HC Deb 31 January 1966 vol 723 cc836-44

Motion made, and Question proposed,

1. That a levy, to be called betterment levy, shall be imposed in respect of land; and that it is expedient—

  1. (a) to make provision as to the rate at which betterment levy is to be charged and as to the value or other amount on which it is to be charged, and
  2. (b) in other respects to make provision for the assessment and payment of betterment levy, including provision for the payment of interest on the principal amount of the Levy.—[Mr. Willey.]

10.47 p.m.

Mr. Boyd-Carpenter (Kingston-upon-Thames)

I hope that the Financial Secretary does not feel, or has not suggested, that a major taxation proposal of this sort should be taken "on the nod". This is a proposal to authorise taxation at what we have been told already is a gross figure of £80 million a year. This is equivalent to a Budget Resolution. Indeed, it involves more taxation than a great many of the normal Resolutions taken on the normal Budget, and it would be treating this House, as the authority for taxation, with very little respect indeed to suggest, even at this late hour, that taxation proposals of this sort should be taken without any explanation whatever from the Government.

The procedure is an extraordinary one. This is, in a sense, the Government's fourth Budget. This is a major taxation proposal. One knows that this is a Government who proceeded at the rate of three Budgets a year, and indeed the process seems to be accelerating. One is glad to know that Treasury Ministers at any rate are responding to the First Secretary's request, for increased output.

We want to know a good deal more about this proposal, and indeed about the procedure followed. I am a little surprised that a Bill imposing major taxation of this kind was not based on a Ways and Means Resolution. It is a little surprising. I recall no precedent—perhaps the Financial Secretary will remind me of one—for taxation on this scale being made on the authority of a Ways and Means Resolution taken after a Second Reading of the Bill. The Financial Secretary has all the precedents at his disposal, though I do not know, from the expressions I see in a certain direction, that that knowledge appears to be immediately available. No doubt it can be obtained.

This is a serious matter in respect of the control by this House of the machinery for the imposition of taxation—[HON. MEMBERS: "Come off it!"]—if hon. Members opposite are not interested in the subject of the imposition of taxation, those of us on this side are, and if hon. Members want to prolong the discussion they are certainly doing their best to do so. This is a serious matter to those of us on this side who are interested in the control by this House of the machinery of taxation—

Mr. Robert Maxwell (Buckingham)

Where are they?

Mr. Boyd-Carpenter

They are where the hon. Member for Buckingham (Mr. Maxwell) has been for most of the day.

This is an important matter of taxation. There is the question of precedent, about which inquiries are being made, for taxation imposed in this way. This Ways and Means Resolution asks the Committee to agree … that it is expedient … to make provision as to the rate at which betterment levy is to be charged … With due respect, that is the one thing which the Bill does not do. The Bill merely provides for a betterment levy to be subsequently prescribed. I should like some explanation why the Government are asking us to pass a Resolution … to make provision as to the rate at which betterment levy is to be charged … when the Bill which this Ways and Means Resolution covers does nothing of the sort.

I gather from the redistribution of portfolios that is taking place—in the physical sense—that the Minister will now deal with the point, so one would like to hear from the right hon. Gentleman a little more about the rate at which it is proposed to prescribe the levy. The White Paper mentioned a figure of 40 per cent., with a suggestion that it would subsequently be raised to 45 per cent. and 50 per cent., and possibly to a higher figure still. Will the Minister now tell us what his intentions are? Will he give some indication as to the speed at which he intends to raise the levels?

Will the right hon. Gentleman also deal with the following point? It has been urged on him here today, as it has been urged upon him outside at some length by the expert bodies, that the effect of a levy at this rate, imposed in this way, with this scope, will be to increase land prices. The right hon. Gentleman has convinced himself—though, I think, very few others—that it will not, but let him accept as a hypothesis that the majority are right and that he is wrong. Does he contemplate using the powers this Ways and Means Resolution covers in the Bill, if this turns out to be the case, not to increase the levy but to reduce the rate so as to minimise the effect of raising the cost of land, particularly for housing?

Perhaps he will assure us that under the Ways and Means Resolution there is a power to decrease the rate of levy as well as to increase it. Perhaps he will give the assurance that if the event turns out as some of us fear and there will be a substantial increase in the cost of land, he will not hesitate to exercise his powers to minimise that event by a reduction in the rate of the levy.

Finally, perhaps he could tell us a little about what he really thinks the net yield of the levy will be. He has repeatedly given the gross figure of £80 million. He accepts, I understand—the Chancellor of the Exchequer said so, so he has to—that this is in replacement of the long-term Capital Gains Tax. There will therefore be some loss on the yield which otherwise would have arisen from the long-term Capital Gains Tax. Can the right hon. Gentleman tell us what it is? There are plainly to be some losses in company taxation in present Profits Tax, and in Corporation Tax. There will be some loss in Income Tax on the profits of companies and income of individuals. Can the Minister tell us what this is?

