HC Deb 26 October 1966 vol 734 cc1127-36

Where persons have bound themselves by an enforceable contract to cause the occurrence of a chargeable act or event relating to certain land and in the same contract have bound themselves to cause the occurrence of a further chargeable act or event or acts or events relating to the same land levy shall be chargeable only as if the carrying out of the whole contract were one chargeable act or event.—[Mr. Graham Page.]

Brought up, and read the First time.

Mr. Graham Page

I beg to move, That the Clause be read a Second time.

The purpose of the new Clause is to relieve those people who are involved in a series of transactions in land between the same parties from being charged a levy on each of the transactions. I put this rather tentatively, because there might, in the depths of all the Schedules to the Bill, be an answer to this. If there is, it has not been discovered by a number of developers to whom I have spoken and who are frightened that the normal transactions into which they enter on large developments will be caught for levy several times.

I ought again to declare an interest as I am a director of a company which is sometimes involved in this type of development. There are in the Bill various cases—A, B, C, D, E and F—under which chargeable acts or events may arise and the levy be payable. There is no relief, so far as I can see, for what one might call "quick succession", when one transaction follows another, except in one Clause, where there is a specific relief. But that does not cover the case which we have in mind in the new Clause.

I should like to give an example. In many cases of city centre development of twilight or slum areas, there is, first, a sale of the freehold by the then owner. That would be a Case A and I assume that levy would be charged. Under the same contract, there might be an agreement with the developing company to develop on that land and if the company then started that development, it would be a Case C and the levy would apparently be chargeable there. Then, when the development was complete, the building might be let back on a ground lease to the original owner of the land. This frequently happens in development schemes and, apparently, that would attract another levy.

Right hon. and hon. Members may be able to think of other combinations of several cases which may all occur in one transaction. So that it is restricted to one transaction, the new Clause defines it as being all within one contract. At present, frequently it is not within one contract, but if that were the qualification to give it exemption so that one might identify the several chargeable Acts and events as being all in one transaction, in future developers would arrange their business so that it came within the Clause.

If the parties are charged on all these acts and events, there is bound to be overlapping and something in the nature of a double levy. That will be a deterrent to development of this sort. The suggestion in the Clause is that we look at the position of the parties at the beginning of the transaction and compare it with the position at the end and treat the whole transaction as a chargeable act or event—the difference between the situation of the parties at the beginning and at the end.

I should not have thought that the Government would want to deter this type of development. I think that we are all proud of the progress of the rebuilding of our cities so far and the plans for rebuilding in the future. Neither side would want to do anything to deter that. There is no doubt that, because of Government policy—the freeze, squeeze and so on—there is a serious contraction in building activities. We do not want to pile another deterrent on top of that and cause developers to hold off altogether.

I assure the Minister that many developers are so doubtful about the effects of the Bill, particularly its effect on the transactions about which they know so well—the sale of freehold, the development of land and lease back—that we should not do anything to deter developers from improving our cities. I hope that the Minister will say that elsewhere in the Schedule provision is made for what the new Clause seeks to achieve. If not, I hope that he will accept our proposal.

Mr. Skeffington

There are two reasons—one of a technical nature and the other the fact that the new Clause might result in widespread evasion—why my right hon. Friend cannot accept the new Clause. However, we do not rest our case on those two reasons alone.

The new Clause would not achieve the general objective outlined by the hon. Member for Crosby (Mr. Graham Page). A conveyance before the appointed day is not a chargeable act and therefore the new Clause could not apply to a case where one of a series of conveyances under a single contract had taken place before the appointed day. Drafting in matters of this sort is difficult and I assure the hon. Gentleman that his drafting would not achieve the objective he outlined.

The new Clause is drafted in such wide terms that even if my right hon. Friend agreed with the objective of it, it would mean that people could cover themselves against liability to tax in virtually any future disposal of land by alleging that the disposal was in pursuance of a contract. It would, therefore, drive a coach and horses through this part of the Bill, although I appreciate that this may be the object of some hon. Gentlemen opposite, though possibly not of the hon. Member for Crosby. It is another reason why we cannot accept the new Clause.

There are two more fundamental reasons, both of principle, why we cannot accept the new Clause. There is the moral and philosophical case for the levy, which is that where there has been an enhancement in land values due to the action of the community, some of it should be returned to the community which has created that enhancement.

