HC Deb 27 October 1966 vol 734 cc1342-64
Mr. Walter Clegg (North Fylde)

I beg to move Amendment No. 203, in page 56, to leave out lines 8 to 21 and to insert: 'is held by or in trust for a charity'.

Mr. Deputy Speaker (Sir Eric Fletcher)

Perhaps it would be for the convenience of the House to discuss at the same time Amendments Nos. 204, in page 56, line 25, to leave out from 'and' to the end of line 28, and 205, page 56, line 34, to leave out subsections (4) and (5).

Mr. Clegg

The Clause concerns charities, and I should have thought that on this Clause the right hon. Gentleman might have had a little more support from his back benches, if not on the more esoteric Clauses which we have been discussing. However, from the outset, the Minister has shown himself rather more concerned with charities than that shown initially by his right hon. Friend the Chancellor of the Exchequer when he introduced the Selective Employment Tax.

As it now stands, unamended, the Clause relieves certain land held by charities, but not their investment land. That situation was put shortly and with extreme clarity by my hon. Friend the Member for Crosby (Mr. Graham Page) in Committee. He said: May I try to crystallise the issue? As I understand the right hon. Gentleman, there are four types of land held by 'charity'. The first is functional, the second is recently functional, the third is permanent endowment and the fourth is investment land. The first three are exempt from the levy under this Clause and the fourth is not exempt. We on this side of the Committee wish to exempt the fourth on the grounds that income from that category is exempt from Income Tax and from other tax spheres, and should be exempt from levy."—[OFFICIAL REPORT, Standing Committee E, 28th July, 1966; c. 688.] These three Amendments are designed to achieve what my hon. Friend said was our objective.

If one accepts the principle that charities are free from Income Tax, this should be followed fully in the levy. Our attitude on this is purely logical. Once one accepts that charities should be in a special category with regard to general taxation, it is logical to follow it through, even though a levy is a once-for-all payment. The underlying principle of tax relief to charities is that they often provide services which the State would otherwise have to provide. Therefore, the bargain between charities and the State is not entirely onesided. There is a certain and sometimes a considerable amount of self-interest behind the State's actions when it grants exemptions to charities, because it knows that it would often pay more itself if it did not grant those exemptions and thus make the work of charities possible.

I appreciate that some discontent has been expressed in the House recently about the definition of charities, but I understood the Prime Minister to say earlier in the week that there was no early possibility of a change, so we have to work with the definition of charities as we know it. Therefore, the present position being what it is, the right hon. Gentleman could accept these Amendments with no great detriment to the State. Indeed, there may well be positive advantages in his letting their investment land be free of levy.

I believe that the Amendment would provide what the Bill so badly needs, the virtue of simplicity. We have already argued this at great length, but it is an argument which we must never relinquish and I and my hon. Friends will continually return to it. I am convinced that the simple laws are the best laws and that our Amendment would make this Clause much more simple.

One of the Minister's main motives—not an improper one: it can be very honourable—is to stop up avenues of invasion. But at times, he draws his net too tight. In the fishing industry, there are laws against using nets with too fine a mesh, for very good reason—that would bring out small fish which are valueless and which would be much better left in the sea to grow bigger, when they would be worth catching.

I hope that the Minister will consider these Amendments. I know that some of my hon. Friends have particular examples in mind and I therefore do not wish to prolong my arguments.

5.30 p.m.

Mr. Percy Grieve (Solihull)

I should not have thought that in this House it would have been necessary to have to urge the cardinal principle that charities should be exempt from taxation. My hon. Friend the Member for North Fylde (Mr. Clegg) has stressed the service they render to the State. In these days, when the State makes itself responsible for a great many services that in the past have been given to the community by charities, the scope for charitable operations becomes smaller, but one cannot go to a single constituency without finding example after example of crying needs that are still not met by the State. This is no criticism of the State, but praise of the endeavour of charitable foundations that have been set up by many generations of our forbears.

It is a great tribute to their work. Were those foundations not there today to do that charitable work of providing services for the sick and the needy, for those in need of education, and so on, the service would have to be rendered by the State. Therefore, from time immemorial it has been a principle of Government to exonerate and exempt charities from taxation. It is a matter for grave reflection that it is under this Government that, for the first time, we have had to meet and combat two separate attempts in one year to tax charities.

When it was decided by the Government to impose the Selective Employment Tax on charities, we on this side rose as one man to point out that this was a precedent dangerous and contrary to the public weal. Our protests were at first not listened to or heeded by the other side, and it was said that the tax would nevertheless be imposed on charities. There was an outcry from one end of the country to the other. Better late than never, the Government resiled from their first intention and announced that the Selective Employment Tax would not be imposed on charities; that is to say, they would get back what they had to let go.

In this Bill and in this Clause we have another attempt to impose a tax on charities. I hope that in this case, as in the case of the Selective Employment Tax, the Government will be persuaded of the grave damage which will be done to free, voluntary and charitable services throughout the country if the Government persist in this attempt. I beg the Minister to give serious and urgent consideration to these Amendments—which have the great merit of simplicity—and announce to the House that he will accept them.

Mr. John Smith (Cities of London and Westminster)

I have done a good deal of financial work for charities, and have also had a good deal to do with property development in this country and abroad—and on behalf, more particularly, of charities. This Clause seeks to manufacture a distinction between two different sorts of money and two different uses to which property can be put. Both these distinctions are old-fashioned, complicated and artificial, and the Bill would be improved—if one can talk about improving it—if they were left out.