It is difficult to ask us in Committee of Ways and Means to authorise a tax if we are given no idea by the Minister responsible of the net yield he contemplates. It is only too apparent today that little thought has been given to many of the difficult problems which arise from this legislation, but this Committee would be quite false to its traditions if we were to accept a Ways and Means Resolution for the imposition of taxation when no idea was given by the Minister responsible of the yields he expects from this tax. These are important issues. It may be that my hon. Friends will have other questions to ask. I should like to have an answer to those I have asked.

The Minister of Land and Natural Resources (Mr. Frederick Willey)

I am willing to concede for the purposes of an answer to the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) that he is endeavouring to be serious, but I think he has largely been repeating matters which we have debated and discussed during the day. His output in Parliamentary time is prodigious. I hope that this will result in his getting satisfactory replies to the queries he has raised.

There is a precedent for this—the Ways and Means Resolution for development charge in the case of the 1947 Act. This is not another Budget; it is not in fact taxation. This is a betterment levy raised on development value arising from the realisation of development value in the cases we have been dealing with in discussing the Bill. It is a charge, and because it is a charge we need a Ways and Means Resolution.

The right hon. Member asked if I would indicate the period in which the levy would be raised from 40 to 45 or 50 per cent. I cannot do so, but I merely tell him, as we said in the White Paper, that this will be done over a reasonably short period. To be pedantic, the Bill does not provide for the rate, as he said, nor does this Resolution. It refers to provision as to the rate and there is provision as to the rate in the Bill. The right hon. Member asked whether it would be possible to reduce the rate. Certainly it would be possible to do so.

He asked about the effect on land prices. I do not want to deploy the argument again, but I make two points. It is no good his saying, enlightened by his post-election advice in the light of the fact that we were introducing a Land Commission Bill, that he and his right hon. Friends are in favour of the levy, and then saying that the levy will increase prices, because, if the levy will increase prices, it would be as applicable to any proposals he makes—he has not made them yet—as to the proposals in the Bill. All that I can do is to emphasise again that the right hon. Member has a very peculiar view of the landowner and speculator. They obtain today the highest possible price they can get and obtain it by squeezing the profits of the developer. There is no reason to suppose that if a levy is imposed this will cause an increase in prices. So far as we can see, there has been no discouragement to the sale of land as a result of the White Paper and the publication of the Bill. As far as one can see, there has been some reduction overall of prices. The landowner and speculator todays gets the highest price he can get.

Something we have to bear in mind is the possibility of scarcity of land which might affect prices because it might affect the position particularly in regard to housing. It might be believed that there could be difficulty in obtaining land which might reflect on house prices because of scarcity. For this reason I emphasise to the right hon. Member that he is living in cloud cuckoo land if he thinks that he can talk about the levy without providing compulsory purchase powers to the body which imposes the levy. People would not regard Mr. Desmond Heap as partisan about this, but he made the point, which has been repeatedly made, that one of the difficulties about the Land Board under the 1947 Act was that it did not have sufficient compulsory powers.

11.0 p.m.

Mr. Boyd-Carpenter

On a point of order. Is it in order on a Ways and Means Resolution for us to follow the Minister in an argument on compulsory purchase? If so, some of us might be very harpy to take this opportunity to do so.

The Chairman

Only in so far as it is relevant to the Resolution.

Mr. Willey

If I have strayed, too far, Sir Samuel, it was because I was endeavouring to answer the question that the right hon. Gentleman asked. The answer is that under the provisions that we are making under the Bill the levy should not cause increased land prices. If there was any risk of this, do not have the slightest doubt but that the Land Commission would take action.

On the amount of the levy and the £80 million, it is true that there would be some reduction; this is a gross figure and not a net figure. The right hon. Gentleman knows the advice that we have received. It would be impossible, except at great expense, to produce an accurate figure. All I can say is, as I said when introducing the Bill, that it is untrue to suggest that capital gains would raise anything comparable to the levy. It is absolutely true, on the other hand, that very little would be obtained from capital gains in the early period in spite of the fact that it would make an enormous demand on valuers. One can certainly say that over the early period considerably more would be raised by levy than by capital gains. I am led to believe that this is well known to land owners and land speculators. This is why they are canvassing the idea that capital gains would be as great as betterment levy. It is not so. We also have to bear in mind, if we are thinking about the position later on, that we are increasing the rate of levy. We have announced, as the right hon. Gentleman reminded me, that the levy will be increased from 40 per cent. to 45 per cent. to 50 per cent. over a reasonably short period.