If we could have collected the levy from October, 1964, we should have been only too glad to have done so. For administrative purposes and other reasons the levy could be collected only from the appointed day, and the appointed day is a watershed and a basic principle. I appreciate that this principle may divide the two sides. It is that once a development has taken place after the appointed day, whatever the contractual obligation may have been before, there is no reason why the enhancement of the value of the land should not be subjected to levy.

The Government do not accept what may be another implication of the argument; that it would have been possible, had the owners known about the development levy and these proposals, to have secured different prices for their land at a given stage. We do not accept the view that it would be possible for the levy just to be passed on like that.

9.0 p.m.

I will not say that in no case would no part of the levy be passed on. I do not think that, administratively, it is possible to devise such a scheme. But as the scheme has been devised that will not normally be the case. The fact is that then, as now, owners of land got as much as people were willing to pay for it, and even then it would be difficult for them to charge more in anticipation of the levy at whatever date the levy might have operated. The appointed day is a watershed. We would have liked to have collected the betterment levy or part of it sooner. We see no reason why people, even if they have made a contract, should be exempted from paying their fair share.

But if the hon. Gentleman will look at Schedule 5 he will see that in the case of quick succession there is some relief in the specific case he had in mind. It does not cover the general case to which the proposed New Clause will apply. The answer is that where there is a sale, levy is taken under Case A and where there is development only if the value is better than the Schedule 5 base value; or in the case of disposal of developed land, which the hon. Gentleman may have had in mind, no levy is charged, because it has already been taken. Therefore, in the specific case he had in mind, he has nothing to worry about. I can give him that assurance, and in the light of what I have said and because the Clause is technically defective, and would in any case wreck the Bill, I hope that he will not press it.

Mr. Eyre

Despite the Parliamentary Secretary's assurance, we still press the Government to look more closely at the new Clause. In his illustration of the moral and philosophical case for the levy, the hon. Gentleman underestimated the levy's damaging effect on the redevelopment of city centres, to which he briefly referred. The levy there will be an enormous burden. For example, it has been calculated by experts that the redevelopment of Birmingham would not have been commercially or economically possible had the levy been in operation in earlier days. We have a situation in which the Government use their overwhelming strength to make the levy, and thereby to bring about certain consequences which may not be desirable.

We say, on the ground of technicality, that there is a danger of allowing a double charging of levy, which is not the Government's purpose. Despite what the Parliamentary Secretary has said, there is a real danger of that in a number of transactions. This is of special importance in the industrial regions, where we get redevelopment and a large number of transactions of the kind my hon. Friend has described. We press the right hon. Gentleman to examine this problem again, because there will be difficulty, and a danger of a double charge.

Mr. Manuel

I do not want to make a long speech, because we on this side want to get on with the Bill and complete the very good job we started in Committee. However, after what the House and Ministers and hon. Members on this side suffered at the beginning of our proceedings today, it should be pointed out that hon. Gentlemen opposite have fallen into a trap of their own making.

We have all the legal talents here—five Members of this House, headed by the right hon. and learned Member for Hexham (Mr. Rippon), who made such a brilliant, sarcastic speech at Blackpool. It was a bit rude, perhaps, not to call people Mr. but just use their Christian names, but the more one does that the more the audience cheers—a sure sign of ignorance. Now they group themselves together, all five of them, all legal luminaries, and bring out this contraption and bunch of words—all five of them employed for the past four days in producing something about people binding themselves under an enforceable contract … to cause the occurrence of a chargeable act or event relating to certain land and in the same contract have bound themselves to cause the occurrence of a further chargeable act or event or acts or events relating to the same land levy shall be chargeable only as if the carrying out of the whole contract were one chargeable act or event. Why did they not say so first? Why did they not say that a series of acts relating to one piece of land should be chargeable?

Mr. Graham Page

I have chosen only the words used by the hon. Member's Minister. They come straight out of the Bill itself.

Mr. Mannel

Of course; this is the point I am making. The whole thing that the hon. Member is complaining about he now adopts and regards as right to deal with the present position. Why steal what you think terribly bad and bring it into this new Clause?

We have enjoyed the contributions made by the hon. Member for Crosby (Mr. Graham Page), both upstairs in Committee and tonight. He is very fair and we like him, but he has got a little mixed with his metaphors. He has spoken about freeze and squeeze, mixing his economic position with his courting life probably. Nevertheless we appreciate that he has at least found something in this Measure which he could copy. But the whole effect is rather lost when the Parliamentary Secretary tells us what this would do.

