HC Deb 27 October 1966 vol 734 cc1532-8

Amendment made: In page 97, leave out line 5 and insert: 'Except in so far as the relevant Schedules otherwise provide'.—[Mr. Willey.]

1.15 a.m.

Mr. Willey

I beg to move Amendment No. 131, in page 98, line 24, at the end to insert: 9. In calculating, for the purposes of paragraphs 7 and 8 of this Schedule, the capital value at any date of a right to receive rent payable in respect of a tenancy, it shall be assumed that the tenant under that tenancy—

  1. (a) will always pay that rent when it falls due and will perform his other obligations under the tenancy, and
  2. (b) will exercise any option to renew that tenancy, and will not exercise any option to terminate it, then or thereafter available to him.
I think that it would meet the convenience of the House, Mr. Speaker, if we took Amendment No. 133, in line 28, in discussion at the same time.

Mr. Speaker

If the Opposition have no objection, certainly.

Mr. Willey

We are here dealing with capitalisation of rents in Case B. By reason of these Amendments we are importing assumptions for grounds of certainty. The assumptions are that the tenant will always pay his rent and perform the other obligations imposed on him and, secondly, that the tenant will exercise any option to renew the tenancy and will not exercise any right which he may have to break the tenancy before the end of its full term.

Mr. Allason

I regret, Mr. Speaker, that we should keep you out of bed at this hour of the night to discuss a point which should have been dealt with in Committee. It seems extraordinary that 13 months after first publication of the Government's intentions, they have suddenly come up with this Amendment. We should have had an opportunity of discussing it in Committee, possibly at length.

We need to remember as background to the Amendment that levy is to be paid on a chargeable act or event, in this case the signing of a lease, and that the levy is assessed and is then payable in advance of receiving the valuable consideration, which is the receipt of rent.

I recognise that there must be a basis of assumption as to the amount of rent which will be paid in the future, but the assumption which is made here betrays a complete lack of knowledge of the hard facts of business life. We all know that Ministers lead very sheltered lives, and it is always alleged the civil servants lead sheltered lives, but it would be interesting to know what consultations have taken place with outside bodies on this matter.

In the event, tenants go bankrupt; tenants flit. Tenants leave, and it is then found impossible or not worth while to pursue them for sums in dilapidations, which consequently are not recoverable. Tenants are not all angels, any more than are all landlords. This is recognised by the Government by a tax allowance of one-twenty-sixth on rent-restricted dwellings to allow for such contingencies if the owner agrees to pay tax on the annual sum due as opposed to what he actually collects.

It is probably not possible to find a better basis of assumption than the assumption which the Government are writing in at this late stage. At the same time, I would like an assurance that if the rent does not subsequently materialise, there will be a levy credit which will find its way back to the man who has paid in full on these very assumptions which the Minister is writing into the Bill.

Mr. Willey

The anxieties which the hon. Gentleman has are met under Schedule 7, paragraph 10. He asked me why we should import this assumption, and the answer is that it is something fairly well known in valuation.

Amendment agreed to.

Further Amendments made: In page 98, to leave out line 26 and to insert: Except in so far as the relevant Schedules otherwise provide".

In line 28, leave out from beginning to "be" and insert: of assessing levy in respect of the disposition".—[Mr. Willey.]

Mr. Skeffington

I beg to move Amendment No. 134, in page 102, line 11, to leave out "paragraph 25" and to insert "paragraphs 25 and 26".

It might be for the convenience of the House if we took, with this Amendment, Amendments Nos. 135, 136 and 137.

Mr. Speaker

Unless there is any objection, so be it.

Mr. Skeffington

These Amendments are more than drafting. They are really a tidying-up operation.

The first three Amendments are tied to the fourth, the effect of which is to insert a new paragraph 26 into Schedule 4; their combined effect is to bring paragraphs 23 and 24 into line with subsection (4) of Clause 32. That subsection provides that a tenancy of part, but not the whole, of the relevant land which is subordinate to one of the assessable interests by virtue of which a person is the developing owner, is not an assessable interest for the purpose of assessing levy.

The reason for that is that the developer will be obtaining possession from the tenant of the part in the process of carrying out his project so that liability for any Case C levy in respect of the tenancy should be his and not that of the tenant whose liability, if any, will be under Case A on notification of the assignment or surrender of the tenancy.

Amendment agreed to.

Further Amendments made: In page 102, line 21, leave out 'paragraph 25' and insert: 'paragraphs 25 and 26'.

In line 42, leave out 'paragraph 25' and insert: 'paragraphs 25 and 26'.

In page 103, line 7, at end insert: 26. Where the relevant interest is in reversion immediately expectant upon the termination of a tenancy which (by virtue of section 32(4) of this Act) is not an assessable interest, that tenancy shall be disregarded for the purposes of paragraphs 22 to 24 of this Schedule.

In line 9, leave out from beginning to 'for' in line 10 and insert: 'Except in so far as the relevant Schedules otherwise provide'.—[Mr. Willey.]

Mr. Willey

I beg to move Amendment No. 139, in page 103, line 24, at the end to insert: (3) Where the nature of the relevant project is such as is described in paragraph 16(2) of this Schedule, the value referred to in subparagraph (1) of this paragraph—

  1. (a) where the relevant interest is the fee simple, shall be calculated as if it were a tenancy expiring at the end of the period mentioned in the said paragraph 16(2) and
  2. (b) where the relevant interest is a tenancy for a term of years extending beyond the end of that period, shall be calculated as if it were for a term expiring at the end of that period.
I think that it would be for the convenience of the House to take with this Amendment, Amendments Nos. 147 and 171 at the same time.

