HC Deb 25 January 1967 vol 739 cc1690-700
Mr. Allason

I beg to move, as an Amendment to the words so restored to the Bill, in page 62, to leave out lines 39 to 42.

Clause 61 exempts from levy a single house built for family occupation on land which the family owns.

But this is only if the land was owned before 23rd September 1965, which was the day after the publication of the White Paper. This is no concession at all to owner-occupiers, it is only a reasonable right. The owner of that land had an expectation that he would be entitled to build on it, and it would have been, as the Minister said, quite unfair if the levy was subsequently charged.

I want to press the case for extending this principle by removing the qualification for the date of the ownership of land, and this Amendment leaves out Clause 61(1,b) so that the qualification of ownership of the land before the date of the White Paper is abandoned. We have already had a debate on owner-occupiers, for whom the Government pretend to have such tender feelings, but in respect of whom they are so harsh.

The Government have, in the Amendment—we have discussed, insisted on taking the levy where an owner-occupier sells, but here they are proposing to take the levy where an intending owner-occupier is to build on a plot of land that he owns. Taking the levy is taxing that operation. My hon. Friend the Member for Harborough (Mr. Farr) has described the sort of case where a plot of land is bought for retirement after the date of the publication of the White Paper, and is a perfectly genuine purchase. This is happening all over the country.

Many people buy a plot of land for their retirement, with the intention of building a house on it when they can raise the money. Is this so criminal? Are they the land speculators the sharks, who have to be attacked? No. They are ordinary people, yet the Government have not yet been able to give us this concession.

The argument that has been used all along is that there is a possibility of evasion. Let us look at this argument. It runs: "Oh, well, this would encourage a property developer to sell off a series of plots of land to the future occupiers and subsequently build houses upon them, and thereby avoid the levy."

This is perfectly true. If this could be achieved on a large scale, which is unlikely, what would be the result? It would be that the levy would not be payable on the building of a series of houses for owner-occupation, that is, those houses would be cheaper. Surely this is the whole intention of the Government? One of the things which they have wanted to do was to cheapen the cost of land and to cheapen house purchase. Here is a great opportunity for them to do so.

At the beginning of this Bill I was hopeful that the Minister would be reasonable about this. We have pressed so many excellent cases upon him that I am beginning to lose heart at this stage, and to doubt whether this excellent case will be accepted by him. Owner-occupiers are receiving one more dollop of discouragement from this Government. Instead of pursuing them with annoyingly complicated taxes, the Government ought to be encouraging them.

1.45 a.m.

Mr. Willey

Until the hon. Gentleman got to the dollop at the end, I was in sympathy with him. He made three points. First, as I understood him, he gave us credit for what we undertook in the White Paper, and Clause 61 imple- ments that undertaking. He said that it would be a good idea if one could pass on a concessionary price to the owner-occupier. This we do by way of concessionary crownhold. Third, he conceded that, if his Amendment were accepted, there would be an easy way of evasion, the easiest way in the world.

The land would be nominally conveyed to the ultimate house purchaser at a price which evaded the levy. But the hon. Gentleman came to the conclusion that the developer would pass the benefit on to the purchaser of the house. The person who does this deliberately to evade the levy is not the sort of person who is likely to pass it on to the purchaser. He is likely to pocket the profit himself.

Mr. Allason

Would not the levy then be assessable on the initial sale under Case A, the sale of the plot of land to the intended purchaser?

Mr. Willey

Yes, and this fictitious transaction would be at a figure which would not attract levy; that would be the whole purpose of the evasion. It would drive a coach and four through the Bill, and I am sure, having got so far with it, the hon. Gentleman would not wish to destroy the Bill.

Mr. Eldon Griffiths

Clause 61 along with the whole series from Clause 56 onwards deals with exemptions from the levy. I would like your guidance, Mr. Deputy Speaker, on how to proceed. I have a question sent to me by small builders in my constituency which arises from the Clause to which this Amendment is directed but which touches Clause 67 also. I wish to raise with the Minister the anomaly between this Clause which is the subject of the Amendment and another which is not. Will you be lenient in allowing me to raise the question which has beer sent to me by my constituents?

Mr. Deputy Speaker (Sir Eric Fletcher)

I should like to hear the hon. Gentleman put the question.