These five luminaries and additions brought in at the last election, who are doing very well indeed—[HON. MEMBERS: "Hear, hear."]—made contributions in Committee and today which I enjoyed, but I ask them to beware. A great many legal luminaries pass into the limbo of lost things and become entirely tarnished—old barnacles which recede into the past. I urge them not to fall into that class but to allow themselves to be persuaded by more experienced members of the legal profession here. I say to them, "Work off your own bat and chance your arm more. Then you will get on better in the Tory Party."

This new Clause has been found wanting. Although it copies something which we produced, I ask hon. Members to recognise that this is not what they really want to do. I hope they will withdraw the Clause with a good grace.

Mr. John Wells (Maidstone)

I am delighted to be able to follow the hon. Member for Central Ayrshire (Mr. Manuel). As he suggested that we might call each other by second names, perhaps I should refer to him as the hon. Member for Central and leave it at that. He gave us several hours of oration in Committee, and I am delighted that he should join with me in the attack which I mounted in Committee on the sheer mumbo-jumbo produced by the legal trade. In this House we suffer from far too many lawyers, and it is a real delight to hear people like the hon. Member attacking them. Unfortunately, on this occasion his usually sharp arrows went entirely the wrong way and were extremely blunt. The new Clause was ably proposed. Its purpose was clearly set out in plain language which even I could understand. Any sensible person could understand it.

I deplore the fact that the hon. Member for Central Ayrshire attacked this simple stuff. He has only to look at the Bill to find some lawyers jargon. The content of the Bill is deplorable. He was not justified in attacking this extremely good, well-drafted Clause. No doubt the Clause does not do what it was meant to do. However, we on this side do not enjoy the benefit of a massive army of civil servants and Parliamentary draftsmen, an army which is becoming more and more numerous every day, all at the taxpayer's expense. The Bill will cost £45 million. The cost of the mere preparation of the Bill, the mounting of the exercise put on by the Labour Party, was massive. And the taxpayer pays.

We on this side are making a reasonable attempt to improve the Bill. The Bill is not the first one that the Labour Government produced on this subject. We had a preview of the beastly thing. Yet the Minister, although he had a previous canter to get himself warmed up, had to produce a mass of Amendments in Committee, the debates on which the hon. Member for Central Ayrshire and myself listened to for long hours. The hon. Gentleman had the neck to grumble at my hon. Friends for a little simple drafting, but the Minister and the Parliamentary Secretary, with the massive staff at their disposal, have made a rare nonsense of the whole affair.

Their first Bill was bad. They produced a second one which was not much better. Then the Minister had to produce I do not know how many hundreds of Amendments in Committee. When I tackled him about this in Committee, he asked me whether I did not want him to improve the Bill. I suppose I want him to improve it, but I would much rather he threw it out.

Now there is this mass of Government amendments on Report. It is a disgrace that the Minister, with the massive army he has behind him, could not have produced something better at the beginning. I take the hon. Member for Central Ayrshire seriously to task for grumbling at my hon. Friends for producing this simple Clause.

I turn now to the Clause. [Laughter.] One must listen to what the Minister says. This is a penance for having served on the Standing Committee. We listened to far too much of what he said. But we must listen to him on this matter. I hope that when the Bill reaches another place there will be yet another batch of Government Amendments. I am sure that in the not too distant future we shall have consideration of Lords Amendments. I hope that when the Bill goes to another place the Minister will have taken close note of the point made by my hon. Friend the Member for Crosby (Mr. Graham Page) with a view to doing what he can to prevent there being double taxation. I know that the Government have pretended all along that this is not a tax, but the Parliamentary Secretary used that very word a very short time ago. This is a tax. On development of city centre property and redevelopment of twilight area property, it may well be a double tax frequently.

Mr. Skeffington indicated dissent.

Mr. Wells

I hope that the Minister will take time to consult the army to which I have referred and who sit behind him at the moment—a very fair army. I hope that somebody in the Government understands this matter. We know that the Minister does not. We know that the Parliamentary Secretary half does. When the Minister and the Parliamentary Secretary have had time to take advice from those to whom I have referred, I hope that there will be some Lords Amendments to deal with this point.

Question put and negatived.