HC Deb 27 October 1966 vol 734 cc1438-48

13. Where in accordance with paragraph 3 of this Schedule a credit is taken to have arisen from a previous chargeable act or event falling within Case D or Case E and (apart from this Part of this Schedule) any of the provisions of Part II of this Schedule would have effect in relation to a subsequent chargeable act or event, then, for the purpose of assessing levy in respect of that subsequent chargeable act or event, either—

  1. (a) the provisions of Part II of this Schedule shall not apply, or
  2. (b) the provisions of the next following paragraph shall apply and the provisions of Part II of this Schedule shall apply subject to those provisions,
whichever results in the lesser amount of levy being chargeable in respect of that act or event.

14.—(1) Where the subsequent chargeable act or event falls within Case A, Case C, Case D or Case E, then (if the provisions of this paragraph are to apply) paragraph 5, paragraph 31 or paragraph 36(4) of Schedule 4 to this Act (as the case may be) shall have effect for the purpose of assessing levy in respect of it as if, for the reference to eleven-tenths of the current use value of the relevant interest, there were substituted a reference to the aggregate of—

  1. (a) the current use value of the relevant interest in so far as it subsists in the original chargeable unit, and
  2. (b) (if that interest extends to land other than the original chargeable unit) eleven-tenths of the current use value of that interest in so far as it subsists in that other land.

(2) Where the subsequent chargeable act or event falls within Case B and the relevant land does not comprise any land not comprised in the original chargeable unit, then (if the provisions of this paragraph are to apply) paragraph 14 of Schedule 4 to this Act shall have effect for the purpose of assessing levy in respect of it as if, in sub-paragraph (a) of that paragraph, the words "eleven-tenths of" were omitted.

(3) Where the subsequent chargeable act or event falls within Case B and the relevant land comprises land not comprised in the original chargeable unit, then (if the provisions of this paragraph are to apply) the current use value realised by the disposition shall be apportioned as between the original chargeable unit and the remainder of the relevant land in such manner as may be appropriate in the circumstances, and paragraph 14 of Schedule 4 to this Act shall have effect as if, for the reference to eleven-tenths of the current use value realised by the disposition, there were substituted a reference to the aggregate of—

  1. (a) so much of that value as is apportioned to the original chargeable unit, and
  2. (b) eleven-tenths of so much of it as is apportioned to the remainder of the relevant land.—[Mr. Willey.]

Brought up and read the First time.

Mr. Willey

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

This Schedule is in three Parts. The first Part sets out the three types of situation in which credit can arise. Part II contains the provisions for carrying the credit forward, and Part III contains the measures to avoid evasion.

Part I deals in the second paragraph with the first of the cases, where a credit is brought forward from Case C—that is the case of a project of material development. Here the value of the land for the purpose of the development being carried out may be less than the price which the developer has paid for it. This could arise in respect of a major development, where the development began as an interim or temporary matter.

The third paragraph of Part I deals with the second credit case. This is in Case D or Case E, where the result is an assessment in which the appropriate deduction exceeds the compensation or consideration. It is the amount of the excess which is carried forward.

The fourth paragraph deals with the third case—the case brought out of Schedule 8 and grouped with the present cases. It deals with a compulsory purchase, where a set-off arises.

Part II deals with the provisions for bringing forward the credit so established. These are virtually unchanged from the provisions in Schedule 6 which we have repealed to make way for this Schedule.

Part III is designed to prevent the eleven-tenths rule being used for evasion. This would arise in a case where there were two adjacent plots of land and the owner of one covenanted prohibiting building for £100. That is a grant of a restrictive right, which would not be within Case E. If, however, the owner released the covenant for the £100 it would be assessable under Case E. If we take £10,000 as the current use value, which would become the restricted value, the eleven-tenths rule would mean that by virtue of this transaction he could get a credit of £900.

We deal with this either by allowing the credit to stand and not allowing the eleven-tenths rule to benefit anybody, or by not conferring any credit, whichever step is the more advantageous to the levy payer.

Mr. Clegg

We have waited for over 24 hours for this explanation of the First Schedule. Having heard that explanation I am hardly any the wiser. I felt from the first moment we started these proceedings and began discussing this Schedule that it was haunted. I had a nightmare last night. In that nightmare I was being pursued by this Schedule—"Credit Carried Forward"—and it was rushing after me. Eventually it caught me, and when I turned round it said to me, in a piteous voice, "What do I mean?" and I could not tell it, so it vanished in a puff of smoke and I woke up screaming.

