§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ernest G. Perry.]
§ 10.14 p.m.
§ Mr. R. W. Elliott (Newcastle-upon-Tyne, North)I am grateful to the Minister for Planning and Land, in view of the pressure of work upon him, for coming here to answer this debate personally at this time of night.
I am glad to have this opportunity to raise what I believe to be a case of extreme individual hardship inflicted on a defenceless citizen—I emphasise those words—through the working of the Land Commission Act. A short while ago the Chairman of the Land Commission stated through the medium of a newspaper article that the Land Commission Act was most complex and had
some loose and rather nasty ends which need tightening up".Sir Henry Wells continued:I am aware of many cases of unfairness. I can only administer the law as it stands.It is a case of extreme unfairness which I am raising tonight. I have made the Minister fully aware of the details. It is one of many which should persuade the right hon. Gentleman that this Act of Parliament, which will disappear altogether with the advent of a Conservative Government, should nevertheless be amended for the remaining period of this Labour Government.
§ Mr. SpeakerOrder. The hon. Gentleman cannot propose amendment of the law on the Adjournment.
§ Mr. ElliottI am obliged, Mr. Speaker. I seek only to point out the effect of the Act as it stands on an individual constituent.
Mrs. Doris Lowe, of Newcastle-upon-Tyne, is a widow whose income is less than £9 a week. She receives £6 15s. 6d. a week from Social Security, and she augments this income with a small part-time job which brings her in just over £2. Mr. Lowe, her husband, died on 4th October, 1966, and was able to leave one item, and one item only, of value to his widow. That was a plot of land in an area known as Darras Hall, Pontleland, 2058 which Mr. Lowe had, in his turn, inherited from his father who had died in 1946.
Father and son had shared a common ambition, to build on this plot of land, which is about half the size of a football pitch, a house for their own occupation. I make that point very firmly because a fundamental factor in this case is that the Lowe family, father and son, can in no conceivable sense be regarded as land speculators.
The story of this plot of land is a sad one because neither father nor son could ever afford to achieve his ambition of building a house upon it. For the younger Mr. Lowe, however, there was hope and he did almost come to the point of beginning negotiation towards the starting of building of his longed-for house, though that hope was sadly dashed by his premature death.
In the interim before he died, Mr. and Mrs. Lowe were so fond of their plot of land that they purchased a caravan and, pending such time as they could, as they hoped, afford to build their house, they spent many happy weekends on what they confidently believed to be the site of their future home.
After the death of her husband, Mrs. Lowe gave up the idea of building, knowing quite well that she could never afford to do so. Her only comfort at the time of her husband's death was the knowledge that the plot of land, which had been cherished for so long by father, son and eventual widow, would give her a certain capital sum with which she could face what would obviously be a lonely future. The land was duly sold for £3,600, and this—I emphasise it—was almost all that Mrs. Lowe had in the world.
Nevertheless, under the cruel terms of the Land Commission Act, this widow, left alone in the world, has been forced by law to hand over no less than £1,253 12s. of the £3,600 as so-called betterment levy. We on this side of the House have regularly called the Land Commission Act possibly the most muddled piece of legislation ever to reach the Statute Book. With considerable justification, we have called it unfair and unjust. I have no hesitation in describing its application to Mrs. Lowe of Newcastle-upon-Tyne as inhuman.
2059 In the course of the 1964 and 1966 General Elections, we were told that a Labour Government would legislate to collect by taxation profits made by land speculators. I do not think that any of us would argue unduly with heavy taxation being placed on those in our community who have made enormous profits through speculation of any kind—short-term profits and short-term gains made through the luck of the draw or the luck of the market. But, I repeat, in what conceivable sense could Mrs. Lowe or her husband have been considered speculators? This land had first been purchased by the late Mr. Lowe's father. It had been in the possession of Mr. Lowe senior and then Mr. Lowe junior since 1917. This was no short-term gain. That piece of land had been purchased and cherished with only one idea in mind, that of building a house for a family. Yet at the point of the premature death of her husband and of a widow being left alone in the world, a cruel Act of Parliament, inflicted by a cruel Government, takes from that defenceless widow a fantastic amount of her very small capital.
It is my hope that by raising this case tonight I shall make the public aware that a massive Act of Parliament is being used to oppress small, defenceless citizens. This is not taxation. It is legalised robbery. It is a public disgrace that this widow has had this amount of money extracted from her by law. This Labour Government should get on their knees in shame at having extracted it.