The first distinction is between funds which are part of a charity's permanent endowment and funds which are not. The modern trend for new charities is not to have a permanent endowment at all. The first reason for this is that, when managing a gross fund such as a pension fund or a charitable fund, and particularly a fund containing property—and the tendency is for gross funds to invest more in property, which is a very suitable investment for such funds, as it is a long-term investment—it is meaningless to divide expenditure between capital and income. Such a fund is just a heap of money that either grows or shrinks, and whether payments out of it come from capital or from income is quite irrelevant.

Many charities do not even know whether they have a permanent endowment or not. That is recognised in the Bill, towards the bottom of this very page, where we read: … a charity shall be taken to have a permanent endowment unless all property held for the purposes of the charity… and so on. It is clear that this difficulty is already recognised.

The second reason why many new charities do not make this distinction and do not have a permanent endowment is the pace of change. Such is the pace of change and the rate of increase of the patronising activities of the State that it is often quite unrealistic to endow any particular purpose permanently.

For years I looked after the money of the Irish Distressed Ladies' Fund. As the House is aware, ladies do get distressed—even today, and even in Ireland. But these ladies had to be distressed in a particular way with the details of which I will not bore the House, except to say that this particular way became so increasingly rare that we could not get rid of our income and then to make matters worse, we were left a lot more money. Many old charities have found their funds tied to purposes that have vanished, and many new charities have learned the lesson and do not insist on the endowment fund being permanent. The distinction is meaningless, and if this Clause is not amended there will be a return to this old-fashioned practice, which is tiresome for everyone and, I believe, damaging for charities.

The other distinction the Clause seeks to draw is between property which is "used for the purposes of the charity" and property which is not. What is the point of this distinction? The land occupied by the almshouse and the land developed and let—the income from which supports the almshouse—both benefit the alms people. Further, as everywhere in this Bill, there will be confusion. What does … used… for the purposes of the charity… mean?

I take an example from the field of preservation; that is, the field of charities that are part educational and part recreational. Very often, a building of national importance can only be preserved if its use is changed and considerable development of it is carried out. A large house may have to be altered into a number of flats. I can think of a building near Hereford which could be preserved only by letting it on a long lease to an insurance company for a completely different purpose.

It was owned by a special charity of its own which had no power to borrow and no other capital and could not have paid development levy. I am a trustee of a charity which is in an unusual position in that its principal asset is a leasehold factory which is constantly being developed, to the great benefit of the objects of the charity, but which could not be developed if it were necessary to pay development levy since it has no funds or capital from which to pay it. That introduces a further element about this Clause. It is not only damaging to charity but to development. Many desirable developments will simply not take place unless this Clause is amended in this simple way.

It is difficult to understand why the Government want to have this provision. The question of evasion has been mentioned, but evasion does not enter into charity. There are many ways of making money—and I see a good many in the Bill, as I believe will shortly be discovered—but one cannot make money by giving it away. I am sure that the Government do not want to give the impression of being against charity. The Selective Employment Tax has been mentioned. We could certainly get many accountants and lawyers down the mine or working in the export trade or where-ever the Selective Employment Tax is supposed to direct them if we could do without this Bill, or could simplify it.

The Government may not be against charity, but it is an impression which is all to easy for them to create. They may feel that if charitable work is worth doing it should be done at the taxpayers' expense, not by volunteers, but by servants paid and controlled by the State. I sometimes detect the idea at Question Time that "charity" is an over-used word, like "peace" and "freedom", and is now meaningless, as it has been worn smooth by too many lips and tongues. Indeed, the whole Bill is built on an anti-charitable basis. Let us face it. It is not founded on any particular national interest, but on envy which is the enemy of all charity.

The wish to help charity with money or work, shillings or muscles, is enormously widespread. It is very unwise for any Government to tinker with it. It is widespread for excellent reasons. One can work in that field without any taint of selfishness, which is a good socialist reason for working. One can, or could, until now, work in this field untrammelled by the fetters of taxation. Paying taxes is painful, but the waste of human spirit, of highly intelligent manpower in trying to comprehend it, in arguing about it, is far worse, and worse for the country.

I have to do an enormous amount of sterile work on that in the morning, and often sterile work here in the afternoon. When we have finished our work at night—though not at 4 a.m., as last night—I go home and as a complete change I often do an hour or so's work on the finances of a charity. There, all one's work is constructive. One can achieve a great deal; and one can realise for a moment what we have all lost. One can see why our predecessors were able to build up our economy in the world: how they made sterling as safe as the Rock of Gibraltar; because they could concentrate on their job and did not have the job turned by successive Bills like this into a three-legged, egg and spoon race, run in sacks.

The Bill deals a severe blow at the development of this country. Who will wade through all its provisions if he can do something else? If the supply of coffee were to be regulated by a Bill of 97 Clauses, 13 Schedules and 80 pages of Amendments, there would be no coffee because every coffee merchant would turn his hand to something else. The same will happen over development in this country.