Mr. Griffiths

Thank you, Mr. Deputy Speaker. Several small builders in West Suffolk have taken the advice of learned counsel in respect of the exemptions from the levy which they seek. In order not to detain the House, I shall refer to the brief which counsel has sent to me on the matter. I do not expect the Minister to answer now, but it is my duty to put it on the record so that an answer can be given.

The builders concerned are advised that, in order to avoid a levy under Case A, a builder must erect a bungalow or house on the plot of land he owns before he sells it, and, further, that the system whereby the builder sells a plot of land and enters into a building contract to build a bungalow or house is not in itself sufficient to avoid the levy because on the sale of a plot after 5th April, 1967, the builder will be liable to a Case A assessment.

I now give an example on that general point which has arisen in my constituency. Builder A—I prefer not to give his name—purchased 15 acres of land on 1st January, 1966. He obtained planning permission. He starts a project of material development on the land prior to 5th April, 1967. That is his intention. I shall not weary the House with the details. He is laying a road and starting to sell plots, if he can. after 5th April. Being a small builder, he cannot afford to finance the erection of his own bungalows, and it has always been his practice to sell the plot of land to his purchaser and enter into a building agreement when the purchaser has paid four instalments of the erection price.

This builder would appear to be exempted from Case C levy under the Bill as it stands on the ground that he has commenced a project of material development before the first appointed day. On the sale of the first plot, however, he is liable under Case A on the difference between the value of the land as agricultural land and the price he receives for it now when it becomes a building plot. He is entitled, of course, to add to the value of the land without planning permission the cost of providing services which are reflected in the price that he receives for the land.

But when he actually bought the land on 1st January this year he had to pay much more than the agricultural value because it had a potential value for building which he had to pay, and he is therefore faced with a loss because he will have to pay betterment levy. That is the first case which I believe falls under this Section.

The second builder, whom I will call builder B, is a larger concern and he is able to sell completed buildings. All the other facts could well be the same—indeed they are—but builder B is exempted from the levy because he sells a completed property and does not have to rely on the purchaser paying the purchase price by instalments. The same situation could arise, and in this case it would have a more marked effect, where a builder had owned the land before 23rd September, 1965, when the Government first brought in the Bill.

My question is simply this. I should like to ask the Minister, and I do so with the benefit of counsel's advice, if this is the correct interpretation of the Bill. If it is it would appear that the small builder is being prejudiced as against the big builder. In addition a purchaser would be prejudiced because if he has to buy completed properties, the legal costs which he will have to pay will be greater than if he bought a plot of land and entered into a building agreement.

The suggestion which my constituents make, and which I endorse strongly to the Minister, is that if builders of varying classes are not to be prejudiced by the Bill then a complete exemption from the levy under Case A and under Case C should be available when the provisions of these Sections apply.

I realise that I have put a very complicated issue before the House, but I do not apologise for that because, goodness knows, this is a most complicated Bill.

I ask the Minister if he would kindly examine this case when he comes to read HANSARD tomorrow. Perhaps he will give me some general reflections this evening, but I hope he will be able to give some detailed reassurance that the advice given by counsel to the builders in my constituency is somewhat inaccurate. But if it is true as stated, then a serious prejudice against the small builder as compared with the larger builder is built into the Bill as it stands.

Mr. Boyd-Carpenter

I should like to go back to the Minister's reply to the Amendment. As I understand him, his objection was that this would drive a coach and horses through the levy because builders would convey the land to the ultimate purchaser, build on it and obtain the exemption of the Clause as it then stood.

The right hon. Gentleman went on to say that the builders, having done this, would themselves take the advantage of the exemption and not pass it on. This was a very interesting argument, but I think an unsound one.

What the right hon. Gentleman was saying was that in this particular case the owner-occupier would find the land provided levy-free but that he would not get the advantage of this because it would be withheld by the builder. This is contrary to our whole experience of other forms of taxation. If the supplier of any goods manages lawfully to get his commodity tax-free it is our universal experience that that commodity sells at a lower price than a similar commodity when subject to tax. The right hon. Gentleman has only got to visit such places as Gibraltar, where duty-free liquor and tobacco are to be obtained, to find that he can gratify any tastes he may have in that direction infinitely more economically than he can in this country. It is not the common experience of taxation that if a commodity otherwise taxed becomes available tax-free, the ultimate purchaser gets no benefit from it. This is not what happens.