Mr. Speaker

If there is no objection, so be it.

Mr. Willey

Again, these are tidying-up Amendments. Paragraphs 16(2) and 25 of Schedule 4 deal with market value in Case C in the special cases where the development is of a "wasting nature." These Amendments are making corresponding provisions relating to base value.

Mr. Graham Page

This is a rather peculiar Amendment. We are introducing it into the part of the Schedule which deals with market value. I cannot understand from the Amendment whether it increases market value or reduces it. If it increases it, it increases the levy. That is why I am rather curious about it.

I do not know whether the Minister can give me an assurance that this is some common form of valuation, about which I have not heard before, treating the fee simple as a tenancy. It seems to be a very peculiar way of valuing and trying to ascertain market value. If the Minister would say one or two words of explanation, I would be satisfied.

Mr. Willey

I am obliged to the hon. Member for raising this point. There is nothing untoward about this. These are corresponding provisions being made in view of other provisions in the Schedule.

Amendment agreed to

Further Amendment made: In page 105, leave out line 2 and insert: 'Except in so far as the relevant Schedules otherwise provide'.—[Mr. Willey.]

Mr. Skeffington

I beg to move Amendment No. 141, in page 107, line 36, at the end to insert: (e) to any expenditure which has been or is to be met directly or indirectly by a government department or a local authority, or. Paragraph 43 of Schedule 4 lists types of expenditure which are ineligible for allowance as "expenditure on improvements and ancillary rights". The effect of the Amendment is to add to the list of ineligible items expenditure which is paid or reimbursed by central or local government. There is no reason why there should be an allowance for improvements which neither the owner nor his predecessor paid for. There is a similar provision for Capital Gains Tax purposes in Schedule 6 of the Finance Act, 1965, so this has a respectable parentage.

Mr. Graham Page

I do not know about respectable parentage. It is most disreputable if it comes from capital gains. I wonder whether this is the right principle. On the face of it, it seems right. If a man has been given a sum of money to make improvements then he should not be allowed to take that into account. When one thinks of the context in which this is being introduced one sees that it is added to the current use value to get the face value, if he is allowed this expenditure. If he is disallowed it he is still, when he sells the property, getting the value of that money in the market value. He is given this grant and he is getting market value, which means that it is added to the figure at the top end. Then it is taken off again to reach face value.

This is surely increasing the margin on which the levy is payable. I do not believe that this is a right principle with expenditure of this sort. If it is not to be added to the current use value in order to ascertain the face value, then it should be deducted from the market value at the top end of the scale because he is getting the benefit of it when he sells, therefore bringing it into his market value. This is a wrong principle and the only one to gain is the Land Commission.

Amendment agreed to.

Mr. Willey

I beg to move Amendment No. 142, in page 107, line 37, after 'incurred', to insert 'after 21st December 1965'.

This Amendment will appeal to the hon. Member for Crosby (Mr. Graham Page). We are making it in response to an Amendment which the Opposition withdrew in Committee on an undertaking given by the Parliamentary Secretary that he would look at the matter again.

1.30 a.m.

Mr. Graham Page

Yes, it does appeal to me but I think that the Minister has got the wrong date. On a previous Amendment he allowed me 29th December instead of 21st December. Will the right hon. Gentleman take back the Amendment and look at this date again? Having put 29th December in one part of the Bill, it will be very confusing to have 21st December in another part of it. It is true that the old Bill, the first of these Bills, was printed, or purported to be printed, on 21st December.

The reason for fixing that date was that it was the date on which people knew what was in the Bill when it was made public. But that was not the date when it was made public, as I tried to show on a previous Amendment. The Minister accepted that it became public on 29th December. I am sorry if I am getting the Minister into difficulties because of his kindness and generosity to me on a previous occasion, but it will be rather confusing to have two different dates in the Bill.

It may be that a different principle applies here, but, on the face of it, it seems that it has been chosen because of the knowledge of the Bill. Anyone who spends money with knowledge of what is in a Bill does not deserve to have any relief or benefit out of it.

Mr. Willey

Mr. Speaker, perhaps you could help us. I am always greatly obliged to the hon. Member for Crosby for the careful scrutiny which he makes of the provisions of a Bill. He could not know that we would accept his Amendment, but we have done so, and if it were possible to put in a manuscript Amendment to meet his wishes I would certainly be willing to do so.

Mr. Speaker

Perhaps the right hon. Gentleman will let me have a manuscript Amendment.

Mr. Willey

Yes, Sir. It is in page 107, line 37, after 'incurred', to insert 'after 29th December 1965', and replaces the Amendment which we were discus sing.

Mr. Speaker

It is obviously the will of both sides of the House that this Amendment should be made.

Amendment agreed to.

Further Amendments made: In page 108, line 46, leave out from 'Schedule' to end of line 50 and insert: 'any reference in Part III of this Act to the amount of any expenditure on improvements or ancillary rights in so far as it has increased the development value of the relevant interest shall be construed as a reference to the amount so ascertained'.

In page 109, line 9, leave out from first 'the' to end of line 13 and insert: 'reference in section 30(4) of this Act to the amount of any expenditure on improvements or ancillary rights in so far as it has increased the development value realised by the disposition shall be construed as a reference to the amount calculated in accordance with the preceding sub-paragraph'.—[Mr. Willey.]