I mentioned at the beginning of my speech, now, I am afraid, rather long-distant, that I have had a good deal to do with development in this country, and in Australia. I can assure the House from my own reactions, which cannot be very different from those of others in the same position—I am not so much concerned about making money as with getting the country arranged in an orderly manner, getting developments accomplished and getting the country forward—that, after the Bill becomes law I shall be more inclined, like the coffee merchant, to concentrate on Australia.

5.45 p.m.

This Amendment means very little to the Government in terms of money. It would be interesting to know whether an estimate has been made of just how much it would mean. But it means a great deal to a great many voters who, through innumerable charities work unselfishly for their country, even if they do not work for the State. I cannot believe that the Government means to alienate them just for the 30 pieces of silver involved in this Clause. I urge the Government to accept the Amendment.

Notice taken that 40 Members were not present;

House counted, and 40 Members being present

Mrs. Jill Knight (Birmingham, Edgbaston)

Sometimes I feel, much to my chagrin and sadness, that it is necessary to spell out in very elementary terms to the Government precisely what they are doing in their Bills. I think sometimes their heads are so full of the language they have fathered that they do not seem to understand precisely what will be the result of the action of a Bill. For that reason I wish, in supporting my hon. Friend the Member for North Fylde (Mr. Clegg) on this Amendment, to spell out a particular example of what the Bill will mean if it is not amended as suggested.

We were fascinated to hear about the distressed Irish ladies befriended by my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith), but detail here is essential. I wish to tell the Government and the House of an example of how, if this provision is not amended, very severe and direct trouble could be caused to at least one charity of which I have a great deal of knowledge. It is a club for children which was founded some time ago. They are not children of wealthy people but live in a particularly rough and tough area of a certain town in the Midlands. They have had this club now for 40 or 50 years. It is a charity which does a very fine job indeed.

These youngsters, teen-agers, are kept off the streets and from all sorts of nefarious pursuits because in the club there is provision for table tennis, cooking facilities for the girls, canoe-building facilities, and that sort of thing. All these things are put there by people who care sufficiently for these children to raise money in various ways for the charity. It is true that sometimes money is forthcoming from the local education committee, but that is a little like getting blood out of a stone and there is not much money obtained in that way.

In the main, the club is financed, as are thousands of similar clubs, by the efforts of those on the management board, who even run jumble sales and coffee mornings to get money. Occasionally a friend of the club dies and leaves it a house or other property. Because this has hap-pended in the past, whenever a hole in the roof needed repairing we always knew that we could turn for money to the proceeds of the investment land which had been left to us.

If the Amendment is not carried, as I understand the Bill—it is a feat to understand any part of the Bill—such land could well be taken without the good will of the club, merely being purchased by a compulsory purchase order, or it could be sold in a more straightforward and open way freely by the club, and then, up to six years afterwards, a bill could be rendered to the charity for the betterment levy or, as it used to be called in those long ago days of post-1945, the development charge. Whether it is called a development charge or a betterment levy, the Bill will still come in.

I am willing to admit that I may have misunderstood the position. It is very easy to do that with this Bill. I should be surprised if hon. Members opposite have much more grasp of the Bill than I have. As I understand it, this charity could have to foot a bill some years after the land had changed hands. I wonder if the Government realise what a heavy blow this could be to this charity.

There are many other charities having land which is a great help to them in times of need. They are not all rich. There are schools amongst them. The grammar school at Northampton where I live has land which is investment land and which is of great help to the school. To many charities—schools and others—the benefit is solid and real. Unless the Amendment is carried, this benefit will cease. I beg the Government to accept the Amendment.

Mr. Geoffrey Rippon (Hexham)

I am very grateful to my hon. Friends who have drawn the Minister's attention to the strength of feeling which exists on this matter. A number of my hon. Friends will wish to add to what has already been said. I intervene at this stage only to say how much we deplore, not merely the lack of attendance of the party opposite on a matter of this kind, which affects every one of their constituents in one way or another, but also the fact that neither a representative of the Treasury nor a Law Officer is present.

As I think that the debate will continue for some time, unless the Minister is minded to accept the Amendment now, in the light of the very persuasive arguments which have been advanced, I ask him to send one of the two people who are here to support him to fetch either the Chancellor of the Exchequer or a Law Officer to explain to the House why the Government have decided, quite contrary to all precedents, to tax charities. On a matter of this kind we are entitled to have the view of the Chancellor or of a Law Officer.

In some ways we are desperately sorry for the two Ministers on whose shoulders fall the responsibility of trying to explain the inexplicable. However, sorry as we are for them, we must ask them to do their duty and send for those of their colleagues who have to answer to the House and to the country on these matters.

Mr. A. P. Costain (Folkestone and Hythe)

When the Amendment was being moved there was not a stir on this side of the House, because we expected that the Minister would immediately accept it. We understand why the Minister is not supported by any back benchers on his own side. They are so ashamed of their Government's action in imposing this further taxation on charities that they are not brave enough to attend. I congratulate the hon. Member for Bethnal Green (Mr. Hilton), who has just entered the Chamber.

I want to deploy an argument not dissimilar to that which I advanced yesterday about the owner-occupier. Unfortunately the Minister in replying yesterday made no reference to my speech. I ask him to be gracious enough today at least to say either that he agrees or that he disagrees with me on this point.

