Clause 58.—(STATUTORY UNDERTAKERS AND NATIONAL COAL BOARD.) (Hansard, 25 January 1967)

§ Mr. Farr
I beg to move, as an Amendment to the words so restored to the Bill, in page 60, line 39, at the end to insert: (7) This section shall come into operation on such date as the Minister may by regulations appoint such date not being earlier than two years after the second appointed day. The inclusion of these words would improve the Bill, because my hon. Friends and I believe it to be manifestly unfair that the large nationalised State concerns—British Railways, the National Coal Board and the others—should escape payment of any betterment levy while their private enterprise competitors, who are in direct competition with them in many spheres of activity, should pay the levy at the full rate of 40 per cent. or whatever figure may be used.
It is unfair that, for example, our nationalised electrical concerns should escape paying any form of levy, although, in the high street of virtually every town and city, they are running their own showrooms in which they are selling the same electrical appliances as their private enterprise competitors are selling, perhaps in adjoining shops. If a private firm next door to one of the State-owned showrooms wants to develop its shop and improve it or move to new premises 1683 and enlarge the company's activities, it must pay the levy at the full rate on the improvements it makes. Yet if the electricity authority builds a new showrooms, moves its showroom or enlarges it, it pays no levy whatever.

§ Mr. Skeffington
I think the hon. Member is wrong. We had a long discussion about this in Committee but that is no reason why we should not discuss it again. Normally the exemption applies to functional land. Electricity showrooms would not be on functional land and, if there were a question of levy arising, it would be paid on them.

§ Mr. Speaker
I hope that the hon. Member for Harborough (Mr. Farr) will soon come to his Amendment.

§ Mr. Farr
I am seeking to show that it is advantageous to postpone implementation of this Clause until the end of the period stated on the Notice Paper.
With respect to the Parliamentary Secretary, what we discussed or what he thought in Committee bears no relevance to what is in the Bill. It is this Bill when it has passed all its stages which will become the law of the land. I have received this advice from baffled expert advisers regarding the electricity industry and I shall interpret it concerning other nationalised industries. One of the reasons why we think this postponement should take place is that it is frightfully unfair that the National Coal Board in its brick-making activities—it is not generally realised that it is about the biggest single producer of bricks in the country—when it develops land for the purpose of those activities, will do so levy-free. Yet the London Brick Company, or a smaller private company producing bricks, will pay levy on new buildings or developments.
The same applies throughout the nationalised industries. British Railways are extending activities in building railway engines. Why should expansion that British Railways undertake to construct engines on a bigger scale be carried out levy-free while private companies, struggling to compete with British Railways in the market for railway engines be forced to pay the full levy of 40 per cent. 1684 or whatever it may be on new buildings they erect for construction of engines?
The same applies to British Road Services and the nationalised bus undertakings. If those bus undertakings build new depôts or offices they will be levy free. There are still quite a number of private bus companies. If they build depôts or offices on new ground or develop, they will pay the full 40 per cent.
Those examples are bad enough.

§ Mr. Skeffington
They are not correct.

§ Mr. Farr
Some of them were raised in Committee and dealt with inadequately by the Minister and his Parliamentary colleague, but since we concluded the Committee stage and since this Measure went through the House of Lords there has been an addition to the privileged collection of industries, these State concerns which are took weak and puny to carry on activities without being in a privileged position—the steel companies to be taken over by the State. This affords a new subject for attention, because those major steel companies which are to be taken over will be allowed to carry on their activities levy-free. Their competitors, however—and there will still be quite a lot of private steel companies in existence—will be required to pay the 40 per cent. levy on any activities which they conduct of a leviable nature. I suggest that those iron and steel companies which are to be nationalised have every chance of a very profitable future if they are to be allowed to continue their work levy-free against the remaining part of the industry which is not being nationalised and which has to pay levy at the full rate.
One of the reasons why I move the Amendment to postpone by the period indicated the implementation of the Clause is that to keep pace with modern innovation and invention, many of the steel companies, both those which are to be nationalised and those which are not, have continually to expand and alter their plant and build new mills and production units. We on this side think it grossly unfair that those concerns which are to be nationalised can construct their new buildings levy-free while the smaller competing firms which remain in private ownership must struggle to pay the full rate of 40 per cent. levy.