Let us follow this argument. The right hon. Gentleman's objection is that he will lose the levy in these cases because this method of avoiding paying will be exploited. But we come back to the ultimate purposes of the Bill. The Bill was brought forward the best part of two years ago on the grounds that it would make housing and land cheaper. Now we have at this stage the right hon. Gentleman objecting to a proposal because it would do just that. This is the reductio ad absurdum of the whole process of the Bill.

We have a Bill introduced under the pretext that it would cheapen houses and prevent the exploitation of home buyers, and at the last stage in this House we have the right hon. Gentleman resisting their exemption from tax because it is an exemption from tax and because he would lose the levy. His objects have, therefore, come a complete circle. We have come from the original good intention of trying to provide housing more cheaply back to providing what he regards as the most efficient way of taxing home ownership.

Mr. Clegg

I hope that the Minister will help us sooner or later with one of these Amendments. Otherwise he will be known as the Adam Adamant of the House of Commons. The only trouble is that the television series is entitled "Adam Adamant Lives", and if the right hon. Gentleman goes on like this we may doubt the latter word.

The Minister somewhat mystified me by his references to concessionary crown-hold. I am glad that this has come up, because I am still wondering, even after the Committee stage, how concessionary crownhold gets first into the hands of the private builder and, having arrived there, to the man in the street. We know that corporations can use it, but I would be grateful if the Minister could make this point a little clearer with regard to just how it will be worked and how it will advantage the man who is buying a house in which to live.

Mr. Eyre

Before my hon. Friend continues with the subject of concessionary crownhold, may I draw his attention to the statement made by the noble Lord Kennet in another place where he said on 17th January: The Commission will be free to dispose of crownhold to the small builder, and the small builder will be free to dispose of crown-hold to the occupier. What is not intended is that the Commission should so dispose of concessionary crownhold; it will dispose only of crownhold in general, of the normal type." —[OFFICIAL RFPORT. House of Lords, 17th January, 1967; Vol. 279, c. 81–2.] In other words, there is no question of the small builders getting any benefit from concessionary crownhold. This is contrary to the whole line of propaganda of the right hon. Gentleman.

2.0 a.m.

Mr. Clegg

I am most grateful to my hon. Friend, who has done considerable research into this matter. Perhaps the Minister could clear up what seems to put it beyond a peradventure of a doubt that concessionary crownhold cannot possibly come into the sort of exemption we are discussing. That will be a grave disappointment to those hoping to get land more cheaply, because that was the carrot that led people to vote for the right hon. Gentleman's party.

I am beginning to dislike intensely the date, 23rd September, 1965, because, as the Minister and Parliamentary Secretary made clear, many matters have had to be cleared up since then. There is, in particular, the problem of what planning consent meant, and we have seen the Amendments which resulted from the hesitancy over that. I am convinced that people, who bought land in the interim period, in genuine ignorance and misunderstanding of the provisions of the White Paper and the Bill—particularly the Bill, will suffer financially in a substantial way through no fault of their own. It will not be because they were trying to make anything. Merely because they were carrying out normal transactions in lack of knowledge—and very much lack of definition, small people with building plots will be hard hit.

I hope that the Minister will be more forthcoming about these matters, and give a definite reply to the point about concessionary crownhold.

Mr. Body

I find it very difficult to reconcile the right hon. Gentleman's reasons for opposing the Amendment and the inflammatory speeches we heard not so many hours ago from some of his back benchers. When we listened to the eloquence about land sharks and speculators we were taken back to the election campaign and we had a rehash of a few of the slogans. That was all good stuff, but it has no relevance to the Amendment, which is designed merely to try to streamline the proposal and to lift out of the categories of those who will be penalised people who are very small fish. I therefore hope that the right hon. Gentleman will reconsider this very modest Amendment. He says that if he allows it to go through we shall have a coach and pair driven through the whole Bill. But surely that is not really his view?

He must acknowledge that this is a very simple and modest proposal, which will help small people. No shark, no speculator will be able to gain by it, and if he allows it—so far I do not think that he has allowed anything—we shall at least not have sat through this night for nothing.

Mr. Willey

We made the position on crownhold very clear from the start. One need only look at the White Paper—

Mr. Rossi

On a point of order, Mr. Deputy Speaker. So that hon. Members do not miss the important statement which the Minister is about to make, and so that he is adequately supported, may I draw attention to the fact that fewer than 40 Members are present?