For a number of years I was treasurer of one of the largest charities in this country a charity with responsibility for thousands of children. The charity was almost 100 years old. It had a number of old properties. Whilst I held that office one of my pleasures was to encourage our local branches to modernise our homes. We could do this because we were able in some areas, where we had large areas of land and farms, to sell off our farms to build modern small houses for children. In earlier days a children's home was considered to be much more of an institution. It is now considered right that children should have small family communities. The crime which we committed and the crime which the Government want to tax was to turn those old houses into small dwelling for children. This is the action which in one way or another the Government want to tax. It is an outrage.

There are provisions in the Bill which will allow a charity to make certain developments of its own. I hope that the Minister will try to clear up the position. As I read the Bill, with all the perversities and difficulties involved in understanding it, it is clear that charities of this type which sell off development land to raise funds and do the right thing for those for whom they are responsible will be taxed.

Is it not deplorable that the Labour Government, who claim to have the interests of the under-privileged at heart, should select once again a way of taxing charities? The appeal made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) that a Treasury Minister should be here should be accepted.

I am delighted that the Minister of Social Security has just entered the Chamber. I am only sorry that she did not hear my plea on a subject which I know is dear to her heart. The Minister kindly accepted the previous Amendment, which was not of such great consequence as this one is. This is a series of Amendments which mean a great deal to charities. Can we not shame the Minister into accepting these Amendments? Can we not shame the rest of his party into coming here and listening to these debates, instead of staying out of the Chamber and then, when the Division bells ring, walking into the Lobby regardless of what they are voting for?

Mr. Farr

I strongly support the plea made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon), especially in regard to the presence of a Law Officer. Yesterday we on this side made a sustained request that the Attorney-General should be sent for. There was a general consensus, not only on this side but also amongst back benchers opposite, that the parts of the Bill we were then discussing were totally indefensible. Once again, this time for a different reason, we ask that a Law Officer be sent for, so that at least the attendance on the benches opposite will increase by some 33⅓ per cent. with his advent.

6.0 p.m.

I endorse in a small way the very knowledgeable views put by experts from my side of the House tonight. My hon. Friend the Member for Cities of London and Westminster (Mr. John Smith) is obviously an expert on this subject. He has given the expert's viewpoint, saying in his modest way that it is a privilege to carry out work for charities, and he tried to point out to the Minister the disincentive for people to work as he is working if the Clause's provisions are put into effect. There was also an effective speech by my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight), who gave, to the fascination of the House, several personal examples with which he had been concerned. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) gave an interesting and detailed account of his experience in running a very large group of charities.

I should like to complete the picture not by referring to a large group of charities but by telling from personal experience of the effect that the Clause will have, if enacted, on a small boys' club in a mining town in the East Midlands. This club almost exclusively looks after the sons of miners, boys aged from about 12 to 17 who are at a loose end in the evenings or at the weekends, and who might well otherwise be on the streets or getting into mischief.

It provides carpentry classes, ping-pong, boxing lessons and various courses of instruction to try to keep the kids together. A football team is run at the weekends in the winter and a cricket eleven in the summer. I hesitate to think that any hon. Member on either side of the House would believe that such an endeavour should be taxed in any way.

The club is in a very ancient ramshackle building. An acre or two of adjoining land and the building itself were given for the use of the club through the generosity of earlier citizens of the town many years ago. It is now absolutely essential for the boys to be re-accommodated, and a building fund which was launched for that purpose brought in quite a lot of money. The club aims to use some of the adjoining land to build a new club and to sell a few hundred square yards of the rest for development. It would then have the wherewithal to erect a suitable new building to carry on its worthy work. Unless my hon. Friend's Amendments are accepted, the Bill will subject this very worthy endeavour to the new betterment levy. No hon. Member who bothered to turn up to listen today could possibly vote for such a Measure.

Those many people who a good number of years ago endowed charities with land foresaw in their generosity and wisdom that land was probably one of the best hedges and safeguards against inflation. They would turn in their graves today if they knew that at the same time they should have had the foresight to hedge against deliberate Government taxation.

Mr. Rossi

The real obstacle to accepting the Amendments is not lack of merit in the argument for the charities. Having listened for a good part of this afternoon, I must say that that argument is completely unanswerable. We have had to drag hon. Members opposite in by the scruff of the neck throughout the afternoon to try to get the benches opposite filled. I feel sure that if the proceedings were televised we should not have this disgraceful display for the country at large on this Measure.

Right hon. and hon. Members opposite stumped round their constituencies during the General Election campaign proclaiming the Land Commission as some miracle, some cure, some panacea for all the woes of the country. Yet it is evident from yesterday's debate and from their absence today that right hon. and hon. Members opposite do not begin to understand what they have been proclaiming, and now care even less about it. When those benches opposite are filled we have an almost paranoiac obsession against charities. There is something about charities that seems to unseat the reason of right hon. and hon. Members opposite completely. We see this repeatedly at Question Time with the snide questions directed against charities, and we saw it during the debate on the Selective Employment Tax. As was rightly pointed out earlier, it was only by the greatest pressure from this side of the House that we eventually got the Government to agree to give some concession to charity.

During the Committee stages of this very Bill, when we were discussing the definition of charity because we were trying to widen the definition's scope, the Minister was in the greatest difficulty with his back benchers, who told him not to listen to our arguments and said that he should not give way in favour of charities because they did not like them. These arguments are recorded in the Committee reports.

