Clause 27.—(GENERAL PROVISIONS AS TO BETTERMENT LEVY.) (Hansard, 26 October 1966)

§ Mr. Clegg
I beg to move Amendment No. 189, in page 30, line 10 after "land", to insert: (in relation to which there is in force at that time planning permission for the carrying out of material development): We have now reached that part of the Bill which deals with the betterment levy and I have a strange feeling that the Amendment will not find sympathy opposite. The object is to limit the circumstances in which the levy becomes chargeable and payable. One of the main motives is to make the problems of the Commission manageable.
There will be an avalanche of matters for the Commission to look at in deciding whether the levy is to be charged or not. Every transaction, every conveyance, will have to be sent to the district valuer and then to the Commission. The same goes for every seven-year lease. There will be a mountain of paper. Such a burden will bog the Commission down and it just will not work.

§ Mr. Skeffington
As the hon. Gentleman may expect, it is doubtful whether the Amendment in this form would have any effect. The substantive provisions of the Clause, particularly subsection (2), would be unchanged. However, I do not rest my case for rejection of the Amendment on that argument.
The intention of the Amendment is clear—that the levy should be assessed only when planning permission exists. No levy would therefore be charged on what the valuer's office calls "hope value." It is well known that land will often fetch a far greater price than its existing use value in certain circumstances, and that is undoubtedly development value as we have defined it, even though there is no planning permission.
If the principle of the Amendment were accepted, the land owner would escape levy. Not only is that unfair and unjust, because the Bill is designed to recoup at least part of the betterment value for the community, but the subsequent purchaser would be unfairly treated, because he would have no base value and would therefore have to pay the levy on something on which he had not realised that amount of levy.
This is the sort of device, which we have resisted all the way through the Bill, by which the person who gets the betterment is able to pass it on to the purchaser. I have said time and again that no device can make it absolutely certain that in no circumstances is some part of the betterment paid by the purchaser, and the principle of the Bill will be defeated whenever that happens, but if the Amendment were accepted and the practice of purchase before planning permission became common, such owners would evade liability and the developer, whom we want to encourage, would be penalised, because he would not have the base value and would be paying on 1236 something on which he was not getting benefit. That would be monstrously unjust and I hope that the hon. Gentleman will not press the Amendment.

§ Mr. Graham Page
The Parliamentary Secretary has dismissed the Amendment in a very cavalier fashion. It is a very important Amendment and it goes to the whole root of Part III of the Bill, as is intended. In Committee, we discussed what I would call the de minimis Amendment to relieve any transaction of less than £5,000. This Amendment is on the same lines in that it would relieve most dwelling houses, most developed plots, from levy. We were told earlier that dwelling houses would probably not have much development value and that what the betterment levy is intended to achieve is to take some of the profit out of the development of land.
The Prime Minister said that his interpretation of the Bill was that it nationalised urban land, that the Bill was intended to put a levy on land which was ripe for development, land on which there was some permission to develop. If the Amendment were accepted, it would let the normal dwelling house out of the levy and out of the whole machinery of Part III. It would have, as it were, the same effect as fixing some figure at which transaction would be relieved from the effect of Part III.
That is what we should like to do, but apart from that expediency aspect, the Amendment implements the principle of payment for planning permission. On many occasions we on this side of the House have said that that would be fair, that where the value of property had been increased by planning permission being granted, the owner should make some payment, not the 40 per cent. which is discussed as the levy in the Bill, but some simple payment in respect of planning permission.
For example, if an owner of a plot of land intends to sell, if he gets planning permission he sells the land with planning permission and gets an enhanced value for that and pays the levy. If he decides to sell it without planning permission, he does not get that enhanced value and there would be little or no levy with which to charge him. We should then be avoiding the notification and the assessment of innumerable transactions, on which there would be very little levy 1237 payable, but, with this Amendment, we should catch those on which levy ought to be assessed. It is a great simplification of Part III and that is why we brought it in at a very early stage.
2.30 a.m.
It is a recognition and a submission to the desire in the Bill to place a levy on development value, but it places it where it really belongs and where it will be effective. With the condition that the levy will not bite unless there is planning permission. Unless the vendor of property in case (a), or the landlord in case (b) or developer in case (c) is making the money out of selling the advantage that he has got out of planning permission, he should not be charged the levy. If he is making the money through selling his planning permission then the levy should be applied.

§ Mr. Allason
The Parliamentary Secretary said that he wanted to ensure that the vendor pays the levy. He is taking a rather innocent view if he believes that, simply because the vendor actually signs the cheque to the Land Commission, the money comes out of his pocket and not out of the pocket of the purchaser. He may have noticed that petrol has risen in price fairly recently, shortly after 20th July. Who does he think pays the tax on petrol? Is it the motorist or the garage? He likes to delude himself that because petrol has gone up it is still the garage which is paying the tax and therefore no one need worry.
We know that every tax tends to put up prices and he is deluding himself if he thinks that the vendor will pay the levy and that this is not going to make the slightest difference to the purchaser. It is because of this purist attitude that he has got himself into the position of making the Bill so desperately complicated in an attempt to say that it must always be the vendor who pays. I do not see that he needs to be such a purist about it. So long as someone pays the levy this is still a satisfactory situation.
My hon. Friend the Member for Crosby (Mr. Graham Page), has said that we support a levy on betterment, but for goodness sake, make it simpler than this. This Bill has become so darned complicated that it will never be understood by anyone. Here we are offering a system which makes things a good deal simpler, and at once the Parliamentary Secretary 1238 turns round and on purist grounds says that it has to be paid for by a particular person, rejecting our suggestion. I regret this.

§ Mr. Eyre
The most valid criticism of the Land Commission's proposals is that they have been conceived with overwhelming ambition. This Amendment is aimed at bringing that ambition within due bounds. The wide ranging purpose of the Land Commission to collect the levy, to restrict and interfere, will result in the machine being overloaded, and this will be at Government and professional level. The number of professionals who will be able to understand and operate this system will be very few. In the administration of this complicated machine, there is no doubt that the Government will require the services of a great new army of valuers. We have said this repeatedly to the Minister. The result will be that the system that the Government are trying to set up will be broken by this overloading.
For that reason—and from my own point of view I resent very much the talk of filibustering which I have heard from the benches opposite—we advise the Minister strongly to consider this kind of Amendment with the aim of limiting the scope of his activities. Otherwise, we feel strongly that he and his Commission and the system will be seriously discredited.