§ Mr. Skeffington
indicated dissent.

§ Mr. Farr
The Parliamentary Secretary is anxious to spring up and say something. He is continually shaking his head. I will listen to him with interest. I can only try in my simple way to interpret to him the views which experts who have studied the Bill have put to me. I hope that the hon. Gentleman can prove me and my hon. Friends who share my views quite wrong in this matter.

§ Mr. Body
My hon. Friend the Member for Harborough (Mr. Farr) has highlighted a number of anomalies. As he listed some of them, I thought that I overheard the Parliamentary Secretary murmer "Not correct" and repeat that a few times, shaking his head rather vigorously as he did so. Perhaps my hon. Friend is not correct, but at least, when he referred to electricity showrooms, he was echoing the opinion expressed by the Parliamentary Secretary in Committee.
The hon. Gentleman said on 28th July: By way of illustration, the hon. Gentleman mentioned electricity showrooms and I said I would hazard that these might pay", but he went on to add without knowing all the circumstances."—[OFFICIAL RFPORT, Standing Committee E, 28th July, 1966; c. 696.] On the face of it, however, he believed at that time that they would pay.
I do not want to be unkind—if the hon. Gentleman is now changing his opinion, it would be wholly understandable—but this illustrates once more how wholly unintelligible the Bill is. If after months of study, with the aid of his officials, people who are skilled in this work and who have studied it over many months, the hon. Gentleman reaches a false conclusion, we must expect many other mistaken opinions to be formed in the months that the Land Commission will be in existence. I was going to say "in the years that it will exist" but I hope that it will not exist for years, because I hope that one of the first things that the next Government will do will be to repeal this pernicious piece of legislation. [An HON. MEMBER: "It will be extended."] We now hear from an hon. Member on the back benches opposite that it is to be extended. This 1686 is indeed ominous. May that be enshrined in the Labour Party's manifesto at the next election.

§ Mr. Speaker
This is fascinating, but the hon. Gentleman must come to the Amendment.

§ Mr. Body
I am sorry if I yielded to temptation, but it was rather strong.
In highlighting these anomalies my hon. Friend mentioned the National Coal Board, and there is one point with which, I hope, the Parliamentary Secretary will deal. We understand that the Coal Board will not have to bear a levy on its transactions, but what is to be the position of that money which is invested for the purposes of its approved superannuation schemes? As things now stand, such schemes are not subject to taxation, but, as I understand it, this scheme, which is run jointly with the National Union of Mineworkers, will be subject to this levy, and I understand that it has been worked out that it may cost the Coal Board and the National Union of Mineworkers—because it is, as I say, a joint venture—a sum of no less than £100,000. That is not my calculation. That is a figure which comes—

§ Mr. Speaker
The hon. Member cannot go on with this matter. We are discussing an Amendment which suggests This section shall come into operation …not … earlier than two years after the second appointed day. The hon. Member must address his remarks a little more closely to the Amendment.

§ Mr. Body
I apologise, and I will not take the point further, although I understood we were dealing with statutory undertakings, and that was why I sought to have this matter clarified. If I am out of order I certainly will not—

§ Mr. Speaker
I was lenient to the hon. Member who moved the Amendment, but the Amendment means what is says, and its purpose is to delay the operation of this Section till a date not earlier than two years after the second appointed day. The hon. Member must address himself at some time to that issue.

§ Mr. Body
I apologise if I have gone further than I should, and, having said that, I will say no more about the point.

§ Mr. Graham Page
I think it will be convenient if before the Parliamentary Secretary answers the debate I put a question to him. It arises on this Amendment very clearly, because Clause 58 as it stands is unintelligible in some parts and leaves a great deal unknown in other parts. The Parliamentary Secretary really must get the Clause right before it comes into operation. We in the Opposition are very often accused of bad drafting. When one looks at the Clause one sees that the draftsman has been too clever—

§ Mr. Speaker
Order. We are not debating the Question, "That the Clause stand part of the Bill". The hon. Member must link his remarks to the Amendment which is before us.

