "by agreement"—
§ 7.30 p.m.
§ Mr. SpeakerOrder. What it does, apparently, is to limit the method of acquisition to acquisition by agreement. It in no way affects the area in which the acquisition could take place. It cannot on the face of it, as I understand it.
§ Mr. Scott-HopkinsThat is so, but it affects the type of business or undertaking which by agreement can be acquired.
§ Mr. SpeakerWith respect, it does not change that. It only changes the method of acquisition.
§ Mr. Scott-HopkinsThis is the point I am trying to make. Does the Secretary of State think that he will be able to acquire by agreement the type and kind of business which, presumably, he expects the Board to wish to acquire in the United Kingdom?
§ Mr. RossThere is not very much to answer, but in fairness to hon. Members who have spoken I should say that we are carrying out a promise given by my hon. Friend the Minister of State in Committee. He said that he would do this for the purposes of clarity. I begin to wonder whether it is advisable to put in unnecessary words. The Amendment makes perfectly clear something about which certain fears were expressed. That is all it does.
In answer to the hon. Member for Cornwall, North (Mr. Scott-Hopkins), this in no way affects businesses. It affects only the way in which businesses can be acquired. I shall not acquire any business at all. It is the Board which will do that. Before it can do it, under the Clause it must have my approval and that of the Treasury.
§ Amendment agreed to.
§ Mr. WillisI beg to move Amendment No. 21, in page 4, line 22, after "agent" to insert:
, or themselves carry on as agent,".The Amendment is designed to make it clear that the Board will be able to carry on a business as an agent without necessarily acquiring it. We visualise that it might do this while new arrangements were being made about a company. Once again to quote the case of Brora, I do not think that the Highland Fund acquired the Brora coalmine, but it became responsible for running it until suitable arrangements were made whereby the mine could be taken over by the people in it. This is the kind of case which we envisage might be covered by the Amendment. The Amendment is designed to make it clear that the Board has this power.
§ Mr. Bruce-GardyneI am anxious about some of the implications of this small Clause. The Amendment gives the Board power to carry on a business as an agent. As an agent, presumably the Board will receive fees. The Board might receive fees for its operations as an agent not only in the crofter counties. It might, as the Secretary of State said, operate in this capacity elsewhere. The right hon. Gentleman said that the Board might set up stores. Presumably it would be operating as an agent in this capacity.
What concerns me is this. Presumably the Board would make a profit as an agent from its agency fees. From what we learned last night, it appears that these fees might be exempt from Corporation Tax and Capital Gains Tax. In other words, in addition to the wide powers which have caused many of us considerable concern and which enable the Board to act in competition with other agencies and operators in the Highlands and, as the Secretary of State has reminded us, outside the Highlands, the Board would also be given a tax incentive to achieve this purpose.
This is a dangerous position. It puts the Board in a highly preferential position vis-à-vis other operators and other agents, not only in the Highlands but perhaps outside the Highlands. In the Highlands I cannot imagine anything which is more likely to discourage industrial development, discourage the setting up of new firms and discourage existing firms than giving the Board these exaggerated privileges. We are at least entitled to an assurance that Ministers will make it their business to ensure that the Board in its capacity as an agent does not get the benefit of being excluded from the operation of Corporation Tax and Capital Gains Tax.
§ Mr. RankinI have a little difficulty with the language employed. I can understand the function of the Board setting up and carrying on
directly or through an agent, any business or undertaking",and so on. It is appointing an agent. That is clear. The Amendment provides that the Board cancarry on, directly or through an agent, or themselves carry on as an agent".Agent of whom? Do I take it that the Board will employ itself as an agent of 976 the Board? I do not know of any other interpretation than this. I ask my right hon. Friend to make clear what is meant by the Board themselves carrying on as agent.