§ Mr. SpeakerOrder. The hon. Gentleman knows that I chose this subject for debate tonight. He cannot, however, on an Adjournment debate, propose reform of the law. He can criticise the administration of it. That is what he must do.
§ Mr. ElliottI accept your Ruling, Mr. Speaker. I shall criticise the administration of it.
Mrs. Lowe knows full well that she will not recover her money. I rather respect her for her view. But what she has said is that she hopes that her case will help to persuade this Government that others may be punished as she believes that she has been punished. I call on the Minister to recognise the harshness 2060 of the infliction of the law on this defenceless citizen, and I hope that he will use his influence to amend the law accordingly.
§ 10.24 p.m.
§ The Minister for Planning and Land (Mr. Kenneth Robinson)The hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) has deployed the case as he sees it on behalf of his constituent, Mrs. Lowe, and has widened his remarks, in so far as the rules of order permitted him to do so, to attack the legislation under which this levy was made. I will do my best to deal with the particular case and also, subject to the rules of order, with one or two of the wider issues.
It used to be said of the Town and Country Planning Act, 1947, that it was the most complicated piece of legislation which had ever reached the Statute Book. More recently, a similar claim has been made for the Land Commission Act. The hon. Gentleman did not use the word "complicated"; he used the word "muddled". Although I would not subscribe to this view, I readily concede that it has its difficult passages. But the paradox is that the principle behind Part III of the Act—the much vilified betterment levy provisions—is one of the utmost simplicity, which I will restate in a few moments.
Whether the Opposition agree with the imposition of betterment levy is a separate matter, but it is wrong to suggest that the whole principle of the levy is impossible to comprehend when the complications are confined to the more unusual cases and circumstances. In the particular case raised by the hon. Gentleman, it will be seen that few of the complicated provisions about which we hear so much have any bearing on it. Let us look again at the simple principle of betterment levy.
§ Mr. SpeakerOrder. I want to help the right hon. Gentleman as I helped the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott). We cannot debate the Act. We can debate the administration of it as far as it concerns the hard case which the hon. Gentleman raised.
§ Mr. RobinsonThat is precisely what I hope to do, Mr. Speaker, but I thought that it would perhaps be a good idea—since betterment levy has been criticised as larceny by the solicitors of the hon. Gentleman's constituent—to explain what the principle behind it is, because it is most certainly not larceny. Let us look again then at the simple principle of betterment levy. Land, whether or not it has buildings on it, has the value of the purpose for which it is at present used. I do not think that it is lapsing too far into jargon when I say that that is called the "current use value". It is a perfectly clear expression. We all know that when planning permission is granted to put land to a more valuable use, or where the prospect of planning permission being granted can be clearly seen, the value of the land rises. The difference between these two values, the amount by which the grant, or prospect, of planning permission has increased the value of land, is the development value, and it is on this figure that levy is based.
It would be very convenient if the matter could be left like that, with a few simple sections in the Act to levy all development value, but without further refinement the levy would indeed be arbitrary. The accretions to the simple framework of a levy on all development value—the complications, if one likes—are principally designed to ensure, first, that allowances are given where necessary so that the levy is applied evenly however development value is realised, and, secondly, that where levy has been taken once on any development value it is not taken again. Nor should it be overlooked that a quite sizeable part of the Act is concerned with providing exemption from levy. It is not against these complications in the Act, I imagine, that complaint is made.
These exemptions so far as they concern individuals are mainly of a transitional nature intended to ensure that if land was owned before the issue of the White Paper in September, 1965, and had been bought for the specific purpose of house building, its owner should not be put in worse position when that purpose is carried out. If, for instance, a house builder had bought land with a view to building houses and secured his planning permission, he pays no levy despite the increase in the value of the land. Again, 2062 if a householder builds for an immediate member of his own family there is no levy. But there is no question of an exemption where no development takes place and all that has happened is that the planning position in the neighbourhood has greatly increased the value.
I have dealt briefly with these provisions because in dealing with the case of Mrs. Lowe I must ask myself whether within the philosophy of the Act it could be argued that an exemption should apply to her case, to which I now turn.