It is clear that the Labour Party has a deep-rooted antipathy towards the whole concept of charity. It is not really surprising, when one examines their mental outlook and philosophy, because they believe in ultimate State control of every form of life and activity in this country. Charities represent the voluntary efforts of individuals who will not bow their heads in allegiance to the local Labour Party bosses, but carry on their public works independently in their own ways. Of course, the Labour Party does not like this, and one sees this attitude in all levels of Government.

In the short time that I have been in the House I have seen it operating repeatedly here in the ways which I have just described. I have also seen it persistently at local government level-effort after effort by local Labour parties to control organisations, and when they cannot control them they try to cripple them by depriving them of local authority monies which should be devoted to these purposes.

I anticipate the Minister's reply, but I shall be very surprised if he accepts the Amendment. He will reject it, not for the fair reasons which we ought to hear from him, as we have done earlier, but from the basic motives which I have tried to outline. Charities are anathema to members of the Labour Party.

Mr. Willey

I assure the hon. Member for Hornsey (Mr. Rossi) that he is completely wrong. The House knows of my personal association with charities. I am not allergic to charities. On the contrary. I have always spoken up for voluntary associations. In my own constituency, the local authority has given considerable assistance, and successful assistance, to voluntary organisations. It is my belief—I hope that the right hon. and learned Member for Hexham (Mr. Rippon) agrees with me thus far—that a good deal ought to be done in the Welfare State through the association of public and voluntary bodies. Having said that, I must emphasise that, if a charity carries out any development for charitable purposes, there is no question of the levy arising. [An HON. MEMBER: "We have not said so."] I am not saying that anyone has said that, but it might have been inferred from some of the observations made about the difficulties of charities that that was so.

I come now to the problem which has been debated on the Amendment. The analogy the whole time has been with taxation, where personal circumstances are relevant. The levy is not taxation.

Mr. Rippon

Can the right hon. Gentleman say when the Law Officer will be coming?

Mr. Willey

No, I cannot say when the Law Officer will come. I have no reason to believe that he is coming. I am speaking for the Government and giving the Government's view.

The levy recognises that, if there is betterment, if there is a development value, this value is shared with the community. That is the purpose of the levy, and all the argument about the levy has been on the question of betterment. We are here dealing not with the particular charity but with the particular land.

Mr. Grieve

Will the Minister explain the difference in real terms between giving one's money for the community by way of taxation, when it is shared for the benefit of the community, and giving it by a levy which is not so described as taxation for the benefit of the community?

Mr. Willey

If the hon. and learned Gentleman had shared our discussions in Standing Committee, he would have appreciated the point. Levy attaches to land. What one is concerned with here is the scale of profit made on land.

We discussed this question with the charities. The precedent was that functional land should be exempt, as the Committee knows, and I accepted it. There are technical reasons for it. I went beyond that and struck a compromise. I may be criticised on groudns of logic, but I went beyond that to include permanent endowment land. I regard that as a fair compromise, and I ask the House to rest up on it.

Mr. Graham Page

This is most unsatisfactory. The Minister has not grasped the arguments which we have put. May I, without tedious repetition, direct his attention to what the Clause does if it remains as it is and what the Amendment would do to alleviate the hardship of charities? Let the House be in no doubt about it. The Government are trying to tax—I say that deliberately—the assets of charities, to tax anything which is not part of the permanent funds of the charity, and even if it is part of the permanent funds but has been used for one year for non-charitable purposes.

6.15 p.m.

A non-charitable purpose arises when the land is used for something other than the charity and the charity earns income from it. The income, of course, is put to charitable purposes and this is what so many charities do. They earn an income by letting out their land for purposes which are not charitable at all. It is an investment. The land cannot be said to be in use for the purposes of the charity or for charitable purposes.

The Amendment would extend the relief which the Clause gives to the functional property of the charity to the permanent funds in all cases, whether they have been out of charitable use for a period of one year or not, and it would extend the relief to investment funds. I am amazed at my own art in summarising—I did not know that I could do it so well—and I hope that I may be allowed to quote something I said in the Standing Committee. I may be accused of being long-winded at times, but I think that my summary of the matter in Committee put the point in a few expressive words. I said: May I try to crystallise the issue? As I understand the right hon. Gentleman, there are four types of land held by 'charity'. The first is functional, the second is recently functional, the third is permanent endowment and the fourth is investment land. The first three are exempt from the levy under this Clause and the fourth is not exempt. We on this side of the Committee wish to exempt the fourth on the ground that income from that category is exempt from Income Tax … and the land should be exempt from levy."—[OFFICIAL REPORT, Standing Committee E, 28th July, 1966; c. 688.] That clearly sums up the position. But, although I stated those four divisions of charitable land, the divisions are entirely fictitious. All are held for the benefit of the charity, whether they be used to house the distressed ladies of Ireland or whether they be used to house Marks and Spencer, Woolworth or some other commercial undertaking. The charity is earning income from property and putting the income to charitable purposes, and there is no reason in logic why the investment land should be treated differently from the permanent endowment. It is not so treated for tax purposes. If we had succeeded in securing the assistance of someone from the Treasury, as my right hon. and learned Friend the Member for Hexham (Mr. Rippon) asked, the representative of the Treasury would have agreed that there is no distinction between this levy and a tax and there ought to be no distinction in the Bill.