Mr. Edward M. TaylorMy hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) has shown greater skill than I did in getting in the point which is worrying us so greatly. It is not wrong for me to repeat that this is a matter which is causing a great deal of concern and on which we want nothing more than clarification. My hon. Friend has put forward his point of view as to what should be done. The least we can ask for is information.
If the words "or themselves carry on as agent" are added, this may well involve a slightly different tax position than if the Board was operating through an agent. In view of this difference, we are entitled to a clear explanation of precisely what is the tax position if there are all these alternatives. The Board might operate quite independently, as was envisaged by the Secretary of State on Second Reading. On the other hand, it might work through an agent. It might act as agent. Precisely what is the position?
Even if the Secretary of State gives us a clear explanation as to what the position is now, this might well have no relevance at the time when the Bill becomes law. Earlier this morning, the Minister without Portfolio was asked over a period of two hours to explain what the position was. At no time did he give us any explanation. He merely said that he was sympathetic and would look into it. The position might well arise whereby the Board, operating through its undertakings, is free of Corporation Tax and free of Capital Gains Tax. On the other hand, if it operates through an agent it might not enjoy this freedom from taxation. We are entitled to a clarification of the position as it is now.
Even then, it is very dangerous for us to consider any Amendment along these lines, because any explanation the Secretary of State may give us now, however accurate it may be, might well be out of date by the time we reach the Report stage of the Finance Bill.
§ Mr. WillisBy leave of the House, may I speak again? The questions asked by 977 the hon. Members for South Angus (Mr. Bruce-Gardyne) and for Glasgow, Cathcart (Mr. Edward M. Taylor) are more appropriate to the Finance Bill than to this Bill, more particularly because that Bill is now on its way through the House. The time to start asking questions about how the tax position of the Board is affected is on the Finance Bill, not now. I can give hon. Members this little piece of information, that, as I understand, the Board will be in the same position as any other corporate body.
§ Mr. Bruce-GardyneWhat is that in this context?
§ Mr. WillisHon. Members sat up all last night to discuss these very matters. It does not say much for their alertness during the night if they did not discover what the position of a corporate body was. It would, however, be out of order for me to deal with that.
The great anxieties expressed by the two hon. Members are to some extent safeguarded by the first two lines of the Clause:
The Board may, with the approval of the Secretary of State and the Treasury …I can hardly visualise the Treasury supporting something which would be a means of avoiding taxation, as they have suggested.
§ Mr. Bruce-Gardyne rose—
§ Mr. WillisI did not interrupt the hon. Gentleman, and he really ought to let me proceed. I put it to him seriously that this matter ought to be discussed on the Finance Bill, not here. We are discussing whether the Board should have powers to act as an agent. I cited the case of the Brora coal mine, an example of it being a good thing for a certain project in the Highlands to be taken over or at least be run by somebody else until satisfactory arrangements could be made for its future, a number of jobs being saved in that way. I can visualise other industries in the Highlands in connection with which it might be useful to do much the same. A business may get into difficulties because it is not being efficiently run.
The Board, in the interests of employment there and believing that the industry could be made successful, but with no desire to acquire it, may obtain the agreement of the owner and say, 978 "We will come in and manage it for a certain number of months, making it more efficient". In that way, an important business could be kept going. I can visualise that happening, and I could give other examples of the way in which it would be valuable. This is why we consider that the Board should have these powers.
The whole question of industry in the Highlands is desperately important, and it is an exceedingly difficult problem to tackle. Any little thing we can do in the House of Commons by way of giving necessary powers to enable the Board to tackle it, including power to carry on a business as agents, is, in our view, very valuable and helpful for the Highland area.
§ Mr. Bruce-Gardyne rose—
§ Mr. Edward M. Taylor rose—
§ Mr. SpeakerEither hon. Gentleman requires leave to speak again.
§ Mr. Bruce-GardyneMr. Speaker, may I have leave—
§ Mr. SpeakerNoises indicate that the hon. Gentleman has not leave.
§ Amendment agreed to.