To be serious, the Schedule is obviously important. The right hon. Gentleman has just given us a sort of explanation of it, but he has been living with the Bill for many months—perhaps for years—and he knows it, or so we hope. He has a day-to-day knowledge of it. He has no doubt had conferences with the Parliamentary draftsman about it. What we have to consider is the person who comes to it for the first time, and who tries for the first time to make some sort of sense out of it. This is exceedingly difficult, and for that I attach no blame whatsoever to the Parliamentary draftsman; the blame should attach to the brief he was given, which was an impossible one. It would have been possible to achieve much of what the right hon. Gentleman wanted without this sort of thing.

I should like to give an example of the difficulties of trying to translate this into something comprehensible, taking credit carried forward from Case C. I intend to read this, as it is only about 10 lines. It reads: Such a credit shall be taken to have arisen where the previous chargeable act or event consisted of beginning to carry out a project of material development in respect of which notice was served under section 38, section 66 (3)(b) or section 68 of this Act"— On that point, one would need three other copies of the Act so that one could look at those three Clauses— for the purpose of assessing levy in respect of an assessable interest in the land, or part of the land, comprised in the project,— (a) paragraph 7 or paragraph 20 of Schedule 5 of this Act had effect"— For that, one would need another two copies— (b) the base value of that interest, ascertained in accordance with that paragraph, together with any amount which was allowable in accordance Part V of Schedule 4 to this Act, exceeded the market value of that interest. If my calculations are correct, one would need six copies of the Bill in front of one to be able to make some sort of sense of it.

This is a serious criticism of the Schedule and of the Act, that we are moving into a period of jargon. We had a complaint from the hon. Member for West Stirlingshire (Mr. W. Baxter) in these same terms yesterday. It may seem a complaint which we have repeated, but for the people of this country, it is no joke. It is no laughing matter. It means that stuff is being churned out which affects their fortune and may affect their liberty at some future date, which is difficult to comprehend merely by reading.

We know that we live in a complex society and we do not expect things to be as simple as they used to be, but this Schedule, as part of this Act, could have been avoided if the right hon. Gentleman and his colleagues had tackled the problem and the solutions to it which they wanted in completely different ways, some of which we have outlined during our discussions. I must confess that, at the end of it all, try as I might, I could not understand it. People outside will not understand it. Until that time is reached, the citizens of the country will not get justice.

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

I thought that my hon. Friend the Member for North Fylde (Mr. Clegg) was unduly charitable when he suggested that the Minister understood the Schedule. I can only say that he has given no evidence to that effect. As far as I could understand, the Minister appeared to think that the Schedule was covered by the Official Secrets Act. I must protest against this method of legislating. We are dealing with a Schedule occupying four and half pages of the Notice Paper, put down, I think, fairly late last week and being discussed by the House as 10.30 on a Thursday night.

It is not as if the proceedings on the Bill had just started. The White Paper on which the Bill was based was presented as long ago as December, 1964, and there was a previous Bill on the same subject and broadly on the same lines in the last Parliament. Now, nearly two years after the submission of the original White Paper, we are confronted with an immense Schedule of this kind, put down a day or two before the last effective stage for amendment in this House, and the House is asked to accept it on the basis of a brief and cursory reading of the Minister's brief.

This is not the right way to legislate on a matter which is of the greatest importance to our fellow citizens and one which, whatever view one takes of its merits, is obviously of great complexity. Why was the substance of the Schedule not put before us months ago, either in a White Paper or in an earlier draft of the Bill?

10.30 p.m.

The Minister has had a very great deal of time to try to get the Bill right. I do not think that he would claim that even now, he has succeeded. We have Report stage rushed through, only a few days after the Minister's Amendments are tabled, and we are asked to consider this seriously, without the help of the Law Officers and, with due respect, with the minimum of help from the right hon. Friend.

We are asked to try, in the last formative stage in this House, to get this right. Quite plainly, the contents of this Schedule will cause the greatest trouble to our fellow citizens. They will give almost unlimited employment to the profession which my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) adorns, and this is the only cheerful aspect of the whole dreary matter.

In all seriousness, I would say to the Minister that this is not the right way to legislate, that it shows a contempt for Parliament and will cause his name to be regarded with regret over the years, long after the time, not far ahead, when his Department will disappear.