The law relating to charities is difficult. Usually, when we have to deal with charity matters in the House, we have the assistance of the Attorney-General. Just after my right hon. and learned Friend asked for the presence of a Law Officer, the Parliamentary Secretary left the Chamber. I thought that he had gone to fetch the Attorney-General, but the only person who turned up in his place was the Under-Secretary of State for Scotland. There are charities in Scotland, too. Exactly the same principles will apply—I say this with hesitation, but I think I am right—because the Clause applies to Scotland. I see no exception here, but, unless one turns to the jungle of the Interpretation Clause, one cannot be quite certain which provision applies to Scotland and which does not.

We did have, and hoped that we should continue to have, the presence of the Minister who really ought to know about charities—the right hon. Lady the Minister of Social Security. But immediately someone whispered in her ear that we were talking about charities she shot out of the door like a rocket. The right hon. Gentleman could have sent for the Chancellor of the Exchequer, whose advisers know all about charities and taxation, for the subject crops up time and again in proceedings on Finance Bills. The right hon. Gentleman could have obtained the Chancellor's advice, and I am sure that this would have been to concede what we ask.

One of the difficulties we have suffered throughout the Bill, particularly in dealing with Clauses and Amendments of this kind, is that we are talking about public revenue, for whether we call the levy a tax or a levy, it is money to be collected from individual citizens for a public purpose. That is not the job of the right hon. Gentleman. He is Minister of Land and Natural Resources. He is not a Treasury Minister.

No doubt, the right hon. Gentleman has received directions that so much levy is to be collected for the purposes of the Exchequer—indirectly, because the Commission is to get a round sum from the Treasury and it must account to the Treasury for the money. Whereas the Exchequer has relieved charities of Income Tax on their income from investment land, it is to collect, via the Commission, a levy on that land by means of this Bill.

We will keep on talking, if the right hon. Gentleman wishes, until he has found where the Attorney-General and the Chancellor of the Exchequer are. I am sure that we should benefit by having their presence on this Clause. The right hon. Gentleman has had to shoulder the burden of the Bill all the way through. He has shown the greatest courtesy to the Standing Committee and to the House but the Government of which he is a Member have shown the greatest discourtesy throughout. Apart from starving him of staff to draw up Amendments in time to get them before the House, the Government have given no thought to the sort of Ministers who could help us on Amendments of this kind. Even the Leader of the House has not looked in on the Bill to see how we are getting on. He does not know what a mess the Bill is and what a struggle the Minister and the Parliamentary Secretary are having. That is typical of the Government.

Today we have been given real examples of hardship which will fall upon ordinary charities by those who know and can see how the Bill will work in practice. We have been told that it will work disastrously for the small charities as well as the big ones. This provision, my right hon. and learned Friend has said, is without precedent in taxation law. But the right hon. Gentleman tells us that it is not taxation but a levy. Are the public going to see the difference between taxation—Capital Gains Tax—and this levy? I shall try to show how the two are related because in the one case a charity is relieved and in the other it is going to be chargeable.

Suppose a charity disposes of its investment land. It bought it for £5,000 and sells it for £7,000 after several years. Someone has to decide how that £2,000 difference is split up for purposes of taxation and levy. Part of it will be an increase in the current use value. If the charity were an individual, it would be charged capital gains tax on that, perhaps £500 out of £2,000 assessed as an increase in current use value. The rest of it may be assessed as net development value, on which the levy is assessed. Is there really a genuine distinction in that division of the gain made out of the sale of the property? To say that one is taxation and the other is not is merely a quibble. It is as fictitious a division as that between the four types of property I have described—the three types exempt from the levy and the fourth, the investment land, which suffers it.

This is an important Clause and we have moved an important Amendment to it which goes to the root of the Bill and the way in which the Government deal with the taxation and levying of people. I hope that the Minister will think again about it and at least save himself the ignominy of taxing charities.

Question put, That the words proposed to be left out stand part of the Bill:—

The House divided: Ayes 177, Noes 131.