The facts have been clearly given by the hon. Member. This lady owned a piece of land which perhaps with foresight the family bought as long ago as 1917 and 1920 when land which is now much sought after in a prosperous and popular small township was cheap and easy to come by. Its current use was for agricultural purposes. She has now sold it for a building plot and has been charged a betterment levy of 40 per cent. of the difference between those two values, which is the gain that planning permission has brought to her.
I think that the aspect of this case which the hon. Member finds most distasteful is that for some time the land has either had planning permission or could have had planning permission for building a house upon it. Indeed, in correspondence he has said that had Mrs. Lowe sold the land at any time between September, 1965, and April, 1967, during the rather protracted passage of the Land Commission Bill through the House she would have escaped liability. That is true. I do not deny that it was known long before April, 1967, possibly as much as 20 years before, that this land could be used for building purposes.
But the Land Commission Act quite deliberately does not assess levy according to April, 1967, values. Not only would this be an impracticable task and result in no levy at all for a great many years but the Government do not accept that development value created before April, 1967, should escape betterment levy when it is realised after that date. We should need entirely fresh legislation to deal with such a concept. I wonder whether that is what the Opposition have in mind when they carry out their threat to abolish the Land Commission and are noticeably silent 2063 about what they propose to do about betterment levy.
Secondly, much play is made with the fact—and the hon. Member made the point again this evening—that Mrs. Lowe is not "a speculator". Of course she is not. But it is a great mistake to think that the Land Commission Act was designed as a selective weapon against that one section of the community. Indeed, one of the Government's main concerns in drafting the Act, and one which leads to many of its complications, was that it should apply evenly to all profits in land which arise from the fortune of planning permission being granted.
§ Mr. Reginald Eyre (Birmingham, Hall Green)Does not the theory which the Minister has explained mean that exemption is given to a builder or developer in the circumstances which he has described but is denied to a widow?
§ Mr. RobinsonNo. That is not so. These exemptions apply to the period between the publication of the White Paper and the legislation. I emphatically deny that the builder is placed in an advantageous position vis-à-vis the individual owner.
From the figures given by the hon. Member it is clear that a development value of over £3,000 has been realised in this case. Is he arguing that a profit of that magnitude ought not to be taxed?
Finally, the Government are castigated for taking levy from this lady because she is a person of limited means. I regret very much that she is in this position, just as I regret that so many members of the community are in a position in which they cannot afford to do all the things they would like to do. Do the Opposition want a new sort of means test by which a person who makes a fortuitous gain from obtaining planning permission should be called upon to demonstrate by reference to his means how much of that gain he should be entitled to keep? Is that what the Opposition have in mind and is that one of the reforms which they will introduce?
§ Mr. ElliottDoes the right hon. Gentleman realise that this is a widow who does not understand legislation? When he speaks of an enormous for- 2064 tuitous gain, does he realise that this land was in the possession of her husband and her husband's father from 1917? In what possible sense can she be called a speculator? The legislation was designed to catch speculators.
§ Mr. RobinsonI specifically rejected the concept that she was a speculator and I said that the Act was not solely designed to deal with speculators. She has made a profit on this land because planning permission was granted for the building of a house, granted by the community. The increase in value was created not by her but by the community and it does not seem to me to be a gross injustice that a proportion of the increase should go back to the community.
I was asking whether the Opposition had in mind that there should be a means test approach. If they have I gather it would involve a still more complicated Act and a very much larger staff to operate it.
§ Mr. SpeakerOrder. The Minister cannot ask the Opposition, on an Adjournment debate, what legislation they would propose.
§ Mr. RobinsonI accept your observations, Mr. Speaker, and I will try not to stray again from the paths of righteousness. If one argues that a person of limited means should not pay 40 per cent. of his gain to the community then one should go on to argue that a person of substantial means should not be allowed to keep the 60 per cent.
What could Mrs. Lowe have done that she did not do? The Act makes provision for those who object to their assessment, and their rights are clearly set forth on the notice that they receive. Incidentally, I do not expect Mrs. Lowe to understand the Act, but people who sell plots of land for £3,600 normally take professional advice, and I should have thought that her professional adviser would have told her exactly what the situation was.