Notice taken that 40 Members were not present;

House counted, and, 40 Members being present—

Mr. Willey

To make the Government's position clear about concessionary crownhold, it is necessary to go no further than the White Paper. In paragraph 24, it says: The Commission will be able, in appropriate cases, to dispose of land for owner-occupied houses at less than its market price. They will normally do so to bodies which can effectively supervise the assignment of such houses, for example housing associations, cooperative groups and local authorities who are prepared to build houses for sale. Where this is not possible, however, the Commission themselves will have power, with the consent of the Ministers, to provide houses for disposal direct. In such cases the disposal will be on a Crownhold basis and in addition to restrictions on development there will be provisions for control of assignment and recovery of the concessions. Concessionary Crownhold disposals will form part of the general pattern of measures which the Government has in mind to deal with the high cost of housing. So the position of the Government and the position of the Commission with regard to the disposal of land for concessionary crownhold housing is and always has been quite clear.

To turn to the points raised by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths), he asked for a general comment and an undertaking. Certainly I will look into what he said and reply to him in due course.

Meanwhile, there are three points which I would make. First, the matters which he has raised do not affect the attitude which I take towards the Amendment. Secondly, where a builder has planning permission and begins development, he will not be affected by the levy. Thirdly, when we consider Clause 62, we are concerned with builders who had stocks of land at the date of the White Paper. If they use that land for building, they will not be affected by the levy.

Mr. Graham Page

I would make a plea to the right hon. Gentleman that the Government should take a broad and generous view of the man who wants to build a house on his own plot. I cannot see the moral difference between the man who owned his plot before 23rd September, 1965, and the man who has bought his plot since then. If it is right to give relief to the man who intends to build his own family house, surely it is right to give it to him whether he owned the plot before the White Paper day or after it. If he sets out to add to the supply of houses by his own efforts in housing his family on his own plot of land, surely the Government can take a broad and generous view and not be niggling over when he purchased the land.

Even if there is the possibility of a loophole or two, by which I mean the possibility of someone buying a plot of land cheap, which I thought was what the Government intended people to do, surely we can overlook it here on the broad principle of relief to the man who builds his family house on his own plot of land.

Mr. Eyre

I have listened to what the Minister has said and cannot refrain from putting to him the record with regard to these concessionary crownhold disposals, because he is still maintaining the same old fairy story. He cannot be allowed to continue to get away with it. Throughout our debates in Committee and subsequently the Parliamentary Secretary has been rather more frank about it, and has said that concessionary crownhold disposals would, in the normal course of events, be available only where the organisation is able to police the restrictions. It is a charming phrase, and it has always been used by the Parliamentary Secretary.

But last month in Birmingham the Minister declared that through the Commission he would make available large areas of land to private developers, eventually for the use of owner-occupiers, by way of concessionary crownhold disposals. We have constantly tried to get him to say how he would do it—how, by Regulations, he would set up the machinery to choose the developers who would have the land and, eventually, the owner-occupiers who would benefit from concession.

Constantly the Minister has avoided doing that, and has repeated his general statement—as he has tonight. But it cannot be right for the Minister to go on repeating this White Paper claptrap, without being genuine enough to give details of the way in which the disposals will be effected. This matter is of tremendous concern to small builders and to the whole programme of private house development building.

How can the right hon. Gentleman reconcile what he has said with the words I have quoted from the report of a debate in another place, when a Government spokesman made it clear beyond doubt that there will not be these allocations of concessionary crownhold to private developers? What the Minister has said tonight is in utter contradiction to the words of the Government spokesman in another place. I have repeatedly asked the Minister to reply to the question and tell us how he will deal with the situation. Now, only the Prime Minister can be called upon to resolve the conflict between the Ministers. It is of tremendous practical importance that this should be done. The Minister should not continue this general protestation, in contradiction to a Ministerial spokesman in another place, when he is quite unable to produce the Regulations which would provide the only genuine basis to entitle him to continue to make this assertion.

It is of the greatest importance that he should say now what the position is, and resolve the conflict between him and his ministerial colleague—or that he should tell us that the Prime Minister will resolve it.

Amendment to the words so restored to the Bill negatived.