Division No. 186.] AYES [6.26 p.m.
Abse, Leo Atkins, Ronald (Preston, N.) Bennett, James (G'gow, Bridgeton)
Allen, Scholefield Atkinson, Norman (Tottenham) Bidwell, Sydney
Anderson, Donald Bacon, Rt. Hn. Alice Bishop, E. S.
Archer, Peter Bagier, Gordon A. T. Blackburn, F.
Ashley, Jack Beaney, Alan Blenkinsop, Arthur
Boardman, H. Gray, Dr. Hugh (Yarmouth) Owen, Dr. David (Plymouth, S'tn)
Booth, Albert Gregory, Arnold Padley, Walter
Boston, Terence Griffths, David (Rother Valley) Palmer, Arthur
Bowden, Rt. Hn. Herbert Hamilton, William (Fife, W.) Park, Trevor
Bray, Dr. Jeremy Hamling, William Parker, John (Dagenham)
Brooks, Edwin Hannan, William Parkyn, Brian (Bedford)
Brown, Rt. Hn. George (Belper) Harper, Joseph Perry, Ernest G. (Battersea, S.)
Brown, Hugh D. (G'gow, Provan) Harrison, Walter (Wakefield) Perry, George H. (Nottingham, S.)
Brown, Bob (N'c'tle-upon-Tyne, W) Hattersley, Roy Prentice, Rt. Hn. R. E.
Brown, R. W. (Shoreditch & F'bury) Hazell, Bert Price, William (Rugby)
Buchan, Norman Herbison, Rt. Hn. Margaret Reynolds, G. W.
Buchanan, Richard (G'gow, Sp'burn) Hilton, W. S. Robertson, John (Paisley)
Butler, Herbert (Hackney, C.) Hooley, Frank Robinson, Rt. Hn. Kenneth (St. P'c'as)
Butler, Mrs. Joyce (Wood Green) Horner, John Robinson, W. 0. J. (Walth'stow, E.)
Cant, R. B. Howarth, Harry (Wellingborough) Rodgers, William (Stockton)
Carmichael, Neil Hoy, James Roebuck, Roy
Carter-Jones, Lewis Hughes, Emrys (Ayrshire, S.) Rogers, George (Kensington, N.)
Chapman, Donald Hunter, Adam Ross, Rt. Hn. William
Coleman, Donald Jackson, Peter M. (High Peak) Ryan, John
Concannon, J. D. Jenkins, Hugh (Putney) Shaw, Arnold (Ilford, S.)
Corbet, Mrs. Freda Johnson, Carol (Lewisham, S.) Shinwell, Rt. Hn. E.
Crossman, Rt. Hn. Richard Jones, J. Idwal (Wrexham) Short, Mrs Renée (W'hampton, N. E.)
Dalyell, Tam Kelley, Richard Silkin, Rt. Hn. John (Deptford)
Davidson, Arthur (Accrington) Kenyon, Clifford Silkin, Hn. S. C. (Dulwich)
Davies, Dr. Ernest (Stretford) Kerr, Dr. David (W'worth, Central) Silverman, Julius (Aston)
Davies, Harold (Leek) Lawson, George Silverman, Sydney (Nelson)
Davies, Robert (Cambridge) Lee, Rt. Hn. Frederick (Newton) Skeffington, Arthur
Dewar, Donald Lee, John (Reading) Slater, Joseph
Diamond, Rt. Hn. John Lestor, Miss Joan Small, William
Dickens, James Luard, Evan Snow, Julian
Dobson, Ray Lyon, Alexander W. (York) Spriggs, Leslie
Doig, Peter Mabon, Dr. J. Dickson Steel, Thomas (Dunbartonshire, w.)
Driberg, Tom McCann, John Strauss, Rt. Hn. G. R.
Dunn, James A. MacColl, James Summerskill, Hn. Dr. Shirley
Dunnett, Jack Macdonald, A. H. Taverne, Dick
Dunwoody, Dr. John (F'th & C'b'e) Mackintosh, John P. Tomney, Frank
Eadle, Alex Maclennan, Robert Tuck, Raphael
Edwards, Robert (Bilston) McMillan, Tom (Glasgow, C.) Varley, Eric G.
Edwards, William (Merioneth) MacPherson, Malcolm Wainwright, Edwin (Deame Valley)
Ellis, John Mapp, Charles Walker, Harold (Doncaster)
English, Michael Marquand, David Wallace, George
Ensor, David Marsh, Rt. Hn. Richard Watkins, David (Consett)
Evans, Albert (Islington, S. W.) Maxwell, Robert Wellbeloved, James
Faulds, Andrew Mayhew, Christopher Whitlock, William
Fitch, Alan (Wigan) Mikardo, Ian Willey, Rt. Hn. Frederick
Fletcher, Raymond (Ilkeston) Miller, Dr. M. S. Williams, Alan (Swansea, W.)
Fletcher, Ted (Darlington) Mitchell, R. C. (S'th'pton, Test) Williams, Alan Lee (Hornchurch)
Floud, Bernard Molloy, William Wilson, Rt. Hn. Harold (Huyton)
Foot, Michael (Ebbw Vale) Morris, Charles R (Openshaw) Wilson, William (Coventry, S.)
Forrester, John Murray, Albert Yates, Victor
Fowler, Gerry Newens, Stan Zilliacus, K.
Fraser, John (Norwood) Norwood, Christopher
Garrow, Alex Ogden, Eric TELLERS FOR THE AYES:
Ginsburg, David O'Malley, Brian Mr. Ioan L. Evans and
Gourlay, Harry Orme, Stanley Mr. McBride
Alison, Michael (Barkston Ash) Crawley, Aidan Harvie, Anderson, Miss
Allason, James (Hemel Hempstead) Crosthwaite-Eyre, Sir Oliver Hastings, Stephen
Atkins, Humphrey (M't'n & M'd'n) Crouch, David Hawkins, Paul
Awdry, Daniel Cunningham, Sir Knox Heald, Rt. Hn. Sir Lionel
Baker, W. H. K. Dance, James Heseltine, Michael
Batsford, Brian Dean, Paul (Somerset, N.) Higgins, Terence L.
Beamish, Col. Sir Tufton Dodds-Parker, Douglas Hill, J. E. B.
Bennett, Sir Frederic (Torquay) Drayson, G. B. Hirst, Geoffrey
Bennett, Dr. Reginald (Gos. & Fhm) Eden, Sir John Hobson, Rt. Hn. Sir John
Biffen, John Elliott, R. W. (N'c'tle-upon-Tyne, N.) Holland, Philip
Black, Sir Cyril Errington, Sir Eric Hooson, Emlyn
Body, Richard Farr, John Hornby, Richard
Boyd-Carpenter, Rt. Hn. John Fisher, Nigel Howell, David (Guildford)
Brewis, John Fraser, Rt. Hn. Hugh (St'fford & Stone) Hunt, John
Bromley-Davenport, Lt. Col. Sir Walter Gilmour, Ian (Norfolk, C.) Hutchison, Michael Clark
Buchanan-Smith, Alick (Angus, N&M) Glover, Sir Douglas Iremonger, T. L.
Bullus, Sir Eric Goodhart, Philip Irvine, Bryant Godman (Rye)
Campbell, Gordon Goodhew, Victor Jenkin, Patrick (Woodford)
Cary, Sir Robert Grant, Anthony Jennings, J. C. (Burton)
Chichester-Clark, R. Gresham Cooke, R. Joseph, Rt. Hn. Sir Keith
Clark, Henry Grieve, Percy Kirk, Peter
Clegg, Walter Griffiths, Eldon (Bury St. Edmunds) Knight, Mrs. Jill
Cooke, Robert Grimond, Rt. Hn. J. Lloyd, Rt. Hn. Selwyn (Wirral)
Cooper-Key, Sir Neill Harris, Frederic (Croydon, N. W.) McAdden, Sir Stephen
Costain, A. P. Harris, Reader (Heston) Maddan, Martin
Craddock, Sir Beresford (Spelthorne) Harvey, Sir Arthur Vere Marples, Rt. Hn. Ernest
Mathew, Robert Price, David (Eastleigh) Taylor, Edward M. (G'gow, Cathcart)
Maude, Angus Prior, J. M. L, Taylor, Frank (Moss Side)
Mawby, Ray Pym, Francis Thorpe, Jeremy
Maxwell-Hyslop, R. J. Rees-Davies, W. R, Turton, Rt. Hn. R. H.
Mills, Stratton (Belfast, N.) Ridley, Hn. Nicholas Wainwright, Richard (Colne Valley)
Mitchell, David (Basingstoke) Rippon, Rt. Hn. Geoffrey Walker-Smith, Rt. Hn. Sir Derek
Monro, Hector Roots, William Weatherill, Bernard
More, Jasper Rossi, Hugh (Hornsey) Webster, David
Morgan, Geraint (Denbigh) Royle, Anthony Whitelaw, William
Morrison, Charles (Devizes) Russell, Sir Ronald Wilson, Geoffrey (Truro)
Murton, Oscar Scott, Nicholas Winstanley, Dr. M. P.
Nabarro, Sir Gerald Sharples, Richard Wolrige-Gordon, Patrick
Nott, John Shaw, Michael (Sc'b'gh & Whitby) Wood, Rt. Hn. Richard
Onslow, Cranley Sinclair, Sir George Woodnutt, Mark
Orr-Ewing, Sir Ian Smith, John Younger, Hn. George
Osborn, John (Hallam) Steel, David (Roxburgh)
Page, Graham (Crosby) Stodart, Anthony TELLERS FOR THE NOES:
Percival, Ian Tapsell, Peter Mr. Blaker and Mr. Eyre.
Pink, R. Bonner Taylor, Sir Charles (Eastbourne)
Mr. Willey