The Act provides that a counter notice can be served within two months of the service of the notice, and an alternative assessment put forward if the district valuer's assessment is considered excessive. The grounds of the objection have to be stated, and there are various grounds 2065 on which counter notices can be put forward. One of the commonest grounds is perhaps that the levy payer does not agree with the current use value put on the land by the valuer concerned. This is a matter of expert judgment and one that can be the subject of argument. It is, however, a figure which is crucial, because that basis of the levy assessment is this figure subtracted from the market value, which in this case is not subject to argument since it is the price at which the land was sold.
It was open to Mrs. Lowe to take advantage of these provisions. Plenty of people have done so. One case has already been heard by the Lands Tribunal, and others are coming forward. From the fact that she did not do so I can only assume that she was prepared to accept the valuer's figure and saw no grounds for putting forward a higher figure so as to reduce the levy.
Nor am I clear what sort of an exemption the hon. Member wants the Commission to recommend. I have seen in recent Press comments on the Commission a narrow band of cases where it is alleged there is "robbery" or sometimes worse. I only take exception to these comments when they attempt to bring personal ridicule on civil servants who cannot reply on their own behalf—a form of public controversy which I am sure the whole House deplores. I fully accept that the hon. Gentleman has not engaged in this. Unfortunately, one or two newspapers have.
Indeed in one respect, at least, I welcome these comments because they serve to bring home to people who may otherwise be unaware of it that the Act is intended not merely to mulct the speculators but genuinely and in a thoroughgoing manner to restore to the community a proportion of what rightly belongs to it.
I have taken note of a good many of these comments. I find that at one end of the list of the cases with which most of them deal are the old-age pensioners who have sold house and garden and are levied because there is development value in the garden. At the other end are young couples who have been given plots of land and built a bungalow which gives a higher value to the land, on which levy is, therefore, due—levy, let me say 2066 in passing, at 40 per cent., whereas if they had bought land in the open market they would have paid 100 per cent. of net development value.
There have been pleas from hon. Members that I should try to exempt from levy this or that class of case. But no one till tonight has seriously suggested that I should summon a coach and horses and drive right through the basic principles of the Act to provide exemptions for such cases as Mrs. Lowe. I might as well dismantle the whole machinery of the betterment levy, and whatever the intentions of the party opposite in this matter, whatever sympathy I may feel for personal cases where people find it hard to pay the levy, such a measure is, to put it mildly, outside the scope of an Adjournment debate.
§ 10.40 p.m.
§ Mr. Reginald Eyre (Birmingham, Hall Green)In his opening remarks the Minister almost described the Act as easy to understand. He suggested that it was within his competence. Then he went on to give a theoretical explanation of the working of the Act which I found to be muddled. It must be so, because the Act is based on a muddled theory.
Concerning these exemptions, there is no doubt that developers and builders have an advantage compared with the widow in these circumstances. By cutting the sod and beginning development they exempt themselves from liability, although they were owners of the land at the same time as this unfortunate widow. Therefore, I maintain that my hon. Friend is right in raising this matter and claiming that this widow has been treated with unjustifiable hardship.
The Minister suggested that had the widow or the previous owner—her husband—disposed of the land, they would have been exempt from this charge. But let us look at the date of death. The husband, who hoped to build a small house on this land, did not die until November, 1966. Therefore, there was no chance to dispose of it before this dreadful Act came into operation early in 1967. This poor widow was caught—absolutely trapped—by the circumstances of this case.
The Minister asks why she did not serve a counter notice and have an argument about the valuations. The truth is 2067 that it would not have made a scrap of difference, because the valuations are probably right, based upon the Act. But the Act is wrong and unjust. It is, therefore, the administration of the Act in this case which causes hardship and injustice.
Looking at the amount of levy which has been assessed in this case, there is no doubt that it is an excessive taxation. It cannot be denied that to take this great slice of money out of this small estate is wrong, and it cannot be justified morally. It is an excessive taxation.
§ Mr. K. RobinsonThe hon. Gentleman is now criticising the Act passed by this House. There is no question that the amount of levy that Mrs. Lowe has been called upon to pay is precisely the amount of levy that this House intended 2068 that a person in her circumstances should be called upon to pay.
§ Mr. SpeakerOrder. The right hon. Member can only intervene. He cannot make another speech without leave of the House.
§ Mr. EyreI have no doubt that the assessment, in figures, is correct in accordance with the Act forced through the House by the Government. I am presuming to question the moral basis of this taxation, because the Act is wrong—
§ The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at sixteen minutes to Eleven o'clock.