§ Mr. Page
I did link it in this way, if I may repeat what I said just now, that the Clause—"this section"—ought not to be brought in as it is; the introduction of this into law should be postponed, as we suggest in the Amendment. One of the reasons why I say it should be postponed is in order to get it right.
By subsection (5) of the Clause we are told that any reference to statutory undertakers should be read as a reference to the National Coal Board; if we wish to apply it to the National Coal Board we have to read "National Coal Board" instead of "statutory undertakers". Reading exactly as we are told to do, subsection (1,b) reads: the relevant land either is operational land of the National Coal Board immediately before that date or has for a period of not less than a year been operational land of the National Coal Board, or of other National Coal Boards… Do we understand that the Government intend, via this provision, to introduce another National Coal Board, because that is how it reads. That is a minor reason why it should be delayed, but there is another and more important reason.
1.30 a.m.
At this time of the early morning it is rather technical to explain, but it is of very great importance to those who deal with land and statutory undertakers. Under subsection (5,b), the operational land, to which reference is made in the Clause, is to be described in a description prescribed by the Minister. I presume that there are some regulations in draft about this, but we are now asked to pass 1688 the Bill without knowing what it is intended should be operational land.
My hon. Friend the Member for Harborough (Mr. Farr) referred to the operational land of the electricity boards and the gas boards and so on, their show rooms in the High Street. It is intended by regulation to prescribe that show rooms of the National Coal Board should be operational land?
The importance of this is that the effect of paragraph 10(1) of Schedule 5 is that if one is buying land from an exempt body and it is exempt land, then the purchase price is the base value, from which one calculates the net development value. It is the purchase price whenever the land is bought. Normally, of course, one can use the purchase price as the base value only if it was purchased before the White Paper day, or after the appointed day, but on this occasion the purchase price is the base value whenever the exempt land is bought.
Clause 58(5,b) says that we shall know the exempt land only when the operational land has been prescribed. If these regulations are not to be brought in quickly, the Bill may come into operation before anyone dealing in this land knows how to calculate the net development value.
For this reason the effect of this Clause should be postponed. It ought to be postponed until we have had the opportunity of seeing the proposed regulations, and I would hope that hon. Members and anyone concerned with transactions of this sort would see the draft regulations and that there would be consultations with the Ministry about them. This cannot happen in the next couple of months and therefore the Clause ought to be postponed for some considerable time until we know its effect and until the Parliamentary Secretary and the Minister know its effect.

§ Mr. Skeffington
The main burden of the argument in connection with this Amendment can be disposed of fairly simply. I sought in my intervention to show where the heresy lay. This is a valuation point in so far as a statutory undertaker is exempt in respect of certain categories of land which it is accepted are not in competition with other land. But, where land is in competition, 1689 broadly speaking it will not be exempt. This is the point concerning electricity showrooms. The hon. Gentleman is wrong about the National Steel Corporation, for it will not be a statutory undertaker.
The exemption is made on valuation grounds. Where operational land is being used solely for that purpose, one cannot value it because there is no comparison. Once, however, there is competition, the exemption cannot apply.
As to the general point about what is operational land, I have no doubt about it and have not changed my views. As the hon. Member for Crosby (Mr. Graham Page) knows, the 1962 Act is applied both in this provision and elsewhere in relation to operational land. Section 221 defines operational land as land …used for the purpose of the carrying on of their undertaking and land in which an interest is held for that purpose, not being land which, in respect of its nature and situation, is comparable rather with land in general than with land which is used, or in which interests are held, for the purpose of carrying on of statutory undertakings. It is because one cannot compare such land that it must be exempt.
There have been complaints by hon. Members opposite that parts of the Bill are not altogether clear. I must say that I do not understand the Amendment. If land is to be exempt because it cannot be valued, we cannot surely postpone exemption for two years. We must give exemption at the beginning. The Amendment is nonsense and I advise the House to reject it.
Operational land is clearly defined in the 1962 Act. If there is doubt as to whether it is operational in respect of a particular undertaking, then it will be for the appropriate Minister to rule accordingly.

§ Mr. Graham Page
The hon. Gentleman says that operational land is clearly defined. But, as far as the National Coal Board is concerned, operational land is to defined by Clause 58(5,b)— …land of any description prescribed for the purposes of this subsection. We do not know what it is yet. That is my complaint and the hon. Gentleman has not dealt with the point.