I beg to move Amendment No. 79, in page 56, line 39, to leave out 'either'.

I think that it would meet the convenience of the House if we took Amendments No. 80, No. 84 and No. 85 with this Amendment, Mr. Speaker.

Mr. Speaker

If there is no objection.

Mr. Willey

We are here dealing with land which has been used for charitable purposes, and ceasing to be charitable land because it has been used for non-charitable purposes. We provided in the Bill that if it was used for such non-charitable purposes for five years it would then be taken out of its charitable use, or would be if there was development of the land for non-charitable purposes.

I have had representations since the Committee stage that this might bear unfairly on some charities, that they might have an interim, temporary development, and that, under the provisions as they are in the Bill, that would result in the land ceasing to be for charitable purposes. I am thinking of charities such as the Peabody Trust. I think that in the circumstances, therefore, the second condition would be better removed and that we should rely on the five-year test. I hope that this will be acceptable to the House.

Mr. Graham Page

This is at least a crumb of comfort. Of course, the Minister only got into this trouble by trying to impose a levy on investment land or on developed land belonging to permanent funds. That is why he has had to make these Amendments to relieve such charities as the Peabody Trust and others who have seen that they would be caught by the levy when they really did not deserve to be caught at all.

I did think that our plea just now had succeeded—to a greater extent than I expected—when I saw the right hon. Gentleman the Prime Minister sitting next to the Minister. I thought that at last we had succeeded in getting him here, if not the Attorney-General or the Chancellor of the Exchequer. However, I fear that the Minister murmured in the Prime Minister's ear that we were talking about charities, and he, like the Minister of Social Security, shot out of the door like a rocket. We on this side cannot expect anyone on that side, even Ministers, to take an interest even on important matters like this when we are going some way to ease the burden on charities. It is quite shocking that more Members on that side of the House are not taking an interest in this vitally important Clause, which affects charities in their constituencies.

Amendment agreed to.

Further Amendment made: In page 56, line 40, leave out from 'years' to end of line 43.—[Mr. Willey.]