Mr. Graham Page (Crosby)

The right hon. Gentleman said—[HON. MEMBERS: "Oh."]—if the owners of the voices below the Gangway are not concerned with £80 million worth of taxation they ought to be. The right hon. Gentleman said that this was not taxation. It is taxation to the extent of £80 million a year. If he will look at his own Bill he will see that that is so. The Resolution is … to make provision as to the rate at which betterment levy is to be charged … Under Clause 28 of the Bill the rate is to be the prescribed rate, the rate which the Minister prescribes by order. When the money is collected it is not spent out straight away on the purchase of property. It is paid into the Exchequer. Therefore, it is taxation. It is not like a trading receipt of the Post Office or something of that sort. It is direct taxation on the owner of land, because under Clause 4(2) All sums received by the Commission by virtue of this Act … shall be paid into the Exchequer. Therefore, it is taxation which, we are told in the Explanatory and Financial Memorandum to the Bill, is going to be £80 million, but we are not to know that it is £80 million if we pass this Resolution. The right hon. Gentleman used the 1947 Resolution as a precedent. He must know that that is not a true precedent to this one before the Committee tonight. In 1947 it was a 100 per cent. development value. Therefore, it was limited to a certain figure, to a 100 per cent. figure. There is no limit in the present Resolution—

Mr. Willey

If I may intervene, the hon. Gentleman should not be so illogical because the hour is late. We are, of course, limited to development value; 100 per cent. of development value would be development value.

Mr. Page

Does the right hon. Gentleman say that this levy may go up to 100 per cent.? The public will be very interested in that remark.

Mr. Willey

I did not say anything of the sort. There is no excuse, even though the hour is late, for the hon. Gentleman to mislead the Committee. The hon. Gentleman said that there is no limit. I said that, of course, there is a limit.

Mr. Page

There is no limit in this Resolution. It is … to make provision as to the rate at which betterment levy is to be charged. … We have been told in the White Paper and by the Minister that the right hon. Gentleman intends that the levy should be 40 per cent. to start with. The right hon. Gentleman should have put that limit in the Resolution and that would have been a proper Resolution with a proper precedent of previous Resolutions. The right hon. Gentleman asks the Committee to give a blank cheque for the rate. It would have been perfectly simple to put a proper limit within the Resolution.

Sir Douglas Glover (Ormskirk)

The Minister appears to think that this is a very minor matter. It is not. It is very serious. The House, and particularly an hon. Member below the Gangway whose principal job in the House is to watch Government expenditure and to watch the executive, ought to take far more interest. The Minister says that this is not a tax. It is a case of a rose by any other name. Anybody who has to pay this so-called levy will look back upon it as a tax and I do not see how words can alter what is taking place as a result of the Bill.

Mr. Scholefield Allen (Crewe)

The hon. Gentleman has referred to "an hon. Member below the Gangway". Will he—

Sir D. Glover

The hon. and learned Member has been accusing me of delaying the Committee. I do not want to delay it any longer. I will not give way to him. He has only just come here and has heard nothing of the debate.

This levy is a tax. The Minister should be able to tell the Committee, as a result of calculations made, what the Chancellor of the Exchequer loses in taxation, because as a result of this Bill certain things happen in the taxation field. This levy replaces the Capital Gains Tax where parcels of land are concerned. Are we to have the extraordinary position that the Minister is saying that the Bill brings about a reduction in direct taxation and increase in indirect taxation as a result of the levy? If the Government are reducing taxation in one sphere on a parcel of land, the Minister should be honest enough to admit that this levy is taxation.

If the levy is taxation, the Money Resolution should be more strongly drawn than it is. When the Chancellor proposes an increase in Income Tax he does not bring in a Resolution to increase it by 1s. 6d. and then increase it by 6d. that year. He clearly lays down by how much the tax is to be increased. I maintain that this levy is a tax and if the Minister wants to increase it at some future date he should obtain another Money Resolution from the Committee and the House. He should not do it by leaving the matter wide open, as he is doing in this Resolution. The Minister has not treated the Committee with the respect with which it deserves to be treated when we are dealing with the raising of finance from the general body of taxpayers, which is what we are doing here.

Question put and agreed to.

Resolved,

1. That a levy, to be called betterment levy, shall be imposed in respect of land; and that it is expedient—

  1. (a) to make provision as to the rate at which betterment levy is to be charged and as to the value or other amount on which it is to be charged, and
  2. (b) in other respects to make provision for the assessment and payment of betterment levy, including provision for the payment of interest on the principal amount of the levy.

Resolved,

2. That, for the purposes of any Act of the present Session to provide for the establishment of a Land Commission, to make provision as to the finances of the Commission and to confer on the Commission powers to acquire, manage and dispose of land, and to impose a betterment levy in respect of land, it is expedient to authorise the payment into the Exchequer of sums required to be so paid by virtue of that Act.—[Mr. MacDermot]

Resolutions to be reported.

Report to be received Tomorrow; Committee to sit again Tomorrow.