Mr. Graham Page

Are we to have no further explanation of this Schedule? My hon. Friend the Member for North Fylde (Mr. Clegg) has done his best with it and he is the only one who has given any explanation at all. One expects, when a Government bring forward a Schedule of this type, that we shall have some detailed explanation. I have read this Schedule, not once twice or three times, but perhaps a dozen times and I know a little about it. But I am certain that I could not put it into practice without some help from those who drafted it. Where a matter is drafted in legal form, in this way, one scarcely expects to understand it, at least very quickly. One scarcely expects to understand it wholly without some explanation of the intentions behind it.

One drafts a legal document so that it shall be precise and introduce certain words for certain definitions, and so on. But if one drafts it in that way, one should be prepared to explain the intentions behind the Schedule, so that the legal words may be understood. We have had no such explanation here and still have a number of Schedules to get through.

If we are to receive the same sort of explanation of the other Schedules as has been given on the first, it will not hasten our proceedings. The Minister may feel that a short explanation of the Schedule may get him away by midnight, but it will not. We shall press for more and more information on these Schedules, because we do not intend to foist these on to the public without knowing something of what they are about and without being able, at this stage, to table Amendments, because we have had no explanations to enable us to put down Amendments. If we can get some explanation now, perhaps we can tell those in another place, who might be prepared to amend the Bill, where Amendments are needed. But we cannot tell whether such Amendments are needed because we have had no explanations.

Mr. Willey

I rise only to say that in the case of this Schedule, ample notice has been given. This is not a question of not having had notice, because this is the old Schedule 6, with provisions taken from Schedule 8. Not much has been added. The House is, and always will be, in very great difficulty in dealing with matters like this. The dilemma is that here we are defining the rules with great particularity. One has to do this to ensure that the levy-payer gets justice, as of right. To do this, particularly in any matter affecting land or taxation, is extremely difficult.

I am sorry that the hon. Gentleman the Member for North Fylde (Mr. Clegg), had a nightmare, but I congratulate him on being able to get some sleep between the two considerations that we are having on the Bill.

Mr. Costain

In our debate yesterday I expressed anxiety about these new Schedules and, in my anxiety to get this matter discussed, I found myself being ruled out of order by Mr. Speaker. On that occasion I said: One interpretation is that it will mean that tax will be charged at 87½ per cent. on any land deals".—[OFFICIAL REPORT, 26th October, 1966; Vol. 734, c. 1033.] I used those words as I saw Mr. Speaker about to call me to order and obviously my mind wandered, for the figure should have been 78.5 per cent. and not 87½ per cent.

Yesterday, I mentioned the anxiety of those dealing in property to understand this and similar new Schedules. The Minister described this proposal as a set of rules, but the first necessity about any set of rules, whether one is playing a game or running a business, is to understand them. People cannot understand these rules, particularly after such a short discussion as we have had. I will speak at greater length on a later proposal.

If the right hon. Gentleman cannot explain the matter in detail to the House, will he give an assurance that he will adopt the attitude of the Chancellor of the Exchequer in matters affecting Finance Acts and publish an explanatory memorandum? That would ensure that the people who must abide by these rules have at least some guidance.

Mr. Willey

I am obliged to the hon. Member for Folkestone and Hythe (Mr. Costain) for making that suggestion and I will certainly take steps along the lines he suggested. This proposal is, after all, in favour of the levy payer. These are reliefs. We would not be making these provisions if we did not believe that the levy payer should be given notice of the reliefs we are providing.

Mr. Allason

I rise with some trepidation because I am due to move a new Schedule later. I would have expected more explanation of these provisions from the Minister. Those who read this debate will get the impression from the right hon. Gentleman's remarks that he has merely lifted parts of Schedule 6 and Schedule 8, put them together and that the wording is substantially the same. However, if one looks at the point where the Minister starts the quotation from Schedule 8 and then compares that with line 31 on page 133 of the Bill, it is difficult to pick out a few lines which correspond.

It is a confidence trick to suggest that this is a complete lift of one provision and that it has been combined with the sense of another. There has, instead, been a considerable change of emphasis. It would have been more reasonable for the right hon. Gentleman to have given an explanation of which paragraph he had in mind to assure us that the changes which have been made are either drafting changes or changes in favour of the levy payer. At the moment, we do not know.

Sir D. Glover

I have read these provisions and have found them completely incomprehensible, but I am neither a lawyer, a land agent, nor anything connected with this system. I was astonished to hear the Minister say that he would be taking steps to produce a memorandum for the help and guidance of people outside the House. Presumably, that will be published after we have allowed the Bill to become law.

It would have been much more sensible if we in this House, made up very largely of non-experts, had had an Explanatory Memorandum to the Bill that we could all have understood, so that we would have known what we were dealing with. As I have said on more than one occasion in these debates, and I have been confirmed in my view by the hon. Member for Stirlingshire, West (Mr. W. Baxter), the two Members who probably know least about the Bill are the Minister and the Parliamentary Secretary.

The Ministers themselves could have done with an Explanatory Memorandum during our debates. They would have probably found it useful to quote to us. They could have said, "I do not know why the hon. Member for Ormskirk is so worried about this. If he will only read paragraph 5 of the Explanatory Memorandum, which I will read to the House, he will find it as clear as daylight." They could have answered the Opposition in that way when complaint was made that their own explanations were quite incomprehensible. They would have valued a clear exposition of what all these things in the Bill mean.

It is treating the House with some contempt when the Minister now says that this publication will be produced for the laymen outside the House, when we in the House of Commons are not to have the benefit of this clear exposition of the meaning of the Bill and the Schedules while we are in process of translating the provisions into the law of the land. It is much more important that we should have the Explanatory Memorandum so that we could know what we were doing. Of course, the right hon. Gentleman's supporters, if they are interested—and I fear that very few of them are—could have said, "Even with this Explanatory Memorandum I still do not understand what the Bill is all about, and I will not allow it to go into law until it is explained to me."

Mr. Robert Cooke (Bristol, West)

My hon. Friend will agree that if we had an Explanatory Memorandum we would understand what the Bill was about, and, therefore, the Minister would never get it through.

Sir D. Glover

I understand my hon. Friend's attitude, and I fear that that may be true. But as in the workings of a democracy the party opposite has a majority of 95 or 97—[An HON. MEMBER: "Sometimes."] Yes, sometimes there is a majority of 28 or 32—there is such a division of opinion on the other side, and there are those who have the courage of their convictions and say: "I can't stomach this, and I will not vote for it." If we had an Explanatory Memorandum, there might then be 92 or 77 who would say: "I cannot stomach this, and I will not support it."

It may be a deep plot on the part of the Government not to have an Explanatory Memorandum until after this Measure becomes law. The Minister could have said, "I understand the difficulties of hon. Members. I know how difficult you find it to go through the Clauses and particularly the Schedules, and I understand that the provisions will never be able to be put into force when they become law unless the Department for which I am temporarily responsible, but which is on notice to quit and is liable to close down, produces a memorandum in language that people can understand."

It must be clear as daylight to all those who are selling their own private houses, or going in for any other little transactions, because it has become clear from our debates that many small people will be involved in these transactions, and they will want to know what the Bill means in language they can understand. But this document will be produced when it is too late for hon. Members on either side to be able to say, "This is a nonsense, and, therefore, we shall not carry it into law."

It seems to be treating the House of Commons with a certain degree of contempt. I wonder why the Minister has made an admission at this late hour, on the Report stage, which seems to imply that he himself does not understand the Bill. We on this side have made it clear that although we have battled with it we do not understand it. Silks, barristers-at-law, solicitors, experts in land valuation, have all asked throughout the debate, "Will the right hon. Gentleman explain this matter, because we do not understand it?" The right hon. Gentleman in his very short tenure of office, which, I understand, is drawing to a quiet and unheralded close, could have gone down in history as a far greater Minister if he had produced the explanatory memorandum before we started debating the Bill.

10.45 p.m.

Mr. Willey

The hon. Member for Ormskirk (Sir D. Glover) has, as he often does, raised an important point with which I have the greatest sympathy. As hon. Members who served on the Standing Committee know what happened in Committee, I have been in communication with the hon. Member for Crosby (Mr. Graham Page) in an endeavour to explain matters which might have been difficult without a written explanation.

There is much to be said for the hon. Gentleman's point. If the hon. Gentleman had only met me a few days ago, I assure him that he would have had such a communication in good time. We will bear his suggestion in mind for the future.

Question put and agreed to.

Schedule read a Second time, and added to the Bill.

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